author: John I. Purtle, Justice. Darrell Hickman, Justice, Richard B. Adkisson, Chief Justice, Steele Hays, Justice,

text:
    AETNA CASUALTY AND SURETY COMPANY v. BROADWAY ARMS CORPORATION
    83-134
    664 S.W.2d 463
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983
    [Substituted Opinion on Denial of Rehearing February 21, 1984.]

      Anderson ér Kilpatrick, by: Overton S. Anderson and Michael E. And, and Friday, Eldredge ir Clark, by: William H. Sutton, for appellant.

      Gary Eubanks ir Associates, by: Gary L. Eubanks and Hugh F. Spinks, for appellee.

      Hays and Hollingsworth, JJ., would grant rehearing.

   John I. Purtle, Justice.

Appellee filed suit against its insurance carrier based upon the tort of bad faith arising out of conduct involving the handling of a claim for damages resulting from a fire. The jury’s verdict (by interrogatories) included a finding that the carrier had acted in bad faith resulting in damages to the appellee (insured) in the sum of $175,000 compensatory loss and $5,000,000 punitive damages. On appeal it is urged that: 1) the trial court erred in failing to direct a verdict on the issue of bad faith; 2) the court erred in instructing the jury; 3) the court erred in allowing an attorney for the appellee to testify; 4) damages awarded were excessive and not supported by substantial evidence; and 5) the court erred in failing to grant a new trial. For reasons stated below we reverse and remand.

Aetna Casualty and Surety Company (appellant) issued a fire insurance policy on property owned by Broadway Arms Corporation (appellee). The policy contained a rider providing for a 25% increase in coverage for loss during peak season. The coverage also included provisions for loss of business and up to $1,000 to be used to clean up the premises in case of loss. On August 22, 1981, a fire occurred on the insured’s premises and all inventory was destroyed or damaged, resulting in the insured’s business being shut down. Aetna advanced appellee the sum of $30,000, as partial payment on the loss,f a few days after the fire. A dispute over the ownership of the salvage arose and matters deteriorated between the insurer and insured. The appellee obtained the services of attorney Roger Glasgow to handle the claim.

On November 10, 1981, appellant offered appellee the sum of $63,225 for settlement of all claims under the policy. This offer included $45,000 for direct fire loss ($30,000 had been previously advanced), $1,000 cleanup and $17,225 for loss of business. The offer was rejected and appellee filed suit on December 4, 1981. Glasgow had originally agreed to represent appellee on an hourly basis; however the fee was not paid as billed and a contingent fee schedule was agreed upon on March 24, 1982. Subsequently, Glasgow associated Gary Eubanks to handle the case. The contract between appellee and Glasgow remains in effect. The two attorneys agreed to split the fee under the terms set out in the agreement of March 24, 1982. Although Glasgow withdrew as attorney of record he will get half of any fee collected in this case. He continued to represent Broadway Arms in other suits brought against them and was designated corporate representative for them during the trial of this cause and as such was allowed to sit at counsel table.

The matter was submitted to the jury on interrogatories. The interrogatories included answers to the effect that: 1) the coverage had not been increased to $100,000; 2) the coverage should increase by 25% for seasonal variation; 3) the loss of earnings was $40,191 in excess of $17,225; 4) the insurer acted in bad faith; and 5) appellee’s damages were assessed at $175,000 compensatory and $5,000,000 punitive.

The first argument for reversal is that the court erred in refusing to direct a verdict on the pleadings which charged appellant with bad faith in handling the first party loss under the insurance policy issued to the insured by the insurer. Appellant argues that the Trade Practices Act (Act 148 of 1959), Ark. Stat. Ann. §§ 66-3001, et seq. (Repl. 1980), and the penalty and fees statute of Ark. Stat. Ann. §§ 66-3238 pre-empt the area upon which the tort of bad faith is founded. We do not agree with this argument. Such interpretation would rule out third party claims of bad faith because the Trade Practices Act is only an effort to clean up undesirable conduct of insurers and the penalty and fees statute applies only to first party claims. The penalty and fees statute is the primary remedy an insured has against an insurer who fails or refuses to pay a claim when there is no bad faith. The Trade Practices Act provides for procedures and penalties to be utilized by the provisions of the act. Neither of these remedies deals with the area of bad faith much less pre-empts it.

We have previously recognized that bad faith is an actionable tort in Arkansas. In discussing the tort of bad faith in Findley v. Time Ins. Co., 264 Ark. 647, 573 S.W.2d. 908 (1978), we cited the earlier case of Members Mutual Ins. Co. v. Blissett, 254 Ark. 211, 492 S.W.2d 429 (1973), as authority for the premise that the tort of bad faith is an extension of the well established rule through which a liability insurance company can be held accountable in tort for failure to settle a claim within the policy limits. Although Blissett was decided on the question of negligence on the part of an insurer for failure to settle a third party claim within the policy limits of its insured, it did state that the action was a separate tort action. M.B.M. Co., Inc. v. Counce, 268 Ark. 269, 596 S.W.2d 681 (1980); Findley v. Time Ins. Co., supra; Members Mutual Ins. Co. v. Busby, 251 Ark. 568, 473 S.W.2d 893 (1971). In Blissett we settled the issue when we concluded that in order to be successful a claim based on the tort of bad faith must include affirmative misconduct by the insurance company, without a good faith defense, and that the misconduct must be dishonest, malicious, or oppressive in an attempt to avoid its liability under an insurance policy. Such a claim cannot be based upon good faith denial, offers to compromise a claim or for other honest errors of judgment by the insurer. Neither can this type claim be based upon negligence or bad judgment so long as the insurer is acting in good faith. We agree with the Ohio Supreme Court in Columbus Finance v. Howard, 42 Ohio St. 2d 178, 327 N.E.2d 654 (1975), holding that in an action of this type for tort, actual malice is that state of mind under which a person’s conduct is characterized by hatred, ill will or a spirit of revenge. Actual malice may be inferred from conduct and surrounding circumstances. Bad faith may give rise to either first or third party claims.

Three accusations of bad faith against Aetna were made in the present action. Appellee alleged: 1) refusal to pay policy limits under the fire coverage; 2) failure to release the salvage to the insured; and 3) a threat to report the transaction to the Internal Revenue Service. Less than 90 days after the loss the insurer offered to settle the matter for the lump sum of $63,225, which was in addition to the $30,000 advanced immediately after the fire. The offer was rejected by the insured. Suit was filed on December 4, 1981. The jury found appellee was due the additional sum of $58,941 under the policy provisions, which was more than the offer by the insurer. The jury found the appellant had committed acts of bad faith and awarded damages in the sums of $175,000 compensatory and $5,000,000 punitive. So far as the salvage is concerned it remained in the possession and control of the appellee at all times. Testimony indicates salvage was discussed in September following the fire and each party apparently thought the other claimed the right to the salvage. There is nothing about the handling of the salvage claim which appears dishonest, malicious or oppressive as a matter of law. The threat about the IRS is the final act of bad faith alleged in the complaint. The testimony on this subject indicates a representative of the insurer met with the insured’s first attorney, Roger Glasgow, and during the discussion indicated that the insurer might be called on by the IRS to explain why it paid $75,000 on a loss when the books of the insured revealed an inventory value of $23,000. It is probable the claim agent’s statement intended to put some type of pressure upon its insured to settle the claim. This matter being a fact issue, it will not be decided at this time because we are remanding for a new trial and the matter may or may not be presented in the same manner at the next trial.

The second argument for reversal is that the court erred in instructing the jury regarding the Trade Practices Act. A portion of this act [Ark. Stat. Ann. § 66-3005 (9)] includes a section headed Unfair Claim Settlement Practices which states in part:

Committing or performing with such frequency as to indicate a general business practice, any of the following:
(a) Misrepresenting pertinent facts . . .
(b) Failing to acknowledge and act reasonably and promptly . . .
(c) Failing to adopt and implement reasonable standards for the prompt investigation of claims . . .
(d) Refusing to pay claims without conducting a reasonable investigation . . .
(e) Failing to affirm or deny coverage . . .
(f) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims . . .

The contingent fee agreement has given us much concern. The agreement was entered into prior to the time the attorney had any idea he would be a witness. His fee agreement was reduced by fifty per cent when he decided to become a witness and employ other counsel to try the case. We are of the opinion that due to the special circumstances of this case he may testify and also share in the fee, provided he completely withdraws from participation in the case other than as a witness. Unless he completely severs his attorney-client relationship in this case he will not be allowed to testify on retrial. If he testifies as an expert witness he may not testify that Aetna acted in bad faith. To do so would not only touch upon the ultimate issue but would in effect tell the jury how to decide the case. Gramling v. Jennings, 274 Ark. 346, 625 S.W.2d 463 (1981).

The question of an attorney testifying in a case where he has an interest in the outcome has been considered and disapproved of by this court many times. In the case of Boling, Adm’r. v. Gibson, 266 Ark. 310, 584 S.W.2d 14 (1979), an attorney was called as a witness during trial and his partner continued with the trial. In holding that it was improper for attorneys to testify on the merits of the case when an associate continued with the trial, we stated an attorney must decide whether he should serve as an attorney or as a witness. The same issue was addressed in Enzor v. State, 262 Ark. 545, 559 S.W.2d 148 (1977), wherein we stated:

We must again take this opportunity to reiterate strongly our disapproval of an attorney testifying in an action in which he is an advocate. An attorney who is to testify in an action should withdraw from the litigation. On the other hand, if an attorney is going to serve as an advocate for his client, he should refrain from testifying in the action.

