author: COOPER, Judge.

text:
    The TRAVELERS INDEMNITY COMPANY, Appellant, v. J. Arthur NIEMAN and John Courtny Schneider, Appellees.
    Court of Appeals of Kentucky.
    Sept. 16, 1977.
    Rehearing Denied Nov. 18, 1977.
    Discretionary Review Denied April 25, 1978.
    James G. Apple, T. Kennedy Helm, III, Stites, McElwain & Fowler, Louisville, for appellant.
    Fielden Woodward, Woodward, Hobson & Fulton, Louisville, for appellees.
    Before COOPER, REYNOLDS and WIN-TERSHEIMER, JJ.
   COOPER, Judge.

This is an appeal from a judgment in the Jefferson Circuit Court awarding appellees the sum of $10,000, the amount of settlement of a civil action with third parties, plus $2,275.00 attorneys’ fees.

This action was filed in the Jefferson Circuit Court, Common Pleas Branch, on February 27, 1973, by appellees, J. Arthur Nieman and John Courtny Schneider against the appellant, The Travelers Indemnity Company, hereinafter Travelers. The complaint alleged that a certain insurance policy issued to Louisville Apothecary, Inc. covered Nieman and Schneider against damages sought in an action filed earlier in the same court by one Cebert Barnes against Nieman and Schneider and Louisville Apothecary, Inc. as a result of Nieman and Schneider illegally and on numerous occasions selling a dangerous drug, Obedrin LA, an amphetamine type narcotic, to Barnes’ wife. An amended complaint also alleged that Travelers was estopped from denying coverage. Neiman and Schneider sought recovery from Travelers in the amount of a settlement of $10,000 negotiated by them with Mr. and Mrs. Barnes in connection with the civil action and criminal proceedings against them. They claimed damages in the amount of $10,000 plus attorneys’ fees of $2,275.00.

Travelers filed an answer setting up the insurance policy and its specific provisions as a defense denying that it was estopped to deny coverage, and alleging that the settlement with Barnes was a settlement to dispose of criminal claims against them by Barnes’ wife and was made by them as volunteers, for which Travelers had no responsibility and no liability.

A trial was held before the lower court on May 28, 1974. The court, in essence, found:

(1) that the policy of insurance in question covered the appellees on the Barnes’ claim against them;
(2) that Travelers was estopped to deny coverage; and
(3) that appellees were entitled to be awarded attorneys’ fees.

Judgment was entered on these findings of fact and conclusions of law on November 15, 1974.

Nieman and Schneider, appellees, were and are pharmacists for Louisville Apothecary, Inc., a corporation which operated eight (8) pharmacies in the Louisville area. Nieman, who is also president of Louisville Apothecary, Inc., worked at the Broadway store and Schneider was the manager of the store on Preston Street. Both acted in the stores as pharmacists, filling prescriptions and dispensing drugs.

In December, 1968, Mrs. Cebert Barnes contacted Dr. Earl Roles about her weight problem. Dr. Roles prescribed a weight reducing drug, Obedrin LA, for Mrs. Barnes. This drug is an amphetamine type drug and controlled by the drug laws of Kentucky.

Mrs. Barnes took the prescription to the Broadway store of the Louisville Apothecary, where it was filled by Nieman, the pharmacist on duty.

Thereafter, Mrs. Barnes took the amphetamine pills once a day and this continued for approximately six months. She would refill her prescription at the Broadway store each time she needed the amphetamine pills. After six months, she started taking two pills a day, and in 1970 she started taking two pills two or three times a day. This consumption gradually increased until she was taking fifteen (15) pills a day. Approximately one year after she first had the prescription filled, Nieman told her she could buy the pills at the Preston Street store of Louisville Apothecary, and called Schneider and told him it was all right to sell her the amphetamine pills. Thereafter, she bought the pills at both stores. At first she was charged $5.80 for 40 tablets but this price was increased to as high as $20.00. When Mrs. Barnes moved to Florida in 1970 with her husband, Nie-man would mail her pills to her.

Her narcotic habit was causing marital difficulties, beginning in late 1970 or early 1971.

Mrs. Barnes’ husband had advised the police about her habit and Mrs. Barnes went to the police in March, 1971. She told the police that she had been buying the pills from Louisville Apothecary and was told that she would have to buy them with a policeman present before any prosecution could proceed. She gave a statement to Lt. Childress of the Louisville Police Department. She went to both the Broadway and Preston Street stores on several occasions in March, 1971, and purchased the amphetamine tablets with the police present. On none of these occasions did Nieman or Schneider call Dr. Roles’ office for approval to refill the prescription, although it had been over two years since the original prescription was written.

As a result of Nieman and Schneider unlawfully selling amphetamines to Mrs. Barnes without a prescription, both men were arrested on or about March 30, 1971. Later, on November 8,1971, both men were indicted by the Jefferson County grand jury, each charged with two counts of unlawfully selling amphetamine tablets known as Obedrin LA. These were felony charges.

In February of 1972, both men pleaded guilty to two counts each of violations of KRS 217.735 and each man was fined $300 on each count or a total of $600 plus costs.

In May, 1971, Mrs. Barnes’ husband, Ce-bert Barnes, filed suit against Nieman, Schneider and Louisville Apothecary, Inc. for damages. The appellants’ attorneys filed an answer, but later withdrew as attorneys for Nieman and Schneider stating that the activities complained about were beyond the scope of the policy; however, they remained as attorneys for Louisville Apothecary, Inc.

Immediately before the criminal trial, involving the felony indictments against Nie-man and Schneider, their attorney in the criminal cases negotiated a settlement with Mr. and Mrs. Barnes. Under the agreement, Nieman and Schneider agreed to pay the Barnes the sum of $10,000. Mrs. Barnes agreed not to testify in the criminal cases, and Nieman and Schneider agreed to plead guilty to lesser misdemeanor charges.

The specific testimony appears on pages 35-36 of the Transcript of Testimony as follows:

Q. And with respect to that settlement, Mr. Nieman, was the settlement agreed, did that relate to Mrs. Barnes and both Mr. and Mrs. Barnes dropping the charges against you in consideration of your paying them a settlement sum?
A. No, I can’t answer that because it was agreed to pay them, and as far as the criminal charges, it would be charged (sic) to a misdemeanor.
Q. That was the terms of the settlement?
A. Yes, sir.

The pre-trial disposition sheet in the criminal file, dated February 29, 1972, which was the day after the settlement was completed, shows that the charges against the two men were reduced to misdemeanors to which they pleaded guilty and paid fines of $600 each for two counts. The pretrial disposition sheet specifically contains the reason for the amended charges, prosecuting witnesses will not testify on advice of her attorney because of possible incrimination.” At the bottom of the sheet is contained the settlement, “I do not desire to testify — Margie Barnes.”

It should also be noted that the settlement amount was paid to both Mr. and Mrs. Barnes, even though Mrs. Barnes was not a party to the civil action and had made no claim against Nieman, Schneider, Louisville Apothecary or Travelers, but was the prosecuting witness in the criminal case. Also the evidence reveals that the settlement was arranged by Nieman and Schneider’s attorney in connection with the criminal charges, who had no involvement in the pending civil action.

Nieman and Schneider were billed for $2,275.00 for attorneys’ fees.. Action was filed against Travelers for the total settlement of $12,275 which included the attorneys’ fees.

Many issues and theories have been argued in this case, but we feel it can be decided in the following:

1. Whether the trial court erred in concluding that the policy of the appellant, Travelers, covered appellees, J. Arthur Nieman and John Courtny Schneider, in a civil action against them for wrongfully selling a narcotic drug.
2. Whether the trial court erred in concluding that the appellant, Travelers, was estopped from denying coverage to appel-lees, Nieman and Schneider.

Under the exclusions in the policy, the insurance does not cover bodily injury or property damage caused by the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured, or a store manager employed by the named insured.

The appellees, Nieman and Schneider, very willfully, flagrantly, illegally and with full knowledge of their acts, violated a penal statute not once, but for a number of years, even to the extent of illegally mailing Mrs. Barnes pills to Florida in 1970, when she left Louisville. We hold that these illegal activities come within the exclusions of the insurance policy.

Travelers gave timely notice to ap-pellees that it reserved the right to withdraw, at anytime, from defense of the civil action. Since appellees suffered no detriment from withdrawal, Travelers is not es-topped to deny coverage. In the Annotation on this subject at 38 A.L.R.2d 1148, the text states at page 1161:

As noted in the original Annotation, it is a well established rule that a liability insurer cannot be estopped to set up the defense that the insured’s loss was not covered by the insurance policy, notwithstanding the insurer’s participation in the defense of an action against the insured, if the insurer gives timely notice to the insured that it has not waived the benefit of its defense under the policy.

Kentucky follows this rule.

In Universal Underwriters Insurance Co. v. Travelers Insurance Co., Ky., 451 S.W.2d 616 (1970), the court held, under facts analogous to the present case, that the withdrawal of an insurance company from the defense of the case did not constitute such prejudice as would give rise to estoppel.

It is the policy of this Court to uphold the judgment of the trial court, unless it is clearly erroneous and not supported by the evidence. We have examined the record in this case, and find it to be clearly erroneous.

The judgment is reversed and remanded to the trial court with direction to enter judgment dismissing the complaint against Travelers with prejudice.

All concur.


source: Caselaw Access Project

license: Public Domain

text:
    The PASCAGOULA-MOSS POINT BANK, Appellant, v. CITIZENS FIDELITY BANK & TRUST COMPANY, Executor of the Estate of Gaines P. Wilson, Deceased, Appellee.
    Court of Appeals of Kentucky.
    Nov. 4, 1977.
    Rehearing Denied Jan. 6, 1978.
    Discretionary Review Denied April 25, 1978.
    James G. Apple, Stites, McElwain & Fowler, Louisville, Roy C. Williams, Mege-hee, Brown & Williams, Pascagoula, Miss., for appellant.
    Foster L. Haunz, Louisville, for appellee.
    Before MARTIN, C. J., and HOWARD and COOPER, JJ.
   COOPER, Judge.

