author: David Newbern, Justice.

text:
    Larry BRANSCOMB v. STATE of Arkansas
    CR 88-214
    774 S.W.2d 426
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Loh, Massey, Yates, Ltd., by: Howard C. Yates, for appellant.

      Steve Clark, Att’y Gen., by: J. Brent Standridge, Asst. Att’y Gen., for appellee.
   David Newbern, Justice.

The appellant, Larry Branscomb, was convicted of capital murder and sentenced to life in prison without parole. He raised four points for reversal: (1) the trial court should have permitted him to be examined by a psychiatrist of his choice at state expense; (2) inculpatory statements he made to the police should have been suppressed because, (a) the state violated Ark. R.Crim. P. 8.1 by delaying appearance before a magistrate after his arrest, and (b) he lacked the capacity to waive his Sixth Amendment right to counsel; (3) the court should have admitted into evidence at a preliminary hearing the report of his psychiatric examination at the state hospital; and (4) the court should have instructed on the lesser included offenses of second degree murder and manslaughter.

We affirm the conviction because (1) the state was under no obligation to provide psychiatric examination other than that done at the state hospital; (2) there has been no showing that the delay in bringing Branscomb before a magistrate was unnecessary; (3) there was evidence to support a finding that Branscomb was competent to waive his right to counsel; and (4) a lesser included offense of first degree murder was instructed but the jury found capital murder, thus whatever error there may have been in refusing to instruct on second degree murder and manslaughter was cured.

Thomas Morgan, an elderly resident of Marianna, was robbed and shot to death in his home on August 15,1986. Larry Branscomb, his brother Earl Branscomb, and Willie McCoy were charged with the crime. Larry Branscomb was visiting in Lee County from Chicago. The three men had, on that same day, looked at a gold colored Cadillac for sale in Marvel. Earl Branscomb and McCoy testified that Larry told them to drop him off in the vicinity of Morgan’s home because he knew Morgan had money and he would get it to buy the car. McCoy had seen Larry Branscomb with a pistol the night before. Earl Branscomb testified that Larry Branscomb had said he wanted the car and would “knock somebody off” to get it.

Earl testified that Larry called him later that day and said the man he robbed had gone for his gun and he had had to shoot him and wanted to go back to Chicago. Fletcher Wilson testified that Larry Branscomb paid him $12.00 to drive him to Memphis at 8:30 that evening. Earl Branscomb testified that Larry Branscomb left for Chicago with a silver pistol and money in a sack.

Larry was arrested in Chicago on September 27, 1986. He remained incarcerated there until December 11,1986, when Lee County Deputy Sheriff Stanley Barnes picked him up to bring him back to Arkansas. Except for Larry’s testimony that he was visited by family and by someone who discussed extradition with him, and that he did not see a lawyer, we have no information about what happened between those dates. Larry testified he had no conversations with Arkansas officers during the return trip except concerning whether he was hungry and wanted to stop to get something to eat.

Larry arrived at the Lee County jail at 8:12 p.m. on December 11,1986. The following morning, which was a Friday, at 9:30 he was questioned by Investigator James Rainbolt in the presence of Barnes. Rainbolt testified he advised Larry of his rights and asked if he understood them, one at a time, getting a response as to each one mentioned. He then handed Larry the form which Larry initialled. After Larry had waived his rights, Rainbolt took Larry’s personal history, and Larry stated he had a 12th grade education.

When asked by Rainbolt if he had anything to say, Larry gave a statement which Rainbolt wrote down. In it Larry admitted shooting the elderly man but claimed it was self-defense. He mentioned nothing about the robbery. Rainbolt and Barnes confronted Larry with discrepancies between the physical evidence at the scene of the crime and Larry’s statement. Larry then gave a second statement in which he admitted he went into the house to rob Morgan after being let out of a car near the house by Earl Branscomb and McCoy. He said he pulled his pistol before Morgan pulled his. He admitted shooting Morgan twice and then running away.

On Monday, December 15, 1986, Larry was taken before the Marianna Municipal Court, which meets on Mondays only.

Deputy Barnes testified that Larry did not ask for a lawyer between the time he was picked up in Chicago and after giving his second statement. Counsel was appointed on February 13,1987.

1. Psychiatric evaluation

Larry pleaded not guilty by reason of insanity. He was sent to the state hospital for psychiatric examination. The report found him to be mildly retarded with an I.Q. of 67 and mixed personality disorder. The report concluded that Larry did not lack the capacity to appreciate the criminality of his conduct at the time of the crime and that he could cooperate effectively with his attorneys in preparation of his defense. Larry’s counsel moved to have the state pay up to $500 to have another psychiatrist examine him and render a report. The motion was denied.

It is contended that the state hospital report was inadequate. The history taken from his mother was said to be deficient because Larry, who is now aged at least 33, had left home when he was 12 or 13, and she had not been with him since then. Counsel also cited Larry’s distrust, fantasies, ánd paranoia they had observed while working with him, as well as stories he told at the preliminary hearing. It is contended here that he did not receive the independent hearing required by Ake v. Oklahoma, 470 U.S. 68 (1985).

In See v. State, 296 Ark. 498, 757 S.W.2d 947 (1988), and Parker v. State, 292 Ark. 421, 731 S.W.2d 756 (1987), we held that an examination by the state hospital satisfied the requirements of the Supreme Court stated in Ake v. Oklahoma, supra. Counsel on appeal acknowledges the position we have taken but contends that, given the facts of this case, we should reconsider it. We decline to do so. We have concluded that a psychiatric examination given by the state hospital is sufficiently independent of the prosecution. As in Starr v. State, 297 Ark. 26, 759 S.W.2d 535 (1988), where it was contended that the appellant’s marginally retarded condition required additional psychiatric examination, we cannot agree here that additional examination was required. Larry Branscomb’s responses to the police interrogation were clear, and there was no allegation of coercion of any sort in the giving of his statements.

2. Failure to suppress

a. Unnecessary delay

The contention here is that the delay of three days between the time Larry arrived in Marianna and the time he was taken before the municipal court violated Rule 8.1. The time between his arrest in Chicago and the trip to Marianna is also noted, but only as having had some effect in causing Larry to confess some 12 hours after his arrival at the Lee County jail. We have no idea of the cause of the delay in Chicago. It could, for example, have been caused by some resistance to extradition, although we have no more evidence of that than we have of any other reason. We can hardly attribute it to an attempt by the state to gain a tactical advantage over Larry. See Scott v. State, 263 Ark. 669, 566 S.W.2d 737 (1978).

Rule 8.1 provides that there shall be no “unnecessary delay” in taking an arrested person before a judicial officer. Neither the rule nor the unofficial commentary defines “unnecessary delay.” In Duncan v. State, 291 Ark. 521, 726 S.W.2d 653 (1987), we set out three requirements for finding a violation of the rule. We wrote that the delay must not be necessary, the evidence sought to be suppressed must be related to the delay, and the evidence must be prejudicial. No doubt Larry’s statements were prejudicial to his case. We need not say, however, whether the delay was necessary because we find the evidence was completely unrelated to the delay.

The Duncan case, upon which Larry relies, provides a stark contrast to this one. Duncan was held incommunicado for three days. The police admitted verbal abuse was used, and the inculpatory statement came at the end of the period. Here, the statements were given when Larry was first questioned. In Brown v. State, 276 Ark. 20, 631 S.W.2d 829 (1982), we declined to suppress a confession taken during a three day delay. We wrote that we could not say there had been a violation of Rule 8.1 given the facts of that case. We say the same thing here, in the absence of facts such as those reported in Duncan v. State, supra.

b. Waiver of counsel

Larry contends he cannot be held to have knowingly and intelligently waived his Sixth Amendment right to counsel. He cites our reference in Duncan v. State, supra, to United States v. Mohabir, 624 F.2d 1140 (2nd Cir. 1980), and its holding that the Sixth Amendment right to counsel could not be waived absent explanation of that by a judicial officer. In Patterson v. Illinois, 484 U.S. 895 (1988), the Supreme Court made it clear that the standard Miranda warning, which had been held sufficient to constitute a waiver of Fifth Amendment rights, was sufficient to waive the right to counsel provided by the Sixth Amendment as well. The question here is thus the same one with which we have dealt many times. We independently examine the totality of the circumstances to determine whether the trial court’s ruling that there was a knowing and intelligent waiver of rights was clearly erroneous. Burin v. State, 298 Ark. 611, 770 S.W.2d 125 (1989); Munnerlyn v. State, 292 Ark. 467, 730 S.W.2d 895 (1987); Beard v. State, 269 Ark. 16, 598 S.W.2d 72 (1980).

In the Burin case we clarified the distinction between the matter of voluntariness in the sense of the waiver and voluntariness in the sense of whether there was police coercion. In discussing the question of knowing and intelligent waiver, we concluded that mental subnormality is one of several circumstances to be considered along with the defendant’s age, experience, education, background, and the length of detention. Low I.Q. is not enough to base a holding that a waiver was not intelligent or knowing. Mitchell v. State, 295 Ark. 341, 750 S.W.2d 936 (1988).

