author: KEITH, Justice. STEPHENSON, Justice,

text:
    JACK CRISWELL LINCOLN MERCURY, INC., Appellant, v. Dimitrios N. TSICHLIS, Appellee.
    No. 7935.
    Court of Civil Appeals of Texas, Beaumont.
    March 31, 1977.

      Roger N. Moss, Lufkin, for appellant.
    George C. Dixie, Houston, for appellee.
   KEITH, Justice.

The corporate defendant appeals from an adverse judgment rendered after a trial by jury and we will designate the parties as they appeared in the trial court.

Plaintiff, a Greek immigrant, purchased a new automobile from the corporate defendant and it agreed to procure a policy of insurance covering loss or damage to such vehicle as well as protection against personal injury and property damage claims of other parties arising out of the acts of the plaintiff in the operation of the vehicle. Although defendant received the premiums from the bank financing the transaction, it did not procure the policy of insurance which it had agreed to procure. After an accident which destroyed the vehicle and in which plaintiff was injured, he found that he had no insurance.

Plaintiff sought and recovered damages for the loss of his vehicle ($2,250), plus attorney’s fees in defense of the personal injury action — $500, and $20,000 in exemplary damages. The judgment was entered against the corporate defendant since the plaintiff did not submit any issues against the individual defendants. Defendant filed a motion for judgment non obstante vere-dicto asking that the court set aside the answer of the jury finding $20,000 in exemplary damages because “[s]aid punitive damages are excessive and are not related to the actual damages found by said jury.” It sought a reduction of such damages to the sum of $5,000. Although plaintiff responded to such motion by filing a memorandum brief, we do not find that the motion was called to the attention of the court.

The amended motion for new trial contained a single assignment: The court erred in submitting Special Issue No. 3 wherein the jury found that the corporate defendant, in failing to procure insurance upon plaintiff’s vehicle, acted “in heedless and reckless disregard of the rights” of plaintiff. It was urged, in this single assignment:

“. . . that there was no pleading by the Plaintiff to support the submission of said issue, and there was no evidence to support the affirmative evidence findings of the jury to special issue No. 3, or there was insufficient evidence to support the affirmative finds [sic] of the jury in special issue No. 3, and in the alternative, said finding by the jury was against the greater weight and preponderance of the evidence.”

This motion was overruled by operation of law although we find an order overruling which was entered after the expiration of the time when the Court could act thereon.

While defendant has four points of error, we are unable to come to grips with any because of the disregard of the rules governing appellate procedure. Consequently, we affirm for the reasons now to be stated.

Under Tex.R.Civ.P. 324, a motion for new trial is a prerequisite to an appeal in all cases tried to a jury except in certain instances not material to this case. Wagner v. Foster, 161 Tex. 333, 341 S.W.2d 887 (1960); St. Louis South-Western Railway Company v. Duke, 424 S.W.2d 896, 897 (Tex.1967); Valdez v. Gill, 537 S.W.2d 477, 481 (Tex.Civ.App.—San Antonio 1976, writ ref’d n. r. e.).

Defendant has completely misconstrued the concept of the rule relating to motions for judgment non obstante veredic-to as set out in Tex.R.Civ.P. 301. A trial court is authorized to enter judgment non obstante veredicto only “if a directed verdict would have been proper.” Before such a motion may be granted, it must be determined that there is no evidence having probative force upon which the jury could have made the findings relied upon. Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194, 199 (1952). And, the trial court, in passing upon the no evidence point so presented must consider the evidence in the light most favorable to the jury’s findings, considering only the evidence and inferences which support the verdict and rejecting the evidence and inferences which are contrary thereto. Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547, 550 (1962). These rules have been followed uniformly by our courts for many years. See, e. g., Grundmeyer v. McFadin, 537 S.W.2d 764, 768 (Tex.Civ.App.—Tyler 1976, writ ref’d n. r. e.).

Thus, only a “no evidence” point is before a court when considering a motion for judgment non obstante veredicto. This is, essentially, a question of law. See R. Calvert, “ ‘No Evidence’ and ‘Insufficient Evidence’ Points of Error”, 38 Tex.L.Rev. 361, 362 (1960). Yet, a determination of excessiveness in an award of damages is a question of fact, not one of law. Southwestern Investment Company v. Neeley, 452 S.W.2d 705, 708 (Tex.1970). The only way defendant could invoke the jurisdiction of this court in considering the excessiveness of the award of exemplary damages would have been to have made such a complaint in its motion for new trial in the district court. No such challenge was made and we have no jurisdiction to consider the question in its present posture. Miller v. Riata Cadillac Company, 517 S.W.2d 773, 776 (Tex.1974). Point one, complaining of the award of $20,000 in punitive damages to the plaintiff, and point two, complaining of the failure of the trial court to require a remittitur of $15,000 of the punitive damages, are overruled.

We decline to consider defendant’s third point of error reading:

“The District Court erred in refusing to grant Defendant’s Motion for a New Trial based upon Defendant’s Amended Motion for a New Trial as to Special Issue Number 3.”

This point of error, apparently, refers to the single assignment of error contained in the motion for new trial which has been set out earlier in this opinion.

The point is multifarious and too general to comply with the requirements of Tex.R. Civ.P. 418. See Barber v. Corpus Christi Bank & Trust, 506 S.W.2d 254, 257-258 (Tex.Civ.App.-Corpus Christi 1974, no writ). See also, Ives v. Watson, 521 S.W.2d 930, 933 (Tex.Civ.App.-Beaumont 1975, writ ref’d n. r. e.); Garrett v. Standard Fire Ins. Co., etc., 541 S.W.2d 635, 639 (Tex.Civ.App.—Beaumont 1976, writ ref’d n. r. e.).

We are not authorized to consider defendant’s fourth point of error complaining of the exclusion of testimony of a witness. No such complaint was contained in the motion for new trial and it cannot be urged here for the first time. Miller v. Riata Cadillac Company, supra (517 S.W.2d at 776).

We have disposed of the appeal upon sound procedural grounds following the rule enunciated in Englander Company, Inc. v. Kennedy, 428 S.W.2d 806, 807 (Tex.1968):

“The burden is upon a party appealing from a trial court judgment to show that the judgment is erroneous in order to obtain a reversal.”

And, we hasten to add, it is the appellant’s burden of establishing error within the framework of the applicable rules governing our appellate practice. However, since our dissenting brother contends that because he can understand the contention of the defendant-appellant he would go to the merits, it is, perhaps, appropriate to point out that, even if we were able to reach the points discussed in the brief, we would, nevertheless, reach the same result.

Plaintiff’s theory of the case, during the trial and upon appeal, has been that the defendant breached the duty it owed to the plaintiff to use due diligence to obtain insurance for him or to inform him promptly of its inability to procure such coverage. It is true that he did have an alternative theory of breach of contract; but, when he came to submitting the case to the jury, he did so upon the tortious theory and no recovery was sought for breach of the contract. We are required, therefore, to consider the case as one sounding in tort, not in contract.

The rule governing defendant’s duty was set out in Burroughs v. Bunch, 210 S.W.2d 211, 214 (Tex.Civ.App.—El Paso 1948, writ ref’d):

“An insurance broker agreeing to obtain insurance owes the legal duty to obtain same and if he can not do so to notify his principal of failure.”

As stated in Burroughs, supra, we must bear in mind that we are not considering an action on a contract of insurance, because “[t]he breach of duty alleged was the failure of an insurance broker to use due diligence to obtain a policy.” (Id. at 215)

The rule enunciated in Burroughs, supra, is in accord with the general rule. See the cases cited in the annotation appearing in 64 A.L.R.3d 398, 411-418, “Broker’s Failure to Procure Insurance” (1975). In an action somewhat similar to the one under review, the court in Powell v. Narried, 463 S.W.2d 43, 45 (Tex.Civ.App.—El Paso 1971, no writ), noted particularly that the “suit is not upon any oral contract of insurance.” Instead, having failed to notify the applicant of his inability to procure the insurance sought, the agent breached the duty he owed to his client and his conduct was actionable.

Having established that defendant owed a duty to the plaintiff and breached that duty, we turn to the case of Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508, 510 (1947), where it was held that even though the relationship between the parties originated in contract, a negligent or faithless failure to discharge a duty arising from the performance of the contract constitutes actionable negligence.

Plaintiff established the breach of duty owed by defendant to plaintiff along with a concealment of the breach until after the loss had occurred. Defendant’s liability in tort to plaintiff was established “in good measure, pressed down, shaken together and running over.” The breach was accomplished by outright deceit and dissembling on the part of the defendant and its vice-principals. Indeed, the evidence supporting plaintiff’s claim for exemplary damages was so strong that had the jury returned an unfavorable answer, it would have been our duty on appeal to have set it aside.

In K-Mart No. 4195 v. Judge, 515 S.W.2d 148, 153-154 (Tex.Civ.App.—Beaumont 1974, writ dism’d), this court had occasion to review the authorities discussing the liability of a corporation to respond in exemplary damages, saying:

“Texas adopted the Restatement of Torts, § 909, setting out the several bases upon which a corporation could be held liable for exemplary damages in the case of King v. McGuff, 149 Tex. 432, 234 S.W.2d 403, 405 (1950). In Fisher v. Carrousel Motor Hotel, Inc., 424 S.W.2d 627, 630 (Tex.1967), the Court followed King and the Restatement, thereby holding the principal liable for exemplary damages in a case where it had been stipulated that the employee involved was the manager of the club and in the course of his employment.
“See also, International Security Life Insurance Co. v. Finck, 496 S.W.2d 544, 546 (Tex.1973); Richter v. Plains National Bank, 479 S.W.2d 95, 97 (Tex.Civ.App.—Eastland 1972, writ ref’d n. r. e.); Transport Insurance Company v. Mabra, 487 S.W.2d 704 (Tex.1972).”

