text:
    Robert Daniel SMITH v. STATE of Arkansas
    CR 74-159
    520 S.W. 2d 301
    Opinion delivered March 10, 1975

      Harold L. Hall, Public Defender, by: Robert L. Lowery, Dep. Public Defender, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Robert A. Newcomb, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

The sole issue on this appeal is whether appellant Robert Daniel Smith, an indigent, is entitled to credit for jail time served by him prior to conviction.

The record shows that appellant was held in custody from December 8, 1973, until the date of his trial before the court on January 11, 1974. The record also shows that appellant was sentenced and committed to the penitentiary for 15 years upon a charge of robbery with a firearm without being given the opportunity to show why he should not receive the full 15 year sentence.

Thus unlike Coleman v. State, 257 Ark. 538 518 S.W. 2d 487 (1975), the record shows appellant was not given the right of allocution and consequently, we cannot indulge in the presumption that the trial court did its duty according to law or that it exercised its discretion pursuant to Ark. Stat. Ann. § 43-2813 (Supp. 1973), in denying jail time, Shelton v. State, 255 Ark. 932, 504 S.W. 2d 348 (1974). Consequently, this case seems to be controlled by Smith v. State, 256 Ark. 425, 508 S.W. 2d 54 (1974), where we pointed out that the denial of jail time solely because of the indigency of the defendant amounts to an unconstitutional discrimination based on wealth, absent some “compelling government interest.”

Reversed and remanded with directions to give credit for jail time.


source: Caselaw Access Project

author: Frank Holt, Justice. John A. Fogleman, Justice,

license: Public Domain

text:
    Ruth H. BARDWELL, Administratrix of The Estate of Emmett D. BARDWELL, Deceased v. Jerry McLAUGHLIN
    74-269
    520 S.W. 2d 277
    Opinion delivered March 10, 1975

      Brick, Wallin and Rainey, for appellant.

      Spears and Sloan and Skillman, Durrett & Davis, for appellee.
   Frank Holt, Justice.

Appellant, administratrix of the estate of Emmett Bardwell, brought this action against appellee alleging that appellee negligently drove a pickup truck which struck and killed appellant’s decedent. A jury denied recovery by finding the comparative negligence of appellee was 10% and appellant’s decedent 90%. The sole issue on appeal is the propriety of the trial court instructing the jury as to “sudden emergency” (AMI [Civil] 614). It is argued that under the facts and circumstances it was prejudicial to give the instruction and we agree.

At approximately 3:50 a.m., the appellee, who was an off-duty state policeman, found the decedent’s truck wrecked on an interstate highway. Appellee could not locate a telephone in the vicinity. He drove back to the scene of the accident and, because of insufficient light, was unable to determine if the driver of the wrecked vehicle was in the vicinity. Appellee returned to his truck, left the interstate and drove down the lateral service road to find assistance. Cars driving in the opposite direction on the interstate caused appellee to drive with his headlights on lowbeam. He was in his proper lane of traffic driving 70 miles per hour, the speed limit being 60, when he suddenly saw the decedent 50 feet ahead in appellee’s lane. This was approximately one mile from the scene of the decedent’s wrecked vehicle. The decedent was walking two feet from the center line in the same direction as appellee was traveling. Appellee testified that the combination of lights from the approaching vehicles on the interstate and the clothing the decedent was wearing prevented him from seeing decedent until he was 50 feet from him. Appellee didn’t think anyone would be walking on the access road. Appellee testified that he did not have sufficient time to take evasive action or apply his brakes before he struck the decedent. Thereafter, the truck skidded several hundred feet, stopping in a field. There is substantial evidence that the decedent was intoxicated at the time of the fatal accident.

The instruction given to the jury is AMI (Civil) 614 (Sudden Emergency) which reads:

A person who is suddenly and unexpectedly confronted with danger to himself or others not caused by his own negligence is not required to use the same judgment that is required of him in calmer and more deliberate moments. He is required to use only the care that a reasonably careful person would use in the same situation. (Emphasis added.)

The appellee contends that this instruction was proper in the circumstances. Appellee’s argument is that appellant’s decedent created an emergency situation which originated and continued from the time he left his wrecked automobile one mile distant from the fatal accident and that appellee was reacting to this emergency situation created by the decedent. Therefore, the appellee was not guilty of any negligence which created the emergency situation.

As previously indicated, we cannot agree that the emergency instruction is applicable in the factual situation here. The appellee’s reactions to his discovery of the decedent’s wrecked vehicle certainly did not create a continuing sudden emergency. The appellee had time to seek a telephone in the vicinity, to return to the scene of the wrecked vehicle, and to decide to seek assistance elsewhere. Thus there was no sudden emergency that caused the appellee, in the stress of the situation, to drive at a speed of 70 miles an hour with his lights dimmed.

Nor was a sudden emergency, within the meaning of the AMI instruction, involved when the appellee saw the decedent walking down the highway. Appellee was admittedly driving 70 miles per hour and first saw the decedent 50 feet from the impact point. Appellee was traveling at a rate of approximately 102.6 feet per second and had less than xh a second to react. The perception/reaction distance of a driver of a car traveling 70 miles per hour is 77 feet. Therefore, as appellee testified, he had no chance to swerve or brake his vehicle.

The basis of the sudden emergency doctrine is that the driver be in a stressful situation which dictates a quick decision as to possible courses of conduct.

The law does not require of the actor more than it is reasonable to expect of him under the circumstances which surround him. Therefore, the court and jury in determining the propriety of the actor’s conduct must take into account the fact that he is in a position where he must make a speedy decision between alternative courses of action and that, therefore, he has no time to make an accurate forecast as to the effect of his choice. (Emphasis added.)

Restatement, Second, Torts § 296 Comment (b).

The sudden emergency instruction given to the jury in the case at bar is cast in terms of “judgment. ” The driver must be aware of the danger in a situation where he has a choice of action. In Howard v. Tri-State Ins. Co., 253 Ark. 405, 486 S.W. 2d 77 (1972), we held it error for the trial court to give a sudden emergency instruction where there was “not one iota of testimony of either driver finding himself in an emergency situation and taking action accordingly.” There, neither driver perceived a situation in sufficient time to indicate an emergency and make a decision between alternative courses of action. Likewise, in the case at bar, it was physically impossible for appellee to make a decisional act after seeing the decedent. Only the instructions on comparative negligence are applicable in this factual situation.

Reversed and remanded.

Fogleman and Jones, JJ., dissent.

John A. Fogleman, Justice,

dissenting. I agree with the majority that the “emergency” in which appellee was acting, i.e., his search for one who was apparently the victim of a very serious automobile accident, was not the type of emergency envisioned by AMI, Civil, 614. This evidence was, of course, admissible in order for the jury to determine whether appellee exercised “the care a reasonably careful person would use under circumstances similar to those shown by the evidence in this case.” But I disagree with the majority as to the circumstances under which the “sudden emergency” instruction is to be given.

The “sudden emergency” principle is nothing more or less than an extension or special application of the definition of simple negligence. The emergency is only one of the circumstances to be considered in determining what a reasonably careful person would do in that particular situation. Prosser, Torts, 2d ed., 169; 1 Blashfield, Automobile Law and Practice, 3rd ed., 342, § 51.9; 57 Am. Jur. 2d 439, § 91. The actor’s conduct is not to be judged by the jury according to the circumstances as they appeared to him. The proper test is how the circumstances ought to have appeared to him in the exercise of ordinary care.

The most analogous case of which I am aware is Baker v. Alt, 374 Mich. 492, 132 N.W. 2d 614 (1965). It is an automobile accident case in which a 7-year-old bicyclist was injured when his bicycle collided with an automobile driven by Alt. The collision occurred at a street intersection controlled by a “flasher” light which flashed red to the boy who was pursuing his youthful companions, also on bicycles, who had preceded him through the intersection. The light was flashing yellow to Alt. All of the youths were on the wrong side of the street. The Michigan court said:

Plaintiff assigns error also on the ground that the trial court injected into the case the “emergency” doctrine which had not been pleaded and for which no factual basis existed. We cannot agree. Defendant testified that he observed and was relying upon the red flasher controlling Hall street traffic. When he was about 100 feet from the intersection, the 2 older boys came through the red light. They passed, according to his estimate, within 15 feet of his car. They testified at variance with their earlier deposed version, but, under either, it is apparent that the driver’s attention was diverted by their appearance. Mr. Alt admits not having seen Billy nor having applied the brakes until the moment of impact. Whether his observations would have been different in focal point of attention, or whether his management of the vehicle would have been different had the older boys not entered the intersection at the time and under the circumstances they did, were proper considerations for the jury under the instructions as given. Appellant urges strongly that because defendant did not see plaintiff until the moment of impact no emergency in fact existed. We think this argument fails to take into account whether it could have been because of the appearance of the 2 cyclists in the wrong lane and the driver’s natural retention of his attention upon them for some period that may have caused his failure to see the third youngster before he did. In actuality, the doctrine of “sudden emergency” is nothing but a logical extension of the “reasonably prudent person” rule. The jury is instructed, as was done here, that the test to be applied is what that hypothetical, reasonably prudent person would have done under all the circumstances of the accident, whatever they were. The trial judge here was meticulous in instructing the jury that the “emergency” rules could not be considered if defendant in any manner negligently contributed to causing the “emergency”, and further, that he had to be making proper and reasonable use of his senses under the circumstances that had been testimonially described.
We do not here dilute the doctrine, which is our settled law under the cases cited by appellant, that the injection of an issue into a case not properly present under either the pleading or the evidence is reversible error.
In this instant case the defendant claimed the benefit of the “emergency” rule and requested instruction to cover it. There was evidence from which the jury could have found the instruction applicable or inapplicable. The instruction as given was correct.