Larry stated he had gone to school through the 12th grade. He said he had attended a technical-vocational school at DePaul University in Chicago after leaving Arkansas. He also said he had held a job as a blueprint maker and a job as a manager of a shoe store. The record of Larry’s colloquy with the court at a hearing where he attempted to plead guilty demonstrates he had limited mentality, and that some of what he said about himself may have been suspect, yet in other discussions his answers were clear and apparently thoughtful.

It was up to the trial judge to decide the credibility of the testimony. Investigator Rainbolt testified that when Larry made his first statement, he made written corrections on it. We cannot say it was clearly wrong to have held the waiver was knowing and intelligent.

3. Admissibility of psychiatric report

During the preliminary hearing counsel for Larry asked the court to take judicial notice of the psychiatric evaluation and to admit it for purposes of the preliminary hearing only. The court refused; however, the court did allow counsel to ask Investigator Rainbolt if he was aware of Larry’s low I.Q. as described in the report.

The state’s objection to the report’s admissibility was well taken. No foundation had been laid. While the report might have been admissible as a business record, and thus an exception to the hearsay rule, under A.R.E. 803(6), we have held that a foundation must be laid for the admission of such a document, and the elements of the foundation must be shown by testimony of the custodian or another qualified witness. Cates v. State, 267 Ark. 726, 589 S.W.2d 598 (1979). As that was not done in this case, there was no error.

4. Lesser included offense instructions

The court instructed the jury on capital murder and the lesser included offense of first degree murder. The court refused proffered instructions on second degree murder and manslaughter. Where a lesser included offense has been the subject of an instruction and the jury convicts of the greater offense, error resulting from failure to give instructions on other lesser included offenses is cured. Harris v. State, 291 Ark. 504, 726 S.W.2d 267 (1987); McKinnon v. State, 287 Ark. 1, 695 S.W.2d 826 (1985).

5. Other possible error

In accordance with Arkansas Supreme Court and Court of Appeals Rule 11 (f), we have considered all objections brought to our attention in the abstracts and briefs, and we find no prejudicial error.

Affirmed.


source: Caselaw Access Project

author: Tom Glaze, Justice.

license: Public Domain

text:
    Patricia BLAND v. Dr. Joe VERSER
    89-63
    774 S.W.2d 124
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Bill W. Bristow, P.A., and Lohnes Tiner, for appellant.

      Barrett, Wheatley, Smith & Deacon, by: J.C. Deacon and Lucinda McDaniel, for appellee.
   Tom Glaze, Justice.

This appeal involves a defamation action filed by the appellant, Patricia Bland, against appellee, Dr. Joe Verser. Bland served as head teller for the Bank of Harrisburg (the Bank), and Dr. Verser is the Secretary of the Arkansas State Medical Board (Medical Board). The Medical Board maintained its checking account in the Bank, and the Board’s employee, Vickie Deatherage, apparently converted to her own use a large sum of money belonging to the Board by cashing at the Bank a number of checks made payable to the Medical Board. In reporting this matter at a meeting of his Board, Dr. Verser made the following statement:

“But I have told them, and I’m telling you, the head teller in the Bank of Harrisburg has to be the dumbest, most stupid, ignorant person; or second, there is a collusion.” (Emphasis added.)

Bland later brought this suit against Dr. Verser, alleging Verser had defamed her by imputing she was guilty of criminal misconduct. Dr. Verser answered and moved for summary judgment stating his statements (1) were opinion absolutely protected by the first amendment, (2) were privileged and thus not actionable and (3) were made by a state employee immune from civil liability. The trial court held Dr. Verser’s statements did not constitute actionable slander and granted summary judgment. We reverse and remand.

It is well settled, of course, that summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, and affidavits show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. ARCP Rule 56. Contrary to the trial court’s ruling, our review of the record and applicable law reflects a fact issue does exist as to the issue of whether Dr. Verser’s remarks constituted actionable slander. In Dean v. Black & White Stores, Inc., 186 Ark. 667, 55 S.W.2d 500 (1932), the court held that where the words, together with the attendant circumstances, are alleged to charge a crime, they are actionable, and whether the words charged, together with the attendant circumstances in the case, amounted to the charge of crime was a question of fact for the jury. See also Luster v. Retail Credit Co., 575 F.2d 609 (8th Cir. 1978). While Dr. Verser argues otherwise, we believe it is readily apparent that a fair and reasonable inference can be made from his statements that Bland was guilty of a criminal act. At the very least, we believe a jury question exists as to this factual issue.

In holding as we do, we considered Dr. Verser’s argument that his statements were opinions absolutely protected under the first amendment. See Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974); Janklow v. Newsweek, Inc., 788 F.2d 1300 (8th Cir. 1986). In arguing that his remarks were opinions rather than facts, Verser relies largely upon the four-part test set out in Janklow. Those four factors, no one of which the Janklow court believed is dispositive when distinguishing fact from opinion, are (1) the precision and specificity of the statements; (2) verifiability of the statement; (3) the literary context in which the statement was made, including tone and use of cautionary language, as well as the type of forum involved; and (4) the public context in which the statement was made, including whether the statement concerned a public or private figure. When considering Dr. Verser’s remarks in light of the foregoing factors, we have no difficulty in concluding they are factual and fall outside the realm of fair comment.

The record reflects that the Medical Board’s employee embezzled its funds and the remarks attributed to Verser clearly reflect Verser believed Bland contributed to the crime either through her collusion or her ignorance and stupidity. In sum, Verser’s statements were in no way vague and reflected that Bland had committed a crime or was derelict in her professional duties. In determining the verifiability of Verser’s remarks as they may reflect Bland’s participation in any embezzlement scheme, we would place ourselves in a difficult posture, indeed, if we were to conclude that a person could be accused of criminal misconduct but alleviate the accuser of any consequences in making such a charge by saying his charge was unverifiable. Here, a private individual was involved in what became a public matter. Dr. Verser seeks some justification for his remarks by relying on a statement made by a deputy sheriff that Deatherage might have colluded with some bank employee and that the sheriffs office would continue its investigation. Of course, the short answer to this argument is that a defendant, in asserting the defense of fair comment, may not escape liability by attributing to others the ideas to which he gives expression. See Cepeda v. Cowles Magazine & Broadcasting, Inc., 328 F.2d 869 (9th Cir. 1964); see also 50 Am. Jur. 2d Libel and Slander § 289 (1970).

Additionally, Dr. Verser points to the public forum in which his comments were made, and argues he was required to report to the Medical Board and to speak freely concerning the conversion of funds and as to any possible collusion involved. This argument also goes to Dr. Verser’s separate contention that his remarks to the Board were privileged. See Navarro-Monzo v. Hughes, 297 Ark. 444, 763 S.W.2d 635 (1989); Ikani v. Bennett, 284 Ark. 409, 682 S.W.2d 747 (1985). Dr. Verser’s own statements to the Medical Board undermine his public forum and privilege arguments since he not only reported the matter to the Board, but also he repeated his asserted defamatory remarks to certain Bank officials. Any privilege Dr. Verser may have enjoyed before the Medical Board is of no importance since he shared those remarks to others outside the Board’s forum.

Finally, Dr. Verser seeks immunity from civil liability for his remarks and asserts his statements were not made with malice, thus he was immune from liability under Ark. Code Ann. § 19-10-305 (1987). Section 19-10-305 does not protect state employees if they act maliciously. Beaulieu v. Gray, 288 Ark. 395, 705 S.W.2d 880 (1986). Nor does § 19-10-305 protect an employee for his or her acts or omissions occurring outside the person’s course and scope of employment. Under Arkansas law, statements made with actual malice include not only those made with spite, hatred, or vindictiveness, but also those made with such reckless disregard of the rights of another as to constitute the equivalent of ill will. Dun & Bradstreet, Inc. v. Robinson, 233 Ark. 168, 345 S.W.2d 34 (1961 ); see also Cunningham v. Skaggs Companies, Inc., 729 F.2d 1156 (8th Cir. 1984).

Since this appeal comes to us from a summary judgment, the movant, Dr. Verser, had the burden to show there is no existence of a fact issue, and if there is any doubt whatever that such an issue exists, the summary judgment should be denied. See Trace X Chemical v. Highland Resources, 265 Ark. 468, 579 S.W.2d 89 (1979). From our review of the record, we are compelled to conclude that the circumstances surrounding Dr. Verser’s remarks present at least a jury question as to whether they infer malice.

For the reasons above, we reverse and remand.


text:
    Sterlin P. JONES v. Brian GOODSON
    89-58
    772 S.W.2d 609
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Raymond Harrill, for appellant.

      Ivester, Henry, Skinner & Camp, for appellee.
   Tom Glaze, Justice.