In discussing the testimony of an attorney in Rushton v. First National Bank of Magnolia, 244 Ark. 503, 426 S.W.2d 378 (1968), we said an attorney thus testifying becomes both “advocate and witness, one of which requires the lawyer to be partisan and the other of which requires him to be factual.” We held that such testimony robbed the trial of the appearance of fairness which should characterize every court hearing. Although Rushton was reversed because the attorney testified to vital issues in the trial, we recognized that it is not always fatal for an attorney to testify when we stated: “. . . it is within the discretion of the trial court to permit a lawyer to testify in a case even though the rule has been invoked.” However, this statement was made regarding lawyers who were not trying the case and related to exclusion under the rule.

We have adopted the American Bar Association Code of Professional Responsibility and the. Disciplinary Rules contained therein. DR 5-102 (A) states:

If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial . . .

DR 5-105 (D) states:

If a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment.

DR 7-109 (C) states:

A lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of his testimony or the outcome of the case . . .

Arkansas Rules of Evidence, Rule 601, states:

Every person is competent to be a witness except as otherwise provided in these rules.

The contingent fee agreement has given us much concern. The agreement was entered into prior to the time the attorney had any idea he would be a witness. His fee agreement was reduced by fifty per cent when he decided to become a witness and employ other counsel to try. the case. We are of the opinion that due to the special circumstances of this case he may testify and also share in the fee, provided he completely withdraws from participation in the case other than as a witness. Unless he completely severs his attorney-client relationship in this case he will not be allowed to testify on retrial. If he testifies as an expert witness he may not testify that Aetna acted in bad faith. To do so would not only touch upon the ultimate issue but would in effect tell the jury how to decide the case. Gramling v. Jennings, 274 Ark. 346, 625 S.W.2d 463 (1981).

It is argued by appellant that the verdict was excessive and was not supported by the evidence. The evidence will no doubt be different on retrial. Therefore, we will not discuss it in this opinion. On retrial the evidence of bad faith must be sufficient to show affirmative misconduct of a nature which is malicious, dishonest, or oppressive.

The matter of granting a new trial is within the sound discretion of the trial court. Dickerson Construction Co. v. Dozier, 266 Ark. 345, 584 S.W.2d 36 (1979), and General Motors Corp. v. Tate, 257 Ark. 347, 516 S.W.2d 602 (1974). In the present case appellant has tried to couch the argument of impeaching the verdict by the jury in a manner approved by the Arkansas Uniform Rules of Evidence, 606(b). However, the so called extraneous prejudicial information went only to the state of mind of a juror while deliberating. Such matters are clearly prohibited by Rule 606 (b) which states in part:

. .. a j uror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon his or any other juror’s mind or emotions as influencing him . . .

We have tried to make it clear in prior decisions that it is improper for a lawyer to try to impeach a jury verdict by affidavits obtained from members of the jury panel. Martin v. Blackmon, 277 Ark. 190, 640 S.W.2d 435 (1982). The trial court did not err in refusing to set aside the verdict and grant a new trial because of misconduct of jurors.

For the reasons set out above, this case is reversed and remanded.

Adkisson, C.J. and Hays, J., concur.

Hickman, J., concurs in part and dissents in part.

Hollingsworth, J., not participating.

Darrell Hickman, Justice,

concurring in part, dissenting in part. We are recognizing in this case that there exists a cause of action by an insured against his insurance company for bad faith or outrageous conduct. Such a cause of action is for both compensatory and punitive damages, but the emphasis is on the punitive aspect — because if the conduct of the insurance company is outrageous, it ought to be punished. The majority opinion does not refer to the new tort as outrage, but as one arising out of bad faith.

It is generally agreed that this tort was first recognized in California and is undergoing a period of refinement. Other states are following that trend to one degree or another. Allen, Insurance Bad Faith Law: The Need for Legislative Intervention, 13 Pac. L.J. 833 (1982); Benton and Johnson, The Tort of Bad Faith: A Perspective Look at The Insurer’s Expanding Liability, 8 Cum. L. Rev. 241 (1977).

In the case of Findley v. Time Ins. Co., 264 Ark. 647, 573 S.W.2d 908 (1978), we left unanswered the question of whether we would recognize this new tort, but laid down quite plainly the elements of the tort, if we did choose to recognize it. In Givens v. Hixson, 275 Ark. 370, 631 S.W.2d 263 (1982), we sharply defined our understanding of the tort of outrage. We said:.

The new and still developing tort of outrage is not easily established. It requires clear-cut proof. ‘Liability has been found only [our italics] where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.’ Restatement of Torts (2d), § 46, Comment d (1965); M.B.M. Co. v. Counce, 268 Ark. 269, 569 S.W.2d 681 (1980). It is for the trial court to determine, in the first instance, whether the conduct may reasonably be regarded as so outrageous as to permit recovery. Restatement, id., Comment H.

The majority opinion is in every respect in line with the Findley case. The tortean only be based upon an affirmative act of intentional dishonest, malicious, or oppressive conduct by a company to avoid its liability. Those are strong words, and impose a heavy burden on an insured, as they well should, because Arkansas has an adequate remedy for an insured against a company that either refuses or through nonfeasance will not honor its contract obligations. See Ark. Stat. Ann. § 66-3001 et seq. (Repl. 1980). While good reasons for recognizing this cause of action exist, the tort should not be merely a new legal tool to collect attorney’s fees, or a means of intimidating the insurance industry so it cannot fairly and reasonably resist false, suspicious or even disputed claims.

That is the reason I characterize the new tort as outrage, because it better describes the kind of conduct that should result in punishment. Bad faith can be, in my judgment, interpreted by jurors as merely negligence, and this tort is not one of negligence — it is one of intentional malicious, dishonest and oppressive conduct.

The evidence in this case does not justify a finding that Aetna is guilty of such conduct. Negligence, and poor judgment, probably; outrageous conduct, hardly. The only real evidence the appellee presented that could support a finding of intentional oppressive conduct was the reference to the statement by the adjuster that he might be called on to explain to the Internal Revenue Service why Aetna would pay $75,000 when there was only $23,000 inventory on the books. That statement could be taken either way. The adjuster had from the beginning questioned the records of the appellee which were admittedly deficient. He had the responsibility to pay a substantial amount for a fire loss and had every right to question how much loss there actually was. Furthermore, this was a conversation between a lawyer hired by the appellee to get the maximum benefits under the policy and an adjuster hired to see that no more was paid than was owed under the policy. The attorney said it was his “impression” it was a threat. That is not “clear-cut” proof; standing alone that is not enough, by any test, to support a finding of outrageous conduct which resulted in a $5,000,000 judgment for punitive damages.

It is a judgment question on our part that Lawyer Glasgow should not have been allowed to testify under the circumstances of the case, as it was tried below. We do not find that there was any unethical conduct on his part. Glasgow did immediately withdraw from the case when he saw he might have to be a witness. At that time he saw that there might exist a suit against Aetna for outrage. He already had a contingent fee arrangement with the appellee, and it was not changed when new lawyers were hired to pursue the suit. He did sit at the counsel table throughout the trial, but apparently as a representative of the corporation, Broadway Arms, and therein lies the problem. It could easily appear he was counsel in the case. Our rule against lawyers testifying in a case in which they continue to participate as attorneys has become fixed — we will not allow it. Bishop v. Linkway Stores, Inc., supplemental opinion, 280 Ark. 124, 655 S.W.2d 426 (1983); Boling v. Gibson, 266 Ark. 310, 584 S.W.2d 14 (1979). That is a relatively recent position of ours. Certainly the lawyer can testify on a retrial, he just cannot participate in any way in the suit, nor appear to. The reason we do not allow lawyers to tetify in a case in which they are counsel is because of the special role a lawyer plays as an officer of the court and advocate. He should not be allowed to play that role in front of a jury and then testify under oath to something that will aid his case. See Boling v. Gibson, supra.

I would reverse the judgment and dismiss the cause.

Richard B. Adkisson, Chief Justice,

concurring. Mr. Roger Glasgow, an attorney, entered into a contingent fee arrangement with Broadway Arms in regard to an insurance contract claim against Aetna. During settlement negotiations, it appeared to him that a tort claim against Aetna had arisen as a result of Aetna’s bad faith in fulfilling the terms of their insurance contract. At that time Glasgow, realizing that he would be a witness in regard to the tort claim, partially withdrew from the case, and another attorney, Gary Eubanks, was hired by Broadway Arms to prosecute the tort claim. Glasgow, however, continued to participate through the contingent fee arrangement, not only in the contract claim, but also in regard to the tort claim in which he intended to testify. Glasgow’s full and complete withdrawal from the tort claim was required by the American Bar Association Code of Professional Responsibility and the Disciplinary Rules which this court has adopted. DR 5-102 (A) states:

If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial . . .

This court, in its opinion, failed to distinguish between the two causes of action in stating that Glasgow could participate through the contingent fee plan. The damages are distinguishable. Glasgow should be allowed to participate in the contract claim pursuant to the initial fee arrangement; otherwise he would be completely deprived of his fee since he could not unilaterally alter the agreed fee arrangement. However, he should not participate in fees resulting from the tort claim since he was to be a witness.

Also, Mr. Glasgow is prohibited from sharing in the contingent fee arrangement regarding the tort claim for yet another reason. The American Bar Association Code of Professional Responsibility provides:

DR 7-109(c):
A lawyer shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of his testimony or the outcome of the case . . .

This section prohibits the payment of a witness contingent upon the outcome of a case. If Mr. Glasgow participates in the contingent fee arrangement regarding the tort claim, his compensation will necessarily be contingent upon the outcome of the case, a practice clearly prohibited by the Code of Professional Responsibility.

Steele Hays, Justice,

concurring. With some misgivings, I concurred in our original opinion on the issue of whether attorney Roger Glasgow should be permitted to testify on behalf of the appellee on retrial, and still retain a substantial fee contingent on the outcome of the trial. I found no clear authority on the point and thought that since the jury would be informed of the fee arrangement, that would cure the obstacle. I believe that was a mistake that should be corrected on rehearing.