Under the record which we review, plaintiff was entitled to the award of punitive damages. Consequently, the judgment of the trial court is affirmed.

STEPHENSON, Justice,

dissenting.

I respectfully dissent, and would enter the judgment the trial court should have entered which is to allow plaintiff to recover his actual damages and attorney’s fee. No recovery for exemplary damages is recoverable in a breach of contract ease. A. L. Carter Lumber Co. v. Saide, 140 Tex. 523, 168 S.W.2d 629; and McDonough v. Zamora, 338 S.W.2d 507 (Tex.Civ.App.—San Antonio 1960, writ ref’d n. r. e.).

This is a breach of contract case. There are no pleadings of negligent acts or omissions on the part of defendant, no evidence of negligence, and no submission of issues to the jury of any negligent act or omission.

The two issues first submitted to the jury demonstrate clearly the type of cause of action plaintiff was relying upon. The jury was asked first if defendant agreed (contract) to procure insurance for plaintiff. Then the jury asked if defendant failed to procure the insurance (breach of contract). Those two issues are not followed by negligence or proximate cause issues. An issue was submitted asking whether the failure to procure the insurance was in heedless and reckless disregard of plaintiff’s rights. Then the jury found actual and exemplary damages. These jury findings establish a cause of action for breach of contract with awards for actual damages and attorney’s fees.

Defendant’s motion for new trial complains that the trial court erred in submitting the issues on punitive damages because there were no pleadings, no evidence, and insufficient evidence to support such issues.

Defendant’s points of error, interpreted in their most liberal light, raise no evidence and insufficient evidence points as to the issues on exemplary damages. See Tex.R. Civ.P. 418. This provides in part that a point of error is sufficient if it directs the court to the error relied upon. An unbroken line of authorities follow the rule that the statement, argument, and authorities will be considered by the appellate court in its determination of the claimed reversible error. Fambrough v. Wagley, 140 Tex. 577, 169 S.W.2d 478. See also Tex.R.Civ.P. 422.

I find no evidence to support a finding that defendant’s failure to procure the insurance was in heedless and reckless disregard of plaintiff’s rights under the pleadings, evidence and submission of this case.

      . It is apparent that the parties did not follow the provisions of the Supreme Court order relating to the preparation of the transcript (Tex.R. Civ.P. 376-a) providing: "Trial briefs and memoranda of authorities shall not be included in the transcript.”

      The quotation, although apt in this case, is taken out of the context in which it was used in Burdick v. York Oil Company, 364 S.W.2d 766, 770 (Tex.Civ.App.—San Antonio 1963, writ ref’d n. r. e.).


source: Caselaw Access Project

author: YOUNG, Justice.

license: Public Domain

text:
    Morris BRASLAU et al., Appellants, v. AMOCO PRODUCTION COMPANY et al., Appellees.
    No. 1126.
    Court of Civil Appeals of Texas, Corpus Christi.
    March 31, 1977.
    Rehearing Denied April 20, 1977.
    Thomas M. Andrews, Ellis, Andrews & Lawrence, Inc., Aransas Pass, James E. Klager, J. W. Cooper, Jr., Corpus Christi, for appellants.
    W. Scott Clark, Clark & Tartaglia, Fort Worth, for appellees.
   OPINION

YOUNG, Justice.

This is an appeal from a declaratory judgment decision holding three term royalty contracts still in full force and effect even though production had ceased after the primary terms had elapsed.

The plaintiffs in the trial court, all term royalty owners, were: Amoco Production Company (formerly Midwest Oil Corporation); Fred W. Shields; Katz Oil Company; Maurice E. Forney, Charles E. Worrel; Marian McCarrick, Marian McCarrick, Trustee; Ethel W. Stewart; and Johnnye Jones Peet. The defendants, all reversion owners, were: Morris Braslau; Irving Braslau as Guardian of the Estate of Frank Braslau, N.C.M.; John Kugerl and wife, Anna Kugerl.

The case was tried to the court without a jury, primarily on stipulated facts. In its judgment the trial court held that the operator used reasonable diligence and good faith in reworking operations on and after November 13, 1972; that production was restored within a reasonable time; that cessation of production between November 1.3, 1972, and February 24, 1973, was temporary; and that the term royalty contracts had not terminated and are still in force and effect. There were no findings of fact and conclusions of law filed separately from those in the judgment. From that judgment the defendants appeal.

On September 2,1947, Frank Braslau and Morris Braslau conveyed to R. P. Holland an undivided ⅝ interest to all royalties produced from lots 206 and 207 of certain land in Live Oak County. This grant was to last “for a period of fifteen years from the date hereof and as long thereafter as oil, gas, or other minerals or either of them, is produced or mined from the lands described herein in paying or commercial quantities.” Subsequently, those interests were obtained by Midwest Oil Corporation (10/⅛2) and Fred W. Shields (⅝2) by mesne conveyances.

On February 4, 1958, Frank Braslau and Morris Braslau conveyed to Katz Oil Company ⅛ interest in all royalties produced from lots 206 and 207 of certain property in Live Oak County. This grant was “for a period of 15 years from the date hereof and as long thereafter as oil, gas or other minerals, or either of them is produced or mined from the land described herein in paying or commercial quantities.” On that same day, John Kugerl and wife, Anna Kugerl, executed to Randolph Coleman a term royalty deed of the same duration for lot 205 of the same property. The following persons have obtained Randolph Coleman’s interest in lot 205 through mesne conveyances: Johnnye Peet, Maurice Forney, Charles Worrel, Ethel Stewart, Marian McCarrick and Marian McCarrick, Trustee. All of these lots, along with lot 307, were unitized into a unit known as the “Frank Braslau Gas Unit.”

During the primary term of all the deeds, Frank Braslau Gas Unit # 1 Well was drilled and duly completed in the Wilcox 7800' (slick) Sand and the Wilcox 8800' (massive) Sand. Production from this well served to extend the primary term of Midwestern’s and Shields’ deeds. In August 1971, the Wilcox 7800' zone was depleted and on October 9, 1972, Arco, the operator of the unit, notified the working interest owner, George Coates, that production of the Wilcox 8800' was becoming marginal because of the high cost of handling water being produced with the oil. In that letter, Arco proposed to recomplete the # 1 Well in the Mackhank 8550' Sand and the Wilcox 7700' Sand. On November 13, 1972, all production ceased from the Wilcox 8800' Sand of the # 1 Well. Thereafter, no production was ever obtained from this well or these strata.

On November 14, 1972, Arco commenced workover operations on the # 1 Well and ceased on December 11, 1972. The purpose of this action was to recomplete the # 1 Well in the Mackhank Sand at 8550' and the Wilcox 7700' Sand. On January 12, 1973, after the casing collapsed in the # 1 Well, Arco moved 700’ away and commenced the Frank Braslau #2 Well, completing it in the Mackhank Sand at 8524'-8565' on February 17, 1973. Production from the # 2 Well commenced on February 24, 1973.

Subsequently, a third well was completed in the Wilcox 7700' Sand. All wells are located in lot 206. All wells producing or that have produced showed positive in the original log of the # 1 Well. Because the operator was producing the zones in sequence, the Mackhank 8550' and the Wilcox 7700' Sands were not initially produced.

There was no extraction of oil, gas, or other minerals from the “Frank Braslau Gas Unit” from November 13, 1972, to February 24, 1973. The primary term of the 1947 deed expired on September 2, 1962. The primary term of the 1958 deeds expired on February 4, 1973.

Appellants, Braslau and Kugerl, in their four points of error present principally two contentions on appeal: 1) that this is not a case of temporary cessation of production; therefore, the trial court’s decision that the working operations were commenced and continued with due diligence and in good faith and that reproduction from the unit was restored within a reasonable time are inapplicable; 2) that production had ceased and, therefore, under the terms of the deeds, the interests as granted revert back to the grantors.

The concept of temporary cessation of production in term royalty deeds was adopted by the Supreme Court of Texas in Midwest Oil Corporation v. Winsauer, 159 Tex. 560, 323 S.W.2d 944 (1959), a case relied upon by appellees. In Midwest, production from a gas well had served to extend the term of the deed. Due to litigation between the lessee and the fee owners and mechanical breakdowns, production ceased for 174 days. The Supreme Court stated: “The question we have for decision is whether the cessation of production from such well due to litigation and mechanical breakdowns terminated the term royalty deed.” The court held that in the instances of temporary cessation of production, there is an implied agreement that the term royalty will not terminate.

Stuart v. Pundt, 338 S.W.2d 167 (Tex.Civ.App.—San Antonio 1960, writ ref’d), another case cited by appellees, holds that where production ceased due to mechanical breakdowns and after two months of workover the casing collapsed and a new well was drilled and completed in the same sand, the interruption was temporary and term royalties did not terminate.

We do not deem these cases controlling in our case. In neither case was the period of nonproduction found to be temporary by reason of production from new strata after the initial production zone had been depleted, as in our case.

In the instant case, when the Frank Braslau # 1 Well was depleted, reworking operations were commenced to produce the Mackhank and Wilcox Sands. After the casing collapsed in the # 1 Well, a second well was drilled and completed in the discovered but unproduced sands. Production began from this well on February 24, 1973, 20 days after the primary term of the second deed had ended.

Production when restricted to paying of commercial quantities has been defined to exclude discovered minerals in Texas. Holchak v. Clark, 284 S.W.2d 399 (Tex.Civ.App.—San Antonio 1955, writ ref’d). The record on appeal shows only a positive well log and kicks experienced by the driller upon reaching the possible zones of production. In Holchak, the court said of similar situation:

“. . .A favorable test for oil or gas, coupled with a strong indication that the well may at some future day become a producer, is not the same as having a producing well. Numerous accidents, unforeseen happenings and the like may intervene between discovery and production. Had the parties desired a provision which would allow the term of the deed to be extended by a discovery of oil within the definite term, followed by diligent operations thereafter, they could have expressly so provided. . . .”