This is a tort case in which Brian Goodson sued his stepfather, Sterlin P. Jones, and obtained a judgment awarding damages in the amount of $27,500. In an effort to satisfy his judgment, Goodson caused writs of garnishment to be issued against banks which held accounts on behalf of Jones. In addition, Goodson caused a writ of execution to be issued for purposes of levying upon Jones’s wheelchair which was valued at approximately $4,000. Jones objected to the writs of execution and garnishment issued under Ark. Code Ann. § 16-110-402 (Supp. 1987). He argued that the wheelchair and bank accounts were exempt from execution and garnishment under federal laws pertaining to Veterans Administration and Social Security benefits. The trial court rejected Jones’s contention as to the accounts, which consisted of certificates of deposit purchased with veteran benefits, but held his wheelchair and any social security funds were exempt. Jones appeals from the ruling that the accounts consisting of veterans benefits are subject to garnishment, and Goodson cross-appeals from the ruling that the wheelchair and the funds consisting of social security benefits are exempt from process. We reverse the trial court’s holding in Jones’s direct appeal and affirm its decisions on cross-appeal.

1. Veterans Administration Benefits

In the direct appeal, the parties’ first argument concerns whether certificates of deposit purchased with veterans benefits are exempt under 38 U.S.C. § 3101(a) (1988), which provides in pertinent part as follows:

Payments of benefits due or to become due under any law administered by the Veteran’s Administration . . . shall be exempt from the claim of creditors, levy, or seizure by or under any equitable process whatever, either before or after receipt by the beneficiary.

In considering the foregoing law, the Supreme Court in Porter v. Aetna Casualty Co., 370 U.S. 159 (1962), stated that such legislation should be liberally construed to protect funds granted by the Congress for the maintenance and support of the beneficiaries thereof. The Court observed that the Congress intended that veterans in the safekeeping of their benefits should be able to utilize those normal modes adopted by the community for that purpose — provided that the benefit funds, regardless of the technicalities of title and other formalities, are readily available as needed for support and maintenance, actually retain the qualities of moneys, and have not been converted into permanent investments. In applying these guidelines, the Porter court held a veteran’s benefits which were deposited, in a federal savings and loan account were exempt from attachment. Cf. Trotter v. Tennessee, 290 U.S. 354 (1983) (court held that land purchased by the guardian with veteran benefits was not exempt); Carrier v. Bryant, 306 U.S. 545 (1939) (court held that United States bonds purchased from veteran’s benefits were not exempt from execution); Lawrence v. Shaw, 300 U.S. 245 (1937) (court held that bank credits derived from veteran’s benefits were within the exemption).

In Fayette County Hosp. v. Reavis, 523 N.E.2d 693 (Ill. App. 3d 1988), the Illinois Court of Appeals held that a judgment debtor’s certificate of deposit, which was purchased solely with social security benefits and payable upon his death to a funeral home, was exempt from garnishment under 42 U.S.C. § 407 of the Social Security Act. That Act provides that “none of the monies paid or payable or rights existing [under the social security act] shall be subject to execution, levy, attachment, garnishment, or other legal process . . .” The court concluded, citing Philpot v. Essex County Welfare Bd., 409 U.S. 413 (1973), that the funds in a certificate of deposit were readily withdrawable, retained the “quality of money,” had not become a permanent investment, and were thus exempt under § 407(a). Significantly, the Supreme Court in Philpot reviewed its decision in Porter and determined that the analysis used with respect to veterans benefits under 38 U.S.C. § 3101 (a) is applicable to social security benefits.

In the instant case, it was undisputed that Jones had immediate access to the funds as needed and that while there would be a penalty of loss of interest for early withdrawal, the principal would be unaffected. We note also that legislation of this type should be liberally construed to protect funds granted by the Congress for the maintenance and support of the beneficiaries thereof. Porter, 370 U.S. 159. In sum, since the funds in question were readily withdrawable, retained the quality of money, and had not become a permanent investment, we reverse the trial court’s finding that the veterans administration funds were nonexempt.

Citing Rose v. Rose, 107 S. Ct. 2029 (1987), Goodson argues that the exemption provided in § 3101 (a) does not apply to family members and that as a stepson of Jones, he is a family member in the “strictest sense of the word.” We do not address this argument since it was not raised below. Malakul v. Altech Arkansas, Inc., 298 Ark. 246, 766 S.W.2d 433 (1989).

2. Social Security Benefits

On cross-appeal, Goodson argues that the trial court erred in holding that the social security benefits were exempt from garnishment. This argument is meritless because, as noted above, the exemption in 42 U.S.C. § 407, extends to “moneys paid.” See Bennett v. Arkansas, 108 S. Ct. 1204 (1988); Philpot, 409 U.S. 413. This exemption applies even after the benefits are in the debtor’s hands. Bennett, 108 S. Ct. 1204; Philpot, 409 U.S. 413.

In Philpot, the Essex County welfare in the state of New Jersey was attempting to garnish funds on deposit in the recipient’s account pursuant to the recipient’s agreement to reimburse. In denying recovery, the court stated:

The protection afforded by sect. 407 is to “moneys paid” and we think the analogy to veteran’s benefits exemptions which we reviewed in Porter v. Aetna Casualty Co., 370 U.S. 159, is relevant here. We held in that case that veteran’s benefits deposited in a savings and loan association on behalf of a veteran retained the “quality of moneys” and had not become a permanent investment. Id., at 161-162.
In the present case, as in Porter, the funds on deposit were readily withdrawable and retained the quality of “moneys” within the purview of sect. 407.

In this case, it is undisputed that Jones’s social security benefits were on deposit in his checking account, were readily withdraw-able, and had not been invested in any manner. Accordingly, the trial court did not err in holding that the social security benefits were exempt from execution.

3. The Wheelchair

Finally, Goodson, citing Porter, argues that the trial court erred in quashing his writ of execution. Porter held that the exemption “shall not extend to any property purchased in part or wholly out of such payments.” We first note that the unrebutted evidence at the hearing revealed that Jones’s wheelchair was purchased with the approval of the Veterans Administration. In other words, the wheelchair was a direct benefit from the Veterans Administration as opposed to personal property that was purchased in part, or wholly, out of payments.

Moreover, we feel that allowing the writ of execution in this case would contravene the intent of Congress which is to exempt from legal process those benefits which are necessary for the maintenance and support of the veteran, in this case, the wheelchair. There was unrebutted testimony at the hearing that Jones, who has Parkinson’s disease, needed a mechanized wheelchair for mobility because he could not operate a standard wheelchair very well. It bears repeating that legislation of this type should be liberally construed to protect funds granted by the Congress for the maintenance and support of beneficiaries thereof. Accordingly, we have no hesitation in holding that the trial court was correct in quashing Goodson’s writ of execution.


text:
    Bruce COZART, d/b/a Cozart Construction Co. v. Aldridge B. LEWIS
    89-78
    774 S.W.2d 127
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Hicham & Williams, P.A., by: D. Scott Hicham, for appellant.

      Friday, Eldredge & Clark, by: Laura A. Hensley, for appellee.
   Douglas O. Smith, Jr., Special Chief Justice.

The appellee Lewis, pursuant to a solicitation by a representative of Energy Center, contracted with Energy Center for substantial repairs to his home in Little Rock. Energy Center in turn arranged for the appellant, Bruce Cozart, d/b/a Cozart Construction Company (Cozart), to perform a portion of the work, including the removal and replacement of a portion of the roof. All repairs were completed in approximately March of 1985, and both Energy Center and Cozart were paid.

In December of 1986, Lewis noted the roof was leaking and that sheetrock had begun to fall from the ceiling. Both Energy Center and Cozart were notified and denied responsibility.

Lewis thereafter filed suit against Energy Center alleging negligent workmanship. Energy Center moved to dismiss because it was in Chapter 11 bankruptcy. Lewis thereafter joined Cozart as an additional party defendant alleging negligent workmanship by Cozart. Cozart answered and denied any negligence on its part and affirmatively pled that the work done by Cozart complied with specifications furnished by Energy Center. The specifications referred to were in effect a proposal by Cozart to perform the agreed repairs and required Cozart to complete the work “in a workmanlike manner.” Thereafter, Cozart filed a motion for summary judgment wherein he contended he performed the work in a workmanlike manner according to specifications provided by Energy Center and that he was not responsible for any defect in the specifications. A brief was filed with the motion, but no affidavits or other supporting documents were submitted with, or referenced in, the motion or brief.

The motion for summary judgment was denied and the case was tried to the court without a jury. While the record does not reflect any action on the motion to dismiss filed by Energy Center, the judgment does state the claim against Energy Center was discharged in bankruptcy. Lewis offered the testimony of Cozart and himself, together with the testimony of Boyd Miller who had been engaged in repair and remodeling work for many years. The testimony of the witness Miller tended to establish that the repair and replacement of the Lewis roof was improper. Miller’s testimony also included evidence as to his bid to complete the necessary repairs to the Lewis residence.