I have come to this view: Mr. Glasgow may testify on retrial on condition that he entirely disassociate himself from the case or any interest in the outcome. Such hourly fee as he had earned at the time he withdrew and associated other counsel is, of course, due him, but it is due irrespective of the trial and its result. I have nothing definitive to anchor this position to, but if DR 7-109 of the Canons makes it improper for a lay witness to be paid contingent on the outcome, how can it be acceptable for a lawyer witness to be paid on that basis? Beyond that, if a lawyer is not professionally associated in a case regardless of who actually tries it, why is he being paid a contingent percentage of any recovery? The very fact of a contingent fee arrangement suggests that he is still associated in the case.

I have no concern that Roger Glasgow would not adhere strictly to the truth as he sees it, I simply think it is impossible for any witness, however well-intentioned, to weigh facts and retain impressions of events, so as to testify with objectivity when they have a heavy stake in the outcome. The law makes exception for the litigant, of course, but that exception should not be extended to witnesses who are not parties.


source: Caselaw Access Project

author: John I. Purtle, Justice.

license: Public Domain

text:
    FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC. v. James SOUTHALL and Honorable Tom F. DIGBY
    83-143
    661 S.W.2d 383
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983

      Laser, Sharp ir Huckabay, P.A., for petitioner.

      Seay ir Bristow, P.A., by: Bill W. Bristow, for respondent Southall.

      Steve Clark, Atty. Gen., by: Jeffrey Story, Asst. Atty. Gen., for respondent Digby.
   John I. Purtle, Justice.

This is an original action in this court. Petitioner seeks to prohibit the Pulaski County Circuit Court from hearing a case wherein the plaintiff alleges the defendant committed the tort of bad faith in refusing to properly handle a claim for damages arising under the terms of a contract of insurance between the parties. A petition for a writ of prohibition is not the proper remedy for failure of the trial court to grant a motion to dismiss.

The petitioner issued a policy of insurance to respondent Southall. The policy provided, among other things, coverage for loss caused by hail. Southall’s chicken houses sustained damages from the impact of rain, snow and sleet. Petitioner rejected the claim because it did not think sleet was hail within the meaning of the policy. Southall filed suit in Hot Spring County and lost, which decision was appealed. We reversed and remanded. Southall v. Farm Bureau Mutual Ins. Co. of Arkansas, 276 Ark. 58, 632 S.W.2d 420 (1982). Petitioner then confessed judgment and tendered the policy limits, plus penalty and interest, into the registry of the court. However, the matter of attorney’s fees was not resolved and the Hot Spring County cause of action remains on the books for a final ruling on the amount of the attorney’s fees to be awarded respondent Southall’s attorney.

On January 27,1983, Southall filed an action in Pulaski County wherein he sought to recover against the petitioner on the grounds of bad faith in refusing to settle the original hail damge loss. On June 8, 1983, he filed an action in Hot Spring Circuit Court which he called “Amended Complaint on a Conditional Basis.” The petition for writ of prohibition had already been filed in this court. The complaints in Hot Spring and Pulaski Counties were identical in nature inasmuch as Southall sought to prove the tort of bad faith. Petitioner moved to dismiss the Pulaski County complaint on grounds that it did not state facts upon which relief could be granted; Pulaski County was the wrong venue; and another action was pending in the Hot Spring County case involving the same transaction. The court overruled the motion to dismiss and petitioner filed this action to prohibit trial in Pulaski County.

Before we adopted our present Rules of Civil Procedure in 1978, we had always followed the common law and code-pleading rule that a demurrer properly determines whether a complaint stated facts constituting a cause of action. A companion rule was that an order merely sustaining or overruling a demurrer cannot be appealed, because it does not constitute a final judgment. Whether the demurrer was sustained or overruled, the losing party had to stand his ground and permit judgment to be entered in order to appeal. Moody v. Jonesboro, L. C. & E. R.R., 83 Ark. 371, 103 S.W. 1134 (1907); Benton County v. Rutherford, 30 Ark. 665 (1875); Horner, Adm’r. v. State, 27 Ark. 113 (1871). A final judgment was required for two reasons: one, to avoid burdening this court with interlocutory piecemeal appeals while the case was still pending below; and, two, to permit the parties to amend their pleadings to supply any deficiency.

ARCP Rule 7 (c) abolishes demurrers, but Rule 12 (b) (6) fills the void by providing that a motion to dismiss may be used to assert as a defense that an adversary’s pleading fails to state facts upon which relief can be granted. Rule 15 allows any party to amend his pleadings at any time without leave of court. And a final judgment is still necessary before a party can appeal, with exceptions not applicable to this case. ARAP, Rule 2.

Thus the only actual change made by the new rules is that the purpose formerly accomplished by a pleading called a demurrer is now accomplished by a pleading called a motion to dismiss. A final judgment is still required for appellate review. Since the petitioner, Farm Bureau, did not stand on its motion to dismiss and permit the entry of judgment for the plaintiff, it is not entitled to a decision in this court about whether the plaintiff’s complaint states a cause of action. Any other view would permit the writ of prohibition to be used not to test the issue of j urisdiction but to test the sufficiency of a complaint filed in a court having jurisdiction both of the subject matter and of the person, as here. We should limit our review to the issue of jurisdiction, which does include the matter of venue.

The petitioner argues venue should be in Hot Spring County because the complaint sounds in tort and venue is controlled by Ark. Stat. Ann. § 27-610 (Repl. 1979). This venue statute requires actions for personal injury or wrongful death to be brought in the county where the injury or death occurred or in the county where the person injured or killed resided at the time of the occurrence. We must consider three other venue statutes. Ark. Stat. Ann. § 66-3234 (Repl. 1980), provides for service of process upon a domestic insurer when suit is founded on a loss occurring under an insurance policy. Ark. Stat. Ann. § 27-605 (Repl. 1979), provides that actions against a corporation created by the laws of this state may be brought in the county in which it is situated or has its principal office. Ark. Stat. Ann. § 27-613 (Repl. 1979), is a kind of catchall venue statute which states: “Every other action may be brought in any county in which the defendant, or one of several defendants, resides, or is summoned.” When a complaint asserts both local and transitory causes of action the venue is determined by the principal purpose of the action. Atkins Pickle Co., Inc. v. Burrough-Uerling-Brasuell Consulting Engineers, Inc., 275 Ark. 135, 628 S.W.2d 9 (1982). See also, Forrest City Machine Works, Inc. v. Colvin, 257 Ark. 889, 521 S.W.2d 206 (1975). A writ of prohibition should not issue unless the petitioner is clearly entitled thereto and the court is without jurisdiction. Wade v. State, 264 Ark. 320, 571 S.W.2d 231 (1978). In this cause of action venue might be established either pursuant to Ark. Stat. Ann. §§ 27-605 or 27-613. In either instance Pulaski County is the proper venue.

The only part of the Hot Spring County case still pending is that of determining the amount of the attorney’s fees to be assessed against petitioner. For all practical purposes the original action is not pending. The Hot Spring County action was on contract and the Pulaski County action is in tort. The present suit in Pulaski County is not for loss arising out of an insurance policy. We do not think there was another cause of action pending at the time the suit was filed in Pulaski County.

Writ denied.

Adkisson, C.J., not participating.


author: Robert H. Dudley, Justice.

text:
    Perry JOHNSON, Individually and Perry JOHNSON, d/b/a P.J.’s LOUNGE v. Barry Morrison CROSS
    83-194
    661 S.W.2d 386
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983

      Eilbott, Smith, Eilbott & Humphries, for appellant.

      Holmes & Trafford, for appellee.
   Robert H. Dudley, Justice.

Appellee, Barry Cross, filed suit for damages sustained from an assault by appellant, Perry Johnson, Jr. The trial court, sitting as a jury, found that appellee had suffered $380.00 in damages for medical expenses and $7,500.00 in damages for pain and suffering. The award for pain and suffering was then reduced by one-third because of the comparative fault of appellee. Appellant’s motion for a new trial was denied and he has appealed. We affirm. Jurisdiction to decide cases presenting a question in the law of torts is in this Court. Rule 29(1) (o).

The motion for a new trial questioned the preponderance of the evidence within the purview of ARCP Rule 59 (a) (6). The trial court held that the verdict was not clearly again'st the preponderance of the evidence and denied the motion. On appeal, when the motion for a new trial has been denied, we affirm if there is substantial evidence to support the verdict. Landis v. Hastings, 276 Ark. 135, 633 S.W.2d 26 (1982). In determining whether substantial evidence exists, we view the evidence in the light most favorable to the appellee.

Viewing the evidence in that manner, there is substantial evidence to support the verdict. The appellee testified that around 4 a.m. on February 6, 1982, he and two companions went to P.J.’s Disco, a tavern managed by appellant, Perry Johnson, Jr. He testified that, while inside the tavern, he was attacked by another patron, Ricky Seamons, and while the two of them were scuffling, the appellant, without warning, twice struck appellee on the head with a wooden stick which was comparable to an ax handle. The medical records reflect a three inch laceration to the back of appellee’s head and a one inch cut to his right ear. They show that the scalp was sutured and that medication was prescribed. Appellee testified his medical bills were $380.00 and his head hurt for two weeks after the blows were struck. He stated the suturing of his scalp was painful, as was the removal of the sutures. He testified his ears drained from the time of the assault until the time of trial and he continues to suffer from dizziness. As a result of the blows, appellant has scarring on the back of his head and a blotch on his right ear. Two witnesses, one of whom was Ricky Seamons, verified appellee’s version of the attack while the appellant and three of his employees testified that the appellee, after scuffling with Seamons, attacked appellant. The evidence, although disputed, is substantial.