To my way of thinking there are two distinct categories of cases, into either of which this case might fall, depending upon the jury’s view of the facts. The first is the case in which there is no time for action, i.e., where the awareness of the actor and the impact are simultaneous, and the other is when there is only a split second for action. For this reason, I find no basis for the application of Howard v. Tri-State Insurance Co., 253 Ark. 405, 486 S.W. 2d 76, as a matter of law. In that case, neither of the drivers involved was ever aware of the presence or existence of the other until the instant of the impact. Much more applicable is the case of Johnson v. Nelson, 242 Ark. 10, 411 S.W. 2d 661, where we held that the instruction was correctly given, rejecting the argument that the instruction was not justified in that case. The background facts were stated and are pertinent. They were:

Appellee was driving east on Ninth Street in Little Rock, and when she had crossed or was in the act of crossing Cumberland Street she saw three boys (one being appellant) walking west along the sidewalk on the south side of Ninth Street. Suddenly appellee saw one of the boys (later identified as appellant) step or fall into the street. Appellee allegedly promptly tried to stop her car but could not do so before she hit and injured appellant.

One witness, whose testimony was critical on the point, was asked to tell where the driver’s car was when one of the youths slipped or stumbled into the street, answered,

Well, she looked like she was right on him. Just like it was going — that was it — she hit him.

When the emergency arises under the circumstances leaving no time within which to act, at least other than instinctively or intuitively, the actor cannot be negligent, unless he is shown to be unfit to act in such an emergency. Miller v. Daniels, 86 N.H. 193, 166 A. 30 (1933); Roberts v. Knorr, 260 Wis. 288, 50 N.W. 2d 374 (1951); Gross v. Gross, 169 F. 2d 199 (7 Cir., 1948). See also, Hasselbrink v. Speelman, 246 F. 2d 34 (6 Cir., 1957); Honnovitis v. Mutual Lumber Co., 120 So. 2d 42 (Fla. App., 1960). The emergency rule excuses inaction as well as improper action. Hoehne v. Miltelstadt, 252 Wis. 170, 31 N.W. 2d 150 (1948). See also, Roberts v. Knorr, supra.

I think the proper rule governing the application of the doctrine is stated in Geis v. Hirth, 32 Wis. 2d 580, 146 N.W. 2d 459 (1966), viz:

There are two procedures which are used to apply the emergency doctrine. The court may apply the emergency doctrine as a matter of law, thereby absolving a party of all negligence in the action. The doctrine is generally applied as a matter of law when the time interval is so short that the reaction is practically instinctive or intuitive. However, the time element may not be so short as to constitute an emergency as a matter of law, yet it may be short enough to warrant a jury finding that an emergency existed. The Cook Case clearly contemplates that the application of the doctrine may be for the jury.

In the same case, language stating the rule governing the giving of an instruction on the doctrine was quoted from an annotation at 80 ALR 2d 5, 20. It is peculiarly applicable here. It reads:

“In determining whether an instruction on the doctrine of sudden emergency is warranted by the evidence, the testimony must be viewed in the light most favorable to the party invoking the doctrine. In making such determination, the court is not necessarily limited to or controlled by the testimony of or on behalf of such party.”

In evaluating the situation at hand, every reasonable inference that a jury might draw from the evidence must be considered, keeping in mind that the testimony as to the time when Bardwell appeared before McLaughlin’s vehicle and the distance it traveled before striking Bardwell is that of McLaughlin. The jury was free to accept or reject any part of this testimony and could have concluded that the time interval or distance could have been greater, but still concluded that there was a sudden emergency created by Bardwell in walking in the service roadway facing traffic on the interstate lanes with headlights shining to his rear, and that, under all the facts and circumstances, McLaughlin was not negligent in contributing to the existence of the emergency, and his “inaction” was excusable.

If, in any view of the evidence the jury could have found a “sudden emergency” as defined in AMI 614, the instruction was proper. I feel that it was, and would affirm the judgment.

I would agree, however, that “sudden emergency” should not be an absolute defense and that comparative negligence instructions would be applicable and appropriate in any event.

I am authorized to state that Mr. Justice Jones joins in this dissent.

      Uniform Table of Driver Stopping Distances, Including Perception-Reaction Distance, Am. Jur. 2d, Desk Book at 456.

        Cook v. Thomas, 25 Wis. 2d 467. 131 N.W. 2d 299 (1964).


author: Frank Holt, Justice.

text:
    Allen A. RONE, Administrator of The Estate of Ricky Lee RONE v. Mildred G. MILLER, Administratrix of The Estate of Edward Lee FLOYD
    74-274
    520 S.W. 2d 268
    Opinion delivered March 10, 1975

      Daggett, Daggett & \'an Dover, for appellant.

      Roscopf & Epes, P.A., by: Charles B. Roscopf\ for appellee.
   Frank Holt, Justice.

Appellee, administratrix of the estate of Edward Lee Floyd, brought a wrongful death action against appellant, administrator of the estate of Ricky Lee Rone. A jury awarded appellee $17,071.04. From the judgment on that verdict comes this appeal.

In answer to appellee’s complaint, the appellant denied that Ricky Lee Rone was the driver of the vehicle and alleged the affirmative defenses of joint venture, assumed risk and that the contributory negligence of the decedent equalled or exceeded that of appellant’s intestate. To substantiate these affirmative defenses, the appellant proffered evidence as to who drove the car, their activities, and the manner in which the automobile was driven preceding the accident. The court excluded the evidence. Appellant contends this was error and we agree.

There were no eye witnesses to the fatal accident in which appellee’s decedent, appellant’s decedent and another youth were instantly killed. In chambers preceding the trial, appellant’s counsel made a proffer of proof in which he stated:

I had purported to show that the fourth boy in the car, Allen Rone, was with these boys from approximately 8 o’clock until 12 to 12:30 that night; that during the course of the evening I would offer testimony from Allen Rone as to what they did, where they went, the manner in which the car was driven, who drove the car, speeds at which the car was driven, and that there were no protests by any passengers in the car as to the way the car was driven. There were no requests to be let out, and there were no admonitions to the driver during this course of time. **** [t]hat the car was driven in excessive speeds on numerous occasions, that the car was skidded to stop, jack rabbit starts, spinning out, and that the plaintiff’s decedent was the principal driver of the car and principal person driving it in such a manner; that by the testimony of Gary Shelton, the defendant would show that at approximately 2:45 to 3 a.m., on the morning of September 2, 1972, the morning of the accident, the plaintiff’s decedent, Eddie Floyd, drove through the Town of Elaine, through the main streets of Elaine at a high rate of speed, slammed his brakes on and slid to a stop in the main street of town, revving up his engine and then spun out in a direction toward the Town of Lambrook; that Gary Shelton, then taking this as a signal to want to race, started his car and drove behind in an attempt to catch Eddie Floyd at speeds of 75 to 80 to 85 miles per hour; that he was unable to do so, and that he lost sight of the Atkinson vehicle in that it outran him; that he then returned to Elaine about 3 o’clock, proceeded toward his home at Oneida, and when he made the turn at Old Town Lake to go to Oneida, the car passed him and the wreck ensued approximately three miles from that corner.

When the court refused the proffer of proof, the appellant objected and the court agreed there would be continuing objections throughout the trial. Consequently, appellant made no further effort to adduce the proffered proof.

In Hooten v. Dejarnatt, 237 Ark. 792, 376 S.W.2d 272 (1964), we said:

.... [w]here the sequence of events is not too remote in distance and time, then the preceding act or occurrence is admissible for the purpose of showing one continuing act or the probability that the circumstances of the preceding occurrence continued to exist at the time of the subsequent occurrence. Therefore, such preceding occurrence has some relation to the actual mishap.

Testimony as to acts of driving was permitted to show a course of conduct. See Scott v. Shairrick, 225 Ark. 59, 279 S.W.2d 39 (1955); Madding v. State, 118 Ark. 506, 177 S.W. 410 (1915); and Carden v. Evans, 243 Ark. 233, 419 S.W. 2d 295 (1967). In the case at bar, we are of the view that the rejected proffer of evidence was relevant to the affirmative defenses of joint venture, assumption of risk and the degree of contributory negligence by appellee’s decedent. The proffered evidence tended to show that the appellee was aware, as a joint participant, of the asserted dangerous and reckless driving that had occurred during the evening and made no protests.