Upon completion of the appellee’s case, appellant moved for a directed verdict which was denied, and the appellant thereafter presented brief testimony disputing certain testimony of the appellee Lewis. The trial court found for the appellee Lewis and entered judgment against Cozart in the amount of $2,000.

On appeal, the appellant relies upon three points: (1) the trial court erred in denying the appellant’s motion for summary judgment; (2) the trial court erred in denying the appellant’s motion for directed verdict on the issue of negligence; and (3) the trial court erred in denying the appellant’s motion for directed verdict on the issue of damages.

POINT I

Appellant contends that the failure of the appellee to respond to the motion for summary judgment, of itself, entitles the appellant to summary judgment, relying on ARCP Rule 56(e). Appellant fails to note that this section of Rule 56 contemplates the filing of affidavits and other documents in support of a motion for summary judgment which was not done in this case. Furthermore, a summary judgment is appropriate only if there is no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law. Rowland v. Gastroenterology Associates, 280 Ark. 278, 657 S.W.2d 536 (1983). The amended complaint of the appellee Lewis alleges that the appellant was negligent in failing to complete the repairs in a workmanlike manner. The motion for summary judgment and brief in support filed by the appellant constitute no more than a denial of this allegation and do not make a prima facie showing that the appellant was entitled to a summary judgment. Therefore, summary judgment was not warranted.

POINTS II AND III

In points II and III, appellant contends the trial court erred in failing to grant his motion for directed verdict on the issue of negligence and on the issue of damages. ARCP Rule 50(a) requires that a motion for directed verdict state the specific grounds therefore. The appellant’s brief contains no abstract of the motion for directed verdict and no recitation of the specific grounds therefore as required by Ark. Sup. Ct. Rule 9. The judgment is therefore affirmed for failure to comply with Rule 9. Jolly v. Hartje, 294 Ark. 16, 740 S.W.2d 143 (1987); Trout v. Mathis, 289 Ark. 24, 708 S.W.2d 629 (1986).

Affirmed.

Holt, C.J., Purtle, Dudley, Hays, and Glaze, JJ., not participating.

Special Justices Bay Fitzhugh, Thomas L. Mays, Richard P. Osborne, and James M. Pratt, Jr. , join in the opinion.


author: Richard A. Reid, Special Chief Justice. John I. Purtle, Justice,

text:
    Brigiette DUHON v. STATE of Arkansas
    CR 89-21
    774 S.W.2d 830
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989
    [Rehearing denied September 11, 1989.]

      James DePriest and Griffin J. Stockley, Central Ark. Legal Servs., for appellant.

      Frances E. Werner and Florence Roisman, National Housing Law Project; and Jean Turner Carter, Legal Services of Arkansas, for amicus curiae National Housing Law Project.

      Steve Clark, Att’y Gen., by: R.B. Friedlander, Solicitor General, for appellee.

      Purtle, J., would grant rehearing. Holt, C.J., and Hays, J., not participating.

   Richard A. Reid, Special Chief Justice.

This court has jurisdiction pursuant to Ark. Sup. Ct. Rule 29(1) (c) involving the interpretation or constitutionality of an act of the general assembly. The act in question is codified as Ark. Code Ann. §18-16-101 (1987), which provides:

Any person who shall rent any dwelling house or other building or any land situated in the State of Arkansas and who shall refuse or fail to pay the rent therefor when due according to contract shall at once forfeit all right to longer occupy the dwelling house or other building or land.
If, after ten (10) days’ notice in writing shall have been given by the landlord or his agent or attorney to the tenant to vacate the dwelling house or other building or land, the tenant shall willfully refuse to vacate and surrender the possession of the premises to the landlord or his agent or attorney, the tenant shall be guilty of a misdemeanor. Upon conviction before any justice of the peace or other court of competent jurisdiction in the county where the premises are situated, the tenant shall be fined in any sum not less than one dollars ($ 1.00) nor more than twenty-five dollars ($25.00) for each offense. Each day the tenant shall willfully and unnecessarily hold the dwelling house or other building or land after the expiration of notice to vacate shall constitute a separate offense.

Brigiette Duhon entered into a rental agreement on November 30, 1987, with Century Twenty-one Jim Gwatney Realty to rent a residence in Jacksonville, Arkansas, beginning December 1,1987. Rent of $425.00 was due each month on the first and to be paid no later than the fifth. Initially, $300.00 was paid, $200.00 of which was a security deposit and $100.00 to be applied to the December rent.

On January 13, 1988, most of the remainder of December rent was received. On January 29,1988, $200.00 was paid toward the January rent. On February 12, 1988, $398.50 was also received, which meant the appellant was then over $300.00 in arrears.

After advising the appellant that if she did not keep her rent paid it was going to be necessary to evict her, Jim Gwatney personally served a notice to vacate, which was acknowledged by the appellant. The notice demanded that the premises be surrendered on or before ten days from service and receipt of the notice. Appellant contended that, following receipt of the notice, she attempted to pay.

On March 4, 1988, appellant was charged in the Jacksonville Municipal Court with violating the section of the Arkansas Code we have cited. She was convicted and fined $1,625.00.

An appeal was taken to Pulaski County Circuit Court. Appellant’s motion for recusal of the judge because of remarks made during the plea and arraignment was denied as well as her motion for a declaratory judgment contending the act was unconstitutional as being in violation of the due process clauses of both the United States and Arkansas Constitutions. The court also denied a motion for dismissal on the theory of waiver. During the trial the court refused to allow the testimony of Dr. Charles Chastain as an expert and to admit testimony from the municipal court record regarding statistics.

Appellant was convicted on September 27,1988. Sentencing was postponed until October 25, 1988, at which time it was determined that appellant had refused to vacate the property for sixty days following service of the notice to vacate.

The court found at that time that the appellant was unable to pay and determined the appellant’s obligation to be $600.00 at $10.00 a day for each day she held over. She was sentenced to thirty days in jail.

Appellant attacks her conviction by raising seven separate points, three of which concern the constitutionality of Ark. Code Ann. § 18-16-101. We will address all of them.

It is alleged the court erred by failing to admit testimony of Dr. Charles Chastain, who is Chairman of the Criminal Justice Department of the University of Arkansas at Little Rock. Dr. Chastain’s testimony was proffered into the record. He was offered as an expert to state his opinion regarding the constitutionality of the act in question and to recite statistical data he had gathered from municipal court records in Little Rock as to how charges under this act were handled. The trial court ruled that this data, as part of the municipal court transcript, was not relevant and that Dr. Chastain should not be allowed to testify as to the constitutionality of the act in question. We agree.

Testimony and statistics from a municipal court are of no consequence to a circuit court. Cases are tried de novo upon appeal from municipal court to circuit court. Ark. Code Ann. § 16-96-507 (1987).

The constitutionality of an act is ultimately to be determined by this court. Dr. Chastain’s testimony gathered from statistics and his general feeling do not appear to be such as would assist the trial court in understanding the evidence or determining a fact in issue as set forth in A.R.E. Rule 702.

The determination of the qualification of an expert witness lies within the discretion of the trial court, and we will not reverse unless that discretion has been abused. Phillips v. Clark, 297 Ark. 16, 759 S.W.2d 207 (1988). We find that the trial court did not abuse its discretion in this regard.

The trial court was also correct in denying appellant’s motion to dismiss based upon the theory of waiver as a defense to the lease contract.

The entire length of this transaction was less than three months from the inception of the lease term to the time the notice to vacate was served upon and received by the appellant. There is no dispute that appellant was in arrears when the notice was served upon her. There is no dispute that she never paid the rent on time. There is no dispute that appellant was advised that, if she did not keep her rent paid on time, it would be necessary to evict her. If we also consider the appellant’s testimony that she attempted to pay rent after the service of notice upon her and it was refused, then holding over for 60 days clearly established that the appellant willfully refused to vacate. Appellant did not establish that there existed a settled course of dealing whereby the rent was accepted late without warning or notice objecting to the arrearage or late payments, which is necessary to establish a waiver. Duncan v. Malcomb, 234 Ark. 146, 351 S.W.2d 419 (1961).

Next, appellant contends the act under which she was convicted is unconstitutional because (1) it denies her due process of law under the authority of Matthews v. Eldridge, 424 U.S. 319 (1976); (2) it is not the least restrictive method available to advance the purpose of the act; and (3) it does not bear a substantial relationship to an end which promotes the public health, safety or welfare, thereby violating due process guarantees of article 2, § 8 of the Arkansas Constitution and Fourteenth Amendment of the United States Constitution.

All legislation is presumed to be constitutionally valid. Price v. State, 285 Ark. 148, 685 S.W.2d 506 (1985). All doubt is resolved in favor of constitutionality. Phillips v. Giddings, 278 Ark. 368, 646 S.W.2d 1 (1983). A party challenging a statute has the burden of proving it unconstitutional. Holland v. Willis, 293 Ark. 518, 739 S.W.2d 529 (1987). We are not convinced by the arguments or authorities presented by the appellant that the act is unconstitutional under any of the theories presented.