The appellant also contends that the trial court should have found that appellee contributed equally to his own injury instead of finding that he contributed one-third to his own injury. However, we do not review an apportionment of comparative negligence if fair minded men might differ about it (which is essentially the same test as that of substantial evidence). Farrell v. Whittington, 271 Ark. 750, 610 S.W.2d 572 (1981). The essence of appellant’s argument is that he used only that force reasonably necessary to break up the scuffling between appellee and Ricky Seamons. Unquestionably, fair minded men might differ about whether it was reasonably necessary for appellant, without warning, to twice strike appellee on the head with a large stick. Therefore, we do not review the apportionment of comparative negligence.

Affirmed.


author: Steele Hays, Justice.

text:
    PORTER FOODS, INC. v. Gerald BROWN, Circuit Judge, and Charles SWAFFORD
    83-113
    661 S.W.2d 388
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983

      Owens, McHaney & Calhoun, by: James M. McHaney and James M. McHaney, Jr., for petitioner.

      Steve Clark, Atty. Gen., by: Curtis L. Nebben, Asst. Atty. Gen., for respondent Brown, Judge.

      Branch ir Thompson, by: James E. Goldie, for respondent Swafford.
   Steele Hays, Justice.

This case comes to us on a petition for writ of prohibition. The respondent Charles Swafford filed a complaint against petitioner, Porter Foods, in Greene County, Arkansas, alleging breach of employment contract and breach of a stock purchase agreement. Summons was served on the president of Porter Foods in Pulaski County and also on Steve Mitchell, a sales representative for Porter Foods who resides and works in Greene County. Porter filed a motion to dismiss the complaint, contending that venue was governed by Ark. Stat. Ann. § 27-613, where the defendant resides or is summoned and that venue was therefore proper only in Pulaski County. Swafford responded to the motion, contending that Porter Foods maintained a branch office or other place of business through Steve Mitchell, in Greene County, and venue was therefore proper in Greene County under Ark. Stat. Ann. § 27-347, which provides in part:

Service on corporate agent at branch office. Any and all foreign and domestic corporations who keep or maintain in any of the counties of this State a branch office or other place of business shall be subject to suits in any of the courts in any of said counties where said corporation so keeps or maintains such office or place of business. . . .

Argument on the issue was held before the Honorable Gerald Brown, Circuit Judge, who held that venue was proper under Ark. Stat. Ann. § 27-347, and denied the motion to dismiss. From that order the petitioner brings this writ contending that venue is improper as a matter of law and that because there are no facts in dispute, writ of prohibition is the proper remedy. Although that is not an incorrect statement of the law, we disagree that it must govern the outcome of this case. Even when the facts may be said to be undisputed, if the weight to be given or the inferences to be drawn are such that conclusions may differ, prohibition is not the proper remedy.

Prohibition will not lie unless the trial court is clearly without jurisdiction or has acted without authority and the petitioner is unquestionably entitled to such relief. The purpose of the writ is to prevent a court from exercising a power not authorized by law when there is no other adequate remedy available. It is never issued to prohibit an inferior court from erroneously exercising its jurisdiction but only where the inferior tribunal is wholly without jurisdiction, or is proposing or threatening to act in excess of its jurisdiction. Wisc. Brick & Block Corp. v. Cole, Judge, 274 Ark. 122, 622 S.W.2d 192 (1981).

Additionally we have held that where the court has jurisdiction over the subject matter and the question of its jurisdiction of the person turns on some fact to be determined by the court, its decition that it has jurisdiction, if wrong, is in error and prohibition is not the remedy. Byrd v. Taylor, Judge, 224 Ark. 373, 273 S.W.2d 395 (1954). When jurisdiction depends on the establishment of facts or turns on facts which are in dispute the issue is one correctly determined by the trial court. Wisc. Brick, supra; Twin City Lines, Inc. v. Cummings, Judge, 212 Ark. 569, 206 S.W.2d 438 (1947). This does not necessarily mean that the evidentiary facts presented must be in dispute, but rather the legal effect of such facts is in controversy between the parties. A question of fact must be determined. Twin City Lines, supra; Wisc. Brick, supra. In Arkansas Towing Co. v. Colvin, Judge, 234 Ark. 908, 355 S.W.2d 287 (1962), the petitioner challenged the court’s finding that it could be served under Ark. Stat. Ann. § 27-340, as a nonresident doing business in the state. We listed the facts presented to the trial court that supported each side of the question and stated: “It follows, therefore, from what has been said above that j urisdiction of the court was determined by contested facts in which case we have repeatedly held that prohibition will not lie.” See also Murry v. Maner, 230 Ark. 132, 320 S.W.2d 940 (1959); Finley v. Moose, 74 Ark. 217 (1905). In contrast, in Tucker Enterprises, Inc. v. Hartje, Judge, 278 Ark. 320, 650 S. W.2d 559 (1983) we found venue improper and granted the writ. In that case however, the asserted venue simply involved no disputed fact on which jurisdiction turned nor were the actions on which venue was founded even alleged.

In the case at bar, the question decided by the court below involved a determination from facts presented, of whether or not the activities in Greene County constituted an “other place of business” under § 27-347 for which venue was proper. It is this type of jurisdictional factual dispute that is properly resolved by the trial court and not by this court on a writ of prohibition. Similarly, in Wisc. Brick, supra, the question of jurisdiction turned on whether the activities of the petitioner were sufficient to satisfy the “minimum contacts” test and whether these activities came within the Arkansas long-arm statute. The writ was denied in that case and we stated:

Whether the “minimum contacts’’ test has been satisfied is a question of fact. In cases where jurisdiction depends upon the establishment of facts, the issue of jurisdiction must be decided by the trial court, and even if that decision should be wrong, we correct that error on appeal and not on prohibition. Robinson v. Means, Judge, 192 Ark. 816, 95 S.W.2d 98 (1936).

Such was the determination made by the court below in this case.

The writ is denied.

      § 27-613. Other actions — County where defendant resides or is summoned. — Every other action may be brought in any county in which the defendant, or one of several defendants, resides, or is summoned. [Civil Code, § 96; C. & M. Dig., § 1176; Pope’s Dig., § 1398],


author: Steele Hays, Justice. John I. Purtle, Justice,

text:
    ARKANSAS TELEVISION COMPANY and Philip Barry BEASLEY, a/k/a Chris CURTIS v. Cecil A. TEDDER, Circuit Judge
    83-160
    662 S.W.2d 174
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983
    [Rehearing denied January 16, 1984.]

      Barber, McCaskill, Amsler, Jones ir Hale, for appellants.

      Rose Law Firm, by: Phillip Carroll, for amicus curiae, Freedom of Information Committee, The Society of Professional Journalists.

      William R. Wilson, Jr., P.A., for appellee.

      Purtle, J., would grant rehearing. Hollingsworth, J., not participating.

   Steele Hays, Justice.

Petitioners, Arkansas Television Company and Philip Barry Beasley, seek a writ of mandamus from this court to direct the respondent, Cecil A. Tedder, Circuit Judge of Lonoke County, to refrain from excluding members of the public and the news media from pretrial suppression hearings held in his court. Although the trial in which the issue arose has ended in a conviction, rendering the question moot, the problem tends to recur but evades review, hence, we will address it here. See Shiras v. Britt, 267 Ark. 97, 589 S.W.2d 18 (1979); Commercial Printing Co. v. Lee, 262 Ark. 87, 553 S.W.2d 270 (1977).

The fundamental issue presented is what standard the trial court should apply when considering a motion for closure in a pretrial hearing. Decisions of the United States Supreme Court have left areas of uncertainty for the lower courts which have had to face this problem. The trial court in this case granted a motion for closure for a pretrial suppression hearing using essentially that standard propounded in Gannett Co. v. DePasquale, 433 U.S. 368 (1979). In the Gannett plurality opinion, the Court sanctioned the closure of a pretrial hearing, finding that the trial court, in its discretion, after balancing the rights of the press and the public against the defendant’s right to a fair trial, may grant closure when there is a reasonable probability of prejudice to the defendant. The only clear holding agreed on by a majority of the Court was a finding that the sixth amendment did not provide the public with a constitutional right of access to pretrial suppression hearings.

The two Supreme Court decisions that have come down since Gannette, though not dealing with this specific pretrial situation, have fostered some of the confusion over the five opinions coming out of the decision in Gannett. See Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555 (1980); Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 102 S.Ct. 2613 (1982). However, these two later decisions do provide-a degree of clarity in the presentation of the rationale for their holdings. Both recognize a constitutional right of access by the public to criminal trials under the first amendment. After discussing the historical tradition of open criminal proceedings, the Court in Globe states:

Second, the right of access to criminal trials plays a particularly significant role in the functioning of the judicial process and the government as a whole. Public scrutiny of a criminal trial enhances the quality and safeguards the integrity of the fact finding process, with benefits to both the defendant and to society as a whole. Moreover public access to the criminal trial fosters an appearance of fairness, thereby heightening public respect for the judicial process. And in the broadest terms, public access to criminal trials permits the public to participate in and serve as a check upon the judicial process — an essential component in our structure of self-government. In sum, the institutional value of the open criminal trial is recognized in both logic and experience.