Appellant next contends that the trial court erred in refusing to permit evidence that Floyd, appellee’s decedent, had been drinking during the evening and was intoxicated at the time of the accident. The proffered testimony of Allen Rone was that Floyd purchased and drank a six-pack of beer and Vi pint of whiskey during the evening. Further, a police officer would testify that the results of blood alcohol tests made on Floyd showed a content of 0.15%. The trial court also refused appellant’s requested instructions pertaining to intoxication and a passenger’s standard of care.

Appellee recognizes that a passenger in an automobile must use ordinary care for his own safety. Appellee contends, however, that it would be speculative for the jury to find that Floyd’s intoxication was a proximate cause of his death. In Elmore, Admr. v. Dillard, 227 Ark. 260, 298 S.W.2d 338 (1957), we cited 65A C.J.S. § 152:

While an occupant of a vehicle is not required to exercise the same watchfulness as the driver, it is his duty to exercise ordinary care, including a reasonable use of his faculties of sight, hearing, and intelligence, to observe and appreciate danger or threatened danger of injury, and if he fails to do so, and such failure contributes to the injury complained of as a proximate cause, he is guilty of contributory negligence.

In the case at bar, although evidence of intoxication alone would not necessarily be sufficient to show that Floyd’s negligence, as a guest, was the proximate cause of his death, it is, however, a circumstance to be considered by the jury along with all the other facts and circumstances as to whether Floyd exercised ordinary care as a passenger for his own protection. Appellant, of course, would be entitled to appropriate instructions based upon the evidence which actually is adduced in this respect.

Appellant next asserts the court erred in admitting a witness’ testimony as to the speed of the vehicle, which he did not see in motion and was based solely upon the sounds made by the vehicle. Willie Shelton, who lives adjacent to the highway and near the crash site, was in bed and awake the night of the accident. His attention was attracted when the lights of the car “flashed in” his bedroom window. When asked, “[W]hen you first heard it what did it sound like?” Shelton responded “[L]ike somebody was overspeeding, and they was, to my knowledge.” Further, it sounded like the car was being driven “real fast” because of the “noise of the engine.” “Sounded like somebody had cranked up and was racing the engine. That is just the way it sounded. ” Several of the cases cited by appellant hold such testimony inadmissible when the witness attempts to establish the speed in terms of miles per hour. Significantly, here the witness merely stated that from the sound of the engine it was “overspeeding” or being driven “real fast.”

In Pierson v. Frederick son, 102 N.J. Super. 156, 245 A.2d 524 (1968), where the court approved similar testimony, it was aptly stated:

Visual perception is not the exclusive sensory means of gaining personal knowledge; it can also be attained by means of auditory perception.

Likewise, in the case at bar, we are of the view that the testimony was admissible.

Appellant next contends the evidence was insufficient that Rickey Rone was driving the car and, therefore, the court erred in refusing appellant’s motion for a directed verdict. We cannot agree. We affirm if there is any substantial evidence, viewed in the light most favorable to appellee, to support the verdict. Members Mutual Ins. Co. v. Blissett, 254 Ark. 211, 492 S.W.2d 429 (1973). The evidence shows that the car did not turn over as it skidded towards a tree. A witness who ran to the scene of the crash testified that none of the occupants appeared alive. They remained in the same positions until the police arrived. An officer testified that Ricky Rone’s feet were pinned down by the emergency brake and the firewall. Of the three individuals in the car, there was evidence that he was the nearest to the driver’s side. When viewed most favorably to the appellee, these physical facts constitute substantial evidence from which the jury could find Rickey Rone was the driver of the car.

Neither can we agree that the trial court should have directed a verdict because there was no substantial evidence of willful and wanton misconduct as is required by our guest statute. Ark. Stat. Ann. § 74-913 (Repl. 1957). In Splawn, Adm'x. v. Wright, 198 Ark. 197, 128 S.W.2d 248 (1939), we said:

This court has laid down the rule that in order to sustain a recovery under our Guest Statute, supra, the negligence must be of a greater degree than even gross negligence, that it must be willful or wanton.

We quoted with approval:

‘To be willfully negligent, one must be conscious of his conduct, and, although having no intent to injure, must be conscious, from his knowledge of surrounding circumstances and existing conditions, that his conduct will naturally or probably result in injury.’. . . .‘Willful negligence means a failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another.’

This issue must be resolved from the facts and circumstances of each individual case. McCall v. Liberty, 248 Ark. 618, 453 S.W.2d 24 (1970).

The accident occurred at approximately 3 a.m. The speed limit on the level highway was 60 miles per hour and a sign warned drivers of the existence of an “S” curve. The weather was clear. Apparently, the first turn was negotiated. However, the car was in the southbound lane of the last turn traveling north when the car started to skid. The skid marks show the car went 114 feet then left the highway and skidded another 131 feet down a ditch. At this point the car slid another 84 feet across a side road and again entered the highway. The car slid sideways down the highway another 158 feet and off the highway on to an embankment. The car continued to slide sideways down the embankment 68 feet until it hit a tree. One witness testified that the car was “wrapped” around the tree to such an extent that one could almost touch the front and rear bumpers with outstretched arms. Photographs show the mangled condition of the car bent into a horseshoe shape around the tree. The three occupants were killed instantly.

Appellant argues that speed alone does not constitute sufficient evidence of willful and wanton negligence. In the case at bar, there are elements other than speed. A sign on the highway warned the driver about the “S” curve he was approaching. It appears that appellant’s decedent lived in the vicinity and had some familiarity with the highway. The car was on the wrong side of the road when the driver lost control. Furthermore, the late hour is a factor which the jury could consider. In McCall we found substantial evidence based on the following elements: abruptness of the curve, familiarity with the curve, tremendous speed, the late hour and appellant’s drinking. As pointed out by the appellee, the only factor missing here is a drinking driver since the evidence is that appellant’s decedent was not drinking. We have said that wanton conduct is:

.... [a] mental attitude shown when a person, notwithstanding his conscious and timely knowledge of an approach to an unusual danger and of common probability of injury to others, proceeds into the presence of danger, with indifference to consequences and with absence of all care.

Carden v. Evans, 243 Ark. 233, 419 S.W.2d 295 (1967). In Turner v. Rosewarren, 250 Ark. 119, 464 S.W.2d 569 (1971), the court noted that drinking was not present in that case as in the McCall case; however, we said “. . . . racing would be an equivalent circumstance to show an attitude of arrogant or heedless recklessness.” The facts in the case at bar present elements from which a jury might find “a conscious failure to perform a manifest duty in reckless disregard of natural or probable consequences to the life or property of another.” McCall v. Liberty, supra.

Appellee asserts that the guest statute is unconstitutional. This contention was determined adversely to appellee recently in White v. Hughes, 257 Ark. 627, 519 S.W. 2d 70 (1975).

Appellant also asserts that the court erred in refusing to instruct the jury as to assumption of risk and joint enterprise. This argument is based primarily upon the admissibility of the proffered proof of previous reckless driving and intoxication, which we have previously discussed in points one and two. Appellant would be entitled to appropriate instructions upon these affirmative defenses whenever evidence is adduced to justify them.

Appellant’s final contention relates to the trial court giving the A.M.I. (Civil) 901 “rules of the road” instruction. Appellant does not object to the instruction other than it be modified. He asks that it be modified by striking the last paragraph or in the alternative by adding at the end of the paragraph “,but which may not necessarily be willful and wanton negligence.” We think the proffered addition is correct except the word “misconduct” should be used instead of “negligence.” See Ark. Stat. Ann. § 75-915 (Repl. 1957); Harkrider v. Cox, 230 Ark. 155, 321 S.W.2d 226 (1959); Spence v. Vaught, 236 Ark. 509, 367 S.W.2d 238 (1963); and Shearer, Adm’r v. Newson, Spec. Adm’r, 250 Ark. 33, 463 S.W.2d 642 (1971). Otherwise, in the case at bar, we can find no merit in the requested modifications.

Reversed and remanded.


author: George Rose Smith, Justice. J. Fred Jones, Justice,

text:
    DALLAS COUNTY PULPWOOD COMPANY et al v. F.J. STRANGE
    74-281
    520 S.W. 2d 247
    Opinion delivered March 17, 1975

      Shackleford, Shackleford & Phillips, by: Norwood Phillips, for appellants.

      Huey and Vitlitow, for appellee.
   George Rose Smith, Justice.

In this workmen’s compensation case the Commission found (a) that the claimant Strange was an employee of the appellant pulpwood company at the time he was accidentally injured and (b) that the claimant’s injuries arose out of and in the course of his employment. The circuit court affirmed. For reversal the appellant employer contends that there is no substantial evidence to support either of the Commission’s findings of fact. We cannot agree.