Mathews v. Eldridge, 424 U.S. 319 (1976), involved a constitutional challenge to the administrative procedures established by the Secretary of Health, Education and Welfare for assessing whether a continuing disability existed. It was contended that the plaintiffs right to procedural due process was abridged. Justice Powell, in writing the opinion upholding the procedures involved, said that, prior to the termination of Social Security benefits, the recipient need not be afforded an opportunity for an evidentiary hearing.

The Mathews case involved procedural due process and a person’s right to a hearing before he is deprived of a property interest. Ark. Code Ann. § 18-16-101 requires a ten day notice and a hearing to determine whether the party charged “willfully refused” to vacate. The appellant’s right to procedural due process has not been abridged in this casé.

In contending the act in question is unconstitutional because it is not the least restrictive method available, appellant cites Thompson v. Arkansas Social Services, 282 Ark. 369, 669 S.W.2d 878 (1984), and Shelton v. Tucker, 364 U.S. 479 (1960). The Thompson case involved the constitutionality of statutes listing conditions which permit the termination of parental rights. The court discussed only the vagueness of the statute involved and did not define or discuss what was meant by the least restrictive method available. In Shelton, the Supreme Court considered an Arkansas act that required teachers to submit an affidavit listing all organizations to which they belonged for the past five years. This act was held to interfere with the associational freedom of teachers far beyond what might be justified in the exercise of the state’s legitimate inquiry into the fitness and competency of its teachers. The court said a legitimate purpose cannot be pursued by means that broadly stifle fundamental liberties when the end can be more narrowly achieved.

We are not concerned in our case with a fundamental liberty as the court was in Shelton. Appellant asks us to apply this principle because we have a civil remedy as well as a criminal act. Most criminal acts also have civil counterparts. For example, all thefts, §§ 5-36-103 to 518; all batteries, §§ 5-13-201 to 203; criminal non-support, § 5-26-401, and numerous others.

. The case of Munson v. Gilliam, 543 F.2d 48 (8th Cir. 1976), did not deal directly with the act’s constitutionality. The court found, however, that the act did not circumvent the civil statute or put a “chilling effect” on a tenant’s right to assert defenses or force a tenant to risk criminal conviction and fine as a result of what he may have considered to be a justified refusal to pay rent. The court said, and we agree, that Arkansas law allows for any civil defense to be asserted in the criminal proceeding and that criminal prosecution, where a tenant, without justification, fails to pay rent, is permissible under the Arkansas Constitution.

Appellant’s third contention regarding the constitutionality of the act involves basically whether Ark. Code Ann. § 18-16-101 (1987) is a valid exercise of the police power of this state. This same argument was made in Poole v. State, 244 Ark. 1222, 428 S.W.2d 628 (1968). There we specifically held this act constitutional as a valid exercise of the state’s police power. A careful review of all the cases and arguments made by the appellant fails to convince us otherwise.

Appellant argues that Greene v. Lindsey, 456 U.S. 442 (1982), and Gorman v. Ratliff, 289 Ark. 332, 712 S.W.2d 888 (1986), clearly show the property rights of a tenant have changed and for this reason the Poole case should be overturned. The Greene case held that posting a notice to vacate on a tenant’s door did not constitute sufficient notice and was violative of due process. The Gorman case outlawed the use of self-help measures to regain property. The landlord had entered the property without any notice and removed the tenant’s property. We have no argument with the principles advanced in these cases or the interests of the tenants they protect. We do not, however, feel they overcome the presumption of constitutionality. The mere fact that § 18-16-101 is unique or may not be prosecuted in a manner which appellant argues is proper does not overcome its presumption of validity. In the 1924 decision of Replogle v. Little Rock, 166 Ark. 617, 267 S.W. 353 (1924), cited by the appellant, the court said:

Constitutionality of an act must be tested not by what has been done under it, but by the power to act which it actually grants.

A tenant wrongfully prosecuted under this act has a remedy and a landlord wrongfully utilizing this criminal act to evict tenants should be aware to the possible consequences. In Parker v. Brush, 276 Ark. 437, 637 S.W.2d 539 (1982), an action for malicious prosecution resulted in compensatory damages of $5,000.00 and punitive damages of $7,500.00 against a landlord.

Appellant moved that the trial judge recuse himself because of comments made during the plea and arraignment and asks us to transfer the case should it be remanded. Although we are not remanding the case for a new trial, some comment should be made.

At the plea and arraignment of appellant, after being advised that the attorneys for the appellant planned to attack the constitutionality of the act, the trial judge made a comment that was unnecessary and improper. He said, “We haven’t got time for — I’m not interested in paying Legal Services my tax money to make all this constitutional stuff.”

A court proceeding in all its phases must not only be fair and impartial but must appear to be fair and impartial. Burrows v. Forrest City, 260 Ark. 712, 543 S.W.2d 488 (1976). This remark could have been interpreted to mean the court would not consider a constitutional argument, and it should not have been said.

We do agree with the appellant that the court erred in convicting her on sixty counts. Each day the tenant willfully and unnecessarily held the premises could have been considered a separate offense for which a fine of not less than $1.00 nor more than $25.00 per offense could have been imposed. But appellant was only charged with one count. At the time of trial the appellant was not occupying the premises and the prosecutor could have determined the number of days or the separate offenses involved.

We also find the court erred in imposing a sentence of 30 days imprisonment. While Ark. Code Ann. § 5-1-107(a)(2) (1987) states an offense is a misdemeanor if it is so designated by a statute that is not a part of the criminal code and § 5-1-107(c) provides that such a statute with no limitations on a sentence to imprisonment is a class A misdemeanor, an exception is provided by Ark. Code Ann. § 5-l-108(b):

Regardless of any designation appearing in the statute defining an offense, an offense is a violation for purposes of this code if the statute defining the offense provides that no sentence other than a fine, or fine or forfeiture, or civil penalty is authorized upon conviction.

Therefore, the appellant’s offense is classified as a violation and she is subject to punishment only in accordance with the limitations of Ark. Code Ann. §18-16-101. See Ark. Code Ann. § 5-4-201(c)(2) (1987).

The appellant’s conviction is affirmed, but because she was charged with only one count, we modify her sentence to a fine of $25.00.

Affirmed as modified.

Holt, C.J., and Hays, J., not participating.

H. Murray Claycomb, Special Justice, joins in the opinion.

Hickman and Purtle, JJ., dissent.

Glaze, J., concurs.

John I. Purtle, Justice,

dissenting. Arkansas has won another distinction: it is the only state in the nation which imposes criminal sanctions on a person who does not pay his rent on time. When we handed down Gorman v. Ratliff, 289 Ark. 332, 712 S.W.2d 888 (1986), I was of the opinion that we were joining the rest of the country in rendering an enlightened decision on the relationship between landlord and tenant. I was mistaken. The majority has, with all the speed of a crawfish, backed into the 19th century.

The appellant was pulled out of her bed on March 3, 1988, and taken to the jail in Jacksonville because she had not paid her rent. She had agreed to pay rent in the amount of $425.00 per month. Possession was taken on December 1,1987, at which time she was given a $50.00 credit for cleaning up the place before moving in. She paid $300.00 in cash. Subsequent payments of $300, $200, and $398.50 were paid. Given credit for the $50.00, she has paid a total of $1248.50, which is $26.50 short of three months rent. On the 15th of February, 1988, before the third month was up, she was given written notice to vacate. If her occupancy had ended on that date, she had overpaid her rent. I am aware that the landlord’s agent claimed $200.00 of the amount paid was for a security deposit. However, it was never refunded.. The facts of this case do not convince me that the appellant failed to pay her rent without justification.

The constitutionality of Ark. Code Ann. § 18-16-101 (1987) is ripe for adjudication. Gorman was decided with contemporary reasoning. There we rejected forcible self-help, but we did not sanction criminal penalties for failure to pay a debt. According to the preamble to the act, the provisions of Ark. Code Ann. § 18-16-101 were clearly designed to assist landlords in cities and towns. (The reason landlords outside cities, towns and villages were not in need of assistance is not explained.) I believe the present decision is contrary to the theme of the Gorman opinion, which was “to compel people ‘to the more pacific course of suits in courts, where the weak arid strong stand upon equal terms.’ ” Gorman continued: “This concept has evolved until now the modern doctrine requires a landlord, otherwise entitled to possession, upon the refusal of the tenant to surrender the leased premises, to ‘resort to the remedy given by law to secure it.’ ” The Gorman decision interpreted Act 615 of 1981, Ark. Code Ann. § 18-60-301 et seq. (1987), concerning forcible entry and detainer and unlawful detainer, as evincing a desire by the legislature to extend additional protection to parties in possession of property before that property could be taken from them. We stated that the act also provided procedures to expedite the removal of the parties who are unlawfully in possession of property.