It is the general rule that courts will not rewrite a contract for parties in the absence of fraud or mutual mistake. Davis v. Davis, 141 Tex. 613, 175 S.W.2d 226 (1943). To do so in this case would expand the meaning of the deed to include a continuous drilling clause. Continuous drilling clauses are not unusual in oil, gas and mineral leases or royalty conveyances. It is, therefore, not necessary for this Court to supply one in this instance. Rogers v. Os born, 152 Tex. 540, 261 S.W.2d 311 (1953); Holchak v. Clark, supra.

It is clear that there was no production from the “Frank Braslau Gas Unit” from November 14, 1972, until February 24, 1973. The primary term of the 1947 conveyance had already terminated and was only extended by production from the # 1 Well, and the primary term of the 1958 conveyances ended February 4, 1973. Applying these facts to the language of the deeds, it is clear that the deeds terminated on November 14, 1972, and February 4, 1973, respectively.

The judgment of the trial court is therefore reversed and judgment is here rendered that the mineral interests revert back to the grantors, their heirs and assignees.


author: NYE, Chief Justice.

text:
    Fred MEYER, Appellant, v. Willett KUPATT et al., Appellees.
    No. 1170.
    Court of Civil Appeals of Texas, Corpus Christi.
    April 7, 1977.
    Rehearing Denied April 20, 1977.

      Keith L. Merrick, Port Lavaca, for appellant.
    Tom A. Garner, Jr., Port Lavaca, for ap-pellees.
   OPINION

NYE, Chief Justice.

This is a summary judgment case. Fred Meyer brought suit against Willett, Laurin and Clarence Kupatt for specific performance or, in the alternative, damages on a contract to convey real estate. The Ku-patts denied Meyer’s claims and filed a motion for summary judgment supported by affidavits. After a hearing, the trial court granted the Kupatts’ motion and denied all recovery by Meyer. From this action by the trial court, Meyer has perfected appeal to this Court.

This suit arose out of an alleged contract between appellant Meyer and the Kupatts to sell to Meyer some 10.93 acres of land in Calhoun County. Two versions of this contract appear in the record. The first is Exhibit A to Meyer’s original petition. This copy, dated March 19, 1976, is signed by the appellant and no one else and has the word “Rejected” handwritten across its face. The second copy of the contract is Exhibit A to Meyer’s first supplemental petition. This copy is almost totally illegible, but appears to have been signed by appellant Meyer and by Joyce Keeble, a real estate agent.

Appellant is bringing suit to have this second contract specifically enforced against the Kupatts or for his damages. It was appellant’s contention that the Kupatts agreed to sell him this land for $7,500.00. Appellant claims that he signed the real estate contract and deposited the earnest money on the contract ($500.00) with the real estate agent, Joyce Keeble. Joyce Keeble was the listing agent for the land. In his original petition, appellant claims the Kupatts rejected the contract and returned his earnest money. The basis of his recovery under this pleading is that the contract was not an offer, but a written memorandum of a prior oral agreement. In his supplemental petition, the appellant comes up with the additional allegation that the contract was signed by Joyce Keeble, the authorized agent of the Kupatts.

The appellees deny all of appellant’s allegations and filed a motion for summary judgment. The basis for appellees’ motion was that they had not executed any written agreement to sell the land in question and, therefore, all that appellant’s allegations amounted to was an oral contract to sell real estate contrary to Tex.Bus. & Comm. Code Ann. § 26.01 (1968), (commonly known as the statute of frauds). In support of their motion for summary judgment, the appellees included an affidavit from appel-lee Willett Kupatt. This affidavit stated that neither he nor his brothers (the other appellees) ever executed a contract with Meyer to sell the land nor did they authorize anyone to execute such an agreement on their behalf. The appellant offered no summary judgment evidence.

Appellant’s first point of error is that his pleadings show the existence of several genuine issues of fact. It is appellant’s argument under this point that his pleadings and exhibits attached thereto raise a number of questions of material facts. The real question presented by this point of error is whether or not pleadings constitute summary judgment evidence.

It is a well established rule of law in this State that pleadings will not be regarded as summary judgment evidence. Hidalgo v. Surety Savings and Loan Association, 462 S.W.2d 540 (Tex.Sup.1971); Justice v. Willard, 538 S.W.2d 651 (Tex.Civ.App.—Amarillo 1976, no writ); P. T. Poultry Growers, Inc. v. Barr Equipment Company, Inc., 537 S.W.2d 773 (Tex.Civ.App.—Tyler 1976, writ ref’d n.r.e.); Roadrunner Investments, Inc. v. Texas Utilities Fuel Company, 536 S.W.2d 597 (Tex.Civ.App.—Fort Worth 1976, no writ); Jeffrey v. Larry Plotnick Co., Inc., 532 S.W.2d 99 (Tex.Civ.App.—Dallas 1975, no writ); Horn v. Toiler, 524 S.W.2d 597 (Tex.Civ.App.—Houston [1st Dist.] 1975, no writ). Admittedly, the party opposing a motion for summary judgment has no burden of proof. Torres v. Western Casualty and Surety Company, 457 S.W.2d 50 (Tex.Sup.1970). However, once the movant has shown his right to the summary judgment, the burden shifts to the non-movant to prove the existence of a material fact question. Gulf, Colorado & Santa Fe Railway Company v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1958). This must be done with proper summary judgment evidence.

In the case at bar, the appellee offered summary judgment evidence which if uncontroverted, clearly established as a matter of law his defense to appellant’s claims. For the reasons stated above, we must hold that appellant’s pleadings presented no summary judgment evidence and, therefore, the trial court was correct m granting appellees’ motion for summary judgment.

Appellant’s second point of error is that the trial court erred in failing to consider a listing agreement between the Kupatts and Joyce Keeble, the real estate agent, as part of the summary judgment evidence. It is appellant’s contention in this point of error that this document was present in the courtroom at the time of the hearing and although tendered by the appellant was rejected by the trial court. The document was not filed as a part of the summary judgment record. Regardless of the merits of this point of error, we cannot consider the question. Appellant failed to make a bill of exceptions as required by Rule 372, T.R.C.P. The evidence in question is not before this Court for consideration. Where documentary evidence is excluded by a trial court and the same is not made a part of the record, it cannot constitute a basis for reversal of the case. Vega v. Royal Crown Bottling Co., 526 S.W.2d 729 (Tex.Civ.App.—Corpus Christi 1975, no writ). Allandale Nursing Home, Inc. v. John Bremond Company, Inc., 514 S.W.2d 958 (Tex.Civ.App.—Austin 1974, writ ref’d n.r.e.).

The appellant’s remaining points of error concern alleged error on the part of the trial court in failing to allow appellant certain discovery measures and the necessary time to implement this discovery. These complaints are all centered around the failure of the trial court to review the listing agreement.

Rule 166 — A, Summary Judgment, Section (c), states in part:

“. . . The motion shall be served at least ten days before the time specified for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. No oral testimony shall be received at the hearing. . . . ”

The appellant made no attempt to attach the listing agreement to an affidavit and get it filed as summary judgment evidence. The appellant made no motion for eontinu-anee for the purpose of supplying opposing summary judgment evidence. In fact, the appellant announced “ready” the day before the day of the hearing on the summary judgment. We find no abuse of discretion in the trial court refusing to consider the purported listing agreement on the day of the hearing on the summary judgment. See City National Bank in Wichita Falls v. Bradshaw, 433 S.W.2d 955 (Tex.Civ.App.—Fort Worth 1968, no writ) and authorities cited therein.

The appellant does not complain of any other evidence he was prevented from presenting at the hearing except the purported listing agreement. The record indicates that the document in question (the listing agreement) was present in the courtroom on the day of the hearing and was available. Since the evidence the appellant now complains he was unable to discover was actually present, there is no showing of harm to the appellant. See Dobbins v. Gardner, 377 S.W.2d 665 (Tex.Civ.App.—Houston 1964, writ ref’d n.r.e). Any error by the trial court in this regard was harmless. Rule 434, T.R.C.P.

The judgment of the trial court is AFFIRMED.


author: PER CURIAM.

text:
    KENTUCKY BAR ASSOCIATION, Complainant, v. John E. ALBERT, Respondent.
    Supreme Court of Kentucky.
    Oct. 15, 1976.
    Leslie G. Whitmer, John T. Damron, Kentucky Bar Ass’n, Frankfort, for complainant.
    Joseph S. Freeland, Paducah, for respondent.
   PER CURIAM.

This is a disciplinary proceeding in which John E. Albert, an attorney of Paducah, Kentucky, is charged with two violations of the Code of Professional Responsibility. (DR2-103).

The trial committee of the Kentucky Bar Association found respondent guilty on one charge, not guilty on the other, and recommended that he be publicly reprimanded and required to pay the costs of these proceedings. Thereupon, the Board of Governors of the Kentucky Bar Association found respondent guilty and made the same recommendations to this court as were made to it by the trial committee. The respondent has not protested.

This court, being fully advised, finds the respondent guilty of violating the Code of Professional Responsibility and he is hereby publicly reprimanded. The costs of this action are assessed against him. The bond requirements of RAP 3.410 are waived.

All concur.


text:
    KENTUCKY BAR ASSOCIATION, Complainant, v. John W. MURPHY, Jr., Respondent.
    Supreme Court of Kentucky.
    Oct. 29, 1976.
    Rehearing Denied Jan. 28, 1977.
    Leslie G. Whitmer, Director, Kentucky Bar Association, Frankfort, for complainant.
    John W. Murphy, Jr., Liberty, for respondent.
   PER CURIAM.

This is a disciplinary proceeding. The Kentucky Bar Association charged the respondent with unethical and unprofessional conduct in that he failed to properly represent his client and failed to give appropriate attention to legal work entrusted to him by his client, resulting in damage to his client and prejudice to his client’s rights.