Upon the first issue the proof shows that the appellant was supplying pulpwood to Continental Can Company. The appellant had some fifteen haulers who, like the claimant, cut the pulpwood (with the assistance of their own crews) and delivered it by truck to Continental’s yard. The claimant had ostensibly purchased his truck from the appellant. The contract, not in writing, required the appellee to pay for the truck, plus the cost of liability insurance, at the rate of $3.00 per cord of wood. The employer’s testimony indicated that the claimant’s truck would be taken away if he hauled for anyone else. The Commission, upon adequate substantial evidence, made the following findings of fact upon the issue of the claimant’s status as an employee:

The Commission is convinced that the relationship in this case is definitely one of employee-employer. The respondent exercised complete control over the claimant. The claimant did not purchase the uncut timber with his own money and he was certainly not independent from the respondent for the very reason that he would lose his truck if he hauled pulpwood to any other dealer. The respondent had control of the cutting, loading, and hauling of the logs and, on occasion would travel to the cutting sites to make sure that correct procedures were used in the cutting and hauling process. There is no hard and fast rule to determine whether a person undertaking to do work for another is an employee or an independent contractor, and each case must be determined by its own particular facts and we are convinced that the particular facts in this case reveal that the claimant was, indeed, an employee.

The significant difference between this case and the case of Pearson v. Lake Lawrence Pulpwood Co., 247 Ark. 776, 447 S.W. 2d 661 (1969), cited by the appellant, is that in Pearson the Commission found that the claimant was not an employee of the pulpwood company. We sustained the Commission’s decision, because it was supported by substantial evidence. In the case at hand we again sustain the Commission’s decision, for the same reason. That conclusion makes it unnecessary for us to consider the Commission’s additional finding that the appellant is estopped to deny its workmen’s compensation coverage of the appellee.

The second question is whether the Commission was justified by the evidence in finding that Strange’s injuries arose out of and in the course of his employment. Here the facts are not really in dispute. On the day of his accidental injury Strange was engaged in buying a tractor for snaking logs out of the woods in his work for the appellant. During the morning Strange borrowed the $200 down payment from his employer, an individual doing business as Dallas County Pulpwood Company. Strange arranged to finance the rest of the purchase at a bank in Warren. Having completed those arrangements Strange went home to get his truck (the one he was using in his work) and tow the tractor to the worksite in the woods, where he would resume cutting timber the next morning. As Strange was backing out of his driveway he brushed against some limbs, fell to the ground, and was run over by one wheel of the truck.

There is ample authority to sustain the Commission’s finding of fact that Strange was injured in the course of his employment. Blair states the general rule in his Reference Guide to Workmen’s Compensation, § 9.32 (1974): “Preliminary preparations by an employee, reasonably essential to the proper performance of some required task or service, are generally regarded as being within the scope of employment and any injury suffered while in the act of preparing to do a job is compensable.”

In Fels v. Industrial Commission, 269 Wis. 294, 69 N.W. 2d 225 (1955), the claimant was injured while repairing his own dump truck with the intention of taking it to the jobsite so that it would be ready to be loaded the following morning. The court upheld an award of compensation. In McBride v. Preston Creamery Ass’n, 228 Minn. 93, 36 N.W. 2d 404 (1949), the claimant was sanding an icy hill on a private road leading to his farm so he could drive his truck to work the next morning, to haul milk for his employer. In upholding the award the court said: “Here, it is undisputed that employee’s employment required the use of the private road which he was attempting to sand at the time of his injury. Such work was in preparation for his employment the following day and was work which was clearly a necessary part thereof.” Other pertinent cases include Sieck v. Trueblood, 485 P. 2d 134 (Colo. App., 1971); Stapleton v. State Highway Commn. of Kansas, 147 Kan. 419, 76 P. 2d 843 (1938); Frandsen v. Industrial Commn. of Utah, 61 Utah 354, 213 P. 197 (1923).

We do not imply, of course, that all injuries sustained by an employee in preparing for work are compensable. But here Strange was purchasing a tractor to be used in his work, his employer had approved the purchase by advancing the down payment, the whole transaction occurred during working hours, and Strange was injured while preparing to take the tractor to the jobsite. Those facts are substantial proof supporting the award.

Affirmed.

J. Fred Jones, Justice,

dissent. I do not agree with the majority opinion in this case. As I view the majority opinion, it comes close to nullifying a long line of our previous decisions wherein we have held that the Workmen’s Compensation Act does not call for general accident insurance. See Birchett v. Tuf-Nut Garment Mfg. Co., 205 Ark. 483, 169 S.W. 2d 574; Barrentine v. Dierks Lbr. & Coal Co., 207 Ark. 527, 181 S.W. 2d 485; Conatser v. D. W. Hoskins Truck Service, 210 Ark. 141, 194 S.W. 2d 680, and the many other digested cases, too numerous to mention.

As I view the majority opinion in the case at bar, it goes beyond the outer limits in finding substantial evidence to support the findings of the Commission. When this court no longer distinguishes between substantial evidence and just any or some evidence in compensation cases, there will be little reason or need for appellate review.

It is my opinion in the case at bar, that there was substantial evidence Mr. Strange was an independent contractor but there was no substantial evidence he was an employee. In determining whether a workman is an employee or an independent contractor, we have heretofore considered the time for which he is employed; the right to terminate employment without liability; the method of payment for service, and the employer’s obligation to furnish necessary tools and equipment. Parker Stave Co. v. Hines, 209 Ark. 438, 190 S.W. 2d 620. We have held that the most important test in determining whether a person is to do certain work as a contractor or a servant is the control reserved by the employer. Parker Stave Co. v. Hines, supra. We have held that if there is nothing in the employment contract showing intent of the employer to retain control or direction of manner or methods by which a party shall perform work, and no direction relating to physical conduct of such party or his employees in execution of work, the relation of independent contractor is created; but, if the employer retains control not only of the result, but also of the means and manner of performance, then the relation of master and servant is created. Massey v. Poteau, Trucking Co., 221 Ark. 589, 354 S.W. 2d 959. Mr. Strange testified that he and a Mr. Hooks were partners in the pulpwood business and that he had been in the business of hauling pulpwood about five years.

It appears rather inconsistent to me when practically the same evidence is found substantial in supporting opposite results or decisions. A comparison of the evidence in the case at bar with that in the case of West v. Lake Lawrence Pulpwood Co., 233 Ark. 629, 346 S.W. 2d 460, is a good illustration of what I mean. The primary difference in the relationship between Strange and Smith in the case at bar and that of West and Lawrence in the West case, was that West borrowed the money from the dealer Lawrence with which to purchase the timber he was hauling exclusively to Lawrence at the time of his injury; whereas, Strange had borrowed money from the appellant-dealer Smith with which to purchase the truck in which he had started to get a tractor he had recently purchased for himself, when he was injured.

Mr. Strange said his only purpose in contacting Mr. Smith relative to hauling pulpwood was the fact he and his partner Mr. Hooks already had some pulpwood cut and had no way to haul it. He said he and Hooks talked to Mr. Smith about a truck and Mr. Smith agreed to assist him in purchasing one. He said he agreed to haul his pulpwood to Mr. Smith and Mr. Smith agreed to hold out S3.00 on each cord of pulpwood hauled to him until the truck was paid for. He said that after acquiring the truck he and Mr. Hooks hauled to Smith the pulpwood they had already cut from timber they had purchased. He said he purchased pulpwood timber from a Mrs. Wilson who lived in front of his house, and also from a Mrs. Earnest under the same arrangement. He said that when he purchased timber, Mr. Smith would hold out of his pay the purchase price of the timber and would pay it to the owner direct. He said Smith would hold out $3.00 per cord to apply on the payment for the truck, and that Mr. Smith would then pay him the remainder on the basis of the number of cords he hauled. He said he had been hauling from Potlatch property about a month when he was injured; that Mr. Smith took him to the Potlatch tract and told him he could cut pulpwood anywhere he could get it off the tract. He said Mr. Smith requested them to haul twenty cords per week if they could get it. He said it was understood that if he hauled his pulpwood to some dealer other than Mr. Smith with the truck he was purchasing from Mr. Smith, that Mr. Smith would repossess the truck.

As to the circumstances surrounding the injury, Mr. Strange’s testimony, as abstracted, is as follows:

“On July 17, 1973, I was injured about three thirty, I guess. That day, I had come over here (to Warren) and bought a tractor. There was a fellow with me till I got back to my house. I saw Mr. Smith that day; we went to the bank and got the money to pay for the tractor. Mr. Smith met me out at Mr. Burgess Williams. I called him. The purpose of buying the tractor was that I was going to move it up there where we was at and snake wood with it. I needed it in my employment. I talked with Mr. Smith about buying a tractor. He lent me some money to make the downpayment on it. He did not co-sign my note. I went and got my wife to sign the note. He loaned me two hundred or two hundred and fifteen dollars to make the downpayment. I went home to get my truck to come back and hook on the front end of it with the loader, pick it up and carry it over yonder where he was working, was where I was started when the accident happened.”

Mr. Strange said as he started to back the truck out of the driveway at his home, the limb on a tree caused him to fall out of the truck and a truck wheel rolled over him.