In United, States v. Brooklier, 685 F.2d 1162 (1982), the 9th Circuit considered the distinction between trial and pretrial proceedings and dismissed any significance for purposes of determining the applicability of the first amendment. In stating its position and in summing up those taken by the Supreme Court Justices on pretrial proceedings the court stated:

. . . [I] t seems evident from the opinions in Gannett, Richmond Newspapers, and Globe Newspaper that a majority of the Justices would hold the public’s right of access under the first amendment applicable to pretrial suppression hearings. Justice Powell expressed this view explicitly in Gannett. Justice Blackmun’s opinion in Gannett on behalf of himself and Justices Brennan, White and Marshall concluded that the public had a right of access to pretrial suppression hearings under the sixth amendment for essentially the same reasons as led the court in Richmond Newspapers and Globe Newspaper to hold that the public had a right of access under the first amendment. . . . Justice Blackmun concluded in Gannett: ‘Unlike almost any other proceeding apart from the trial itself, the suppression hearing implicates all the policies that require that the trial be public’.... It would elevate form over substance to deny access to an identical proceeding because it began prior to trial.

We agree that the reasoning applies with similar force to pre-trial as well as trial proceedings. We emphasize this not only for the importance as it pertains to the right of the public, but also, because it is often at this stage of the criminal proceedings that the rights of the defendant must be most vigorously safeguarded. Although there are situations when this can be best accomplished by closure there will be other occasions when the best protection a defendant can have is a watchful public.

This position is consistent with a tradition in our case law of open judicial proceedings [See Shiras, supra; Commercial Printing, supra; Wood v. Goodson, 253 Ark. 146, 485 S.W.2d 213 (1975)] and with a legislative mandate of openness dating back to the Revised Statutes:

The sittings of every court shall be public, and every person may freely attend the same. Ark. Stat. Ann. § 22-109 (Repl. 1962).

In Shiras, our reasoning for denying closure was not unlike that as quoted from Globe, supra. Shiras, although sympathizing with the public’s right to be a part of the judicial process, also found significance in the protection of the accused through the public’s gaining sufficient knowledge of the process to make “adjustments or reforms in the law or the judiciary.” As in Globe, we find the reasoning in Shiras to apply as logically to pretrial as to trial proceedings.

This right of public access is not absolute, but because of its importance it merits a stricter standard than provided in Gannett, when considering closure of pretrial procedures. As noted in Iowa Freedom of Info. Council v. Wifvat, 328 N.W.2d 920 (Iowa 1983), the United States Supreme Court has not given any clear guidelines to balance the competing interests of open judicial proceedings and fair trials, but many jurisdictions have adopted all or variations of the three prong test articulated by Justice Blackmun’s dissent in Gannett. We believe the first two prongs of that test adequately protect the two competing interests, requiring that in order to overcome the presumption of open pretrial hearings, the proponent of closure must demonstrate a substantial probability that (1) irreparable damge to the defendant’s fair trial will result from an open hearing and (2) alternatives to closure will not adequately protect the right to a fair trial. Additionally, the trial court’s findings must be articulated and sufficiently specific to demonstrate on review that these requirements have been satisfied.

Although we have emphasized the advantages we believe accrue to the defendant from open proceedings, it is clear that in many situations the trial court will be in the difficult position of weighing two competing constitutional rights. Before the trial court, and on review, each case will have to be considered on its own merit as directed by the circumstances and exigencies of each situation. Of necessity, the sound discretion of the trial court must bear heavily on the outcome in these cases and the right of an accused to a fair trial cannot be jeopardized where prejudice is evident and no acceptable alternatives to closure appear.

In this case, the trial court made a commendable effort to avoid a simple conclusory finding in granting closure. Even so, that effort did not fully satisfy the previously stated requirements. Alternatives were not fully considered and no evidence was presented by which the court could have made a determination. Recognizing the still unsettled nature of the law in this area and the need for guidance of the trial courts, to the extent the trial court here failed to apply the two pronged standards and to fully weigh alternatives to closure, we find it to have erred, but as it would serve no useful purpose to issue a writ of mandamus after the trial proceedings have been concluded, the petition is denied.

Purtle, J., dissents.

John I. Purtle, Justice,

dissenting. I disagree with the results but I generally agree with the law as stated in the majority opinion. Trial courts will be no better off with this opinion than they were before because the opinion does not tell them whether pretrial closure is proper or not. In the present case I would deny the writ because I believe the trial judge proceeded correctly. He properly expressed his reasons for closing the suppression hearing. Clearly Gannett Co. v. DePasquale, 433 U.S. 368 (1979) held a suppression hearing may be closed when there is a reasonable probability of prejudice to the defendant. Two of the burdens cast upon the proponents of closure are that (1) irreparable harm will result from an open hearing and (2) alternatives to closure are inadequate.

The sixth amendment guarantees an accused a fair trial but it does not guarantee the public the right to attend all phases of the trial or any of it for that matter. On the other hand the first amendment guarantees the public the right to attend all phases of the trial. Therefore, we have two competing interests, both guaranteed by the constitution, calling for different conclusions about the same problem. Neither amendment is superior to the other but nevertheless one has to yield in this situation. I think the right to a fair trial is absolute. If so, first amendment rights would have to be slightly delayed, at least until the end of a hearing. If the court decided to admit the evidence the public could be notified immediately. If the court suppressed the evidence the public would have to wait until the trial to learn what was suppressed. In the case before us, if the public learns that a confession was given no power on earth will erase that fact from the minds of the public. The jury will be selected from these same people. I need neither precedent nor rule of law to know that once it is learned that a confession was given, it can never be completely disregarded by the jurors. Little harm is done to the public by waiting a few hours or a few days to learn what was not allowed in evidence.

It is my opinion that the trial judge in this case correctly decided there was a reasonable probability that the rights of the accused would be prejudiced if the public, including prospective jurors, were informed that the defendant had signed a confession. Such knowledge leaves an indelible impression and it matters little, if any, that the confession was obtained by fraud, force or otherwise. It is obvious that the court considered all the alternatives to closure. I would hold that whenever a trial court considers the alternatives to closure and finds them inadequate to guarantee the right of fair trial and further finds that there is a reasonable probability of prejudice to the rights of the accused if the hearing is not closed, then he should close the proceedings to the public. On review we would consider the trial court’s discretionary procedure in the same manner as in other exercises of discretion matters. That is, absent an abuse of discretion we would not disturb the ruling of the trial court.

      ". . Moreover, quite often suppression hearings are the only important public proceeding that takes place during a criminal prosecution. Thus, whatever educative and therapeutic effects accrue to the public from observing trials must also flow from public access to suppression hearings.

        "Indeed, these last two purposes are often more directly implicated by suppression hearings than by trials. By definition suppression hearings arise out of the allegations of serious misconduct which has allegedly resulted in the infringement of important civil rights. In those instances in which evidenc-’ is not suppressed, despite even serious misconduct by law enforcement officials, a closed suppression hearing will result in the suppression of this information for a substantial period of time. By delaying its dissemination and divorcing it from a meaningful news event, a court is generally ensuring that these facts will never appreciably penetrate the public consciousness. ...” Some Observations on the Swinging Courthouse Doors of Gannett and Richmond Newspapers, Schmidt, Schmidt, 59 Denver Law Journal 721 (1982).

      See Iowa Freedom of Info. Council, supra, at p. 925, for extensive citations.

      Alternatives proposed by petitioners are: 1) change of venue; 2) deferment of pretrial hearings until the jury is seated; 3) trial continuance; 4) partial closure of pretrial hearings; 5) use of voir dire; 6) sequestration; 7) admonition of the jury.


author: Per Curiam.

text:
    James FINLEY v. STATE of Arkansas
    661 S.W.2d 359
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983

      Jeff Rosenzweig, for appellant.

      Steve Clark, Atty. Gen., by: Alice Ann Burns, Deputy Atty. Gen., for appellee.
   Per Curiam.

In response to the Court’s per curiam order of November 21, 1983, in this case, the petitioner’s attorney, Jeff Rosenzweig, admits that if the Court adheres to its position expressed in that order, he was at fault in not filing the record in this case within the time allowed. The Court adheres to its position; so the record will be filed on the basis of counsel’s admission of fault.

A copy of this opinion will be filed with the Committee on Professional Conduct.


text:
    Larry GONCE v. STATE of Arkansas
    661 S.W.2d 390
    Supreme Court of Arkansas
    Opinion delivered December 19, 1983

      Davis <1? Bracey, by: Charles E. Davis, for appellant.

      Steve Clark, Atty. Gen., by: Alice Ann Burns, Deputy Atty. Gen., for appellee.
   Per Curiam.

Appellant Larry Gonce, by his attorney, has filed for a rule on the clerk.

His attorney, Charles E. Davis, has attached an affidavit admitting that the record was tendered late due to a mistake on his part.

We find that such an error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See our per curiam dated February 5, 1979, In Re: Belated Appeals in Criminal Cases, 265 Ark. 964.

A copy of this opinion will be forwarded to the Committee on Professional Conduct.


author: Richard B. Adkisson, Chief Justice.

text:
    Stanley HARPER and Stephen HARPER v. NASH IMPLEMENT COMPANY, INC., and its Successor, WHEATLEY IMPLEMENT COMPANY, INC., WHITE MOTOR CREDIT CORPORATION and Clay NASH
    83-226
    662 S.W.2d 811
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984

      Guy Jones, Jr., P.A., for appellants.

      James D. Sprott, for appellees.
   Richard B. Adkisson, Chief Justice.

On December 13, 1982, this Court reversed and remanded this case for retrial holding that the Faulkner County Circuit Court erred in prohibiting appellants from producing evidence as to the commercial reasonableness of the property sale under the Uniform Commercial Code. We also held that the trial court was correct in striking appellants’ counterclaim pursuant to Rule 37, ARCP, because of the failure of appellants to answer interrogatories. Harper v. Wheatley, 278 Ark. 27, 643 S.W.2d 537 (1982). The sole issue on this second appeal is whether the trial court, on remand, correctly refused to permit additional pleadings on appellants’ counterclaim. The trial court applied the doctrine of “law of the case” and refused to allow additional pleadings. On appeal we affirm.