Practically all jurisdictions have recognized that a renter or lessee has a property interest in the premises. A holdover tenant, whether by written lease or oral agreement, is no longer considered a trespasser by the enlightened courts of the nation. The constitutionality of Ark. Code Ann. § 18-16-101 was clearly challenged in the trial court. In Green v. Lindsey, 456 U.S. 442 (1982), the United States Supreme Court stated:

In this case, appellees have been deprived of a significant interest in property: indeed, of the right to continue residence in their homes.

The Green case involved the sufficiency of notice to vacate. The tenant had questioned the validity of posting a notice on the door.

Due Process and Equal Protection are not the property of any one group of people, but are the rights of all citizens. In the present case the state has simply lent her hands to landlords by enacting this 1901 statute. It criminalizes a breach of contract.for failure to pay a debt. Criminal sanctions should be as applicable to property line disputes and other breaches of contract as to agreements between landlord and tenant. The weak and the strong do not stand upon “equal terms” when the state is on the side of one or the other.

Finally, I wish to concur with the majority on finding that the court prejudicially and erroneously imposed imprisonment of 30 days upon the appellant. It was benevolent of the majority to reduce the penalty to one day.

Hickman, J., joins.


author: Jack Holt, Jr., Chief Justice.

text:
    AMERICAN MEDICAL INTERNATIONAL, INC. and St. Mary’s Hospital v. ARKANSAS BLUE CROSS AND BLUE SHIELD, A Mutual Insurance Co.
    88-259
    773 S.W.2d 831
    Supreme Court of Arkansas
    Opinion delivered July 17, 1989
    [Rehearing denied September 11, 1989.]

      Wallace, Dover & Dixon, P.A., by: Charles R. Nestrud and Janie W. McFarlin, for appellant.

      Robert Cabe, General Counsel, Arkansas Blue Cross & Blue Shield; and Gordon & Gordon, P.A., for appellee.
   Jack Holt, Jr., Chief Justice.

Appellant St. Mary’s Hospital is a wholly owned subsidiary of separate appellant American Medical International (“AMI”). In 1987, St. Mary’s and AMI brought suit against appellee Arkansas Blue Cross and Blue Shield (“ABCBS”) seeking a declaratory judgment as to whether ABCBS could refuse to honor patient assignments of insurance benefits to medical care providers such as St. Mary’s. Summary judgment was entered in favor of ABCBS premised on a right to disallow assignments. St. Mary’s brings this appeal. We reverse.

St. Mary’s Hospital admitted several patients in 1987 who were insured by ABCBS and who were in need of the hospital’s services. Apparently, the admission forms provided by St. Mary’s and completed by its patients contain provisions whereby the patients authorize direct payment to the hospital of any indemnity insurance benefits otherwise payable to the insureds for services provided by the hospital. Other provisions purport to actually assign the benefits for application to the patients’ bills. On the other hand, the insurance contracts or policies written by ABCBS and executed by its insureds apparently contain provisions whereby indemnities or proceeds payable under the policies may be assigned only upon approval by ABCBS.

Acting pursuant to language in its admissions forms, St. Mary’s, as purported assignee of the right to its patients’ insurance benefits, sought payment from ABCBS. ABCBS refused to honor the assignments for two reasons. First, the assignments had not been approved as required in ABCBS’s contracts with its insured. Second, in its pleadings, answer to interrogatories, and admissions of fact, ABCBS conceded a practice whereby patient assignments of insurance benefits by its insureds were not honored if the assignee hospital did not have a “provider contract” with ABCBS. The terms of the provider contracts are not relevant to this appeal; suffice it to say, St. Mary’s has no such contract with ABCBS. Suit followed upon ABCBS’s refusal to honor the assignments.

The public policy issues concerning an insured’s interest in freely assigning the right to payment versus ABCBS’s freedom of contract and its right to include provisions against assignment were raised below but never reached. Both parties moved for summary judgment arguing that the result in this case was controlled by certain of our code provisions.

St. Mary’s maintained below that Ark. Code Ann. § 4-58-102 (1987) governed the outcome. That section provides:

All bonds, bills, notes, agreements, and contracts, in writing, for the payment of money or property, or for both money and property, shall be assignable.

St. Mary’s further argued that, as a defense, ABCBS would rely on Ark. Code Ann. § 23-85-114(b)(2) (1987), part of the Arkansas Insurance Code, which provides:

The following [provision] may be included with [foregoing provisions in a policy of insurance] at the option of the insurer:
Subject to any written direction of the insured in the application or otherwise, all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer’s option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person.

St. Mary’s position in its motion for summary judgment was that the assignment statute, section 4-58-102, controlled the assignability of insurance proceeds and that Ark. Code Ann. § 23-85-114(b)(2) did not operate to repeal, amend or alter the law in this regard. ABCBS, in its own motion for summary judgment, responded that section 23-85-114(b)(2) in fact amended the law on assignability, at least in the field of insurance. ABCBS also relied upon Ark. Code. Ann. § 23-79-124 (1987), which in subsection (a) provides:

A policy may be assignable or not assignable, as provided by its terms.

At the hearing on the cross-motions for summary judgment, ABCBS cited Ark. Code Ann. § 23-86-112 (1987) as further support. That section provides:

Any group disability policy may, on request by the group policyholder, provide that all or any portion of any indemnities provided by any policy on account of hospital, nursing, medical, or surgical services may, at the insurer’s option, be paid directly to the hospital or person rendering such services; but the policy may not require that the service be rendered by a particular hospital or person.

In ruling upon the underlying issue of whether ABCBS could lawfully refuse to honor patient assignments, the chancellor sought to determine whether: (1) the code provisions cited by ABCBS give an insurer the option of paying either the provider or the insured; (2) if so, do those provisions conflict with the general law on assignability; and (3) in that event, do the insurance code provisions repeal the law on assignability to the extent the laws conflict?

In his decree, the chancellor ruled there was an irreconcilable conflict between the insurance code provisions and the general law on assignability (no mention was made of section 23-79-124). He further concluded the insurance code provisions repealed the general law to the extent of any inconsistency. The chancellor’s decree contains the following language:

An individual insured, as opposed to a person covered under a group policy, may, by a timely written direction, prevent an insurer from making payment directly to the provider of services; however, an individual insured is not empowered by that statute to compel an insurer to pay directly to a provider . . . The ABCBS policies, as authorized by statute. . . reserve to ABCBS the option to pay a provider directly, or to pay the covered person. [Emphasis ours.]

On appeal, St. Mary’s makes three arguments with several subdivisions. First, it is argued that as a matter of law the chancellor erred as to which code provision controls and whether the provisions actually conflict. St. Mary’s contends the code provisions can be read together and argues the insurance code provisions apply only to the direction of payment by an insurer, not an insured’s ability to assign “the right to receive payment.”

St. Mary’s second point on appeal is identical to its first but applies to group policies rather than individual policies. On this issue, St. Mary’s additionally argues the court erred in granting summary judgment because this was an “11th hour” argument by ABCBS and because there remained a genuine issue of fact as to the definition of “policyholder” as that term is used in the ABCBS policies, in Ark. Code Ann. § 23-86-112 (1987), and in the ABCBS provider contracts.

St. Mary’s third and final argument is that the chancellor’s ruling conflicts with the intent and purpose of the insurance code. We need not reach this issue as it was not raised below. Arguments made for the first time on appeal will not be addressed by this court. O’Bryant v. Horn, 297 Ark. 617, 764 S.W.2d 445 (1989).

Section 23-85-114(b)(2), relied upon by the chancellor and by ABCBS, provides that subject to any written direction of the insured in the application or otherwise, all or a portion of any indemnities provided by a policy on account of hospital, nursing, medical, or surgical services may, at the insurer’s option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person. We give the words their usual and ordinary meaning, and if there is no ambiguity we give the provision effect just as it reads. Woodruff v. Shockley, 297 Ark. 595, 764 S.W.2d 431 (1989); Chandler v. Perry-Casa Public Schools, 286 Ark. 170, 690 S.W.2d 349 (1985).

Clearly, section 23-85-114(b)(2) provides the insurer with the option of drafting insurance policies to stipulate that payment shall be made to the provider of medical care services rather than to the insured. The apparent purpose underlying the legislation is to assist hospitals or health service agencies in receiving payment for services provided. Equally clear is that the insured can prevent the payment of benefits to the provider by so requesting, in writing, at the time of application or when submitting proof of loss. The section therefore contemplates that the insurer’s option to direct payment is governed by the will of the insured, so long as the insured is timely in his request. Finally, the section provides that any exercise by the insurer of his option to make payment directly to the provider of services should have no effect on the insured’s choice of hospitals or care providers.

The chancellor concluded section 23-85-114(b)(2) does not authorize the insured to “compel” the insurer to pay the provider. Simply because this section does not provide that an insured may compel payment to be made to the provider does not mean other code provisions, such as the law on assignments, might not allow the insured to do so.