The trial committee recommended a finding of guilty and that the respondent be suspended from the practice of law for a period of three months. The board of governors of the Kentucky Bar Association considered the recommendation of the trial committee and found the respondent guilty and recommended that respondent be suspended from the practice of law for a period of three months.

Respondent asserts that the evidence does not support a finding of guilt.

We have reviewed the evidence and exhibits, and are of the opinion that the respondent is guilty of unethical and unprofessional conduct.

In a law suit involving title to real estate, respondent failed to attend the taking of depositions by the opposing party, but, more importantly, did not offer any proof for his client, then failed to take any action to further the interest or protection of his client after judgment was entered for the opposing party. Respondent’s testimony that he had withdrawn from the case is not credible in view of his signature on an order directing him to complete the proof for his client within a period of 30 days. Further, there is the testimony of opposing counsel and respondent’s client that respondent had not at any time indicated to them that he had withdrawn from the case.

Respondent owed a duty to his client to faithfully represent him in the litigation and failed to so do. We are of the opinion that respondent’s failure to protect the interests of his client is such unethical and unprofessional conduct as to warrant his suspension from the practice of law. In Kentucky Bar Association v. Dillman, Ky., 539 S.W.2d 294 (1976), we ordered suspension for one year for similar conduct. We are of the opinion that an equal penalty is warranted here.

It is, therefore, the judgment of this court that respondent, John W. Murphy, Jr., be and he is hereby suspended from the practice of law in Kentucky for a period of one year and is required to pay the costs of this proceeding.

All concur.


text:
    KENTUCKY BAR ASSOCIATION, Complainant, v. Carlos B. POPE, Respondent.
    Supreme Court of Kentucky.
    Oct. 29, 1976.
    Leslie G. Whitmer, Director, Kentucky Bar Ass’n, Frankfort, for complainant.
    Lowell W. Lundy, Barbourville, for respondent.
   PER CURIAM.

On June 15, 1976 the respondent was convicted by the United States District Court for the Eastern District of Kentucky of the offenses of attempting to evade income tax by means of a false and fraudulent income tax return (26 U.S.C. § 7201) and knowingly making and subscribing an untrue and incorrect income tax return (26 U.S.C. § 7206(1)) for the calendar year 1971. The returns in question were filed during the calendar year 1972. The offenses mentioned are felonies. No appeal has been taken from the judgment of conviction and appeal time has expired.

These matters have been brought to the attention of the court by the President of the Kentucky Bar Association in the manner prescribed by RAP 3.320. The response raises no issues which require a hearing.

The facts, the rule and our decision in Kentucky Bar Association v. Ball, Ky., 501 S.W.2d 253 (1971) require that we, forthwith, disbar the respondent and direct him to pay the costs of these proceedings.

It is so ordered.

All concur except JONES, J., who did not sit.


author: LUKOWSKY, Justice.

text:
    KENTUCKY DEPARTMENT OF REVENUE and Kentucky Board of Tax Appeals, Appellants, v. HOBART MANUFACTURING COMPANY, Appellee.
    Supreme Court of Kentucky.
    Jan. 14, 1977.

      William S. Riley, Asst. Atty. Gen., Kentucky Dept, of Revenue, Frankfort, Glenn McDonald, Louisville, for appellant, Kentucky Dept, of Revenue.
    Clay, Marye & Cowden, Mount Sterling, for appellee, Hobart Mfg. Co.
    Paul L. Madden, Hancock County Atty., Hawesville, for amicus curiae, Hancock County.
   LUKOWSKY, Justice.

This is an appeal from a summary judgment entered by the Montgomery Circuit Court which held that Hobart’s leasehold interest in real estate was intangible personal property and that the intangible personal property of a foreign corporation is not subject to taxation in Kentucky. We reverse.

This is the second time that this case has been before us. Its first visit was in Hobart Manufacturing Co. v. Kentucky Board of Tax Appeals, Ky., 515 S.W.2d 232 (1974), in which we remanded the case to the Montgomery Circuit Court with directions to cause an appropriate assessment of the leasehold interest (as distinguished from leasehold improvements) to be made. The summary judgment was the trial court’s response to this direction.

In the first opinion we set the stage in the following language:

“In 1966, the City of Mt. Sterling, Kentucky, leased a tract of its land to appellant Hobart Manufacturing Company. The city issued revenue bonds (KRS 103.-210), which provided funds used to construct buildings and make improvements on that land. The lease provided that title to the leased premises should remain in the city and at the conclusion of the original lease term or renewal thereof it would become the owner of all buildings and improvements, unless Hobart exercised its option to purchase the land and improvements thereon. From 1966 through 1971, no tax assessment was made on the land, the improvements or a leasehold interest. In 1971, at its own expense, Hobart constructed additional improvements on the land at a cost of $962,301.08.
In 1972, the Montgomery County Property Valuation Administrator sent a ‘Notice to Property Owner of an Increased Assessment * * * Real Estate (Leasehold value of improvements built on leased land) increased from 0 to $1,162,000.00.’ This assessment was reduced by the Montgomery County Board of Supervisors to $933,441. Hobart unsuccessfully appealed to the Kentucky Board of Tax Appeals, which concluded ‘ * * * that the leasehold improvements made by appellant in 1971 are subject to ad valorem taxation.’ The Board ruled that $933,441 was the correct amount. Hobart then appealed to the Montgomery Circuit Court which held ‘ * * * that the leasehold improvements made by Hobart Manufacturing Company in 1971 are subject to ad valo-rem taxation and * * * that * * $933,441 was an equitable assessment * * * t t>

In Kentucky Tax Commission v. Jefferson Motel, Inc., Ky., 387 S.W.2d 293, 295 (1965) we said:

“ . . . the leasehold . . ., being a contract right, theoretically is intangible personal property, often called a ‘chattel real.’ ” (Emphasis supplied)

Even if we were to restrict our examination of this case to the theoretical the judgment of the circuit court is erroneous.

KRS 132.190(l)(a) clearly provides that the intangible personal property of corporations not organized under the laws of this state is subject to taxation if it has acquired a business situs within this state. Commercial Credit Co. v. Commonwealth, 296 Ky. 826, 178 S.W.2d 188 (1944) is inapposite because that case arose at a time when the business situs doctrine was not in force in Kentucky.

The business situs doctrine was first established here in 1907 by judicial decision in Commonwealth v. R. G. Dun and Co., 126 Ky. 108, 102 S.W. 859. The following year the legislature abolished the doctrine. Carroll’s Kentucky Statutes, Sec. 4020; Commonwealth v. Sun Life Assurance Co. of Canada, 294 Ky. 19, 170 S.W.2d 890 (1943). In 1938 the legislature reestablished the doctrine by statutory amendment. Acts of Kentucky, 1938, c. 6; KRS 132.190(l)(a).

It would be ridiculous to contend that the lease had a business situs at any place other than in Kentucky. The lessee conducts mercantile, manufacturing operations on premises in Kentucky. The use and substantial value of the lease is in Kentucky. Luckett v. Louisville and Nashville Railroad Company, Ky., 479 S.W.2d 15 (1972); Kentucky Department of Revenue v. Bomar, Ky., 486 S.W.2d 532 (1972). Hobart offered no evidence to show that its manufacturing operations in Kentucky were not local to Kentucky and independent of its manufacturing concerns at its domicile. It failed to prove that the lease did not have a business situs in Kentucky. One who claims an exemption must prove he is within its parameters. Tennessee Gas and Transmission Co. v. Commonwealth, 308 Ky. 571, 215 S.W.2d 102 (1948).

We leave the realm of the theoretical and return to the world of practicality. In Kentucky Tax Commission v. Jefferson Motel, Inc., supra, we also said:

“Unquestionably, however, a leasehold is an ‘interest’ in the nature of real estate, and we do not necessarily imply that it cannot or should not be so classified for purposes of ad valorem taxation. See Purcell v. City of Lexington, 186 Ky. 381, 216 S.W. 599, 602 (1920).”

In further refining the ore we said 387 S.W.2d at page 296:

“In Fayette County Board of Supervisors v. O’Rear, Ky., 275 S.W.2d 577 (1955), it was held that the leasehold and the fee may not ordinarily be separated for ad valorem tax purposes. Cf. KRS 132.-220(3). The underlying reasons for that approach are practical in nature. When the lessor is not tax-exempt he bears the incidence of ad valorem taxes on the entire value of the property as a whole, and he passes it on to the tenant through the rental rate agreed upon between them. Hence, even though the lessee may have the better of the bargain (e. g., if the rent is lower than another lessee would be willing to pay), the taxing authority still collects a tax on the full value of the property. But this is not so when the landlord is tax-exempt, and in such a case we agree that if the non-exempt lessee’s contract right has a fair cash value it is taxable. This does not violate the uniformity requirement of Const. Sec. 171. In fact, it is not fundamentally a question of tax classification at all; it is more a mechanical matter of sifting a clearly taxable private property interest from a non-taxable public interest with which it has been commingled. This viewpoint is entirely consistent with the principles enumerated in Raydure v. Board of Sup’rs of Estill County, 183 Ky. 84, 209 S.W. 19 (1919).

To put the problem in its simplest perspective, fee simple title to real estate and the improvements thereon is no more than a bundle of all of the rights one could have in and to the property. The result of the sifting process, which is required in this peculiar class of cases, is the tax-exempt lessor pays no ad valorem tax on those rights which it retains but the non-exempt lessee must pay ad valorem tax on those rights which it obtains. The rights conferred by the lease being a part of the bundle of total rights in and to a parcel of realty and not otherwise listed for taxation, the leasehold is taxable as real estate at its fair cash value.