The decedent, Gaines P. Wilson, Sr., was the principal in a corporation known as the Coastal Construction Company, Inc. On June 8,1972, the Pascagoula Bank of Pasca-goula, Mississippi, made a loan to the Coastal Construction Company, Inc. in the amount of $10,000 at the request of the decedent, Wilson. The loan was evidenced by a note signed by the president of the Coastal Construction Company, G. C. Arbo-gast. The guaranty on the back of the note was signed by the decedent, Gaines P. Wilson, Sr., and G. C. Arbogast, both signing as endorsers and guarantors of the note. On July 12, 1972, the decedent, Wilson, executed to the Pascogoula Bank a continuing guaranty agreement in which he guaranteed loans to the Coastal Construction Company, Inc. in the sum of $100,000.

The relevant language of the guaranty agreement reads as follows:

I hereby give this continuing guaranty to the said Pascagoula-Moss Point Bank, Pascagoula, Mississippi, hereinafter called “Bank”, its transferees or assigns, for the payment in full, together with all interest, attorney fees, other fees, and charges of whatsoever nature and kind, of any indebtedness, direct or contingent whether secured or unsecured, of said debtor to said Bank up to the amount of One Hundred Thousand and no/100 ($100,000.00) Dollars, whether due or to become due, and whether now existing or hereafter arising. The Bank may, one or more times in its judgment, grant extensions, take and surrender securities, accept compositions, release or discharge endorsers, guarantor’s or other parties, grant releases and discharges generally, make changes of any sort whatever in the terms of its contract or manner of doing business with the debtor and with other parties and securities in relation thereto without notice to the undersigned, such notice being hereby specifically waived. . It is also understood and agreed that this continuing guaranty does not supersede nor cancel any pre-existing guaranty or guaranties given by any of the undersigned on behalf of the borrower named above but to the contrary shall be in addition thereto.

As a result of the above guaranty agreement, the Pascagoula Bank loaned $100,000 to the Coastal Construction Company, Inc. which is evidenced by three (3) notes dated July 12, 1972; August 2, 1972; and August 10, 1972. Again, these notes were signed by the president of the Coastal Construction Company, G. C. Arbogast.

On February 13, 1974, the Pascagoula Bank assigned the continuing guaranty agreement to the Whitney National Bank of New Orleans, Louisiana, and relinquished any right, title or interest in and to the $100,000 in notes executed by Coastal.

The Pascagoula Bank has never been paid on the $10,000 note dated June 8, 1972. The Coastal Construction Company, Inc. dissolved at the decedent’s death on September 4, 1972, and G. C. Arbogast, who signed the original note individually and for the Coastal Construction Company, had not been found at the date this action was commenced. Consequently, the Pascagoula Bank filed the original petition seeking payment on the note from the decedent, Wilson’s, estate. The lower court held that the guaranty agreement of July 12, 1972, signed by the decedent, Wilson, by its language released Wilson from the $10,000 guaranty of June 8, 1972.

The issue before the Court is:

WHETHER THE FINDINGS OF THE LOWER COURT ARE CLEARLY ERRONEOUS.

The appellant is correct in stating that the present Kentucky case law is of no help in aiding the Court specifically with the issue before us. 38 Am.Jur.2d Guaranty § 85 reads in part:

The additional security taken by the creditor may be in the form of a new guaranty. When this occurs, the prior guaranty contract is not extinguished by the execution of the subsequent contract of guaranty if the subsequent contract was not executed as a substitute for the earlier one. The mere acceptance of a guaranty of a corporate indebtedness for one year does not extinguish the liability of the makers of a similar instrument executed the preceding year. But discharge or release of the guarantor by taking a new guaranty will result when it is shown that the parties so intended.

Apparently, the lower court found, as a. matter of fact, that the makers of the latter guaranty in this case intended that the guaranty of June 8, 1972, be released and discharged by the guaranty of July 12,1972. We are bound by that decision unless the record is devoid of substantial evidence of a probative nature which would indicate that intent. After a review of the record including careful scrutiny of the guaranty agreement of July 12, 1972, we are convinced that the judgment of the lower court denying the claim of the appellant is clearly erroneous. There is no evidence in the record indicating the intent of the parties except the language of the guaranty agreement of July 12, 1972.

The reading of that agreement reveals that in its ambiguity, it is, if anything, favorable to the claim of the appellant. Therefore, we hold that the latter guaranty agreement will not release or discharge the guarantor of a prior guaranty unless the evidence clearly indicates that the parties intend the latter guaranty to release the guarantors from the prior agreement. In this case, we find no evidence of such intent; and consequently, the findings of the lower court are clearly erroneous. CR 52.-01.

We reverse the lower court and direct that judgment be entered for the appellant consistent with this opinion.

All concur.


author: HOWERTON, Judge.

text:
    Thomas L. BULLOCK, Appellant, v. Paul HANCE and Travelers Indemnity Insurance Company, Appellee.
    Court of Appeals of Kentucky.
    Nov. 18, 1977.
    Rehearing Denied Jan. 13, 1978.
    Discretionary Review Denied April 25, 1978.

      Dwight Preston Lewis, Bland & Preston, Elizabethtown, for appellant.
    David L. VanZant, Huddleston, VanZant & Coyle, Elizabethtown, for appellee.
    Before HOWERTON, GANT and WHITE, JJ.
   HOWERTON, Judge.

This action was originally commenced in 1969, as a result of an automobile accident which occurred on February 5,1969, in Hardin County, Kentucky. Appellant brought this action against Paul G. Hance and ultimately obtained a judgment against Hance in the amount of $5,802.24. Hance was insured by Wabash Fire and Casualty Company of Indianapolis, Indiana. In August 1970, approximately seventeen months after the accident, Wabash was adjudged and declared “insolvent” by an Indiana court upon a petition filed by the Indiana Department of Insurance.

In June 1971, appellant moved the trial court to amend his complaint to join the appellee, Travelers Indemnity Insurance Company, as a party defendant. Appellant had a policy of insurance with Travelers that covered him for damages up to $10,-000.00 caused by a negligent, uninsured motorist.

The “uninsured motorist” provision of appellant’s insurance policy with the appellee was based, in part, on the provisions of KRS 304.20-020(3). KRS 304.20-020(3) reads as follows:

Protection against an insurer’s insolvency shall be applicable only to accidents occurring during a policy period in which the insured’s uninsured motorist coverage is in effect where the liability insurer of the tortfeasor becomes insolvent within one (1) year after such an accident.

The appellee filed a motion for summary judgment on the basis that Wabash was not declared insolvent within one year after the date of the accident. The circuit court granted the motion, and appellant appeals from the summary judgment.

The sole issue on this appeal is whether or not a material issue of fact exists as to when Wabash became insolvent.

Appellee argues that “insolvent”, as used in KRS 304.20-020(3) and as used in the policy, means a specific legal status as determined by competent authority. We agree that such a determination is necessary. Appellee further argues that the Kentucky court must give full faith and credit to the Indiana decision which determined that Wabash was in fact “insolvent” as of the date the proceedings were brought against Wabash in Indiana by the Indiana Department of Insurance. This, too, is a correct premise. Since such a determination has been made, appellee argues that there is no question of fact to be considered at a trial. This, however, is not the proper conclusion. The fact that Wabash was found to be “insolvent” as of the date the insolvency proceeding was filed does not mean that the company was not in fact insolvent sometime prior to that date.

Appellee attempts to support the summary judgment by citing KRS 304.36-050(4) for a definition of an “insolvent insurer”. The definition reads as follows:

“Insolvent insurer” means (a) an insurer licensed to transact insurance in this state either at the time the policy was issued, or when the insured event occurred, and (b) against whom a final order of liquidation, with a finding of insolvency, has been entered by a court of competent jurisdiction in the company’s state of domicile after June 16, 1972, and (c) with respect to which no order, decree, or finding relating to the solvency of the insurer, whether preliminary or temporary in nature, or otherwise, has been issued by a court of competent jurisdiction or by any insurance commissioner, insurance department, or similar official or body before June 16, 1972, or which was in fact insolvent before June 16, 1972, and such de facto insolvency was known by the chief insurance regulatory official of the state of its domicile. KRS 304.36-050(4).

We note that this statutory definition was enacted in 1972 for Subtitle 36, establishing the “Kentucky Insurance Guaranty Association”. The association was created to guarantee the payment of funds for covered claims under certain insurance policies, to avoid excessive delay in payment, and to avoid financial loss to claimants or policy holders because of the insolvency of an insurer. The legislators apparently found a need to statutorily define “insolvent insurers” for the purpose of protecting the members of the association. Subtitle 20, on the other hand, relates to “Casualty Insurance Contracts”. The legislature has obviously found no need to alter the generally accepted meaning of “insolvent” as it relates to such contracts.

We therefore cannot agree with ap-pellee’s arguments, and even if we did accept the definition of “insolvent insurer” as set forth in KRS 304.36-050(4), we note that as to situations occurring before June 16, 1972, a court determination would not be required and the fact of insolvency could merely be known by the chief insurance regulatory official of the state of the company’s domicile.