The principles of law determined and announced in the former appeal are binding and must stand as the law of the case. Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979); St. Louis S.W. Railway Co. v. Jackson, 246 Ark. 268, 438 S. W.2d 41 (1969). The decision of the trial court pursuant to Rule 37, ARCP, was approved by this Court in the first appeal. On retrial the trial court correctly applied the doctrine of “law of the case” in applying the law set out in this Court’s opinion in the original appeal. Accordingly, we conclude the trial court was correct in refusing to grant a trial de novo on all of the issues.

Hollingsworth, J., not participating.


author: George Rose Smith, Justice.

text:
    Dorris V. AUGUSTINE and Dennis AUGUSTINE v. CITY OF WEST MEMPHIS et al
    83-227
    662 S.W.2d 813
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984

      Skillman ir Durrett, by: V. E. Skillman, Jr., for appellants.

      Robert Smith and David White, for appellees.
   George Rose Smith, Justice.

The appellants, a married couple, brought this tort action against the City of West Memphis and its Public Utility Commission to recover for personal injuries suffered by Mrs. Augustine when she was struck by a falling limb that had been cut by an employee of the City or of the Commission. The trial judge sustained the defendants’ motion to dismiss, which asserted the city’s immunity from tort liability. The appeal comes to us under Rule 29 (1) (o).

The complaint alleges that Mrs. Augustine was riding her bicycle along a city street on the morning of May 22, 1981. A truck belonging to the defendants was parked on an intersecting street, where employees of the defendants were cutting tree limbs adjacent to a house. As Mrs. Augustine approached the site near the truck and slowed her bicycle to pass the truck and to avoid oncoming traffic, the defendants’ employees cut a limb which struck her. It is alleged that defendants were not performing any governmental function and were acting in a proprietary capacity. The four specific allegations of negligence were that the defendants (a) failed to have warning devices in the area where the limbs were being cut, (b) failed to warn the plaintiff and other persons of the dangerous activities in and about the truck, (c) cut limbs that would fall in the traveled part of the street, and (d) failed to block off traffic in the area where the tree limbs would fall.

We are compelled to note that the appellants’ abstract of the complaint includes a recitation that the Commission’s “crew was using an attachment [on the vehicle] which would raise a man in the air for the purpose of cutting tree limbs. ” The appellees point out that the complaint contains no such language and ask us to disregard it. We must accede to that request, for counsel’s inclusion of the non-existent language in the abstract was definitely improper. Nowhere else in the abstract is there any mention of such an attachment to the vehicle.

The trial judge, on the pleadings, was right in granting the motion to dismiss. The complaint is based on the erroneous premise that the City and Commission were acting in a proprietary capacity and were therefore liable for negligence. No facts are alleged to show why, even under our former law, the defendants were not acting in a governmental capacity. In Patterson v. City of Little Rock, 202 Ark. 189, 149 S.W.2d 562 (1941), for example, we pointed out that a city engages in a governmental function in the operation of waterworks, electric light plants, sewer systems, and the like. Moreover, the former distinction between governmental and proprietary actions was abolished by Act 165 of 1969, which declared the state’s public policy to be that municipal corporations and other political subdivisions shall be immune from liability in tort. Ark. Stat. Ann. § 12-2901 (Repl. 1979). The positive language of that statute is inconsistent with the distinction formerly made by our case law.

The appellants’ brief is primarily devoted to a contention that Mrs. Augustine’s injuries were caused by the operation of a vehicle generally known as a “cherry picker,” that the defendants were required to carry liability insurance on the vehicle, and that in the absence of such insurance the defendants would be liable in a tort action. Ark. Stat. Ann. § 12-2903; Sturdivant v. City of Farmington, 255 Ark. 415, 500 S.W.2d 769 (1973). The trouble is, the record as abstracted does not support that argument. As plaintiffs, the appellants had the burden of stating a cause of action. Their complaint made no allegations to support the contention now presented on appeal, nor is there any indication that any effort was made to amend the complaint after the motion to dismiss was sustained. We have no alternative except to sustain the trial court’s action.

Affirmed.

Hollingsworth, J., not participating.


text:
    Beverly Ann LATIKER v. STATE of Arkansas
    CR 83-103
    662 S.W.2d 812
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984

      William R. Simpson, Jr., Public Defender, by: Kelly Carithers, Deputy Public Defender, for appellant.

      Steve Clark, Atty. Gen., by: Theodore Holder, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

The appellant was charged with the capital murder of Raymond Allen in the perpetration of a robbery, convicted of first-degree murder, and sentenced to life imprisonment. Her only contention is that the proof is insufficient to sustain a conviction of any offense more serious than second-degree murder.

There was ample proof that Allen was shot fatally. The appellant’s written confession was sufficient to support a finding of murder in the first degree. She said that on the evening of the homicide Allen picked her up in a white Continental as she was walking down the street. After Allen stopped to buy beer the two checked into a motel. The confession continued:

We went in 8c I started drinking a beer, I sat on the dresser and he sat on the bed. He reached and got my hand (not in rough type manner). I told him to let me finish my beer first. We got to struggling 8c I pushed him down on the bed, 8c when he sat up, I had pulled my gun (a 38 cal.) and I shot him.... After he was shot I stood there for awhile and then I got his wallet off the dresser and I went outside.

In the confession the appellant said she then caught a ride with a man who stopped at a trailer residence before taking her home. She said that in the trailer she went to the bathroom, took $77.00 out of the wallet, and put the wallet on a shelf. The State’s proof showed that the wallet was found there and contained the victim’s driver’s license and identification papers.

At the trial the appellant testified quite differently, saying that a man named Charles Lewis had arranged a date for her with the victim, had come to the motel and shot Allen, and had dropped the wallet as he was running out. She said she picked up the wallet as she ran after Lewis. It was for the jury to say which of the appellant’s stories was the true one. The court gave the appropriate AMCI instructions on first-degree murder. We find no merit in the appellant’s argument that the proof was insufficient nor any other prejudicial error in the matters that have been abstracted.

Affirmed.

Hollingsworth, J., not participating.


author: Darrell Hickman, Justice.

text:
    Enid BOSTIC, an Incompetent, by Estelle Searcy HOLMES, Her Guardian v. Wesley M. BOSTIC Estate
    83-174
    662 S.W.2d 815
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984

      Lohnes T. Tiner, for appellant.

      Killough & Ford, by: Robert M. Ford, for appellee.
   Darrell Hickman, Justice.

This is an appeal from an order of the Probate Court of Cross County approving a final accounting by the executor of the estate of Wesley M. Bostic. We affirm the trial court.

The appellant raises three issues on appeal: the court erred in refusing to delay the closing of the estate pending a circuit court action; the court erred in its interpretation of the will; and, the court erred in approving the final accounting. The only question that concerns us is the handling of the crops and rents from the two pieces of property, but we are severely handicapped because the appellant has failed to indicate exactly what the trial court did wrong in this regard, and for that reason the judgment must be affirmed.

The objections filed below were made by the appellant, Estelle Searcy Holmes, guardian of Enid Bostic, who is the widow of Wesley Bostic and is incompetent. The appellant objected to the court hearing the final accounting because a lawsuit, which had been filed by the appellant against Fain Bostic, the executor of this estate, was pending in circuit court. That suit is essentially one of conversion, alleging that the executor commingled estate funds with those belonging to Enid Bostic and asking for damges of some $42,000. The trial court found the pending circuit court suit did not bar hearing the final accounting, approved in most respects the final accounting, and ordered the estate closed.

The judge held he must interpret one provision of the will. It provided that all debts and final expenses, including those of administration, be paid from “my cash assets or assets which can be readily converted to cash.” The judge held this meant that the expenses and debts were to be paid from personalty first, then from realty. He had ordered the sale of the 1980 crops held in storage to this end. Part of the crops was from 240 acres of land owned by the entirety; the other from 80 acres owned individually by the deceased. The crops had been commingled and the executor could not say what proceeds came from the entirety land and what came from that owned individually by the deceased. After an extensive hearing the judge ordered that certain estate expenses, attorney’s fees, physician charges, one-half of the H & R Block bill, and CPA expenses were not to be charged to any property owned by Enid Bostic.

The court made the specific finding:

.... the assets of the two estates were commingled. However, the Court has examined the accountings carefully and has concluded that except for the matters discussed hereafter, neither the personal representative nor the estate has derived pecuniary advantage by virtue of the acts of the executor. There is absolutely nothing to indicate any self-dealing or ill motive. Quite to the contrary, Mr. Fain Bostic has demonstrated complete honesty and good faith in dealing with the assets of the estates. It is true the assets were commingled, but his motives were pure. He served as ‘informal guardian’ at a time when no one else came forward. He should not be penalized for his efforts.

The appellant touches on the problem of crops but actually argues that there was $58,967 in cash available and this should have been used to pay the debts. But it is undisputed this was not property of the estate; rather it was the proceeds from monies or certificates of deposit that went to certain designated heirs on death of Mr. Bostic. It was not estate property and, therefore, not “cash” to be used to pay debts.

Wesley Bostic died November 28, 1980. His will was admitted to probate on December 10, 1980. It was not until December 8,1981, that Estelle Searcy Holmes was appointed guardian of Enid Bostic who is incompetent and resides in a nursing home. The circuit court suit was filed on April 28, 1982, and is still pending. According to the evidence presented, all of her expenses have been paid since the estate was opened.

There was a specific finding that the executor had not converted any money to his own use. The court found:

The personal representative — in good faith — managed the entire farm (individually owned and jointly owned properties) as one farming unit. He did not separate the income from the separately owned lands. Estelle Walker voiced no objection to Fain Bostic’s appointment and did not have herself appointed as guardian until almost one year after the death of Mr. Bostic. The Court finds that Estelle Walker knew that Fain Bostic was serving as ‘informal guardian.’