The terms “fair cash value” and “fair market value” are synonymous. In Commonwealth, Department of Highways v. Sherrod, Ky., 367 S.W.2d 844, 950 (1963), we held that the fair market value of a leasehold (if any) can be ascertained by simply subtracting the fair market value of the land as a whole if sold subject to the lease from the fair market value of the land as a whole if sold free and clear of the lease. This formula has worked well in condemnation cases. We see no reason why it would not work equally well in taxation cases.

The judgment is reversed and the cause is remanded with directions to the trial court to take such action as may be necessary to procure appropriate assessment of the leasehold interest.

All concur.

       The question of classification would arise only if the leasehold were assessed at a different percentage of fair cash value, or taxed at a different rate, from real estate. It is not suggested that a leasehold, though technically ‘intangible,’ comes within the purview of KRS 132.240, which requires the listing of intangibles at ‘face value.’ ”


author: STERNBERG, Justice.

text:
    Viola S. WAGNER, Appellant, v. DEPARTMENT OF EDUCATION, STATE PERSONNEL BOARD, Appellee.
    Supreme Court of Kentucky.
    April 1, 1977.

      Robert M. Braden, Corbin, for appellant.
    Robert F. Stephens, Atty. Gen., Carl T. Miller, Asst. Atty. Gen., Frankfort, for ap-pellee.
   STERNBERG, Justice.

Appellant was a vocational education teacher at the Pineville School of Practical Nursing. Her employment was terminated, not because she was deficient in her work as a teacher but because of friction engendered by conflicts between appellant and her immediate superior, who was the coordinator of the school. Appellant was then discharged by the Superintendent of Public Instruction. She proceeded to a hearing before the State Personnel Board (KRS 18.-270), which approved her termination. From thence she appealed to the Franklin Circuit Court (KRS 18.272), where the termination was again sustained. Hence, this appeal.

Appellant contends that the procedure followed by the State Department of Education in effecting her termination violated the Fifth and Fourteenth Amendments to the Constitution of the United States of America (due process).

Viola S. Wagner was employed in what the State Merit System identifies as a “classified position.” KRS 18.110(5). KRS 18.-210(16) provides that a person in such position may be discharged or reduced in rank after being presented with reasons in writing for the discharge or reduction. The responsibility for carrying out the program of vocational education and rehabilitation (KRS, Chap. 163) is vested in the State Board of Education. KRS 163.030. Although the Superintendent of Public Instruction is given general supervision of the personnel, the dismissal of appellant “shall be with the approval of the State Board of Education.” KRS 163.050. The appellant does not challenge the constitutionality of the statute providing for her discharge, rather her challenge is directed at the procedure followed in bringing about the termination of her employment.

Appellant is entitled to a due process hearing and anything less than that is insufficient. American Beauty Homes Corp. v. Louisville, etc., Ky., 379 S.W.2d 450 (1964); City of Louisville v. McDonald, Ky., 470 S.W.2d 173 (1971).

There were many conferences between representatives of the State Department of Education and appellant and much correspondence, discussions and informal hearings in which an effort was made to amicably dispose of the conflict that had arisen between appellant and the school’s coordinator. By letters dated April 22, 1974, and May 13, 1974, appellant was advised in writing of the charges made against her. She had an evidentiary-type hearing before the State Personnel Board on August 7, 1974, at which she and her attorney were present. Eleven persons testified, all of whom, except three, were cross-examined by counsel for appellant. Appellant was afforded the opportunity to testify, but did not. The testimony was stenographically reported and a certified copy of the transcript is filed in these proceedings. Appellant was duly notified of the findings and decision of the State Personnel Board, and within thirty days she filed her petition and appeal with the circuit court. Due process does not mean that at every step of the way there must have been a due process hearing. A due process hearing means that at some time in the course of the administrative proceedings there must have been a due process hearing. The record clearly reflects that appellant was afforded a due process hearing before the State Personnel Board.

By letter of April 22, 1974, the Superintendent of Public Instruction notified appellant that her employment would be terminated as of May 10, 1974. The superintendent is authorized to hire and fire, but such action must have the approval of the State Board of Education. KRS 163.050(1). This statute does not provide that the hiring or firing must be with the prior or subsequent approval of the Board. Appellant charges that her discharge was not effective until approved by the Board. In the event a dismissal can legally only be effected by the subsequent approval of the State Board of Education, as contended by appellant, then any attempt at firing by the superintendent would in fact be ineffective inasmuch as it must await a meeting of the State Board of Education for its approval. This certainly would limit the ability of the superintendent to effectively carry out the vocational education and rehabilitation program. On the other hand, if the superintendent can effectively discharge a person and thereafter have the dismissal approved by the State Board of Education, this could place the Board in the posture of perfunctorily approving the action of the superintendent or taking up arms against it and, by its overriding authority, overthrow it and direct a reinstatement with all its attendant implications. We can only guess what the legislature had in mind, but, without doubt, the legislature meant for the vocational education program to be operated in as orderly and effective manner as possible. To do so, the superintendent must be given the privilege of exercising great latitude with regard to personnel, bearing in mind that the State Board of Education approves or disapproves of his action. We are of the opinion that the Superintendent of Public Instruction may effectively hire or fire an employee, with his action being subsequently submitted to the State Board of Education for its approval or disapproval.

Appellant was notified in writing of the reasons for her discharge, regardless of whether her dismissal was effective on May 10, 1974, or whether it became effective when it was approved by the State Board of Education on June 18,1974. Appellant had a hearing before a hearing officer of the State Personnel Board, at which there was a taking and weighing of evidence, a finding of fact based upon consideration of the evidence, and the making of an order supported by substantial evidence and from which a judicial review is provided.

KRS 18.210(16) provides as follows:

“For discharge or reduction in rank or grade only for cause, after the person to be discharged or reduced has been presented with the reason for such discharge (emphasis ours) or reduction stated in writing, and has been allowed a reasonable time to reply thereto in writing, or, upon request, to appear personally with counsel and reply to the head of the department or his deputy. The statement of reasons and the reply shall be filed as public record with the commissioner.”

The provisions of this statute may not have been followed to the letter of the law, but appellant had a due process hearing by the State Personnel Board, where her dismissal was sustained.

Next, appellant alleges that there was no proof offered to substantiate the charges that were the bases for her termination. Counsel for appellant, throughout his brief, states that there is no proof whatever to substantiate any of the charges against the appellant.

A reading of the transcript of testimony of the hearing held August 6, 1974, before a hearing examiner of the State Personnel Board discloses that appellant was not cooperative with her superiors and, as a matter of fact, was insubordinate to them. Appellant was afforded the opportunity to testify and refute the charges, but she chose not to do so. We assume, therefore, that had she testified, her testimony would have corroborated the charges. Even though appellant contends that there is no proof to substantiate the charges, we have read the proof and are convinced that there is sufficient evidence to support the action of the Board. In Taylor v. Coblin, Ky., 461 S.W.2d 78 (1970), we said:

“If there is any substantial evidence to support the action of the administrative agency, it cannot be found to be arbitrary and will be sustained. * * * ”

Had there not been substantial evidence, then the action of the State Board of Personnel would have been arbitrary and could not be sustained. In view of our findings, however, the action of the Board must be sustained. We cannot substitute our findings for that of the Board where its findings are supported by evidence of a substantial probative nature. Cowden Manufacturing Company v. Fultz, Ky., 472 S.W.2d 679 (1971).

The judgment is affirmed.

All concur.


author: VANCE, Judge.

text:
    COMMONWEALTH FIRE AND CASUALTY INSURANCE COMPANY, Appellant, v. Janice Garland MANIS et al., Appellees. FIRST NATIONAL INSURANCE COMPANY OF AMERICA and Safeco Insurance Companies, Appellants, v. Janice Garland MANIS et al., Appellees.
    Court of Appeals of Kentucky.
    Jan. 7, 1977.
    Rehearing Denied April 15, 1977.

      William Donald Overbey, Overbey, Over-bey & Overbey, Nat Ryan Hughes, Hughes & Gregory, Murray, for appellants.
    M. Ronald Christopher,'Hurt, Christopher & Jones, Murray, for appellees.
    Before MARTIN, C. J., and VANCE and HOWARD, JJ.
   VANCE, Judge.

This is a case of first impression as to several aspects of uninsured motor vehicle insurance coverage.

Janice Garland was injured in a one-vehicle automobile accident. She was a passenger in a vehicle operated by Kenneth Dow-ney, age 16 years, and owned by Robbie Raspberry. Mrs. Raspberry was uninsured. Buel Downey, the father of Kenneth, had insurance with Safeco Insurance Companies which provides liability insurance for personal injuries and property damage as follows:

“LIMITS OF LIABILITY: The limit of bodily injury liability stated in the declarations as applicable to ‘each person’ is the limit of the company’s liability for all damages, including damages for care and loss of services, arising out of bodily injury sustained by one person as the result of any one occurrence; the limit of such liability stated in the declarations as applicable to ‘each occurrence' is, subject to the above provision respecting each person, the total limit of the company’s liability for all such damages arising out of bodily injury sustained by two or more persons as the result of any one occurrence.”

The policy was limited to $10,000.00 liability for each person.

The Safeco policy provided coverage to Kenneth Downey if he was operating Mrs. Raspberry’s automobile with her permission or reasonably believed that he had her permission under the following policy provision:

“PERSONS INSURED: The following are insureds under the liability section:
‘(b) with respect to a non-owned automobile;
(1) The named insured
(2) Any relative, but only with respect to a private passenger automobile or trailer provided, under (b)(1) or (2) above, his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission of, the owner and is within the scope of such permission.”

On the day of the accident Mrs. Raspberry let her daughter use her automobile. The daughter consented to its use by Janice and she consented to its operation by Kenneth. On previous occasions Kenneth had operated the automobile with Mrs. Raspberry’s permission.