Generally speaking, “insolvency” is “the inability of one to pay his debts as they become due in the ordinary course of his business . .”42 Am.Jur.2d, Insolvency § 1; see also Black’s Law Dictionary, p. 937 (1968); KRS 355.1-201(23); Greater Louisville Auto Auction v. Ogle Buick, Inc., Ky., 387 S.W.2d 17 (1965), and Oscar C. Wright Company v. Steenman, 254 Ky. 381, 71 S.W.2d 991 (1934). We see no reason to give the word “insolvent” in KRS 304.20-020(3), or as the word is used in the policy, any meaning other than as above stated. Surely, had the writers of the statute in Subtitle 20 intended that a separate, formal, judicial determination of insolvency be required by the state of the insurer’s domicile, they would have said as much. Such a requirement could create a very unfair problem for a claimant. An insolvency suit is to determine that the defendant is insolvent at the time of the action, and it would not necessarily determine that the defendant was in fact insolvent at some particular time prior to the commencement of the action. Also, any delay by a state’s insurance department in initiating such litigation could be very harmful to a claimant.

We realize that to resolve questions of insolvency of a foreign insurer in domestic courts can create real problems as to proof. However, to uphold the summary judgment would tend to defeat the purposes of uninsured motorist coverage. In this case, the claim was not liquidated for several years after the accident. No claim could have been enforced against Wabash until long after is was “out of business,” although if appellant’s claim had been processed within one year, it might or might not have been collectible.

It was the legislature that allowed the • one year limitation. It will also have to be the legislature that establishes any restrictive definition of “insolvency”. If the problem is considered by the General Assembly, it may wish to look not only at the problems of determining the time and fact of “insolvency,” but also look at the problems created by a one year limitation.

We conclude that a genuine issue of fact does exist in this action and that the summary judgment was improperly granted. Appellant is entitled to his day in court to prove, if he can, that Wabash was in fact “insolvent” within one year after the date of the accident. If the appellant can show that the tort-feasor’s insurance company was insolvent within one year after the accident, we believe that the purpose of the statute will be served if appellant is allowed to collect under his own “uninsured motorist” coverage from the appellee.

The judgment is reversed and the case is remanded for further proceedings consistent with this opinion.

All concur.


author: GANT, Judge.

text:
    Donald O’BRYAN, by his statutory guardian, George O’Bryan, Appellant, v. John C. PETERSON and Robert H. Peterson, d/b/a Seven Sons Farms and P & D Manufacturing Company, Appellees.
    Court of Appeals of Kentucky.
    Dec. 2, 1977.
    Discretionary Review Denied April 25, 1978.
    Jon William Goodman, Davis Williams, Munfordville, for appellant.
    William S. Bowman, Stiles & Miller, Louisville, for appellee, P & D Mfg. Co.
    Robert Spragens, Jr., Spragens, Smith & Higdon, Lebanon, for appellees, John D. Peterson and Robert H. Peterson.

      Before GANT, VANCE and WILHOIT, JJ.
   GANT, Judge.

The appellant, an infant 14 years of age, was injured on December 9, 1973, when he fell into the discs of an auger feeding system owned by Joseph E. Mouser and Paul Mouser and used by them in their farming operation. This system was manufactured by the appellee, P & D Manufacturing Company, and distributed by the appellee, John C. Peterson and Robert H. Peterson, d/b/a Seven Sons Farms.

On March 4, 1974, George O’Bryan was appointed statutory guardian for his son, Donald O’Bryan, by the judge of the Nelson County Court and executed a release in his capacity as guardian, which release is set out below.

It should be noted that this release contained no reservation by the statutory guardian of any right to proceed against any other parties, including the appellees. The appellant was without benefit of counsel at the time this release was executed. A second release was executed by George O’Bryan and Mary O’Bryan, his wife, but that release is not before this Court on appeal, as the appeal was only from the action filed by George O’Bryan as guardian of his infant son. The second release by the parents did purport to release “all other persons, firms and corporations whomsoever of and from any and all claims and demands whatsoever which claimant now has or may hereafter have . . . ”

On April 2, an action was filed by the guardian against the appellees herein in their capacity as manufacturers and distributors of the auger system and appellees set up the defense of the release as a bar to the claim of the appellant.

In an excellent opinion consisting of findings of fact, conclusions of law and judgment, the trial court reluctantly held that all claims of the appellant against the ap-pellees were barred by reason of the execution of the release signed by the appellant guardian and entreated the appellate court to “reconsider its previous stands on this type release.”

In examining the plea of the lower court to change the law in Kentucky and reverse this case, the Court is mindful of the fact that its position as an intermediate court renders it vulnerable when it chooses not to follow a recent case of the Supreme Court of Kentucky. However, this is not without precedent in the Commonwealth of Kentucky. The latest case which we can find touching on this subject matter is the case of Stewart, Pros. Atty., et a 1. v. Sampson, Judge, et al., 285 Ky. 447, 148 S.W.2d 278 (1941). This was a case in which an appeal from the Corbin Police Court was taken to the Whitley Circuit Court presided over by the respondent, Flem D. Sampson. The Police Court had imposed a fine of $100.00 under the Alcoholic Beverage Control Law of 1938, which statute provided for a penalty of not less than $100.00 nor more than $5,000.00, or by imprisonment not to exceed' five years, which statute was clearly beyond the jurisdiction of the Corbin Police Court. Without going into the facts any further or into the disposition of the case, the question then became whether the circuit court, which acted as an intermediate appellate court in this case, had the power to disregard prior decisions of the Court of Appeals of Kentucky, the highest court in the state. The court, in dealing with that problem, stated as follows at page 453, 148 S.W.2d at page 281:

But in the general practice a circuit court in this Commonwealth — and we believe also in other jurisdictions — has the inherent right and power to adjudge questions coming before it according to its sound judicial discretion independently of what may have been said to the contrary to other courts in the same sovereignty, although it may be the highest court therein, unless the right to do so has been expressly taken away by the only authority having the right to confer jurisdiction, i. e., the constitution of the state, or a duly enacted statute in pursuance thereto.
Numerous are the instances where circuit judges are confronted with questions previously determined by this court in cases prosecuted to it but which determinations do not meet the approval of the judge trying the particular case before him, since in the exercise of his judicial discretion he concludes that the determination made by this court is unsound and he declines to follow it.

This Court is of the opinion that the time has come for Kentucky to join the two-thirds of the American jurisdictions which have abrogated the rule set out in the case of Kingins v. Hurt, Ky., 344 S.W.2d 811 (1961) that the release of one joint tort-fea-sor effectively releases all joint tort-feasors unless on the face of the release it can be fairly interpreted as reserving the claimant’s right against other tort-feasors. As was said in the case of Stewart, Pros. Atty. et a 1. v. Sampson, Judge, et al., supra, we think that the determination made by the court in Kingins, supra, and in the case of Sanderson v. Hughes, Ky., 526 S.W.2d 308 (1975) is “unsound” and would like to “decline” to follow the rule. We would rather adopt the dissenting opinion of Chief Justice Reed in the case of Sanderson v. Hughes, supra. We feel that it is time to bury this rule, once and for all, to abolish any fictions which have grown up as methods of avoiding the rule, such as covenants not to sue, etc., and usurp the prerogative of declaring ourselves pallbearers at the funeral. However, this Court is mindful of the fact that we are without authority to overrule the Supreme Court of Kentucky or its predecessor court.

The Kingins rule has not always been the law in Kentucky. An excellent summary of this history is contained in the dissenting opinion of Judge Stewart in the case of Commonwealth Dept. of Highways v. Cardwell, Ky., 409 S.W.2d 304, 306 (1966). The first case recited therein was the case of Louisville & Evansville Mail Co. v. Barnes Admr., 117 Ky. 860, 79 S.W. 261 (1904). In that case the court said:

. The law ought not to be that a release of one joint tort feasor, by his making a partial satisfaction for the wrong done, should operate as a release of the other wrongdoers. The law looks with favor upon compromises and settlements. It is not the intention of the law to force people into litigation and prevent settlements out of court. To uphold the rule contended for by appellant, such a result would follow.

This case established the rule that the release of one joint tort-feasor is not automatically the release of all, and further established the admissibility of parol evidence to show the intention of the parties and the amount of satisfaction of the claim. The rule announced in the Barnes’ case continued to be the law in Kentucky until the Kingins decisions in 1961.

The courts, for years, have indulged in artificialities and fictions. They have argued that since there is but one injury there can be but one action, and yet actions for contribution are commonplace. It is paradoxical that under the present rule in Kentucky only the injured party is barred from another action while the wrongdoer is free to pursue any course he chooses. See Orr v. Coleman, Ky., 455 S.W.2d 59 (1970); Nix v. Jordan, Ky., 532 S.W.2d 762 (1975); K.R.S. 454.040.

Some jurisdictions have called such actions “several torts” as distinguished from “joint torts” and it is certainly true that they enter the courtroom through separate doors while sitting at the same table. The Kingins rule has never had a true foundation in any conception of unitary obligation. The acts of joint tort-feasors, independently or in concert, serve to injure and are never entire in themselves. Each is responsible for the whole, which is not to say the injured party may have more than full satisfaction — he may not.

The courts have also talked of contract law, and with good reason. As is said in Corbin, Contracts § 596, Page 572 (1960):

. there is a definite tendency to relax the operation of the parol evidence rule when a stranger to the writing is involved. This tendency is to be thoroughly approved when it prevents a writing from being held to be a substituted integration and discharge when the contracting parties have not so agreed. It is to be thoroughly disapproved if it is used to establish the validity of some oral agreement (or a written one) that has been effectively discharged by a subsequently fully integrated writing (or by a subsequent oral contract). It is to be thoroughly approved in those cases where it is used to prevent what appears on the face of an instrument to be a “release” of one joint obligor or joint tort-feasor from operating as a discharge of another such obligor or tort-feasor. In such a case, the offered testimony shows that the claimant did not intend the document to be a discharge of all his claims or to indicate that he had accepted anything in satisfaction of all of them. For that purpose it should be admissible in any suit against anybody.