The obvious effect of section 23-85-114(b)(2) is that the insured gets paid directly, unless the insurer prefers to pay the provider, so long as the insured does not object. For the most part, this provision exists for the purpose of allowing the parties to directly benefit the provider and in no way conflicts with section 4-58-102, which similarly would allow insured to directly benefit medical care providers by assigning their right to receive insurance proceeds. For this reason, we conclude that the chancellor erred in ruling that such a conflict existed and erred in ruling that the insurance code provisions repealed the general law on assignments. In sum, we find no conflict between sections 23-85-114(b)(2) and 4-58-102.

Because the chancellor erroneously determined that there was an irreconcilable conflict between sections 23-85-114(b)(2) and 4-58-102 causing the insurance code provisions to repeal the general law on assignments, we reverse for proceedings not inconsistent with this opinion.

Reversed.


author: John I. Purtle, Justice.

text:
    Thomas E. COOK and Mary M. Cook v. WAUSAU UNDERWRITERS INSURANCE COMPANY
    89-130
    772 S.W.2d 614
    Supreme Court of Arkansas
    Opinion delivered July 17, 1989

      Mobley & Smith, by: William F. Smith, for appellant.

      Daily, West, Core, Coffman & Canfield, by: Douglas M. Carson, for appellee.
   John I. Purtle, Justice.

This is an appeal from a declaratory judgment entered in favor of appellee Wausau Underwriters Insurance Company upholding a clause in a liability policy which excluded coverage to the spouse of the policyholder. The single point argued on appeal is that the trial court erred in upholding the exclusion of a member of the same household from coverage in the liability policy. We hold that the declaratory judgment was properly entered and therefore affirm.

The facts in this case are not in dispute. By stipulation the parties agreed that the appellee issued an automobile policy to appellant Thomas E. Cook for a period of time which included the date of the occurrence in question. The stipulation reveals that appellants Thomas and Mary Cook were husband and wife at all times pertinent to this appeal. The appellee’s policy covered the vehicle for liability, but specifically excluded household members.

Thomas Cook was driving his automobile on October 16, 1986, with Mary Cook riding as a passenger, when it collided with another automobile driven by Blake Frost. Mary Cook filed a negligence action against both her husband and Frost. A declaratory judgment was then commenced by the appellee.

The exclusion from liability coverage under the policy was “for bodily injury to you or any family member.” The policy defined “you” and “your” as the “named insured” and the “spouse” if a resident of the same household. We considered such an exclusionary clause in an automobile liability policy in State Farm Mutual Insurance Company v. Cartmel, 250 Ark. 77, 463 S.W.2d 648 (1971). Cartmel became an insured under the terms of the policy because he was driving with the permission of a named insured. The wife of the owner was a passenger in the insured vehicle when it was involved in an accident in which she suffered injuries. The wife brought suit against Cartmel for recovery of damages. The insurance company filed a declaratory judgment action. The trial court held that the exclusion from liability coverage for family members was invalid. This court reversed on appeal. The Cartmel opinion held that neither substantive law nor public policy prohibited enforcement of the exclusion in the insurance policy.

We faced a somewhat similar question in the case of Holcomb v. Farmers Insurance Exchange, 254 Ark. 514, 495 S.W.2d 155 (1973), where we considered a provision in an automobile liability policy excluding uninsured motorist coverage. The Holcombs owned two automobiles, both of which were insured with the Farmers Insurance Exchange. The policy on one included uninsured motorist protection; the policy on the other did not. Leona Holcomb, the wife of James Holcomb, was injured in the automobile which did not have uninsured motorist coverage included in the policy. (The other driver was an uninsured motorist.) The Holcomb opinion concluded with the following paragraph:

We conclude, therefore, that Ark. Stat. Ann. § 66-4003 [the uninsured motorist statute] does not restrict contracts between liability insurance companies and the owners of automobiles in this state to the extent urged by the appellants, and we hold that the policy exclusion in the case at bar was valid and effective in this case.

254 Ark. at 522.

The court rejected Holcomb’s argument that public policy demanded the exclusion be held invalid.

The same issue addressed in Holcomb was considered by this court in Lucky v. Equity Mutual Insurance Co., 259 Ark. 846, 537 S.W.2d 160 (1976), where we stated:

Appellant suggests that we should overrule our holding in Holcomb v. Farmers Insurance Exchange, 254 Ark. 514, 495 S.W.2d 155 (1973). We find no merit in this contention. The construction there given to the uninsured motorist statute has become as much a part of the statute as the words of the General Assembly [citation omitted].

We have more recently considered the same question in Crawford v. EMCASCO Insurance Co., 294 Ark. 569, 745 S.W.2d 132 (1988), where we were again asked to overrule our holding in Holcomb. The Crawford opinion, however, emphatically reaffirmed our decision in Holcomb.

The appellants argue that the compulsory motor vehicle liability insurance law enacted by the General Assembly, Act 442 of 1987 (Ark. Code Ann. § 27-22-101 et seq. (Supp. 1987)) renders such exclusionary clauses in liability policies invalid. The legislative intent of the Act was expressed in § 27-22-101 (a):

This chapter is not intended in any way to alter or affect the validity of any policy provisions, exclusions, exceptions, or limitations contained in a motor vehicle insurance policy required by this chapter.

The General Assembly is presumed to be aware of our decisions. It is particularly significant that, in enacting the compulsory insurance law, the legislature specifically recognized that liability policy provisions included exclusions and limitations. Moreover, the legislature has specifically provided that the compulsory insurance law was not intended to affect the validity of any policy exclusions. Since the legislature has not indicated any intent to overrule our longstanding precedents, and we find no compelling public policy reason for doing so, we decline the invitation to overrule our prior decisions.

Affirmed.


text:
    Andrew Carl GLADDEN, Executor of the Estate of Andrew Carl Gladden, Jr. v. Owen Glen BUCY III; Rebsamen Insurance Company, A Division of Rebsamen, Inc.
    89-11
    772 S.W.2d 612
    Supreme Court of Arkansas
    Opinion delivered July 17, 1989

      Wright, Chaney & Berry, P.A., for appellant.

      Friday, Eldredge & Clark, by: Donald H. Bacon, for appellee.
   John I. Purtle, Justice.

At the beginning of the second trial of this suit, the court sua sponte declared that the appellant was not the proper party to bring the action and therefore dismissed the complaint. For his appeal, the executor of the estate argues that the court erroneously refused to allow the guardian of the estate or the decedent’s three minor children to be added as plaintiffs. We hold that the court erred in dismissing the suit for lack of standing.

The executor of the decedent’s estate filed an action against an insurance agent and an insurance company, alleging that the agent was negligent in failing to explain to the decedent the effects of switching insurance companies. In 1981, the appellant asserts, the agent caused the decedent to change from a $ 100,000 policy with one company to a $250,000 policy with another company. The decedent’s three children were the named beneficiaries in the life insurance policy. Before the second policy had been in force for two years, the policyholder committed suicide. Had the first policy continued in force, the two-year limitation on suicide would not have been a bar to recovery. The appellees, the second insurance company and the agent, denied liability on the ground that the policy had not been in force for two years at the time of the decedent’s suicide.

The case was originally tried in July, 1987. On the second day of a two-day trial, the appellees raised the issue of standing to sue on the part of the executor. However, the court overruled the motion and allowed the case to go to the jury, which was unable to reach a verdict. The court declared a mistrial. At the beginning of the second trial, on March 7, 1988, the court decided that the executor was not the proper party to bring the suit. The appellant then offered to amend to include the guardian of the children and/or the children themselves as parties plaintiff. The court rejected this motion and dismissed the complaint with prejudice.

The only issue in this appeal is whether the trial court erred in dismissing the appellant’s action on the ground that the appellant was not the proper party to bring suit. Arkansas Rules of Civil Procedure, Rule 17(a), provides in part:

Every action shall be prosecuted in the name of the real party in interest. An executor, administrator, [or] guardian (conservator) . . . may sue in his own name without joining with him the party for whose benefit the action is being brought. No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

The words of Rule 17(a) standing alone would compel this court to remand the case to the trial court. Moreover, even if the executor were not the proper party, the appellees did not make a motion to dismiss or name the real parties in interest while the case was waiting for the second trial. The court, therefore, erred in refusing to allow the amendment.

The real party in interest is generally considered to be the person or corporation who can discharge the claim upon which the' allegation is based and is not necessarily the person ultimately entitled to the benefit of any recovery. House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968). Although Rule 17 requires an action to be brought in the name of the real party in interest, it also provides for the joinder of the proper party if the issue of standing is timely raised. See Childs v. Philpot, 253 Ark. 589, 487 S.W.2d 637 (1972); and Hall v. Robins, 212 Ark. 803, 207 S.W.2d 746 (1948).