Janice Garland brought an action for her injuries against Kenneth Downey, the operator of the automobile; Buel Downey, the father of Kenneth, and Robbie Raspberry, the owner of the vehicle. The claim against Buel Downey was based upon the fact that he had signed for the operator’s license for his infant son, KRS 186.590.

The claim against Mrs. Raspberry was based upon the allegation that she permitted Kenneth to operate her automobile. KRS 186.590(3).

B. C. Garland and Melvie Garland, the parents of Janice, asserted a claim against the same three defendants for medical expenses and loss of services resulting from the injury to Janice.

Safeco provided representation at trial for the individual defendants.

The case was submitted under an instruction which allowed recovery against Mrs. Raspberry, the owner, if the jury believed that she had given sole possession and control of her automobile to her daughter and the daughter, in turn, had permitted Kenneth to operate the car.

The jury returned a verdict in favor of Janice Garland in the amount of $21,000.00 and in favor of her parents in the amount of $5,000.00 against all three defendants. The judgment entered pursuant to that verdict was not appealed.

The Garlands had a policy of insurance with Commonwealth Fire and Casualty Company which contained standard uninsured motor vehicle coverage.

A disagreement soon developed as to what extent, if any, each of the two insurance companies were liable on their policies and a declaratory judgment action was instituted to settle that question. Summary judgment was requested by each of the parties and was granted to appellees.

The judgment provided that Safeco was liable to Janice Garland in the sum of $11,-000.00 and to B. C. and Melvie Garland in the amount of $5,000.00.

It further provided that Commonwealth Fire and Casualty Company was liable to Janice Garland in the amount of $11,000.00.

Both insurance companies have appealed.

There is agreement that the $11,000.00 judgment against Safeco represents a clerical error and should in fact have been $10,-000.00. We will proceed as if the judgment were for $10,000.00.

Safeco contends that its policy does not provide coverage since the automobile was not owned by its insured and was being operated without the consent or permission of the owner.

No liability could have attached to the defendant, Robbie Raspberry, unless it was first established that Kenneth Downey operated the automobile with her permission. KRS 186.590(3). This issue was submitted to and determined by the jury in the original trial. Counsel for Safeco participated in that trial and Safeco is bound by that determination. State Farm Mutual Automobile Ins. Co. v. Shelton, Ky., 368 S.W.2d 734 (1963).

Safeco contends that it cannot be held to pay the $5,000.00 adjudged to the parents of Janice Garland because the $5,000.00 was for medical expenses and loss of services arising out of the injury to Janice. The policy language is plain that the limit of liability for bodily injury to one person is $10,000.00 and this sum shall include damages for care and loss of services.

Although the claim by the parents may constitute a separate cause of action— the policy limits recovery as a fixed sum for damages arising from bodily injury to any one person. The limits cannot be enlarged by the means of making one claim for bodily injury and another claim for medical expenses arising therefrom. Smith v. Cassida, 403 Pa. 404, 169 A.2d 539 (1967). See also 8 Appleman Insurance Law and Practice, Section 4891.

The judgment is erroneous insofar as it holds Safeco liable for the judgment rendered in favor of Mr. and Mrs. Garland.

Commonwealth Fire and Casualty Insurance Company, contends it has no liability under its uninsured motor vehicle coverage for the simple reason that the automobile operated by Kenneth Downey was an insured vehicle. We agree.

It is true the vehicle was not insured by its owner but the insurance coverage of the operator provided the minimum coverage required by KRS 304.20-020. We think the purpose of uninsured motor vehicle coverage is to make available to injured parties from their own insurer a stated minimum amount of insurance coverage when no other valid or collectible insurance exists with respect to the vehicle causing the damage. That situation does not obtain here.

This case is factually distinguishable from Meridian Mutual Ins. Co. v. Siddons, Ky., 451 S.W.2d 831 (1970), wherein a policy holder was permitted to “stack” or claim recovery under two different policies for injuries sustained in one accident.

We do not consider Sellers v. U. S. Fidelity and Guaranty Co., Fla., 185 So.2d 689 or Safeco Ins. Co. v. Jones, 286 Ala. 606, 243 So.2d 736, applicable because each case involved judgments against the drivers of two different automobiles, one of which was insured and the other not. In each case a part of the damage was caused by the operation of an uninsured motor vehicle.

The conclusions we have reached make it unnecessary to determine the questions raised by Commonwealth with respect to subrogation.

The judgment is affirmed in part and reversed in part. A new judgment shall be entered which:

(1) Allows recovery to Janice Garland Manis against First National Insurance Company of America and Safe-co Insurance Company in the sum of $10,000.00 with interest at the rate of 6% per annum from July 6, 1971.
(2) Dismisses the claim of B. C. Garland and Melvie Garland against First National Insurance Company of America and Safeco Insurance Companies.
(3) Dismiss claims of J. G. Manis and B. C. and Melvie Garland against Commonwealth Fire and Casualty Insurance Company.
(4) Adjudges one-half of costs against First National and Safeco and the other one-half against B. C. Garland and Melvie Garland.

All concur.


author: HAYES, Judge.

text:
    Robert W. CROGHAN, an infant suing by his father and next friend, Anslem H. Croghan, Appellant, v. HART COUNTY BOARD OF EDUCATION and Hart County Board of Education, Composed of, D. M. Belt, Member, in his official capacity, Munfordville, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    March 11, 1977.
    James F. Williamson, Louisville, Davis Williams, Munfordville, for appellant.
    Dixie R. Satterfield, Bowling Green, for appellees.
    Before HAYES, HOGGE and VANCE, JJ.
   HAYES, Judge.

This case involves the claim of the Appellant, an eleven year old boy, suing by his Father and Next Friend, against the Hart County Board of Education, the individual members of that Board, the driver of the Hart County School Bus, upon which the appellant was a passenger, and the driver of the auto which struck the appellant as the appellant crossed Kentucky Highway 88. The accident occurred April 6, 1972. During the pendency of the action, the appellant settled with the auto driver and appellant reserved his rights against the remaining defendants-appellees. The jury returned a verdict for the appellees, the court entered judgment thereon and the plaintiff appealed.

The appellant, Robert W. Croghan (hereinafter called Croghan) attended the Cub Run School, an elementary school in Hart County, Kentucky. He resided several miles west of Munfordville, Kentucky, on Kentucky Highway 88, the principal road between Cub Run and Munfordville, Kentucky. Highway 88 runs generally in an east-west direction. Croghan’s home is located on the north side of Highway 88, a two lane highway. A short distance west of the Croghan home there is a curve in Highway 88 and at this point there are yellow lines in both lanes of traffic constituting a no passing zone for traffic both ways. In that curve there is a road that leaves Highway 88 on the south, that runs parallel to Highway 88 and then re-enters Highway 88 at a point some distance from Croghan’s home. Croghan’s home is located on the side opposite this road. Located on this side road is the Mount Beulah Church and a grocery store operated by the Jack Wilkersons. This side road will be referred to as the Church Road.

On April 6,1972, Croghan was on the bus headed home. Croghan’s stop was the last stop on this route and, after letting Cro-ghan off, the bus returns west toward Cub Run to drop off the remaining passengers. The bus driver, Childress, as he always did, and continued to do even after the accident, pulled off Highway 88 onto the Church Road. He travelled that road to the point where it re-enters Highway 88, and while still on the Church Road, he stopped his bus, and permitted Croghan to disembark. Chil-dress had no flashing signals on nor did he have his stop sign operating. Croghan permitted several cars going east to pass, and while attempting to cross Highway 88 to his home, he was struck by the Waddle auto, which was traveling west on Highway 88. The bus remained stopped on Church Road at its intersection with Highway 88.

The appellant makes the following arguments:

(1) The trial court erred in failing to direct a verdict for Croghan.

(2) The trial court erred in its instruction to the jury because it did not fit the issues.

It is this court’s opinion that the trial court should have instructed the jury that the defendants were negligent as a matter of law and the case should have been submitted to the jury to determine if Croghan was contributorily negligent.

The appellees contend that the reason the school bus did not stop on the highway immediately across the road from the Cro-ghan’s home was due to the provisions of KRS 189.375.

KRS 189.375 states in part:

“. . . no driver shall stop a school bus for loading or unloading purposes in a no passing area such as a hill or curve which does not afford reasonable visibility to approaching motor vehicles from both directions . . (Emphasis added).

This court finds that the appellees, through their own actions, present a contradictory position which seriously weakens this contention. The testimony by another bus driver for the same school board was that his bus stops on Highway 88 across from the Croghan house with all the safety precautions provided to the student by KRS 189.375.

The appellees argue that KRS 189.375 supersedes that rule of law set forth in Taylor v. Patterson’s Administrator, 272 Ky. 415, 114 S.W.2d 488 (1938) which held that the transporter of school children was required to exercise the highest degree of care for a child’s safety until the child was on the side of the street where his home was located and was out of danger of injury from passing traffic. (Emphasis added). KRS 189.375 does not supersede this rule but operates to affirm and strengthen it by adding this further safety standard:

“. . . Before stopping the school bus and while loading or discharging school children, the driver shall open out the [stop] sign so that it will be plainly visible to traffic approaching from both directions .” (Emphasis added).

This law applies whether the child is 6 or 16 years old.

The appellant proposes several alternatives for the bus driver in discharging the student Croghan. We do not desire to tell the school board what to do other than to state what they should not do. One of the appellant’s suggestions, however, bears some consideration by the school board. The appellant, Childress, could have driven the school bus eastwardly past Croghan’s home to a place, however far, where the bus could safely be turned around, and then proceed west toward Cub Run, stopping near Croghan’s home, in which event Cro-ghan could be discharged on the north side of the road adjacent to his home.