The courts have also tried to hide their shame by inventing the “covenant not to sue” and seeking to differentiate between that and a release. This is probably the worst of all the fictions for how can we possibly say that the surrender of the right to sue does not release the person to whom it is given.

Legislatures in many states have passed laws relieving the harshness of the rule that the release of one joint tort-feasor releases all, but we in Kentucky cannot lay the blame for this rule on the General Assembly. This rule was not dropped on the doorstep of the courts; it was conceived and nurtured by us. And, to paraphrase the Scriptures, “The law giveth and the law taketh away.”

Probably the finest opinion on the subject matter,, an opinion which Professor Prosser states “seems to leave nothing more to be said,” is that of Justice Rutledge in McKenna v. Austin, 77 U.S.App.D.C. 228, 134 F.2d 659 (1943). If space permitted, huge sections of this opinion should be copied herein. For example, in speaking of the rule currently in effect in Kentucky, the court stated:

The rule’s results are incongruous. More often than otherwise they are unjust and unintended. Wrongdoers who do not make or share in making reparation are discharged, while one willing to right the wrong and no more guilty bears the whole loss. Compromise is stifled, first by inviting all to wait for the others to settle and, second, because claimants cannot accept less than full indemnity from one when doing that discharges all. Many, not knowing this, accept less only to find later they have walked into a trap. The rule shortchanges the claimant or overcharges the person who settles, as the recurring volume and pattern of litigation show. Finally, it is anomalous in legal theory, giving tort-feasors an advantage wholly inconsistent with the nature of their liability.
The majority are not unmindful of the force of stare decisis. But it is not a doctrine of mortmain. It does not exclude room for growth in the law nor does it require adherence to a highly technical rule which, at its inception, was at war with the elementary nature of the substantive liability to which it was applied; which has been maintained by lip service, while being chipped away in its substantive effect through multiplying through equally artificial distinctions

It is the opinion of this Court that the law in Kentucky should revert to the doctrine announced in the Barnes’ case, supra. A step backward in time is often a step forward in justice. We would concur with the statement in Prosser, Handbook of the Law of Torts, Sec. 49,304: “the only desirable rule would seem to be that a plaintiff should never be compelled to surrender his cause of action against any wrongdoer unless he has intentionally done so or unless he has received such full compensation that he is no longer entitled to maintain it.”

Since this court is without authority to overrule Kingins, supra, and other decisions of the Supreme Court, we reluctantly affirm the lower court. However, we urge the Supreme Court to review the decisions in Kingins, supra, and Sanderson, supra, in light of the considerations suggested herein, especially in the aftermath of Orr v. Coleman, supra, and Nix v. Jordan, supra.

WILHOIT, J., concurs.

VANCE, J., concurs in the result only.

      . KNOW ALL MEN BY THESE PRESENTS, That I, George O’Bryan, Guardian and next friend of Donald O’Bryan of New Haven, Kentucky, in the County of Nelson and State of Kentucky, being of full age, for the sole consideration of Eighteen thousand five hundred and 00/100 Dollars, to me paid by Joseph E. Mouser and Paul Mouser, the receipt whereof is hereby acknowledged, do hereby release, acquit and forever discharge the said Donald O’Bryan (sic) from all claims and demands, actions and causes of action for, upon or by reason of any damages, costs, loss of service, expenses and compensation which heretofore have been or which hereafter may be sustained by Donald O’Bryan on account of, or in any way growing out of injuries including known and unknown injuries and the consequences thereof which may hereafter develop as well as those which have already developed or are now apparent resulting from an accident that happened to said Donald O’Bryan on or about the Ninth day of December, 1973, at or near New Haven, Kentucky, by reason of accident of 12/9/73 and do hereby for myself, my heirs, executors and administrators, covenant with said Joseph E. Mouser and Paul Mouser to indemnify and save harmless the said Joseph E. Mouser and Paul Mouser from all claims and demands for damages, costs, loss of service, expenses or compensation on account of, or in any way growing out of said accident or its results, and including also any claim I have or may have for loss of service of said Donald O’Bryan, it being further agreed and understood that the payment of said Eighteen thousand five hundred and 00/100 Dollars is not to be construed as an admission on the part of said Joseph E. Mouser and Paul Mouser of any liability whatever in consequence of said accident.
      WITNESS my hand and seal this 4th day of March in the year nineteen hundred seventy four.


author: HAYES, Judge.

text:
    Melvin Lee ATCHISON, Appellant, v. Kenneth Wayne OVERCAST, Appellee.
    Court of Appeals of Kentucky.
    Dec. 2, 1977.
    Discretionary Review Denied April 25, 1978.

      Nat Ryan Hughes, Hughes, Gregory & Haverstoek, Murray, for appellant.
    Wm. Donald Overby, Overby, Overby & Overby, Murray, for appellee.
    Before COOPER, HAYES and HOWER-TON, JJ.
   HAYES, Judge.

The parties to this appeal have stipulated the following facts:

(a) Kenneth Wayne Overcast, owns and operates an uninsured automobile.

(b) On September 2, 1975, in Murray, Kentucky, he was riding in an automobile owned and operated by his father-in-law who also was uninsured.

(c) Melvin Lee Atchison owned and operated an insured automobile which struck the rear of the automobile Overcast was a passenger in, thereby injuring Overcast.

(d) Neither Overcast nor his father-in-law had rejected the limitations of his tort rights and liabilities as prescribed by KRS 804.39-010-304.39-340.

(e) The sum total of all Overcast’s bills did not total $1,000.00 and there were no injuries sustained that would prevent the operation of the “no-fault” statute.

Overcast sued Atchison who plead the “no-fault” statute as a defense. The trial court sustained Overcast’s motion to strike this defense, and entered judgment for Overcast. Atchison appeals. The issue is whether Overcast is barred from bringing his common law tort action by reason of the “no-fault” statute.

In view of the decision rendered by this court in Dixon v. Cowles, Ky.App., 562 S.W.2d 639, 24 Ky.L.Summ. 12 (August 26, 1977), we must state that Overcast is subject to the “no fault” statute and may not bring a claim against the appellant Atchi-son.

Although the facts are not the same, because in Dixon the passenger did not own an automobile, the reasoning applied in the Dixon case would also apply here. Judge Vance in Dixon hinted that if Dixon had owned, operated, maintained or used an auto then the “no-fault” statute would come into play. It would make no difference whether that owned automobile would be insured or not when considering the “no-fault” statute.

KRS 304.39-030(1) states:

If the accident causing injury occurs in this Commonwealth every person suffering loss from injury arising out of maintenance or use of a motor vehicle has a right to basic reparation benefits, unless he has rejected the limitation upon his tort rights as provided in KRS 304.39-060(4).

KRS 304.39-060(1) states:

Any person who registers, operates, maintains or uses a motor vehicle on the public roadways of this Commonwealth shall, as a condition of such registration, operation, maintenance or use of such motor vehicle and use of the public roadways, be deemed to have accepted the provisions of this subtitle .

The plain intent of the above language is that all persons owning an automobile, whether insured or not, are subject to the limitations of “no-fault”, unless the owner actually rejects the limitation of his tort rights and liabilities under KRS 304.-39-060(1), which requires the rejections to be in writing.

It being stipulated that Overcast had not rejected the limitations of his tort rights and liabilities, therefore he comes under the provisions of KRS 304.39-060(1) and (2)(b) and since it was stipulated his loss was less than $1,000.00 with no permanent injuries or broken bones, he was precluded from bringing suit against appellant.

The judgment is reversed with directions to dismiss the complaint.

All concur.


author: VANCE, Judge:

text:
    Donald MAVIS, Appellant, v. BOARD OF EDUCATION OF the OWENSBORO INDEPENDENT SCHOOL DISTRICT, Appellee.
    Court of Appeals of Kentucky.
    Dec. 9, 1977.
    Discretionary Review Denied April 25, 1978.
    Richard S. Taylor, Miller, Taylor & Bur-lew, Owensboro, John J. Slattery, Jr., Louisville, for appellant.
    William L. Wilson, Mark L. Moseley, Wilson, Wilson & Plain, Owensboro, for ap-pellee.
    Before GANT, VANCE and WILHOIT, JJ.
   VANCE, Judge:

This is an appeal from a judgment upholding the dismissal of appellant, a tenured teacher in the Owensboro school system. The questions on appeal are whether the charges are sufficiently specific, whether the evidence supports the charges and whether the charges were supported by written records of performance as required by KRS 161.790(2).

Appellant was charged with insubordination and conduct unbecoming a teacher. KRS 161.790. The charge of insubordination specified that appellant failed to obey the instruction of the superintendent that appellant cease and desist all forms of physical and mental punishment of students and warning him that failure to comply would be considered insubordination in violation of KRS 161.790. The charge of conduct unbecoming a teacher specified abusive treatment of young students. Both charges were spelled out in more detail with statements furnished to appellant of witnesses to be called by the Board and the substance of what they would testify. The original date of hearing was postponed at appellant’s request to give him additional preparation time.

The hearing was commenced without any objection by appellant that the charges were not specific enough to enable him to know what he had to defend against. We think the charges and specifications therein, coupled with the information furnished appellant as to the nature of anticipated testimony, were adequate to meet the requirements of KRS 161.790(3) and were also sufficiently specific as to inform him of the acts which he had to defend against. There was no basic unfairness which deprived appellant of due process.