On cross-examination Mr. Strange testified as to how he and Mr. Hooks had some pulpwood cut and were unable to get it hauled when they went to see Mr. Smith. As abstracted, he then testified in part as follows:

“It was sometime in January or February, 1973, when Marion Hooks and I went to see him. Marion Hooks and I were buying, paying for it together. We acquired the stumpage together and cut it together and we were looking for a way to haul it. I had seen Mr. Smith before at town but I never had talked with him prior to the time I talked with him in January or February, 1973. We talked at his house in Fordyce. Mr. Hooks and I were going in partners on the truck. It was our agreement that Mr. Smith would buy the truck and let us pay it out by the cord. We were going to pay him $1,850.00 for the truck. I guess it was our agreement that after the $1,-850.00 was paid, he would transfer the title to us. I more or less felt like I was renting the truck. I used it. I took it home with me at night. I bought gasoline for it. I paid for the maintenance on it like the tires, if it needed tires. I was going to get legal title to it when I paid off the $1,-850.00. Mr. Hooks and I dissolved our working relationship in July, 1973, shortly before the accident.”

Mr. Strange said he hired some people to work for him when he was cutting pulpwood and that he paid them out of what he received. He said that when he cut a load of pulpwood, he would haul it to the woodyard where it was coaled and he was paid so much per cord. He said he furnished his own chainsaws and that Mr. Smith did not furnish anything but the truck that he was buying. He said he bought his own gasoline and maintained his truck and chainsaws. He said he hired his own employees and paid them. He said that Mr. Smith did not hold out anything from his pay for Social Security or for workmen’s compensation insurance. He said Mr. Smith would come by where they were working in the woods occasionally but did not tell him how to cut, or how to load, or how to haul the pulpwood. He said that all Mr. Smith wanted was wood and if he did not haul and deliver the wood, he did not get paid. He said that on the day he was injured he did not haul any pulpwood but on that day he had gone to Warren and purchased a tractor. He said he wanted to buy a tractor and “use it in my businesss. ” He said he met Mr. Smith in Warren and told Smith he needed to borrow some money to make the downpayment on the tractor. He said Mr. Smith went with him to look at the tractor and loaned him $215.00. He said that James Vines, who had been helping him cut pulpwood, went to Warren with him and went with him to look at the tractor, but that he did not go to the bank with him. He said he borrowed the balance of the money for the tractor from the bank; that Mr. Smith did not sign his note but did drive him out to where his wife worked, and that she signed the note with him. He said when he obtained the money from the bank and took it, together with what he had borrowed from Mr. Smith, he paid the tractor company for the tractor and obtained the title to it. He said the bank did not require the title after he got his wife to sign the note with him. He said Mr. Vines drove him home and that he went directly to “crank up” his truck and after he got the truck started, Vines left. He said he intended to use the winch on the back of the truck to lift the front end of the tractor and intended to haul the tractor to Calhoun County where he had been cutting pulpwood, but did not intend to haul it that day. He said the accident occurred as he backed the truck out of his driveway.

Mr. Smith testified that he was a pulpwood dealer for Continental Can, who owned the yard where his pulpwood was delivered, and that all the pulpwood delivered to their yard had to come through him as their dealer. He said he had approximately fifteen haulers who hauled to his yard; that these haulers employed their own help and paid their own help, and that Mr. Strange was no different from the others. He said he was selling Mr. Strange a truck under an arrangement whereby the truck would be placed in Strange’s possession and that the bank would retain title to the truck in Smith’s name. He said the bank retained a lien against the truck and when it was paid for at $3.00 per cord, the bank would then transfer the title to Mr. Strange. He said $3.00 per cord was withheld from the amount owing to Mr. Strange and he in turn paid it to the bank on the truck indebtedness. He said the $3.00 per cord also covered the liability and collision insurance on the truck. He said that after Mr. Strange was injured, Mr. Strange’s crew continued to haul pulpwood with his truck.

As I view the evidence in this case, the nearest Mr. Strange came to making out a case of employee-employer relationship was the fact that Mr. Smith required him to deliver twenty cords of wood per week if he could do so, and that Mr. Smith required that he sell his pulpwood to him as long as he was paying on the truck Smith had sold him. In the West case, supra, the substantial evidence upon which the majority opinion was based is stated as follows:

“In the present case the evidence shows that appellee, Lake Lawrence Pulpwood Company, exercised no control over the details of the work. West’s job was to haul pulpwood to the railhead at Norman where he was paid. The loading and hauling of the logs were left solely to the discretion of West. The evidence further shows that West did the cutting of the timber without the supervision of Lake Lawrence Pulpwood Company. The proof further shows that West furnished his own tools for the cutting and hauling of the logs, employed and paid his own employees and that he, West, was injured upon land leased by him for timber cutting. There is no evidence that West was required to work for any certain time or on any particular day and the method of payment to him was by the cord. The stipulated amount was paid for each cord of wood hauled, the price varying with the distance of the haul. The evidence does not show that the hauling of pulpwood was a part of the Lake Lawrence Pulpwood Company’s operation, in fact the evidence indicates that the aforesaid company purchased only from haulers. The only evidence in any way contradicting this is that West testified that he thought he was covered by workmen’s compensation.”

The dissenting opinion pointed out, however, as follows:

“. . . Tom West was not cutting timber upon land owned or rented in fact by him. The evidence shows that Lake Lawrence, through use of a straw man, had actually rented this land to avoid certain government regulations on cutting other parcels before completion of another. I find it even more significant that not only Tom West thought he was covered by workmen’s compensation but evidently Lake Lawrence thought so too. Corroborated evidence was presented in the record to the effect that Lake Lawrence deducted a fixed sum per cord of wood cut for workmen’s compensation insurance.”

I find no substantial evidence that Strange was an employee of Smith or the pulpwood company, neither do I find any substantial evidence that the claimant’s injury arose out of and in the course of his employment. Even if I could agree that Strange was an employee, and that the injury he sustained as he started to drive the truck he was purchasing to pick up a tractor he had purchased and paid for with money he had personally borrowed, arose out of his employment, certainly I find no substantial evidence that the injury occurred while in the course of his employment. Strange was not being paid by the hour and he testified that he cut or hauled no pulpwood that day. He did say he had been to the woodyard but did pot say what for. Certainly there was no evidence that Smith was paying Mr. Strange anything for looking at and purchasing the tractor. Mr. Strange simply went to town with another person and decided to buy a tractor. He found Mr. Smith in town and borrowed enough money to make the downpayment on the tractor and then went to the bank and borrowed the remainder of the purchase price of the tractor on his and his wife’s note. He rode back home with the individual he had ridden to town with and was injured when he started back to town to pick up the tractor he had purchased.

I would reverse the judgment in this case.

      Additional facts in West are set out in dissenting opinion.


author: Lyle Brown, Justice.

text:
    STATE FARM FIRE AND CASUALTY COMPANY v. Phillip H. SWITZER and Roderick D. SWITZER
    74-302
    520 S.W. 2d 245
    Opinion delivered March 17, 1975

      Mays and Landers, for appellant.

      Switzer & Switzer, for appellees.
   Lyle Brown, Justice.

This action involves the issue of auto theft liability under a contract issued to appellees Phillip H. Switzer and Roderick D. Switzer, by appellant, State Farm Fire and Casualty Company. The chancellor held that the auto had been stolen by Hazel, wife of Roderick, and removed by her to Yakima, Washington. Based on the finding of theft, judgment was rendered in favor of Phillip Switzer for the lien he claimed against the truck as a result of his sale of the truck to Roderick Switzer.

There is little dispute about most of the essential facts. Roderick Switzer orally purchased the truck from his brother, Phillip, in July, 1972. It was agreed that Ovid Switzer, father of Roderick, would pay Phillip $1,000 on behalf of Roderick’s interest in the truck; also, Roderick would pay to Phillip the amount of an indebtedness owed to GMAC, being approximately $1,000. Roderick was to repay Ovid after Roderick had finished paying the balance owed GMAC. Shortly thereafter, Phillip and Roderick made application to appellant’s local agent for insurance. On that instrument Roderick showed that he was to be the operator “100 per cent”; however, he also listed his wife, Hazel, as an operator.

Subsequent to the issuance of the policy domestic difficulties arose between Hazel and Roderick Switzer. On or about September 19, 1972, Hazel packed her belongings in the truck and drove from Crossett to Yakima, Washington, the previous home of the couple. The trip was made without prior notice to Roderick. There were later telephone conversations between the couple, Hazel making no pretense to conceal her location. No serious effort was made to seek return of the truck. A divorce was granted Roderick in November, 1972.

Phillip paid GMAC the balance owed the latter on the truck and took an assignment of GMAC’s lien. Of the SI,000 which Ovid Switzer agreed to pay Phillip for his equity in the truck, Ovid Switzer made two payments totaling $200.00; that left an unpaid balance of $800 and Ovid Switzer made no further payments after the truck was removed to Yakima, Washington. Totaling the amount paid GMAC and the $800 unpaid by Ovid Switzer, the trial court found that Phillip suffered a loss of $1,592.27, for which he had an equitable lien on the truck, and entered judgment against appellant in that amount. Roderick dismissed his complaint at the close of the case.