The appellant cites the case of Van Gaasbeck v. Webatuck School District No. 1, 21 N.Y.2d 239, 287 N.Y.S.2d 77, 234 N.E.2d 243 (1967), and argues that Kentucky law should be in accord. The Van Gaasbeck case declares that violations of a school bus statute similar to KRS 1891375 give rise to absolute liability. The defense of contributory negligence, therefore, would not be available. We are not constrained to go this far. This court in a line of eases from Williamson v. Garland, Ky., 402 S.W.2d 80 (1966), to Oldham v. Adkisson, Ky., 448 S.W.2d 55 (1969), has stated that the defense of contributory negligence is available regarding accident and injuries of children where they have reached sufficient age, experience, maturity, and intelligence to make them aware of dangers and the proper method of avoiding these dangers. Whether the appellant Croghan was con-tributorily negligent is a question of fact to be determined by a jury, rather than one of law.

The judgment of the trial court is reversed and remanded for a new trial. Since we hold the appellees were negligent as a matter of law, the only issue to be determined on re-trial is one of contributory negligence of Croghan, if any.

Judgment reversed.

All concur.


author: PARK, Judge.

text:
    KENTLAND ELKHORN COAL COMPANY, Appellant, v. Earl D. JOHNSON et al., Appellees.
    Court of Appeals of Kentucky.
    March 25, 1977.

      Kelsey E. Friend, Pikeville, Kenneth E. Hollis, Acting Gen. Counsel, Department of Labor, Frankfort, William L. Huffman, Director, Workmen’s Compensation Bd., Frankfort, for appellees.
    John H. Baird, Pikeville, for appellant.
    Before HOWARD, LESTER and PARK, JJ.
   PARK, Judge.

While employed by the appellant, Kent-land Elkhorn Coal Corporation, the appel-lee, Earl D. Johnson, received a work related injury to his back on August 31, 1972. Johnson returned to work for Kentland Elkhorn Coal Corporation in January 1973 at his same job, driving a truck. Johnson received a second work related back injury on October 6, 1973. The Workmen’s Compensation Board found that Johnson was 70% occupationally disabled solely as a result of the second injury on October 6,1973. The Board found that there was no permanent aisability as a result of the first injury on August 31, 1972. The Board also held that there was insufficient proof to assess any liability against the Special Fund. Kentland Elkhorn Coal Corporation appeals from a judgment of the Pike Circuit Court affirming the opinion and award of the Board.

On this appeal, two issues are raised. First, did the Board err in attributing all of Johnson’s disability to the second injury? This issue is important because the benefits payable in 1972 were at a lower rate and for a shorter period of time than benefits payable for an injury sustained in 1973. Second, did the Board err in failing to assess any liability against the Special Fund?

A claimant in a Workmen’s Compensation proceeding has the burden of proof. If the Board rules against the party having the burden of proof, the test is whether the evidence was so overwhelming as to compel a finding in his favor. Wagoner v. Smith, Ky., 530 S.W.2d 368 (1975). If the Board finds in favor of the party having the burden of proof, the only question on appeal is whether the Board’s findings are supported by substantial evidence. Smyzer v. B. F. Goodrich Chemical Company, Ky., 474 S.W.2d 367 (1971).

In this proceeding, Johnson had the burden of proving that he was occupationally disabled as a result of the second injury in 1973. Therefore, this court must determine whether there was substantial evidence to support the Board’s finding that Johnson was 70% occupationally disabled as a result of the second injury. With respect to the Special Fund, the employer is the party primarily liable. Any liability of the Special Fund is to reimburse or indemnify the employer who is primarily liable. Yocom v. Milish, Ky., 497 S.W.2d 702 (1973). Therefore, Kentland Elkhorn Coal Company had the burden of proving any liability of the Special Fund. This court must determine whether the evidence was so overwhelming as to have compelled a finding by the Board of some liability on the part of the Special Fund.

The Board had the benefit of the testimony of three physicians: Dr. Leatherman on behalf of Johnson, and Dr. Miller and Dr. Thompson on behalf of the employer. In addition, the Board received the report of Dr. Goodman who was appointed pursuant to KRS 342.121. None of the four physicians in question saw Johnson prior to the second injury on October 6, 1973. In each instance, the physician’s opinion was based upon an examination of Johnson made after the second injury and upon the history given by Johnson.

Dr. Thompson testified that Johnson suffered no permanent disability as a result of either injury. Dr. Leatherman testified that Johnson had a 50% functional disability as a result of his injury on October 6, 1973. When asked on cross-examination whether any of this disability could be attributed to the earlier injury on August 31, 1972, Dr. Leatherman testified:

“Well, I can’t say for certain, having not seen him in the interval between the two accidents or not seen him prior to the second accident, and it would only be conjectural and by his history, so that it would be very difficult for me to evaluate him as to residual disability or whether he had any or not following the first accident.”

When asked about Johnson’s history of having returned to work following the first injury, Dr. Leatherman testified on re-direct examination:

“Well, I think it would put more weight on the effect of his second accident, if he were able to return to full heavy work as a result of the healing process of his first injury, even though he did complain of some symptoms.”

Dr. Miller testified that Johnson had a 35% functional disability to the body as a whole, although the disability was not necessarily permanent. When asked his opinion as to the cause of the disability, Dr. Miller testified:

“I felt it was virtually impossible to pinpoint one specific factor. The injury which occurred in 1972 and from which he stated that he was never fully recovered was probably the primary cause; however, his excessive obesity and his second injury certainly contribute their shares.”

In his report, Dr. Goodman found that Johnson had a 10% functional disability to the body as a whole. Of this disability, Dr. Goodman attributed one half, or 5% impairment to the arousal of a pre-existing dormant nondisabling disease condition. The remaining disability he attributed equally .to each of the two injuries. In other words, Dr. Goodman assigned a 2½% functional disability to the injury of August 31, 1972, and a 2½% functional disability to the injury of October 6, 1973.

In addition to the medical evidence, the Board also had before it the testimony of Johnson. Johnson testified that the injury of August 31, 1972, occurred as he was leaning out the cab of his truck. As he was reaching back to latch the tailgate of his truck, Johnson felt a sharp pain in his back. Johnson returned to work in January 1973, and he continued to perform his regular work until the date of his second injury on October 6, 1973. On that occasion, Johnson was operating a high lift. His feet slipped as he got out of the high lift, and he fell approximately seven or eight feet to the ground striking the center of his back.

This court concludes that there was substantial evidence in the record to support the Board’s finding that Johnson’s disability was solely attributable to the second injury in 1973. This court further concludes that the evidence was not so overwhelming as to compel a finding by the Board that the Special Fund was responsible for a portion of the disability. None of the physicians had examined Johnson prior to the date of his second injury. Consequently no witness could testify from observation that Johnson suffered any disability prior to the second injury. Although Johnson was continuing to suffer some symptoms from the first injury, he was able to return to his regular work, something that he was unable to do after the second injury. The first injury occurred as Johnson was straining to reach something; the second injury occurred when he fell on his back from a height of seven or eight feet. The evidence was not so compelling that the Board was required to find that Johnson was suffering from a dormant non-disabling degenerative disc condition which was aroused into active disability as a result of the second injury. This case is distinguishable on it facts from Haycraft v. Corhart Refractories Co., Ky., 544 S.W.2d 222 (1976). The circuit court did not err in affirming the order and award of the Board.

The judgment of the circuit court is affirmed.

All concur.


author: LESTER, Judge.

text:
    Cleveland JOHNSON, Appellant, v. GUM BRANCH COAL COMPANY et al., Appellees.
    Court of Appeals of Kentucky.
    March 25, 1977.
    Robert J. Greene, Paintsville, for appellant.
    William G. Francis, Francis, Kazee & Francis, Prestonsburg, for Gum Branch Coal Co.
    Gemma M. Harding, Louisville, Kenneth E. Hollis, Dept, of Labor, Frankfort, for Special Fund and George R. Wagoner, Acting Commissioner of Labor.
    Before HOWARD, LESTER and PARK, JJ.
   LESTER, Judge.

This appeal found its origin in Cleveland Johnson’s application for adjustment of his claim for workmen’s compensation occasioned by his alleged contraction of pneu-moconiosis while in the employment of ap-pellee, Gum Branch Coal Company. The Special Fund was joined as a party defendant.

On October 16, 1974, the case was assigned for a hearing at the conclusion of which the hearing officer entered the following order:

Plaintiff’s evidence in chief heard in part and he is given thirty days hereafter to complete by depositions. At the conclusion of plaintiff’s proof this case shall be redocketed for defendants proof.

Within the time prescribed, appellant took the deposition of Dr. E. E. Musgrave, a general practitioner, and requested and received additional time in which to adduce further medical testimony but he never availed himself of that opportunity until some ten months later.

By notice of January 6, 1975, the Workmen’s Compensation Board advised the attorneys and the parties that the claim had been assigned for a second hearing on January 15, 1975, at which time there was no appearance on behalf of appellant but counsel were present for appellees, Gum Branch Coal and the Special Fund. On the last mentioned date, the Hon. Gerald Jones, Hearing Officer, entered a field order which said, in part:

Counsel for defendant announced he was not ready for trial but would complete his case by depositions and the parties are given the following number of days to complete by depositions: defendant 30 days thereafter; plaintiff 5 days thereafter for rebuttal.

We specifically note that deleted from the hearing officer’s printed form of field order were the words “plaintiff 30 days” immediately after the word “depositions;” and pri- or to the phrase “defendant 30 days etc.” At this stage, our view of the record is that the claimants’ time for the production had expired and the case had been reassigned for defendants’ proof which they were not ready to offer at the second hearing. This being true then the appellees had to and including February 14, 1975, to introduce their evidence. Appellee, Special Fund, would have us believe to the contrary when it states at page three of its brief:

A second hearing was held in this matter on January 15,1975. A Field Order from this hearing officer who presided at this January 15, 1975 hearing (36) gave the claimant 30 days to February 15, 1975 for proof time and the defendants 30 days thereafter to March 15,1975 with 15 days rebuttal time thereafter for the claimant.