The evidence clearly supported both of the charges. After a long period marked by parental complaints about appellant’s physical beating of students, he was ordered by the superintendent to cease all physical punishment. He was transferred to a different school because of the complaints. At the new school he continued to administer corporal punishment. His defense was that he was told to cease corporal punishment at the old school only, and he did not consider the injunction applicable after his transfer. In light of all his past difficulties brought about by his administration of corporal punishment his treatment of the order of the superintendent was cavalier indeed.

Much of the evidence on the charge of insubordination was also competent to show conduct unbecoming a teacher. Without going into great detail about the testimony, we think it adequately supported the charges without any consideration being given to certain new matter introduced at the hearing about which appellant objected because of lack of notice.

The charges were supported by written documentation. The letter which ordered appellant to cease using corporal punishment, the letter notifying appellant of his transfer because of past difficulties, and a letter of complaint from a parent were introduced in evidence.

After he was found guilty of the charges, an appeal was taken to circuit court, but appellant did not offer any additional evidence. The trial court, in an excellent written opinion, affirmed the dismissal.

Finally, appellant contends the Board should be required to issue findings as to the particular charges of which he was deemed guilty. There were only two charges, and as we have indicated, the evidence supports a finding of guilt on each charge. We think better procedure would indicate a need for a finding by the Board, but it is not required by statute and does not result in prejudice in this case. A different holding might become necessary if several charges are preferred and the evidence supports some of the charges but not the others. In that case we would be confronted with uncertainty that the evidence supported the particular charge which the Board used as the basis for dismissal. In this case it is not material for the evidence supported either or both charges.

The judgment is affirmed.

All concur.


author: LESTER, Judge.

text:
    Baz JOBE and his wife, Flossie Jobe, et al., Appellants, v. Richard HAMMER, Sr. and his wife, Vivian Hammer, et al., Appellees.
    Court of Appeals of Kentucky.
    March 3, 1978.
    Shelly T. Riherd, Phillip R. Patton, Ri-herd, Richardson & Patton, Glasgow, for appellants.
    Clay Hundley, Jr., Tompkinsville, for ap-pellees.
    Before HOWERTON, LESTER and REYNOLDS, JJ.
   LESTER, Judge.

This appeal is before us upon a record consisting of the pleadings, a summary judgment, and a four page deposition. Since no proof was adduced before the trial court, we must glean the facts from the briefs of counsel but absent supportive evidence, we do not vouch for the authenticity of the narrative.

Peter Hammer died in 1839 seized of 150 acres of land in Monroe County. He was survived by two sons, Martin K. Hammer and Richard Hammer, who, each, inherited a one-half undivided interest in their father’s property. It is asserted by way of brief that Peter died survived by eight to ten children. It is also claimed that between 1839 and 1907 Martin supposedly acquired the individual interests of his brother, Richard, and a sister (unnamed) by deeds, but the trial court was not furnished copies. Martin’s heirs are said to have made conveyances of their respective interests in the entire tract among themselves. Reference to one such deed purports to set up adverse possession in one or more of Martin’s heirs but we are not favored with a copy of that document.

In 1946, the heirs of Martin Hammer brought a suit in the Monroe Circuit Court for the sale of their undivided interests in the property but the heirs of Richard Hammer were not made parties thereto. Since neither party sought to include the 1946 record in this appeal, we are unsure just what the allegations therein may have been but appellees do relate that there was no determination as to just how Martin Hammer may have gained title to the entire tract. The Commissioner’s deed purports to convey the 150 acres to yet other Hammer heirs, namely, Pete, Jim and W.D.

In 1976, the three last mentioned Hammers brought the present action to sell the tract of land for the reason that it was physically incapable of being divided, claiming ownership thereof by virtue of the master commissioner’s deed stemming from the 1946 legal action. Before a sale was ordered, appellants, the heirs of Richard Hammer, asked leave to file their intervening complaint, wherein they, as a class representing themselves and all other heirs, both known and unknown, of Richard, would set forth their interests in the subject real estate. Appellees filed a motion to dismiss the third party complaint or in the alternative, to grant summary judgment.

Without ruling upon appellants’ motion to file the third party complaint, the court entered a “Finding Of Fact” and a “Judgment” dismissing with prejudice appellants’ “claim”, assigning as reason therefore that the Richard Hammer heirs were barred by “laches” and “the tolling of the Statute of Limitations.”

The only evidence in this nebulous record is that of a real estate broker who related that he was familiar with the land, having been on it and having studied aerial photographs. From his deposition, we learned that there were no structures, crops or development on the land, but there was a road through the tract with the balance of it being described as “all woodland.” The broker’s testimony would indicate that not one of the parties is in open or notorious possession of the land.

Appellees rely upon Wilcox v. Sams, 213 Ky. 692, 281 S.W. 832 (1926) for the argument that the 1946 litigation followed by the judicial sale constitutes an ouster of the co-tenant appellants when the appellees entered and took possession of the land. Admittedly, this is the rule of Wilcox, supra, but in the case at bar, there is not one scintilla of evidence that anyone took possession. Moreover, the only evidence in the record would seem to be that no one is on the land or has been in recent years. Therefore, since there is no proof of possession of such an “adverse character required by law as against strangers” sufficient to bring home to appellants — co-tenants notice that appellees are holding adversely to them, then Wilcox, supra, does not apply and we are required to hold that the statute of limitations does not govern in this cause.

Since appellees concede and appellants assert that a judicial sale will not affect the title of owners of real property not parties to the action, we will not belabor that point except to hold that the heirs of Richard Hammer, upon the record as so constituted, are co-tenants with appellees. Borderland Coal Sales Company v. Walker, 208 Ky. 146, 270 S.W. 717 (1925), III American Law Of Property § 13, 13 at 524.

We now turn our attention to the question of laches. Plaintiffs below raised the plea in their answer to the third party plaintiffs’ motion for leave to intervene, in spite of the fact that the circuit court never ruled upon the motion. For that matter, there are two such motions, one having been marked filed as of July 24,1976, while the second appears of record dated December 2, 1976. To be more specific, the latter motion requested intervention by the appellants as a class pursuant to CR 23.01.

Laches is generally considered to be a shield of equitable defense rather than a sword for the investiture of legal title, 27 Am.Jur.2d Equity § 152 at 687, 688, but if a defendant seeks affirmative relief by cross-bill, the defense of laches is as applicable to him as though he had proceeded by original bill. 30A C.J.S. Equity § 113 at 26, 29. Since appellants requested affirmative relief, namely, that they be declared to have one-half interest in the land, and since we perceive no great distinction between the mechanism as to how they asked (either by cross-bill or intervention as a class), then the doctrine would be applicable to them. However, at 27 Am.Jur.2d Equity § 174, at 719, 721 we note:

It has been held that the burden of proving laches is on the one asserting it, and that it must be proved by clear and positive evidence. This has been said to be particularly true where the effect of the application of the doctrine would be to divest one of the ownership of land. Where laches is regarded as an affirmative defense it is accordingly held that the burden is on the party asserting it to prove its essential elements. There is also authority that where courts of equity act by analogy to statutory limitations of actions at law, the burden of proof may depend upon whether or not the statutory period has expired — that is to say, where suit is brought within the time fixed by the analogous statute, the burden is on the defendant to show circumstances constituting laches, whereas where the suit is brought after the statutory time, the plaintiff must plead and prove that laches does not exist.

There is also some doubt as to whether one holding in privity of title with another may plead laches in asserting and taking possession of that interest. 30A C.J.S. Equity § 114 at 33.

As heretofore mentioned, there is also absolutely no proof of value addressing the issues herein adduced by either of the parties. Moreover, there is no evidence of what duty appellants had to bring any action whatsoever because there is nothing in the record to reflect that they knew of the previous litigation or that appellees were asserting a right to all the land. It could be said that Martin’s heirs should have brought an action to determine the interests of the parties as well as Richard’s.

Appellees rely heavily upon two deeds, one dated in 1853 and the other 1885, which purport to convey certain interests in the land to Martin from some of the heirs of Richard. No allegation is made that Richard executed either one of these documents and only a copy of one of them appears in the record and that is by way of an exhibit attached to the intervening complaint. CR 23.03 demands that the trial court “by order” rule upon the maintenance of an action brought as a class and since none was entered here, then that exhibit is not properly before the trial court. Such being the case, that document cannot be used as a foundation for a finding of fact.

There is some discussion by way of brief and the court takes judicial notice of the fact that the Monroe County records were destroyed in whole or in part in 1865 and again in the 1880’s. With respect to destroyed documents, in relation to the doctrine of laches, we invite attention to 30A C.J.S. Equity § 121 at 73, 74.

This cause is reversed and remanded to the Monroe Circuit Court with directions to make the appropriate determination pursuant to CR 23.03 and if the court finds that the procedure thereunder is proper, then require the parties to present sufficient proof to make proper determination of the issues presented.

All concur.


text:
    R. C. DURR COMPANY, INC., Appellant, v. Cletis CHAPMAN, Workmen’s Compensation Board of Kentucky, and Special Fund, Appellees.
    Court of Appeals of Kentucky.
    March 10, 1978.
    Robert B. Hensley, Horse Cave, for appellant.
    John Riehl, Jr., Asst. Counsel, Louisville, for appellees.
    Kenneth E. Hollis, Gen. Counsel, Dep’t of Labor, Frankfort, for Special Fund.
    William Colvin, Greensburg, for Chapman.
    Before HOWERTON, LESTER and REYNOLDS, JJ.
   LESTER, Judge.

The Workmen’s Compensation Board found that Cletis Chapman had become totally occupationally disabled following the work related reinjury to his back that occurred on April 4, 1974, during his employment at R. C. Durr Company. The Board attributed 50% of the occupational disability to this injury alone and required the employer to pay the entire compensation for this portion of the disability. The Board dismissed the Special Fund when it determined Chapman’s claim for the back injury he sustained on March 4, 1971, was barred by the statute of limitations. R. C. Durr appeals from the order of the Cumberland Circuit Court affirming the opinion and award of the Board.