Phillip testified that he notified the National Automobile Theft Bureau about the taking of the car. He said he looked for the truck in El Dorado, Arkansas, with the help of the police. He testified that he found out about the truck being kept in Yakima; he conceded he made no effort to get it back.

Roderick testified he notified the local sheriff of the taking of the vehicle. He said he gave Phillip two addresses at which Hazel might be found in Yakima. One of those addresses was the motel at which Hazel was working as manager. About Hazel’s use of the truck, he conceded he listed Hazel as one of the users. He said he told the insurance agent “that Hazel Switzer would drive the truck occasionally. As far as I was concerned and as far as State Farm is concerned, she was an authorized operator of that vehicle.” Subsequent to arrival in Yakima, Hazel called and told Roderick she wanted to keep the truck. “I assumed she was claiming an interest in the truck. I made no effort to get the truck”. Hazel Switzer wrote the checks for the payments made to GMAC, apparently on the joint bank account of husband and wife.

The parties to this action agree that the principal crucial question around which liability of State Farm revolves is whether the taking of the truck by Hazel Switzer and the removal thereof to Yakima, Washington, amounted to a theft. Hazel claimed some interest in the truck. She testified that she took the truck to Washington “because she had gone into her marriage with a car which she no longer had and with more than she was taking out of it [the marriage] ”. Thus she asserted a claim of right and asked Roderick to mail the registration papers to her. Also, the vehicle was not entirely within the classification of “the personal property of another”. Additionally, the legal title to the truck was never changed from Phillip; the payment from Roderick and Hazel and the payment from Ovid for the benefit of Roderick gave Roderick and Hazel an equitable interest in the vehicle. Hazel’s right to drive the truck without restriction was listed in the application for insurance by Roderick. Apparently a warrant was never issued against Hazel for theft. And, finally, there was no effort to repossess the truck made by either of the Switzers, notwithstanding they were apprised of the exact location of the vehicle. Under the peculiar circumstances of this case it is more reasonable to assume that Hazel took the truck under a claimed right than it is to assume her taking constituted a felonious theft. This being a chancery case, we try it de novo.

Reversed and dismissed.


author: John A. Fogleman, Justice.

text:
    PINE BLUFF NATIONAL BANK v. Kenneth KESTERSON et al
    74-231
    520 S.W. 2d 253
    Opinion delivered March 17, 1975

      Jones, Matthews & Tolson, for appellant.

      Owens & Fikes, for appellees.
   John A. Fogleman, Justice.

This litigation was commenced on May 12, 1971, by Kenneth Kesterson and Harold Norton, who, along with W. A. Harris, were trustees of Pine Bluff Memorial Park Cemetery Permanent Maintenance Fund (to which we will hereafter refer as Trust Fund). Their complaint was against Harris, the sole owner, president and manager of Pine Bluff Memorial Park Cemetery, and against Pine Bluff National Bank to recover for funds allegedly withdrawn from the bank account of the Trust Fund by W. A. Harris, with the approval and consent of Bank, in violation of the trust and without proper authority. They sought an accounting.

Bank answered and made Pine Bluff Memorial Park Cemetery, Inc., (which we will call the cemetery corporation) Arkansas Memorial Gardens, Inc. and Tommy H. Russell, Trustee, third party defendants. The defenses pleaded were the statute of limitations, laches, and the bar of Ark. Stat. Ann. § 85-4-406 (Add. 1961). Appellant alleged that it had promptly mailed statements of the account of Trust Fund to the address designated along with all items paid out of the account by it, all of which it contended it had paid in good faith. Bank also alleged that any unauthorized withdrawal by Harris had been ratified by the plaintiffs (who are appellees here) and by the State Cemetery Board. The allegations relating to ratification by the Cemetery Board were that this board had authorized the third party defendant Arkansas Memorial Gardens, Inc. (which we will call Memorial Gardens), to operate the cemetery owned by the cemetery corporation upon the consideration that it would restore the trust fund. Memorial Gardens denied these allegations generally but, admitting that it had agreed to restore the Trust Fund, denied that its agreement relieved the bank from liability. Russell, as Trustee, admitted the transfer to him by Harris of certain assets to apply toward restoration of the Trust Fund, but denied that they were sufficient to do so and resisted a marshalling of assets.

Appellee Fikes, as receiver of Trust Fund, then intervened alleging that Kesterson and Norton were guilty of breaches of their duties as trustees in that they failed to keep themselves informed of the condition and status of the Trust Fund and failed to protect it from loss. He sought to recover $30,000 from them. The intervenor also sought recovery of $11,000 from appellant bank based upon their alleged negligence in permitting Harris on October 16, 1967 to withdraw $11,000 deposited in the Trust Fund on that date by check bearing his signature alone. He alleged that this deposit consisted of the proceeds of three certificates of deposit issued by Bank to Trust Fund which had been endorsed only by Harris. The signature card for both the checking account and the certificates of deposit required the signatures of all three trustees. The receiver also sought to recover $8,000 from Memorial Gardens and Russell, and impress a constructive trust on the cemetery corporation, Memorial Gardens, and any funds received by Russell for restoration of Trust Fund.

To all intents and purposes, Bank pleaded the same defenses to the intervening receiver’s complaint. During the course of the litigation, Harris died and a special administrator was appointed to defend, and the receiver’s complaint against Russell was dismissed with prejudice. Before trial, the receiver amended his complaint to allege, in the alternative, breach of contract by Bank.

The chancery court rendered judgment against Bank for $11,000 for permitting the certificates of deposit to be cashed on the signature of Harris. The case was tried upon an agreed statement of facts along with the testimony of several witnesses.

Most of the facts are undisputed and there is little dispute about any of them. The three trustees purchased a certificate of deposit for $8,900 on June 2, 1965, at which time they signed signature cards for it and for the cemetery corporation checking account requiring signatures of all three on behalf of the Trust Fund. No address was given for the Trust Fund on the signature card, but the Depositor’s contract included this clause: “The bank is authorized to mail statements and cancelled checks to the last address known to the bank.” All three trustees signed a check for $1,100 on the Trust Fund checking account for the purchase of another certificate of deposit on October 11, 1965. This check accompanied the October 1965 bank statement. Statements of the account were mailed by Bank on November 30, 1965, January 31, February 28, March 31, April 29, May 31, August 31, November 30, and December 31, 1966. On November 22, 1966, the checking account was increased from $135 to $1,400.66 to bring the total Trust Fund up to $19,400.66, thé amount that should have been paid into it according to an audit for the Arkansas Cemetery Board. The other assets of the fund were the two certificates of deposit which have previously been mentioned, and a deposit in Guaranty Federal Savings & Loan Association at Pine Bluff amounting to $8,000.

On December 13, 1966, a check signed only by Harris was used to purchase a certificate of deposit for $1,100. On December 21, the bank paid a check on the account to W. A. Harris for $400 signed by Harris only. This check and the one for the $1,100 certificate of deposit accompanied the statement mailed at the end of the month which showed the balance to be $0.66. On January 3, 1967, a check of Guaranty Federal Savings and Loan Association for $8,-000, bearing the Trust Fund’s endorsement by W,-A. Harris, trustee and Charles Arnold, trustee, was deposited to the checking account.. On the same day a check on the account for the same amount signed only by Harris was deposited to the operating account of the cemetery corporation and used for proper purposes except for $750 used to pay individual income taxes of Harris. The check on the Trust Fund was included in its bank statement for that month.

There were no other transactions involving the Trust Fund account until October 16, 1967, when the proceeds of the certificates of deposit issued by Bank for $1,000, $1,100 and $8,900 were deposited to the Trust Fund checking account on endorsement by Harris only. A check on the account for $11,000 payable to the cemetery corporation signed by Harris only was paid on the same date. A statement showing the deposit to the Trust Fund Account and the payment of the check, along with the check itself was mailed to the usual address at the end of the month. It showed a balance of $0.66. There were no further transactions involving this account until March 12, 1970, when it was closed. All bank statements, at least since August 1966, were mailed to 6707 Dollarway Road, Pine Bluff at which the cemetery corporation office was located. This address for Trust Fund was shown on the certificate of deposit issued December 13, 1967 and on Bank’s ledger sheet and statements at all times after September 30, 1965. The address shown on the ledger sheet was the address used for mailing statements which were folded so that the address thereon was exposed through the window envelope by which the statement was transmitted.

An audit report made by an auditor employed by the Arkansas Securities Division showed a liability of the cemetery corporation to the Trust Fund of $32,195.94 as of June 24, 1970. The last previous audit had shown a liability of $27,875.06 on September 16, 1969. There was no other audit or examination after that of November 1966. The $19,400.66, shown to be the amount due the Trust Fund then was the only money or assets which ever came into the Trust Fund. The auditor’s review of the payroll account of the cemetery corporation into which the $11,000 deposit had been made on October 16, 1967, showed that except for three or four transfers made to other cemeteries and a check for $3,008 to Bank the money was expended for routine cemetery expenses. It was stipulated that only $5,160.77 of the $11,000 was expended for improper purposes.