The appellee must have a different copy of the field order than we have for the claimant was not given 30 days to complete nor 15 days for rebuttal.

On March 17, 1975, the Special Fund moved the Board for an extension of time to April 14, 1975, in which to conclude its depositions and on that same date, Johnson filed his brief and motion to submit the claim for judgment. By order of March 31, 1975, the Board submitted the case for opinion and judgment and allowed the parties time to file briefs. On March 20, 1975, the Special Fund mailed the usual notice of the taking of the deposition of Dr. William H. Anderson on April 4, 1975, which it did and which appellant did not attend assigning as his reason therefor, in his motion to strike the deposition, that he

. naturally assumed that because of the Board’s order submitting the case, that the Fund would not take the deposition of Dr. Anderson on April 4 and for that reason did not make any appearance and was deprived thereby of cross-examining Dr. Anderson.

On June 2,1975, the Board overruled Johnson’s motion to strike the Anderson evidence because on April 28, 1975, an order was entered setting aside the previous entry of submission and extending the time in which the Special Fund had to complete its evidence. Appellees took two depositions of medical witnesses and after submission for judgment, the Compensation Board entered its final order on November 24, 1975, dismissing appellant’s claim because:

The plaintiff has failed to sustain his burden of proof and/or persuasion to the effect that he is affected with the occupational disease of pneumoconiosis and/or is disabled thereby.

On this appeal, the plaintiff below complains that the Board erred in ordering the claim withdrawn from submission and permitting the Special Fund to go forward with its evidence and ip further failing to strike the evidence of Dr. Anderson because Johnson was deprived of his right of cross-examination. If appellant were to prevail before this Court, it would have the effect of submitting his case without opportunity for the appellees to present any medical evidence whatsoever.

Appellant directs our attention to Collista Coal Company, Inc. v. Castle, Ky., 407 S.W.2d 719 (1966) in support of his argument that the April 28, 1975, order of submission could not have been withdrawn but we are not persuaded by that decision for in that case, the Board had entered an award which had become final while in the case before us no conclusive determination was made in the claim until November of 1975. Our reasoning finds support in 2 Am.Jur.2d Administrative Law § 590 at 420 (1962);

Courts are averse to review interim steps in an administrative proceeding, and it appears to be the universal rule that appeal to the court will not lie from an interlocutory order unless such order affects the merits.
Whether review is sought in nonstatutory or statutory proceedings, review of preliminary or procedural orders is generally not available, at least if they are purely preliminary or procedural, prior to entry of a final order in the proceeding, primarily on the ground that such a review would afford opportunity for repeated delays in the course of administrative proceedings for the purpose of reviewing mere procedural requirements or interlocutory directions. Even though a statute broadly provides for review of an “order” it is held not to apply to mere preliminary or procedural, as distinguished from final, orders.

See also 73 C.J.S. Public Administrative Bodies and Procedures § 230 at 602 (1951).

In discussing informality of rules as to pleadings and process Professor Larson’s views may be found at 3 Larson’s Workmen’s Compensation § 78.11 at 15-15 (1976):

Since the purpose of the informality rule in compensation procedure is not merely to prevent the defeat of claims by technicalities but also to simplify and expedite the achievement of a substantially just result, it should also be applied in proper cases for the benefit of the employer or insurer.

If we were to adopt appellant’s position, a substantially unjust result would be reached for it would serve to preclude the appellees from introducing any medical evidence whatsoever. Moreover, we know of no rule which would prevent the Workmen’s Compensation Board from setting aside its order of submission for judgment prior to the rendering of its final order or award.

Cleveland Johnson further complains that he was denied his right to cross-examine Dr. Anderson but the record reflects that counsel for the Special Fund mailed notice of that deposition to appellant on March 20, 1975, reciting therein that some fifteen days later the doctor’s testimony would be taken and it was appellant who elected not to attend. We also note that the claimant had ample opportunity to adduce testimony from the witness as if upon cross-examination but he failed to pursue that avenue of approach. We do not intend to imply that a party should be required to attend depositions in the absence of a specific order, especially at extensive expense and travel, after the Board has ordered a claim submitted for opinion and judgment for an intolerable practice could develop wherein litigants would continue to take testimony at a time when they should be briefing their respective cases.

Appellant had the burden of proving by evidence of probative value which should have been so conclusive as to compel a finding in his favor and in this respect, he failed. The Board made findings of fact in favor of the appellee and the Courts will not disturb such findings. McDowell Memorial Hospital, et al, v. McCoy, et al, Ky., 407 S.W.2d 717, 718 (1966) and Royal Crown Bottling Company v. Bedwell, et al, Ky., 449 S.W.2d 767, 769 (1970).

The judgment is affirmed.

All concur.


author: HOGGE, Judge.

text:
    Mary Louise RILEY, Appellant, v. Ruth MILLER et al., Appellees.
    Court of Appeals of Kentucky.
    March 25, 1977.
    W. Pelham McMurray, McMurray & Livingston, Paducah, for appellant.
    Joe A. Owen, Prince & Owen, Benton, for appellees.
    Before HOGGE, WHITE and LESTER, JJ.
   HOGGE, Judge.

This appeal is from a judgment of the Marshall Circuit Court wherein the court found a chattel mortgage executed in favor of the appellee was superior to a lien asserted by the appellant.

Appellant obtained a judgment against one Leonard Miller in June 1974. On November 26, 1974, she attempted to levy execution on a herd of cattle in which Leonard Miller held a partnership interest. At that time, appellant found that Miller’s interest in the cattle was subject to a “security interest”, referred to herein and in the record as a chattel mortgage, executed in favor of the appellee. The chattel mortgage, filed in the Marshall County Court House, lacked the signature of the secured party and the addresses of either party.

Sitting without a jury, the Marshall Circuit Court heard the case upon the depositions, exhibits and briefs of the parties. The court issued findings of fact, conclusions of law and judgment wherein the court found the defects in the chattel mortgage to be technical in nature and concluded there had been substantial compliance with the requirements of KRS 355.9-402. Therefore, the chattel mortgage was prior and superior to the levy of execution issued by the appellant. From that judgment this appeal is brought.

The essential facts are not in dispute and only two questions are raised on this appeal. First, is it a fatal error to omit the signature of the secured party from the face of a chattel mortgage? Second, is it fatal error to omit the addresses of both the creditor and the debtor from the face of the chattel mortgage?

The resolution of both of the above issues entails a construction of KRS 355.9-402(1) & (6) in conjunction with KRS 355.1-102. KRS 355.9-402(1) and (6) provide as follows:

(1) A financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items or collateral.
(6) A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.

KRS 355.1-102 provides as follows: “(1) This chapter shall be liberally construed and applied to promote its underlying purposes and policies.” With the above in mind, we must determine what the purposes of KRS 355.9-402 are and whether the deviations from it were seriously misleading so as to defeat its purpose. The most obvious and most important purpose behind the requirements set forth in KRS 355.9-402(1) is to put subsequent creditors on notice. Therefore, our inquiry must be whether the omissions were so misleading that the financing statement would fail to provide notice to prospective creditors that the property of the debtor was subject to a security interest. The only Kentucky case brought to our attention that directly addresses the issue at hand is Alloway v. Stuart, Ky., 385 S.W.2d 41 (1964). The appellant correctly points out that this case was decided soon after the Code was adopted in Kentucky, and the court stated it was granting a “period of indulgence.” The court analyzed the issues and arrived at a holding consistent with the statute. In that case the signature of the creditor was omitted from the chattel mortgage. The court stated at page 43:

As was pointed out in the Queenan case, the financing statement merely serves notice of, and warning to, third parties that the creditor has some interest in the property which is in the physical possession of another . . We believe substantial compliance was had (under subsection (6) of KRS 355.9-402) even though the creditor did not sign the instrument. The failure to sign could not have seriously misled anyone. [Emphasis ours.]

Id. at page 44, the court stated:

All circumstances in the case indicate full notice — and to enact a complete forfeiture because of a minor error during the period when even the essence of the Commercial Code was known to a few would not be in accordance with a fair conception of justice. [Emphasis ours.]

This position has since become widely accepted and, in 1970, the Permanent Editorial Board for the Uniform Commercial Code recommended an amendment to the Code that would remove the requirement of the creditor’s signature on the financing statement. We see no reason for this court to retreat from the previously held position that the lack of the creditor’s signature on the financing statement is a minor error and a financing statement with that omission, nevertheless, is in substantial compliance with KRS 355.9-402(1).

Next we must consider whether the absence of the addresses of the debtor and creditor from the financing statement will result in its failure. This omission is certainly more serious since the address not only provides a means whereby the debtor and creditor may be contacted in order that a prospective creditor may make further inquiry, but the address also aids in identifying the parties to the agreement. We have found no Kentucky case that addresses itself to this issue. Nor have other jurisdictions been uniform in their position on this issue. We believe the position taken by the courts in Rooney v. Mason, 394 F.2d 250 (10th Cir. 1968) and In re French, 317 F.Supp. 1226 (E.D.Tenn.1970) is most consistent with the code and its underlying purposes. Those two eases held that, while the addresses of both the debtor and creditor are required, it will not necessarily be fatal error when they are omitted. The omission will be fatal only when it actually precludes the notice function of the financing statement. When the omission does not operate to prejudice the position of a subsequent creditor it shall not render the financing statement ineffectual.

It was neither alleged nor did the facts adduced below indicate that the omission of the addresses of the debtor and creditor operated to prejudice the position of the appellant. All the parties involved were residents of the same small town; the appellant knew both the debtor and the creditor and knew where they each lived. In the absence of a showing that the omission was prejudicial to the appellant, we conclude that the omission was not fatal.

The judgment is affirmed.

All concur.