R. C. Durr takes issue with the Board’s award based on disability arguing that Chapman failed to prove that he sustained any permanent disability from the 1974 injury; that in any event, the evidence did not support a finding of complete occupational disability; but, that whatever disability benefits the Board awarded, it should have apportioned them between the Special Fund and the employer. In addition R. C. Durr challenges the Board’s calculation of Chapman’s average weekly wage.

Cletis Chapman, 52 years old at the time of his 1974 injury, had spent his working life as a heavy equipment mechanic. He had completed two years of high school when he joined the army during World War II. After the war, he went through a program at the Nashville Diesel College. Over the years, the companies for which he worked provided him with training on various types of heavy equipment. Chapman worked for about four years for R. C. Durr as a master mechanic.

On March 4, 1971, Chapman, while helping overhaul a caterpillar engine, caught the weight of the engine head and injured his lower back. Dr. Kenton D. Leatherman treated Chapman. Dr. Leatherman fitted Chapman with a Williams back brace and Chapman eventually returned to work although he experienced limitations in his ability to labor. Dr. Leatherman estimated Chapman’s permanent functional disability as thirty to thirty-five percent to his body as a whole. However, Chapman neglected to timely file his claim which barred recovery for the injury.

On April 4, 1974, Chapman hurt his back once again when he attempted to lift a metal plate to weld onto a dump truck. Dr. Armand Fischer treated Chapman after this incident. Dr. Fischer, in his deposition of March 20th while relating the history of his treatment of Chapman, stated that Chapman went to work as a mine foreman in Williamsburg, Kentucky, on October 26th. Dr. Fischer last saw Chapman on December 21st. Dr. Fischer considered Chapman to have a thirty percent permanent functional disability, fifteen percent of which he attributed to the injury of 1971 and the other fifteen percent he ascribed to an arousal of an already diseased condition of the fourth and fifth lumbar discs. Dr. Fischer apparently felt any disability from the 1974 injury was temporary.

On August 19, 1975, the Board sustained R. C. Durr’s motion to make the Special Fund a party and directed Chapman to submit himself, for examination, to Dr. Stanley Collis, appointed pursuant to KRS 342.121. Dr. Collis expressed his opinion that Chapman had a permanent functional disability of eight percent which Collis divided as four percent due to the injury in 1971 and four percent because of the 1974 accident.

The testimony of Dr. Collis supplied the Board with adequate evidence that the 1974 back strain caused permanent disability. Appellant’s contention that Chapman did not prove permanent disability as a result of the 1974 injury has no merit. Caudill v. Maloney’s Discount Stores, Ky., 560 S.W.2d 15 (1977).

We do not believe that the passing reference in Dr. Fischer’s deposition that Chapman had returned to work as a mine foreman enables us to overturn the Board’s finding of total occupational disability. We realize that continued regular employment will prevent a determination of total occupational disability. Yocom v. Spalding, Ky., 547 S.W.2d 442 (1977); Winn Dixie Louisville, Inc. v. Watson, Ky., 473 S.W.2d 148 (1971). However, nothing in the record before the Board revealed whether Chapman continued to work. When questioned further, Dr. Fischer responded that he did not know Chapman’s status in regards to work because he had not seen Chapman in two months. Dr. Collis, when asked about Chapman’s current work, answered that he did not recall nor did his records reflect a statement by Chapman of present employment. Perhaps Chapman’s condition would not permit him to keep his job in the mines; the Board could not tell. Appellant did not pursue the matter. In addition, the proof did not show whether Chapman ever worked regularly after the 1974 injury. We have recently held that the claimant’s ability to perform some part-time work will not necessarily preclude a finding of total disability. Yocom v. Yates, Ky.App., - S.W.2d - (March 3, 1978).

Evidence of sufficient probative value tended to show that a 52 year old man who had worked all his life doing strenuous mechanical work, could no longer lift heavy objects. We conclude that a sufficient evi-dentiary foundation existed to support but not compel the Board’s finding Chapman incapable of performing any kind of work of regular employment and therefore, totally disabled. Caudill, supra, and Tacket v. Sizemore Mining Co., Ky., 560 S.W.2d 17 (1977).

Given the state of the record before the Board, the reasoning of Yocom v. Keene, Ky., 512 S.W.2d 27, 29 (1974) guides us:

. [I]t would appear as easy for the employer to demonstrate the availability of other regular employment as it is for the claimant to show the lack of it. Considering the appellant’s testimony in the light of the fact that his education, work experience and physical condition limit his job opportunities, and in the absence of any countervailing evidence as to the availability of regular work in the area which he could perform, the court is of the opinion that the evidence in the record is sufficient to sustain the finding of the Board.

As in Keene, supra, we simply do not have countervailing evidence of the availability of regular work in the area which Chapman could perform.

The Board did not err by not apportioning disability benefits between the Special Fund and the employer. Dr. Collis, in his report to the Board, stated that the 1974 accident caused four percent of Chapman’s functional disability. At the time of the 1974 injury, Chapman suffered with an active disability stemming from his 1971 injury. Chapman did not timely file his claim to recover for the 1971 injury and therefore, there cannot be an apportionment for the arousal of his preexisting condition caused by the 1971 injury. Dr. Collis did not base his opinion attributing four percent functional disability from the 1974 injury on the 1971 injury. The Board, in choosing to believe Dr. Collis, correctly placed the entire responsibility for disability benefits upon the employer. Holman Enterprise Tobacco Warehouse v. Carter, Ky., 536 S.W.2d 461 (1976).

The Board computed Chapman’s average weekly wage in accordance with KRS 342.140. The exclusion of overtime or premium pay in KRS 342.140(l)(d) refers to pay in excess of the employee’s regular hourly rate because of the extra hours worked. It does not restrict calculation of the employee’s average weekly wage to the forty hour week. The Board found that Chapman worked sixty hours per week at a base rate of $6.78 an hour which did not include overtime pay above this base rate. This comes to an average weekly wage of $406.80. The Board had sufficient evidence to make the determination of Chapman’s average weekly wage.

The judgment is affirmed.

All concur.


text:
    LOUISVILLE GAS & ELECTRIC COMPANY, Appellant, v. Leland SCOTT and Hazel Scott, his wife, Bedford Loan and Deposit Bank, Appellees.
    Court of Appeals of Kentucky.
    March 10, 1978.

      Thomas F. Manby, Jr., James L. Theiss, LaGrange, for appellant.
    William A. Carter, Carrollton, John M. Berry, Jr., Berry & Floyd, New Castle, for appellees, Leland Scott and Hazel Scott.
    Bobby K. True, Bedford, for appellee, Bedford Loan and Deposit Bank.
    Before GANT, HOGGE and WILHOIT, JJ.
   GANT, Judge.

Appellant, Louisville Gas & Electric Company, had a preexisting easement of 150 feet across the 118-acre farm of the appel-lees. On this easement they had constructed a power line consisting of six H poles which were 15 feet 6 inches apart on center, 60 feet high, carrying 138,000 volt lines. This action was brought to acquire an additional 60-foot easement immediately adjacent to the 150-foot easement, making a total width of 210 feet. At the time of the trial, the new power line had been constructed consisting of five H poles, 27 feet apart on center, one pole 70 feet high, two poles 75 feet high and two poles 80 feet above the ground. The new lines carried 345,000 volts. The amount of acreage involved was ■ 4.56 acres and all witnesses agreed that the use of the land was for “general purpose farming.” No structures, fences, roadways or improvements were materially affected, the only evidence being that the power line was moved some 75 feet closer to the dwelling house. The jury awarded the appellees $20,000 for this additional easement.

Appellant first complains that the verdict of the jury was so excessive that it appears at first blush to have been reached as the result of passion and prejudice or in disregard of the evidence. CR 59.01(4). With this we must agree.

The law is so well established in Kentucky that it barely needs repeating but it is well set out in the case of Louisville Gas & Electric Company v. Diemer, Ky., 443 S.W.2d 647, 648 (1969) in which the court states:

[I]t appears that where there is an appropriation of land for a high tension power line or other wire lines over private property the owner has the right to be compensated “[not only] for the depreciation and the value of the strip of land over which the wires are suspended and which is subjected to use as a right of way for maintenance of the line, but he is entitled to compensation for the impairment of the remainder of the tract by reason thereof * * *. In short, the appellees here were entitled to recover such sum as would equal the difference in the market value of their entire property immediately before the taking and after the easement is taken.” East Kentucky Rural Co-op Corp. v. Smith, Ky., 310 S.W.2d 535.

The law is quite clear in Kentucky that it is not patently erroneous for a jury to award more per acre for easements taken for electric transmission lines across farms than the per acre value of the land in fee simple. East Kentucky Rural Electric Co-op Corp. v. Story, Ky., 413 S.W.2d 348 (1967). However, it is equally clear from the same case that when this occurs the court will carefully scrutinize the verdict as it relates to the question of exeessiveness.

This Court has found few cases relating to an even greater problem, that being the widening of an existing easement. The trial court must be extremely careful to allow recovery only for the difference in fair market value of the land subject to an existing easement immediately before and immediately after subjecting it to the additional easement. See Nantahala Power & Light Co. v. Sloan, 227 N.C. 151, 41 S.E.2d 361 (1947). All damages which may be traced to the existing easement must be eliminated, as the condemnor should pay only once for that easement. Thus, where the award to the condemnee exceeds the per acre value of the land in fee simple, there must be clear proof that the impairment of the remainder of the tract is occasioned by the additional easement and not the existing one.