The office of the cemetery corporation was located at 6707 Dollarway Road. The two trustees who instituted the action first learned of the problems relating to the Trust Fund account about March 10, 1970, when Norton was present at a meeting of the Arkansas Cemetery Board, after having read a newspaper report about alleged irregularities. He called his attorney from the meeting and directed him to file suit. Norton testified that he never received or requested a statement of the bank account, although he knew they would be rendered and assumed they would go to the cemetery corporation office.

Russell appeared before the Arkansas Cemetery Board on March 10, 1970, on behalf of Memorial Gardens to obtain a permit to continue the operation of the cemetery. He then agreed on behalf of Memorial Gardens to pay a total of 2b % of sales proceeds, rather than the required 15%, to Trust Fund, in order to reestablish it. As a result, the permit was issued and Memorial Gardens has continued to operate the cemetery. On March 25, 1970, Harris executed three deeds conveying property to Russell, as Trustee. Russell testified that Memorial Gardens had once owned the lands of the cemetery corporation and had foreclosed the Harris company on an indebtedness which appears to have amounted to $55,000. He stated that from accounts receivable of the cemetery corporation and other funds put into the Trust Fund about $20,000 of a deficit of approximately $40,000 had been restored. A part of this was attributable to the property Harris deeded to Russell, as Trustee, which Russell, in turn, deeded to the receiver. Russell said the receiver realized some $11,355.92 net from the Harris equity, a substantial part of which was payable in monthly installments of $176.53. Another $5,000 was contributed by Memorial Gardens. He disavowed any agreement to relieve the bank or any trustee of any liability to the Trust Fund.

Jim Hood, a director of Bank, who also attended the Arkansas Cemetery Board meeting in an effort to purchase the business and operate it, testified that Russell’s agreement would have relieved the bank of liability.

The chancellor found no evidence of wrongdoing on the part of the trustees, that $5,260.77 of the $11,000 transaction on October 16, 1967 was misappropriated by Harris, but that the evidence seemed to indicate the remainder was properly used; that there was no evidence that Russell agreed to exonerate the bank.

On appeal, Bank contends that the claim of the trustees and the receiver was barred by the absolute time limit of Ark. Stat. Ann. § 85-4-406 (Add. 1961), by the statute of limitations and by laches. The statute reads:

Customer’s duty to discover and report unauthorized signature or alteration.
(1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or instructions of its customer or otherwise in a reasonable manner makes the statement and items available to the customer, the customer must exercise reasonable care and promptness to examine the statement and items to discover his unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof.
(2) If the bank establishes that the customer failed with respect to an item to comply with the duties imposed on the customer by subsection (1) the customer is precluded from asserting against the bank
(a) his unauthorized signature or any alteration on the item if the bank also establishes that it suffered a loss by reason of such failure and
(b) an unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank after the first item and statement was available to the customer for a reasonable period not exceeding fourteen (14) calendar days and before the bank receives notification from the customer of any such unauthorized signature or alteration.
(3) The preclusion under subsection (2) does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item (s).
(4) Without regard to care or lack of care of either the customer or the bank a customer who does not within one (1) year from the time the statement and items are made available to the customer (subsection (1)) discover and report his unauthorized signature or any alteration on the face or back of the item or does not within three (3) years from that time discover and report any unauthorized indorsement is precluded from asserting against the bank such unauthorized signature or indorsement or such alteration.

The following committee comment is enlightening:

5. Whether the preclusion rule of subsection (2) operates or does not operate depends upon determinations as to ordinary care of the customer and possibly of the bank. However, subsection (4) places an absolute time limit on the right of a customer to make claim for payment of altered or forged paper without regard to care or lack of care of either the customer or the bank. In the case of alteration or the unauthorized signature of the customer himself the absolute time limit is one year. In the case of unauthorized indorsements it is three years. This recognizes that there is little excuse for a customer not detecting an alteration of his own check or a forgery of his own signature. However, he does not know the signatures of indorsers and may be delayed in learning that indorsements are forged. The three year absolute time limit on the discovery of forged in-dorsements should be ample, because in the great preponderance of cases the customer will learn of the forged indorsements within this time and if in any exceptional case he does not, the balance in favor of a mechanical termination of the liability of the bank outweighs what few residuary risks the customer may still have. In thirteen of the existing statutes there are limitations on the liability of a bank for payment of items bearing forged indorsements which limitation periods range from thirty days to two years. In the remaining twenty-seven no provision is made for forged indorsements.

If there be any doubt about the applicability of the staute, it is easily resolved by the comment.

The principal question to be resolved is whether the checks drawn on Trust Fund checking account were paid on unauthorized signatures. Appellee Fikes contends they were not, because no signatures were forged and the signature of Harris was authorized. From reading the statute, the committee comment and the U.C.C. definition, we conclude that the coverage of § 85-4-406 is much broader than that and that the check was paid upon an “unauthorized signature.” The authorized signature of Trust Fund required the joint signatures of three trustees. Any purported signature of Trust Fund with fewer signatures was an unauthorized signature. See, Ark. Stat. Ann. § 85-1-201 (28), (30), [Supp. 1973]; 85-3-403 (1), (3) [Add. 1961]. One of the purposes of the section was to replace existing state statutes which varied considerably in their applicability to unauthorized signatures as distinguished from forgeries. See Committee Comment 1. An unauthorized signature is one without actual, implied or apparent authority and includes a forgery. Ark. Stat. Ann. § 85-1-201 (43) [Add. 1961). It includes a signature made by an agent in excess of his authority. Comment 1 Ark. Stat. Ann. § 85-3-404 [Add. 1961]. The intention to extend the statute to cover unauthorized signatures beyond those which are forgeries seems clear to us. See W. P. Harlin Construction Co. v. Continental Bank & Trust Co., 23 Utah 2d 422, 464 P. 2d 585 (1970); Stauffer v. Oakwood Deposit Bank, 19 Ohio App. 2d 68, 4800 2d 127, 249 N.E. 2d 848 (1969); Salsman v. National Community Bank of Rutherford v. Breslow, 102 N.J. Super. 482, 246 A. 2d 162 (1968). It also seems clear that the signature which was “unauthorized” is that of Trust Fund. For this reason, we disagree with the reasoning and result of Wolfe v. University National Bank, 270 Md. 70, 310 A. 2d 558 (1973) relied upon by appellees.

The trustees could not and the receiver cannot, as he attempts to do, shift the responsibility to the bank because Harris was regularly at the office of the cemetery company to which the bank statements were mailed, but the other trustees were not. A depositor is not excused from the discharge of his duty to examine the statement of his bank account with reasonable dispatch and care and to inform the bank of any errors by entrusting its performance to an incompetent or dishonest agent in the absence of reasonable diligence in supervising his conduct. The depositor must be held chargeable with knowledge of all the facts a reasonable and prudent examination of his bank statement and the accompanying items would have disclosed if made by one who had not participated in unauthorized withdrawals from the account. Huber Glass Co. v. First National Bank of Kenosha, 29 Wis. 2d 106 (1965), 138 N.W. 2d 157 (1965); Morgan v. United States Mortgage & Trust Co., 208 N.Y. 218, 101 N.E. 871, LRA 1915 D 741 (1913) and accompanying annotation; Bank of Thomas County v. Dekle, 119 Ga. App. 753, 168 S.E. 2d 834 (1969); Myrick v. National Savings & Trust Co., 268 A. 2d 526 [D.C. Ct. Ap. (1970)]; Exchange Bank & Trust Company v. Kidwell, 463 S.W. 2d 465 [Tex. Civ. App. (1971)]; see also, Westport Bank & Trust Co. v. Lodge, 164 Conn. 604, 325 A. 2d 222 (1973); Faber v. Edgewater National Bank, 101 N.J. Super. 354, 244 A. 2d 339 (1968); Rainbow Inn, Inc. v. Clayton National Bank, 86 N.H. Super 13, 205 A. 2d 753 (1964); Screenland Magazine v. National City Bank, 42 N.Y.S. 2d 286 (1943).

It has also been held that the failure of joint depositors to discuss among themselves or inquire of their bank regarding their failure to receive bank statements over a three month period of time was evidence of negligence on the part of the depositors. Terry v. Puget Sound National Bank, 80 Wash. 2d 157, 492 P. 2d 534 (1972).

Section 85-4-406 (4) is not a statute of limitations. It creates an absolute bar because it is a rule of substantive law which is a condition precedent to an action. Billings v. East River Savings Bank, 33 A.D. 2d 997, 307 N.Y.S. 2d 606 (1970); Stauffer v. Oakwood Deposit Bank, 19 Ohio App. 2d 68, 249 N.E. 2d 848 (1969). See also Gennone v. Peoples Nat'l Bank, 51 Pa. D. & C. 2d 529, 9 U.C.C. Rep. 707 (1971); Dobbins v. National Union Ins. Co., 70 Misc. 2d 1087, 335 N.Y.S. 2d 480 (1972); Terry v. Puget Sound National Bank, 80 Wash. 2d 157, 492 P. 2d 534 (1972).