Our only concern regards the crops stored for 1980 and the rental income received after 1980. The appellant simply argues this income was treated wrongly. The crops from the 240 acres held by the entirety were undoubtedly the property of Enid Bostic. Arkansas recognizes that an estate by the entirety can exist in personalty. Moore v. Denson, 167 Ark. 134, 268 S.W.2d 609 (1924); Western Union Telegraph Co. v. Bush, 191 Ark. 1085, 89 S.W.2d 723 (1936). Once crops are severed they become personalty. The 1980 crops were severed and in storage. There is no evidence of exactly in whose name those crops were stored, but since they came from property held by the entirety, the survivor would have strong claim to them. Cummings v. Greif Bros. Cooperate Co., 202 F.2d 824 (8th Cir. 1953); Moore v. Denson, supra; Patton v. Rankin, 68 Ind. 245 (1879); Whitlock v. PSC, 239 Ind. 680, 159 N.E.2d 280 (1959). The crops grown after the 1980 season were rents and profits and, unmistakably, the property of Enid Bostic. But, we cannot say from this record whether the trial court applied the law we have recited; neither can we say he did not. The judge was correct in ruling that personalty could be considered an asset to be sold to pay the debts of the estate and any crops belonging to the estate would be personalty. Apparently, the judge found that after all the expenses paid on behalf of Enid Bostic were taken into consideration, there was no net gain to her. It is the responsibility of the appellant to demonstrate error. The appellant has been unable to show where the trial court erred. Absent that showing, we do not reverse the trial court’s decision. The Corning Bank v. Rice, 278 Ark. 295, 645 S.W.2d 675 (1983).

The other two arguments are without merit. The lawsuit pending in circuit court is not a claim against the estate, it is a suit against the executor individually. The appellant does not dispute this. Therefore, the court did not err in closing the estate. There was no pending claim against the estate as defined by Ark. Stat. Ann. § 62-2003 (b) (Repl. 1971); Ark. Stat. Ann. § 62-2601 (Repl. 1971). The claim was against the executor individually. Digby, Executor v. Cook, 200 Ark. 1004, 142 S.W.2d 228 (1940).

The trial court heard extensive testimony about the accounting. In fact, it is as though he conducted an in-court accounting. His acceptance of the accounting was based upon sworn testimony and records. He found only minor adjustments had to be made. Specifically, the estate was ordered to reimburse the guardianship for (1) attorney’s fees; (2) Wynne Medical Clinic bill; (3) one-half of H & R Block bill; and (4) the bills of the CPA. The estate was allowed to set-off against the total of these figures, the proceeds from the sale of the 1980 crop. The proceeds of the sale more than offset the reimbursement.

The trial judge was to decide the facts, judge the credibility of witnesses, and it was within his discretion to decide whether the estate should be closed. We find that the action of the trial court was not clearly erroneous; therefore, the judgment is affirmed.

Affirmed.

Hollingsworth, J., not participating.


text:
    Jack W. DAWDY et al v. Mamie Ware HOLT
    83-223
    662 S.W.2d 818
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984

      Steve R. Crane, for appellants.

      Keith, Clegg ir Eckert, for appellee.
   Darrell Hickman, Justice.

The only issue in this case concerns the validity of a tax deed to oil, gas and mineral interests and whether we should overrule our decision in Garvan v. Potlatch Corp., 278 Ark. 414, 645 S.W.2d 957 (1983).

This case comes to us on appeal from a motion for summary judgment that was granted by the chancellor. The appellee, Mamie Ware Holt, owned a mineral interest in the Chalybeat Springs Unit in Columbia County. The appellee failed to make tax payments on the mineral interest for the years 1979 through 1982. In 1980, after proper advertisement, appellant James H. Dawdy, Jr., purchased the appellee’s mineral interest at a tax sale and received a deed. Appellee filed a petition to quiet title and remove a cloud, claiming the deed was invalid because it was based on an invalid tax assessment and because the mineral assessment was not subjoined to the fee assessment as required by law. After considering affidavits from the county clerk, assessor and collector explaining the assessment procedure, the chancellor granted summary judgment, finding that the assessments were not subjoined.

The appellants raise two arguments. They argue that the trial court should not have granted summary judgment because there was a genuine issue of material fact for trial. The thrust of appellants’ argument is that a material question of fact exists as to whether the assessment method used, which involved keeping separate record books on real estate fees and producing leases and royalties, constitutes “subjoinder” as required by law. This is also essentially the appellants’ second issue on appeal, whether the trial court was wrong in holding that the surface or fee books and the mineral and royalty books did not satisfy the requirement of subjoinder because they were simply maintained in separate books.

The assessments of mineral interests in Columbia County showed the name of the owner, the number of acres contained in each call, and the acreage land commencing in the lowest number in township and range and in the northeast corner in each township. The assessments proceeded numerically with all sections, townships and ranges in the county, first setting out all the subdivisions of each section as they belong to different individuals or the whole section together if owned by one person and not divided due to the different values of the parcels. Admittedly, the mineral and fee records were in separate books.

The concept of subjoinder, as relates to assessments, arose in the case of Sorkin v. Myers, 216 Ark. 908, 227 S.W.2d 958 (1950), where we said:

The minerals, being primarily an interest in the land, are severable only because the legislative authority has made them so; yet for taxing purposes they are so closely related to the realty that ownership identification and accuracy make it well-nigh imperative that the mineral listings be subjoined to the land assessments. Any method that destroys this unilateral relationship burdens ready determination when an owner seeks information respecting the status of his interest at a given time.

In Garvan we addressed the question of whether the separate mineral assessments were subjoined to the fee assessments where both assessments were listed in the same book but in different sections. We held that they were not and defined subjoinder as requiring the separate assessments to be listed “individually immediately after each respective fee or surface interest.” Consequently, the tax deeds were void because it has long been the law in Arkansas that when a tax deed to mineral interests derives from a defective assessment, it is void. Steinbarger v. Keever, 219 Ark. 411, 242 S.W.2d 713 (1951); Sorkin v. Meyer, supra. In Garvan we also defined “subjoined” to mean “at the end, to append, to place in sequence or juxtaposition.” We noted that assessments have been found to be improper when the mineral interests were listed in a separate book from the fee assessments; when they were listed randomly in a separate section of the tax books; and when they were listed in one section following the fee assessments. We have stated that listing the mineral assessments immediately after the surface assessments is the only way a fee holder or any interested person can readily determine his tax status.

The appellants acknowledge that this is the status of the law, but they argue that we have defined “subjoined” too restrictively and it will place an unreasonable burden on assessors in counties such as Columbia where there are thousands of divided assessments. The appellants also point out that, unlike the case in Sorkin, the assessment method used did not deprive the taxpayer of due process of law, obscure the information from the taxpayer, prejudice the taxpayer, or burden an easy determination by an owner of his tax status at a given time. Our cases have taken a clear direction for years in this matter and if any change is needed, as the appellants suggest, it is a matter for the legislature.

Affirmed.

Hollingsworth, J., not participating.


text:
    Ricky SCOGIN by his Guadians, J. T. SCOGIN and Reba SCOGIN v. TEX-ARK JOIST COMPANY and RYAN STEEL PRODUCTS, INC.
    83-229
    662 S.W.2d 819
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984
    [Rehearing denied February 6, 1984.]

      Gibson Law Offices, by: Charles S. Gibson, for appellants.

      Shackleford, Shackleford & Phillips, P.A., for appellees.

      Hollingsworth, J., not participating.

   Darrell Hickman, Justice.

On May 18, 1978, Ricky Scogin fell from a steel joist at his work site in Warren, Arkansas, suffering injuries which rendered him quadraplegic. The joist was manufactured by appellee Tex-Ark Joist Company and supplied by Ryan Steel Products, Inc., of Memphis, Tennessee. Scogin sued both Tex-Ark and Ryan in federal district court under theories of negligence and strict liability. The complaint was based on diversity jurisdiction. Ryan filed a cross-claim against Tex-Ark for indemnity. It was learned before the fourth day of trial, however, that Tex-Ark was actually an Arkansas based company and therefore, was not diverse from Scogin. Tex-Ark moved to dismiss for lack of jurisdiction; no action was taken by the court at that time.

The federal jury found, inter alia, that the joist, when suspended and unbraced, was unreasonably dangerous. The j ury found Tex-Ark to be 100% negligent and that Ryan was not negligent. Scogin was awarded damages of $775,000. The federal trial judge found that the claim by Scogin against Tex-Ark had to be dismissed because of lack of jurisdiction, but retained jurisdiction over Ryan’s claim for indemnity against Tex-Ark. The judge found that Ryan was liable to Scogin for the full amount of the judgment on the basis of strict liability and that Tex-Ark was liable to indemnify Ryan for any and all amounts paid to Scogin. Ryan paid Scogin and Tex-Ark fully indemnified Ryan.

Scogin sued Tex-Ark in state court on October 15,1982, alleging the same theories as in the first suit. Tex-Ark filed a motion for summary judgment asserting res judicata and collateral estoppel as a bar to the state court action. Summary judgment was granted, and Scogin appeals. We affirm.

Scogin has already had a complete and fair opportunity to pursue his claim against Tex-Ark. Although it may be argued that Tex-Ark was not technically a defendant in the first suit, it participated totally in that action. The jury there heard all the facts that they would in the state case and determined the damages in light of those facts. The issues are identical. We find that the present suit is barred by the equitable doctrine of collateral estoppel.

The doctrine of collateral estoppel is based on the policy of limiting litigation to one fair trial on an issue. The doctrine has the dual purpose of protecting litigants from the burden of relitigating an identical issue in a subsequent action and of promoting economy by preventing needless litigation. Actual litigation of an issue is a prerequisite to application of collateral estoppel.