The facts in this case simply do not meet this test. The taking herein was an easement across 4.56 acres. As was pointed out, the condemnee had a farm of 118 acres subject to an easement when he started and a farm of 118 acres subject to an easement when he finished. The proof clearly showed that no structures, fences, roadways or improvements were affected. The con-demnor, in acquiring the right of way across the additional land, acquired few, if any rights that he did not already have with respect to the entire tract. He already had the right to construct his lines and the right of entry to maintain these lines. As a matter of fact, the evidence indicated that the primary purpose of the additional easement was to permit the con-demnor to maintain service on the old line while constructing the new one, the old line being removed after the new one was constructed. The danger, if any, already existed and it would be of little consequence if contact was made with a 138 KV line or a 345 KV line — either would be fatal. There was testimony herein that the new line would sizzle during humid weather but that the sizzle could not be heard at the residence. The old line would also sizzle and the difference in degree would have little compensable value. The inconvenience in plowing would be affected slightly if at all. The evidence discloses that there were two less poles (one less H pole), that they were farther apart, and that the lines were higher above the surface.

There was evidence of additional damages by virtue of widening the easement, such as the fact that the fences would have to be grounded because of the additional power and that the additional width would permit future construction of either additional lines or larger lines, although the evidence was that there were no plans to do so within any foreseeable future. However, there was no evidence of a nature that would justify the verdict herein.

The evidence relating to comparable sales in the vicinity fixed the value of land when sold in fee simple at from approximately $500 an acre to approximately $1,900 per acre. There was testimony concerning one tract which was sold under threat of condemnation, which evidence was incompetent and should not be admitted on retrial of this case. The bulk of the evidence indicated that land in the vicinity used for general farming purposes had a value of somewhere between $1,000 and $1,200 per acre. To permit the condemnee to recover approximately four times the fee simple value of this 4.56 acres under the circumstances of this case is patently erroneous.

Appellant raises two other questions in his argument. The first is that the ap-pellees sought to imply by cross-examination that the experts utilized by the appellant had testified to approximately the same difference in fair market value in this case as in other cases. This is improper cross-examination and should not be permitted on a retrial of this case.

Appellant further urges that it was error for the experts for the appellees to consider the existing easement in fixing their value on the land before the taking. We are unable to understand why appellant would insist upon such a point. As stated above, the value of the farm subject to the existing easement is not only permissible but mandatory in determining the difference in fair market value when an additional easement is being requested.

For the reasons above stated, this case is. reversed and remanded to the lower court with instructions to set aside the verdict herein and to grant a new trial consistent with this opinion.

All concur.


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    HENRY A. PETTER SUPPLY COMPANY, Appellant, v. HAL PERRY CONSTRUCTION COMPANY, Finis Gilbert, d/b/a Gilbert Corporation, Murray Independent School District, and Aetna Casualty and Surety Company, Appellees.
    Court of Appeals of Kentucky.
    March 10, 1978.
    John A. Gregory, Jr., Hughes & Gregory, Murray, for appellant.
    John C. Lovett, Lovett, Lewis, Johnson & Shapiro, Benton, James A. Anderson, III, Paducah, for appellees.
    Before GANT, HOGGE and WINTER-SHEIMER, JJ.
   GANT, Judge.

This is an action by Henry A. Petter Supply Company, a supplier to a subcontractor, against the prime contractor, Hal Perry Construction Company and its surety, Aetna Casualty and Surety Company.

The facts in evidence disclose that in early 1971 Perry received a contract for the construction of the Murray Vocational School, which contract provided in part that “. . the Contractor shall provide and pay for all labor, materials, equipment . necessary for the proper execution and completion of the work.” The contract further required the Contractor to furnish a bond “covering the faithful performance of the contract and the payment of all obligations arising thereunder . .” Perry procured a performance and payment bond from Aetna which adopted the contract by reference binding Aetna “to all persons who furnish labor and materials . . .”

One of the subcontractors under Perry was the appellee, Finis Gilbert, d/b/a Gilbert Corporation, who was subsequently awarded the subcontract for the plumbing, heating and air conditioning on May 12, 1971. Prior to the subcontract, on April 21, 1971, Petter sent a proposal to Perry stating that they would furnish materials ordered by Gilbert on this project on “open account” if Perry would agree to pay for the material invoiced by “check made payable to Henry A. Petter Supply Company and Gilbert Corporation.” This proposal was accepted at the bottom of the letter as follows:

We agree to this arrangement

HAL PERRY CONSTRUCTION CO.

By: /s/ Hal Perry

Date: 4-23-71

Perry was undertaking two construction jobs at the time and the evidence indicates that he became worried that material used on another job by Gilbert was being billed to the vocational school job. It also was apparent that both Perry and Petter were fearful that Gilbert was financially unstable. On June 18, 1971, about two months after Perry had agreed to make all checks to Gilbert for materials furnished by Petter to both Gilbert and Petter, jointly, Perry wrote a letter to Petter stating that he would “not be responsible for the debts” of Gilbert unless (1) prior approval was obtained; (2) materials itemized; (3) project specified, and (4) cost does not exceed agreed amount. This letter was received by Petter but they did not respond or agree to its demands or terms.

After this letter of June 18, Perry made two payments by checks to Petter and Gilbert jointly totalling $9,434.80, the last one in February, 1972, without any indication of prior approval or performance of the other terms of that letter except as hereafter indicated. Petter continued to furnish material to Gilbert on open account. On each item furnished he sent to Perry what Petter refers to as an invoice and Perry calls a delivery ticket. Perry admits knowing that Petter continued to supply materials to Gilbert but denies knowing that they were being furnished on open account. The record does not indicate whether the invoice showed the exact job and there is no testimony that any item exceeded the contract amount.

At the completion of the job, Perry paid Gilbert $12,500 without requiring an affidavit from Gilbert that all laborers and mate-rialmen had been paid; without ascertaining the open' account at Petter; and without making Petter a joint payee as he had agreed on April 23, 1971. It is stipulated that at this time Gilbert owed Petter $6,543.10.

Petter brings this action as third party beneficiary under the contract between Perry and the Murray Board of Education; as third party beneficiary under the performance and payment bond with Aetna; and for breach of the agreement of April 23, 1971, by Perry to make all checks payable to Gilbert and Petter jointly in return for supplying material to Gilbert on open account. The original action asserted a mechanic’s lien but it was subsequently stipulated that this was not timely filed.

This is a classic case of third party beneficiary. There is absolutely no question in the minds of this Court that Petter was such under both the contract with the Murray Board of Education and under the bond with Aetna. The quoted language from both makes this manifestly clear. In American Radiator and Standard Sanitary Corporation v. Albany Municipal Housing Commission, Ky., 441 S.W.2d 433, 435 (1969) the court stated:

The appellees, the prime contractor and its paid surety, assert that the only right of recovery, if any, that the appellants have would be the one set out in the lien statutes and that that would be from any unpaid funds due the prime contractor from the Housing Commission. We do not agree with this assertion because we conclude that the language of the bond itself not only was intended to afford protection to the Housing Commission but also to protect “ * * * all persons doing work or furnishing skill, tools, machinery or materials under or for the purpose of the contract” for the construction of the housing project. In fact, all materialmen and workmen involved in the project are third-party beneficiaries of this bond regardless of whether they contracted directly with the prime contractor or a subcontractor.

There is also no question in our minds that the proposal in the letter of April 21, 1971, and its acceptance by Perry on April 23 constituted an agreement between the parties that Petter would furnish materials to Gilbert on open account and that Perry would pay for them by checks made payable to Petter and Gilbert jointly.

Additionally, KRS 376.070(1) states as follows:

Contractor or architect to apply payments to claims — Exception where lien waived. —(1) Any contractor, architect or other person who builds, repairs or improves the property of another under such circumstances that a mechanics’ or material-man’s lien may be imposed on the property shall, from the proceeds of any payment received from the owner, pay in full all persons who have furnished material or performed labor on the property. (Emphasis added).

This section is not made dependent upon the assertion of a lien as provided elsewhere in Chapter 376 but requires payment to materialmen where the circumstances are such that a “lien may be imposed.” It requires a standard during construction, not retroactive application, and where this standard is ignored a lien may not lie if the time therefor elapses, but the duty of the contractor is clear.

Accordingly, we must examine the effect of the letter of June 18,1971. It was apparently a unilateral attempt by the contractor to modify his duties under (a) the contract with the Board of Education and/or (b) the performance and payment bond, and/or (c) the agreement with Petter and/or (d) KRS 376.070(1). The Court finds that it fails to do any of these. It is not disputed that the parties to a contract creating a third party beneficiary may vary the terms of the contract without the consent of the beneficiary unless the beneficiary materially changes his position in reliance on the contract. See Restatement, Contracts (2d) § 142. This being a continuing benefit, it might have been changed by the parties (note plural) to the contract or bond. However, the action of only one of these parties will not suffice.

The agreement by the parties pursuant to the April 21, 1971, letter was not modified by this unilateral action of June 18, 1971. Petter never agreed to it nor is his silence to be construed as conduct which will estop him from asserting his rights. Indeed, the conduct of Perry in paying Petter one month and eight months after the letter is at least some indication that the silence was not relied upon by Perry. Also, the letter of June 18 referred to responsibility for debts of another while the agreement set out the method for payment of an open account on a particular project. We believe this specific unilateral disclaimer could never avoid the contractor’s obligation under the statute.