The decedent’s three children were his only immediate heirs. They are the persons who are entitled to inherit his estate. They are, consequently, the real parties in interest in this proceeding. In the case of Stokes v. Stokes, 271 Ark. 300, 613 S.W.2d 372 (1981), we considered the standing of two adult children of a decedent contesting the probate of their decedent’s will, which had left the property to others. We held that, since the children would suffer a financial loss if the will were upheld, the court erred in dismissing the action they had instituted. In Hess v. Wims, 272 Ark. 43, 613 S.W.2d 85 (1981), we held that those persons who suffer financially were the proper parties to an action.

Even if the requests to amend the complaint had not been made, the children would be the eventual recipients of any sums recovered by the executor of the decedent’s estate. Furthermore, the appellees did not raise the standing issue until the first trial was nearly over. Although the court overruled their first motion, it was not renewed by them before the second trial. Instead, the court raised the issue sua sponte. Since the rule is made for the protection of the defendant, it may be waived by him either by his action or inaction. See Monaghan v. Davis, 16 Ark. App. 258, 700 S.W.2d 375 (1985). Had the complaint been filed initially in the names of the children or their guardian, the defense would have been exactly the same. There was, therefore, no prejudice to the appellees by the appellant not naming the children or their guardian in the initial complaint.

The parties invite us to give an advisory opinion concerning the case on remand. It is not the function of this court to give such opinions. We do not know what the evidence will be at the second trial. There may be technical evidence or expert testimony which is not in the briefs or record before us.

Reversed and remanded.


text:
    JIM ORR AND ASSOCIATES, INC. v. Tilmon WATERS, Beverly Brown and David Huso
    89-116
    773 S.W.2d 99
    Supreme Court of Arkansas
    Opinion delivered July 17, 1989

      Sexton Law Firm, P.A., by: Sam Sexton, Jr,, for appellant.

      Wood Law Firm, P.A.,by. Arnold N. Goodman, for appellee Tilmon Waters.

      Mitchell, Williams, Selig & Tucker, by: Byron Freeland and Abraham W. Bogoslovsky, for appellees Beverly Brown and David Huso.
   John I. Purtle, Justice.

Jim Orr and Associates, Inc., appeals the decision of the Pulaski County Circuit Court awarding Tilmon Waters damages in the amount of $119,700.00 and dismissing its third party complaint against Beverly Brown and David Huso. It is argued that the trial court erred in: (1) its finding that the appellant did not use due diligence at the time of the purchase of the insurance agency; (2) its assessment of damages; and (3) its dismissal of the third party complaint. We agree that the court erred in its assessment of damages. Otherwise we find no prejudicial error.

The appellee, Tilmon Waters, owned and operated a credit life insurance business for a number of years. On April 1,1985,he sold his business to the appellant, a broker and agent for Omaha Financial Life, a subsidiary of Mutual of Omaha. When Waters sold his business to Jim Orr and Associates, Inc., he entered into a separate contract which provided for the retention of appellee Waters and his wife as consultants at a salary of $ 1,900 per month for the life of the survivor.

During the time Waters operated the company, he entered into agreements with various automobile dealerships, whereby the dealership selling an automobile would receive a commission by placing the credit life insurance with Waters. The commissions paid the automobile dealers as the producing agents varied.

Waters’ office manager was appellee Beverly Brown, who continued in the same capacity with the appellant after the sale. On January 27, 1986, Brown wrote letters to the various agents producing credit life insurance, requesting that each execute a statement that their “agent of record” was David Huso and Associates. Some of those who received the letter sent copies to the appellant, Jim Orr and Associates, which commenced an investigation of the matter. On March 10, 1986, Brown sent another letter to the agents advising them that Orr and Waters were going out of business and that appellee David Huso would be taking over the credit life operation. She stated that she would continue to handle the business as in the past and requested that all correspondence be sent to her at her home address. The letters to the agents were written on the appellant’s stationery.

Subsequent to the sale agreement, Orr learned that Waters’ commission and production reports, which had been shown to him prior to the sale, inaccurately reflected the commissions paid to agents. Actual commissions were higher than the reports indicated. The difference in commissions paid to the producing agents resulted in less income to the appellant than anticipated. After investigation, the appellant terminated the consulting agreement with Waters, who sued to recover unpaid consultant fees for the rest of his life expectancy. (Mrs. Waters was deceased at the time the case was tried.) The appellant counterclaimed, alleging breach of contract.

Orr filed a third party complaint against Brown and Huso for interference with his contractual relationship with the producing agents. The trial court found that Orr, as a “sophisticated” businessman, had failed to investigate the transaction thoroughly before making the purchase of the agency and that he had failed to protect himself by not making a proper investigation. The court awarded damages to Waters, limited by the complaint, in the amount of $ 119,700.00 and dismissed the suit against Brown and Huso.

We first discuss the appellant’s argument concerning the matter of sufficiency of the evidence to support the trial court’s findings of fact. The trial court was presented evidence relating to the claim by Orr that Waters had misrepresented the business to him at the time of the sale agreement. Orr testified that the accounting books and checkbooks of the company were not available for examination at the time of the closing of the purchase agreement. Waters and Brown testified that the books were readily available for Orr to examine but that he did not desire to do so. This dispute is based primarily on the contention that Waters did not reveal to Orr the amount of commissions paid to each agent; further, that the true amount was not revealed by the monthly report sent to the home office of the insurance company. Without repeating all of the facts in detail, we can say with confidence that there was enough disputed evidence before the court to sustain a judgment for either party on this issue. Furthermore, the trial court’s finding that Waters had not breached the contract is not clearly erroneous. Therefore, we will not reverse on this point.

We now discuss the issue concerning the damages awarded by the trial court. The parties and the trial court acknowledge the existing law of Arkansas as announced in School District No. 45 Pope County v. McClain, 185 Ark. 658, 48 S.W.2d 841 (1932). That case involves the doctrine of anticipatory breach of contract. School District No. 45 involved the breach of a contract of employment of a teacher by the Board of Education. The opinion stated:

On the appeal of appellee, all that need be said is that she was not entitled to recover the full amount she would have earned under the contract at the time this case was tried because she may have since that time obtained other employment which would reduce the amount of her recovery subsequent to the trial.

In the present case the trial judge quite frankly stated that he did not agree with the result in School District No. 45 and proceeded to award damages based upon what appellee Waters would have received to the end of the contract. The end of the contract in the present case was based upon insurance company mortality tables. The appellant urges us to abide by our precedent, while Waters insists that we should overrule School District No. 45 and its progeny. This doctrine, whatever its fate in other jurisdictions, has never been overturned in Arkansas. The doctrine of anticipatory breach of a contract of employment was very clearly stated in Van Winkle v. Satterfield, 58 Ark. 617, 25 S.W. 1113 (1894), where it was established that a servant or employee who has been wrongfully discharged by his employer before the end of the contract has three options for recovery:

“First, he may consider the contract as rescinded, and recover on a quantum meruit what his services were worth, deducting what he had received for the time during which he had worked. Second, he may wait until the end of the term, and then sue for the whole amount, less any sums which the defendant may have the right to recoup. Third, he may sue at once for breach of the contract of employment.”

The opinion went on to state that if the third remedy was his choice:

[H]e can recover the damages which he has sustained down to the day of the trial, which is limited to a compensation for the injury suffered by the breach of the contract. The loss of the wages which his employer agreed to pay him constitutes the injury. What, therefore, he has suffered by reason of the loss of wages, as a rule, is the amount of the damages he is entitled to recover.

This doctrine has been followed by the Arkansas courts down to the present time. Although we may be in the minority of jurisdictions holding to this doctrine, we find no justification for overruling it at this time.

We now consider whether the third party complaint should have been dismissed. The third party complaint was based on the theory of interference with a business expectancy or contract of employment. The tort of interference has been defined by this court in Walt Bennett Ford, Inc. v. Pulaski County Special School District, 274 Ark. 208, 624 S.W.2d 426 (1981):

The fundamental premise of tort — that a person has a right to pursue his valid contractual and business expectancies unmolested by the wrongful and officious inter-meddling of a third party — has been crystallized and defined in Restatement, Torts § 766 . . . .
The basic elements going into prima facie establishment of the tort are (1) existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damages to the party whose relationship or expectancy has been disrupted.

274 Ark. 213-214.

The two letters written by Beverly Brown, the former office manager for Tilmon Waters who became office manager for Jim Orr and Associates, were sufficient to present a fact question on this issue. However, the trial judge’s finding that the appellant suffered no damages as a result of the activities of Brown and Huso is not clearly erroneous. Joe Works, the producer of half of Waters’ commissions prior to the sale, testified that he quit doing business with Orr because he was dissatisfied with Orr’s services. He testified that he transferred his credit life business to Brown and Huso because he was satisfied with the services Brown furnished. Other producers testified to the same effect. Moreover, Orr did not have contracts with the producing agents. Neither did Waters. Although reasonable minds could have reached a different result, the trial court’s decision on this question is not clearly erroneous.

Reversed and remanded.