Note, Civil Procedure Collateral Estoppel Offensive Use of Equity Finding Allowed in Subsequent Law Action, 3 UALRL.J. 103 (1980).

Billman v. Nova Products, Inc., 328 So.2d 244 (Fla. App. 1976), closely parallels this case. There, the plaintiff sued a retailer for breach of warranty when he was injured by a boat winch. The retailer brought a third party suit against the manufacturer asking for indemnification. The jury returned a verdict against the retailer and the court directed a verdict against the manufacturer in favor of the retailer. The plaintiff refused to accept satisfaction and sued the manufacturer. The issues were identical as they are here. The manufacturer argued that the second suit was barred by the first. The trial court essentially agreed and granted summary judgment. The case was affirmed on appeal. The court stated:

. . . . [W]hen the complaining party has a full opportunity to litigate those issues against one of the parties, and has obtained a favorable judgment, he is not permitted to relitigate the same issues in a new action against the other party. He has had his day in court on the issues, and against the party of his choosing who was closely related to the other party. Under the doctrine of collateral estoppel, he is precluded from relitigating the same issues. There must be an end to litigation.

We agree with this reasoning.

Scogin argues that Tex-Ark and Ryan are joint tortfeasors and that under the Uniform Contribution Among Joint Tortfeasors Act, Ark. Stat. Ann. §§ 34-1001 — 34-1009 (Repl. 1962), that recovery and satisfaction of a judgment from one tortfeasor does not discharge the other tortfeasor. That is the rule in Arkansas. Smith v. Tipps Engineering & Supply Co., 231 Ark. 952, 333 S.W.2d 483 (1960). Where, however, the plaintiff has had one full opportunity to pursue his claims on the same theories and the same issues against a tortfeasor, he should not be allowed to relitigate those against one who fully participated in the first suit, was found liable and has discharged a judgment. We find that the above provision of the Joint Tortfeasors Act does not preclude application of the equitable doctrine of collateral estoppel.

Affirmed.

Hollingsworth, J., not participating.


text:
    C & C ELECTRIC CONSTRUCTION COMPANY, INC. and SPAULDING ATHLETIC GOODS COMPANY, INC. v. Lee Otis ROGERS
    83-253
    663 S.W.2d 707
    Supreme Court of Arkansas
    Opinion delivered January 9, 1984
    [Opinion Amended on Denial of Rehearing February 21, 1984.]

      Davidson, Horne, Hollingsworth, Arnold ir Grobmyer, A Professional Association, for appellants.

      Hoover, Jacobs & Storey, for appellee.

      Hollingsworth, J., not participating.

   John I. Purtle, Justice.

Appellant purchased appellee’s stock in Spaulding Athletic Goods Company, Inc. and Spaulding Investment Company, Inc. As part of the sale agreement appellant entered into a non competition contract. Subsequently appellant brought suit in chancery court for rescission and damages on grounds that appellee had made material misrepresentations and omitted or concealed material facts and breached certain warranties in the purchase agreement. The chancellor found in favor of appellee on all allegations and dismissed the complaint with prejudice.

On appeal appellants argue that the chancellor erred in finding that appellee made full and adequate disclosure of all material facts as required by law and that appellants were not entitled to rescission. We think the chancellor was correct on both arguments and therefore affirm the decree.

Sometime in June of 1980 Russell Clark, majority stockholder of C & C Electric Construction Company, Inc., entered into negotiations with Lee Otis Rogers, President and holder of one third of the stock in Spaulding Athletic Goods Co., Inc. and Spaulding Investment Co., Inc., for the purchase of Rogers’ stock in the companies. During negotiations Rogers allowed Clark to have access to several previous annual financial reports of the companies and to monthly financial reports of the year 1980 and to minutes of the board meetings and other related material. Clark inspected the records of the companies, including accounts payable and receivable. He also talked to the in-house bookkeeper and the accountant. Clark inspected the year-to-date bookkeeping records which showed a year-to-date profit of some $37,000. A note attached indicated that bonuses, deferred commissions and taxes were not accumulated and carried in the financial statement.

The sale of the stock was completed on July 14, 1980. A non competition agreement was entered into at the time of closing. The purchase price of the stock was $250,000.

During 1980 it developed that Spaulding owed $35,000 to salesmen as commissions at the time the same was completed and about $70,000 in deferred salaries by the end of the year. The business was not doing well and Clark contacted Rogers several times in an effort to rescind the contract. Although he tendered the stock, Rogers refused to rescind. Clark then filed suit for rescission and damages.

Following the closing Rogers immediately commenced working for his son who was also in the sporting goods business. It was their activity which gave rise to the count in the complaint for damages for breach of the non competition agreement.

We first address the issue of whether appellee failed to make adequate and full disclosure of all material facts relating to the Spaulding stock. The most likely failure to disclose involves the matter of delayed compensation and bonuses for employees. Appellants argue that appellee failed to disclose the amount of commissions which were earned but not specifically mentioned in the financial statement of Spaulding. The same argument is made relating to about $70,000 in deferred salaries. A note to the financial statement for calendar year 1980 up to the time of negotiations and sale pointed out that the statements did not reflect accrued bonuses and federal and state taxes. Clark and Rogers discussed bonuses and commissions several times. Rogers claims he never represented anything about the bonuses. This being a disputed fact question the chancellor was free to believe either party. As to the accrued salaries or commissions the record of sales was kept in a ledger which Clark inspected. It would have required some work but accrued commissions for the year to date could have been determined from available information.

The first quarterly report for 1980 revealed total compensation paid to date was $55,840. The 1978 and 1979 reports, which were in Clark’s hands, stated yearly compensation payments of $403,939 and $399,755. By common sense analysis and projection of the partial report for 1980 it is readily seen that total compensation for 1980 would be about $244,000 unless compensation was paid mostly in the last half of a calendar year. It is also argued that, among other things, the appellee executed a stock purchase agreement in which he warranted that there were no liabilities not fully reflected or reserved against the books of Spaulding. Therefore, appellants argue that the earned but unpaid commissions and bonuses were liabilities not reflected in the purchase agreement. The appellants were furnished with all financial statements on Spaulding’s operation from the time of the sale backward for several years. Clark discussed the matter with Spaulding’s in-house bookkeeper on several occasions. At no point is it argued that Rogers made false or fraudulent statements. Rather it is argued that he failed to properly inform the purchaser of all material facts relating to the stock at issue and the financial status of Spaulding. In examining the voluminous abstract and brief we are unable to find undisputed evidence that appellee failed to make adequate disclosure of all material facts involving this transaction. We think appellants either had in their hands or had access to every material fact at issue in this proceeding.

We cannot say with certainty that the bonuses which were paid at the end of the year were vested. Even if such evidence were in the record there is substantial evidence to the contrary. The amount of the bonuses could not be determined until the end of the year at which time Spaulding determined the amount of its profit for the year. A portion of the annual profits was then distributed as bonuses. We stated earlier that previous year end financial reports revealed that bonuses were paid at the end of the year. Thus, it was apparent that Spaulding had paid bonuses in prior years. In any event this was a disputed issue and facts were before the court which would support a decision either way.

The standard of review in chancery cases is that of clear error. Smith v. City of Little Rock, 279 Ark. 4,648 S.W.2d 454 (1983). The least that can be said in the present case is that Clark either had in his possession, or had access to, all relevant and material facts relating to this transaction. We recognize that the seller had a duty to disclose but we think the chancellor could have found from the evidence that such disclosure as is required by law was made in this case. Titan Oil & Gas, Inc. v. Shipley, 257 Ark. 278, 517 S.W.2d 210 (1974).

The purchase in this case was more a purchase of a business than of stock. The stock had never been traded on the market. The earnings per share were not discussed. In such cases it has been held that the securities laws are inapplicable. Ballentine v. Ballentine, 275 Ark. 212, 628 S.W.2d 327 (1982); United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975); Canfield v. Rapp & Son, Inc., 654 F.2d 459 (7th Cir. 1981). Appellant had agreed to purchase another third of the Spaulding stock prior to the time he closed the deal with appellee on July 14, 1980. With this acquisition he owned two-thirds of the stock and shortly thereafter became the chief executive officer of Spaulding Sporting Goods, Inc. and his son-in-law Ronnie Roach became president. He had successfully taken over the business.

Having found that the trial court’s ruling was not clearly erroneous inasmuch as it was found there were no material misrepresentations or concealments we do not reach the matter of rescission. The chancellor did not shift the duty of the seller to reveal and disclose material facts to the buyer. The appellee was an employee and a stockholder but he had been denied policy making authority. He probably had no more inside information than appellant at the time of closing the transaction. The misstatement or nondisclosure of facts must be such that a reasonable person would consider it important in making a decision before it is material. Lane v. Midwest Bancshares Corporation, 337 F. Supp. 1200 (E.D. Ark. 1972). If there was no material misrepresentation or failure to disclose then there is no right to rescind.

Appellants argue the chancellor erred in failing to find that appellee breached his agreement not to compete with Spaulding. The agreement as modified and signed by the parties states in part as follows:

It is understood and agreed that Rogers will be or may become associated with the firm, Sportstop, Incorporated, and/or his son James W. Rogers, and that Rogers will not be in violation of the foregoing covenant by virtue of such association and his activities connected therewith, whether it be in the capacity as an employee, officer, partner, advisor, consultant, lender, stockholder, or any other type of association.

Rogers is now associated with Sportstop, Incorporated. The above quoted sentence clearly states that appellee will not be in violation of the agreement by working for Sportstop in any capacity. Therefore, the chancellor’s decree holding that there had been no violation of the agreement is not clearly against the preponderance of the evidence.

Affirmed.

Hollingsworth, J., not participating.