The lower court based his ruling on the fact that “Petter was negligent and careless in failing to take any note whatsoever of Mr. Perry’s letter of June 18, 1971 .” and that he had not acted “reasonably and diligently as a reasonably prudent man.” We are at a loss to understand this use of the law of tort in a contract case. However, as the court said in the case of First National Bank of Louisville v. Progressive Casualty Insurance Co., Ky., 517 S.W.2d 226, 229 (1974), “[w]e are also reminded of the equity rule that as between two innocent parties the one who made the loss possible is the one who should suffer.” All Perry had to do was what he agreed to do and what he had done on two previous occasions, i. e., make the final check of $12,500 payable to Gilbert and Petter.

Accordingly, this case is reversed and remanded with instructions to enter judgment against Finis Gilbert, d/b/a Gilbert Corporation, the court having previously held that the appellant was entitled to same without entering that judgment; against Hal Perry Construction. Company and against Aetna Casualty and Surety Company. We make no finding of the respective rights of the appellees, as all were represented by the same counsel and these rights were not before the Court.

All concur.


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    The MIDLAND-GUARDIAN COMPANY, Appellant, v. E. Gayle McELROY and Helen Ruth McElroy, his wife, Chester L. Sturgeon and Thelma R. Sturgeon, his wife, Ashcraft’s Inc., Dennis Ashcraft and Marcella Ashcraft, his wife, Dale Ashcraft and Deborah Ashcraft, his wife, Douglas Ashcraft and Victoria Ashcraft, his wife, Commonwealth of Kentucky, Department of Revenue, Commonwealth of Kentucky, Department for Human Resources, Appellees.
    Court of Appeals of Kentucky.
    March 10, 1978.

      Edward S. Monohan, Otto Daniel Wolff, Vest, Ware & Monohan, Florence, for appellant.
    Asa M. Rouse, Walton, William S. Cheat-ham, Dept, of Revenue, Frankfort, J. J. O’Hara, Douglas M. Stephens, Covington, Ryan Halloran, Dept, for Human Resources, Frankfort, William McEvoy, County Atty., Burlington, for appellees.
    Before GANT, HOGGE and WILHOIT, JJ.
   GANT, Judge.

This is an appeal from an order of the Boone Circuit Court confirming the sale of certain real property and distributing the proceeds thereof, by which distribution the court directed that tax claims of Boone County and the City of Walton had priority over a vendor’s lien and a recorded mortgage, both recorded some three years prior to the tax claims, the bulk of these tax claims apparently being against tangible personal property owned by the same parties who owned the realty sold. This priority was accorded even though neither the county nor city was a party to the action and no proof was taken concerning the amount of the tax claim attributable to the personal property tax.

The grantees of a 2.106-acre tract of land executed to the grantors a promissory note on April 25, 1972, for which a lien was retained in the deed. At the time of this purchase, grantees owed appellant a large sum of money on another note and appellant took a mortgage on the same property at the time it was acquired, which mortgage was inferior to the purchase money lien. The deed and mortgage were recorded in April of 1972. The grantees operated a mobile home sales center on the property and on September 25, 1975, failed to make payment on the purchase money note to the grantors who then instituted this proceeding to foreclose on their lien. The action was brought against the grantees, the appellant, the Commonwealth of Kentucky, Department of Revenue (because grantees owed delinquent withholding, sales and use taxes) and the Commonwealth of Kentucky Department of Unemployment Insurance (because grantees owed delinquent unemployment insurance).

On October 18, 1976, the Master Commissioner recommended that the property be sold and the court, in its judgment and order of sale, ordered the property sold and the proceeds applied first to the costs of the action, second “[t]o the taxes due on said property to the City of Walton, Kentucky; to the County of Boone; and to the State of Kentucky.” Then followed the lien of the grantors, the mortgage lien of the appellants, and the various tax liens of the Commonwealth of Kentucky. The property was sold for $58,100.00, the appellant objecting to the sale, motion for order of distribution, final report, order confirming the final report, and now appeals on the ground that the county and city taxes assessed for the years 1974,1975 and 1976 were paid prior to his mortgage lien and were either totally or partially on personalty and not on the property itself.

The law in Kentucky is quite clear that a recorded mortgage takes priority over any subsequent creditors. KRS 382.-270, KRS 382.280. It is equally clear that the legislature may create statutory liens and establish the priorities thereof. However, as stated in 51 Am.Jur.2d Liens § 57, “In the absence of a statute giving precedence to a statutory lien, its relative rank is determined under the general principle of first in time first in right . . . ” This was echoed in the case of Indiana Truck Corp. v. Hurry Up Broadway Co., 222 Ky. 521, 1 S.W.2d 990 (1928), in which the court adopted the rule that:

In the absence of statutory regulation to the contrary, a lien which is prior in time gives a prior claim and is entitled to satisfaction, out of the subject-matter it binds, before other subsequent liens binding the same property. (Citing authority). But although it is within the power of the Legislature to give a statutory lien priority over other liens, as a general rule a statutory lien does not take precedence over a prior contractual lien, unless the statute clearly shows or declares an intention to cause the statutory lien to override the prior lien. (Citing authority). See also Adkins v. Carol Mining Co., 281 Ky. 328, 136 S.W.2d 32 (1940).

Thus we must examine the applicable statutes, KRS 134.420 and KRS 92.650. Actually, there is only one statute which applies, as KRS 92.650 is made subject to and must be read in conjunction with the provisions of KRS 134.420. KRS 134.420(1) reads, in pertinent part, as follows:

The state and each county, city or other taxing district shall have a lien on the property assessed for taxes due them, respectively, for five years following the date when the taxes become delinquent. . This lien . . . shall have priority over any other obligation or liability for which the property is liable.

This section simply means, as applied to this case, that any taxes by the City of Walton or by Boone County assessed against the particular real estate would have a priority over the recorded mortgage.

KRS 134.420(2) provides that the lien for taxes other than those upon the property assessed “shall accrue at the time the liability is fixed.” The section goes on to specify that this includes “any property tax, license tax, inheritance or estate tax, excise tax, income tax, or other tax” not included in Subsection (1). It is quite obviously the import of this paragraph to protect “a holder in due course” or “any person taking the property or a lien thereon for value without actual or constructive notice.” The lienholders in the instant case certainly could have neither actual nor constructive notice of personal property taxes accruing two, three and four years after the lien. Any portion of the tax bills of the City of Walton or Boone County on real or personal property other than the property assessed would be subject to the general principle of “first in time, first in right.”

The appellees urge that the part of KRS 134.420 which gives the city or county a first lien “also on any real property owned by a delinquent taxpayer when the sheriff offers the tax claims for sale as provided in KRS 134.430 and KRS 134.440” pertains to this case and would give the city and county a lien on the real property of the grantees. This is simply not the fact. In the first place, there was no sale of tax claims by the sheriff. Also, all this section means is that when there is a tax lien on assessed real property which is subject to sale by the sheriff under the provisions of the applicable statutes, so much of the lien that remains after the sale of personalty as provided in KRS 134.430 shall constitute a first lien against the assessed real estate. In no event can this be construed to give the taxing authority a lien against real estate for taxes assessed against property other than the particular real estate.

Although the case dealt, in part, with the retrospective application of a statute, analogous language was contained in the case of Louisville Title Mortgage Co. v. Commonwealth, 229 Ky. 224, 184 S.W.2d 963 (1945), in which the court, at page 231, 184 S.W.2d at page 967, stated as follows:

If the construction contended for . should be the proper one, the result would be that the title to property remains under a cloud until the claim is barred by limitation, for neither he nor anyone with whom he deals could know that at some future date there would not be a retroactive assessment of taxes. . . . The consequences would be that all property of every citizen who might become liable for an income, license, inheritance, excise or any other species of tax is in lien always to the Commonwealth for an unknown and unknowable sum, and no one could clear it. Vendors, purchasers and lenders of money upon mortgage would have their rights subordinated, however innocent they might be. It is not believed that so radical an idea was in the mind of the Legislature. The policy of the law to protect bona fide purchasers and lienees is too firmly embedded in our Bill of Rights, our statutes, our common law and our jurisprudence to be partially extracted by an interpretation of an ambiguous legislative act .

Appellees take the position that the appellant is barred by his failure to object to the judgment and order of sale directing the property to be sold and the proceeds applied to “the taxes due on said property.” As hereinabove pointed out, the real estate taxes due on said property did constitute a first and superior lien. As soon as the appellant learned that the distribution after sale was to be made for payment of taxes assessed against personal property and not “taxes due on said property” he objected thereto and we feel that his objections were prompt and adequate.

Appellees further urge three cases which would seem to be in contravention of this opinion. Two of those cases apply to the statutes as they existed prior to 1900, when the lien was extended from the property assessed to “all other property” and this extension has been removed from the law. The other case, Commonwealth v. Walker, Ky., 80 S.W. 185 (1904), was a case which was “not to be officially reported” and is not authority for their position thereby.

Appellant urges that no taxes should be paid from the proceeds of this sale, including taxes on the real estate, as the City of Walton and Boone County were not named parties to the action in contravention of KRS 426.690. This statute does require that in a suit to enforce a lien against real property, all known claims shall be set out in the petition and the claimants shall be made parties to the action. It is certainly better practice that this be done but it is obvious that the appellant knew of the real estate taxes due against said property and it is equally obvious that appellant acquiesced in the judgment and order of sale directing that these taxes be paid.

Accordingly, the judgment herein is reversed insofar as it pertains to the tax claims of Boone County and the City of Walton and remanded to the lower court with directions to proceed as follows:

1. Proof shall be taken to establish the amount of the tax claims of Boone County and the City of Walton for the years said claims were made in the original action which pertained to the particular real estate only;

2. No additional penalty or interest shall be added to these claims;

3. All taxes assessed against personal property or property other than the real estate sold shall be deducted from the sum awarded to Boone County and the City of Walton and applied against the mortgage of the appellant and judgment entered in accordance herewith.

All concur.