Since items on which the complaint is based were paid by Bank on unauthorized signatures, the one year statutory period applied to the liability of Bank on the checks written by Harris. The endorsements on the certificates of deposits should also have been discovered by the trustees by reason of their deposit to the Trust Fund checking account. Suit was not filed for more than three years thereafter, but there is evidence that some report was made to Bank within the three year statutory period relating to endorsements. No loss was sustained by Trust Fund, however, by reason of the endorsements, because the proceeds were deposited to the Trust Fund account. Starkey Construction, Inc. v. Elcon, Inc., 248 Ark. 958, 457 S. W. 2d 509. See also, Davis Aircraft Products Co., Inc. v. Bankers Trust Co., 319 N.Y.S. 2d 379 (1971). The misappropriation by Harris resulted from the payment of checks on his signature alone.

There was no evidence of lack of good faith on the part of the bank, so intervenors’ action is clearly barred by § 85-4-406 (4). Mansfield v. Jimden Realty Corp., 36 A.D. 2d 623, 319 N.Y.S. 2d 381; Hardex-Steubenville Corp. v. Western Pa. National Bank, 446 Pa. 446, 285 A. 2d 874 (1971).

Appellee - intervenor, in endeavoring to avoid the impact of Ark. Stat. Ann. § 85-4-406, argues that the cause of action on the certificates of deposit did not accrue until demand was made by the depositor and was not barred until five years later. Neither the trustees nor the receiver based the action against Bank on the certificates of deposit. The cause of action finally stated in the “Amended Intervention Complaint” is based entirely upon the payment of the $11,000 check drawn on the account with the signature of Harris only on October 16, 1967. We have previously pointed out that there was no loss occasioned by the deposit of the proceeds of the certificate of deposit in the bank account.

Appellee contends that the ordinary rules should not be applied to a trust fund. There is no exception made in any of the pertinent U.C.C. provisions. Furthermore, our case law does not support that argument. It is true that where a bank permits a trustee to withdraw funds from the bank account of the trust with notice that the trustee is commiting a breach of trust, it is liable for participation in the breach. Drainage Dist. No. 7 v. Citizens Bank, 205 Ark. 435, 170 S.W. 2d 60. But this liability does not attach in the absence of notice of an intention on the part of the trustee to misappropriate the trust fund. City of Helena v. First National Bank of Helena, 173 Ark. 197, 292 S.W. 140; Church of God in Christ v. Bank of Malvern, 212 Ark. 971, 208 S.W. 2d 770. There is nothing to indicate that the bank had any notice that Harris intended to misappropriate funds withdrawn from the Trust Fund checking account and paid to the cemetery corporation. This would be a normal procedure in accomplishing the purposes of the trust.

The only evidence relied upon by appellee to show that Bank had notice of an intention on the part of Harris to misappropriate funds is testimony showing that sometime after the transfer of SI 1,000 from Trust Fund to the cemetery corporation account a check for S3,008 payable to Bank was drawn on the cemetery corporation account. Appellee contended that this testimony was sufficient to charge the bank with notice, when coupled with evidence that in December 1966, Bank honored a check on the Trust Fund account for S400 payable to Harris individually and that, after a transfer of S8,000 from the Trust Fund account to the cemetery corporation account in January 1967, S750 from the cemetery corporation account was used to pay personal income taxes of Harris. There was no evidence relating to the purpose for which the check for S3,008 was drawn. It was not shown that it went to pay personal obligations of Harris. We do not agree with appellee and find the evidence insufficient to charge the bank with notice of the intention of Harris to misappropriate trust funds.

We think the claim of the trustee and receiver was also barred by laches. If a claim had been timely asserted, the bank might have recovered losses from the assets of Harris or from the cemetery corporation.

Appellees concede that the point raised on cross-appeal need not be considered unless we agree with their view of the law on the direct appeal. Since we do not, we consider the cross-appeal to be mooted.

The decree is reversed and the cause dismissed.

Harris, C.J., not participating.

      We are not unaware of Jackson v. First National Bank of Memphis, 403 S.W. 2d 109 (Tenn. App. 1966) which appears to be contra, but feel that the rule stated is far preferable and more nearly in harmony with the express purpose of § 85-4-406 (4).


author: J. Fred Jones, Justice.

text:
    DIVERSA, Inc., Employer, COTTON BELT INSURANCE COMPANY, Insurance Carrier v. Lee DAVIS, Employee
    74-307
    520 S.W. 2d 243
    Opinion Delivered March 17, 1975

      Killough & Ford, by: Robert M. Ford, for appellants.

      Pickens, Boyce, McLarty & Watson, by. James A. McLarty, for appellee.
   J. Fred Jones, Justice.

This is a workmen’s compensation case. Lee Davis, the claimant-appellee, sustained a ruptured disc in the course of his employment by the appellant-employer, Diversa, Inc. Following surgical intervention Davis filed a claim for workmen’s compensation benefits and the claim was controverted in its entirety by the employer and its compensation insurance carrier. Upon hearing, the Referee found the injury compensable and awarded compensation including a thirty per cent permanent partial disability to the body as a whole. The full Commission on review adopted the findings and award of the Referee and the circuit court affirmed the Commission.

On appeal to this court the appellants rely on the following point for reversal:

“The award of the referee, that has been affirmed by the full commission and the circuit court, for permanent partial disability in the amount of thirty percent (30%) to the body as a whole commencing on May 19, 1973, and continuing forward for one hundred thirty-five (135) weeks, as a result of said alleged accident, is not supported by substantial evidence introduced and presented at the hearing.”

We agree with the appellants that there was no substantial evidence to support the award of thirty per cent permanent partial disability to the body as a whole. As already stated, the appellee sustainedruptured disc as a result of his injury and following conservative treatment for a period of time, a lumbar laminectomy was performed by Dr. Ray Jouett in Little Rock and an extruded nucleus pulposus was removed from the L5-S1 level on the left.

Dr. Jouett’s final report was submitted on May 24, 1973, and this report in pertinent parts reads as follows:

“Mr. Davis was seen in the office on May 18, 1973.
He continues to make fine progress since his surgery and at the present time is essentially without difficulty. In fact, all of his pain has disappeared.
Neurologically, he has no evidence on walking of any weakness and there is no limp. He can bend forward and touch his toes. Hyperextension and lateral rotation were thought full. His reflexes revealed diminished ankle jerk bilaterally. His knee jerks were thought within normal limits. There was no sensory abnormality and no evidence of atrophy.
I think this man has had a very fine result from his surgery. Some three months have passed and I feel he has had a good period of healing and he may now return to work. I feel that he needs to be cautious for at least another three to six months about bending over and picking up 50 to 60 pound weights, but aside from that I feel he can be at work.
This man had a large extrusion of the nucleus pulposus and I feel that even though he is relatively asymptomatic that this man should be considered for some permanent partial residual disability affecting the body as a whole, perhaps in the range of 10 per cent.”

As to the only point presented on this appeal, we are of the opinion that this case is controlled by our decision in Ray v. Shelnutt Nursing Home, 246 Ark. 575, 439 S.W. 2d 41, rather than such cases as Johnson County v. Timmons, 249 Ark. 1106, 463 S.W. 2d 365, and Wilson & Co. v. Christman, 244 Ark. 132, 424 S.W. 2d 863, apparently relied on by the Referee and the Commission. The Timmons and Christman cases are easily distinguishable on their facts from Shelnult and the case at bar. In the case at bar there was simply no evidence in support of an award for permanent partial disability in excess of Dr. Jouett’s estimate of “perhaps in the range of 10 per cent.”

The compensability of the injury was hotly contested before the Commission and, as the attorney for the appellee points out in his brief, most of the evidence in this case was directed toward proof of the compensability of the injury rather than the extent and duration of the disability. Apparently a good job was done in this connection as evidenced by the fact that the appellants have only appealed in connection with the permanent partial disability award.

As to his physical condition following his surgery, Mr. Davis testified as follows:

“Q. Tell us in your own words how your back is getting along following your discharge from Dr. Jouett?
A. It is doing all right.
Q. Do you notice any particular pain or any impairment in your back at the present time?
A. No, I don’t.”

Mr. Davis -said he continues to be cautious about lifting. He also said he had not been able to find employment that he could do but did not state what he felt he could or could not do. He said he had not attempted to return to his former employment but he did not say why. Mr. Davis did not mention anything he has attempted to do and gave no reason for not being able to find employment in something he could do.

Mrs. Billie Davis, the wife, of the appellee, testified as to her husband’s disability, apparent pain and symptoms prior to his surgery, and she testified he was getting no better until he underwent the surgery. She then testified as follows:

“Q. Has he appeared to have a fairly satisfactory recovery following his discharge from the hospital down there and his surgery?
A. Yes, he is doing just fine now.”

In the case at bar there was simply no evidence in the record, other than the medical report above referred to, that the appellee had sustained any permanent disability at all as a result of his injury. The burden, of course, was on the claimant to prove that he had permanent disability and the extent of it.

The judgment of the trial court is reversed and this cause remanded with directions to remand to the Commission for entry of an award of ten per cent permanent partial disability-

Reversed and remanded.