author: LESTER, Judge.

text:
    Pearl CAMPBELL, Appellant, v. BLUE DIAMOND MINING, INC., John Calhoun Wells, Secretary Labor Cabinet, (Successor to Thelma L. Stovall, Commissioner of Labor Special Fund), Workers’ Compensation Board, Appellees.
    Court of Appeals of Kentucky.
    Feb. 15, 1985.
    Alva A. Hollon, Jr., Hazard, for appellant.
    Maxwell P. Barret, Hazard, John E. Stephenson, Labor Cabinet, Louisville, for ap-pellees.
    Before COMBS, HOWERTON and LESTER, JJ.
   LESTER, Judge.

This is an appeal from an order of the Perry Circuit Court remanding the appellant’s claim for benefits to the Workers’ Compensation Board.

There is no dispute that the appellant is totally and permanently disabled due to the occupational disease of pneumoconiosis and the only issue confronting this Court is whether the amount of the appellant’s benefits should be reduced under the provisions of KRS 342.800. We do not believe that that statute is applicable to the facts of this case and therefore, we reverse the judgment.

By order of the Workers’ Compensation Board dated October 3,1983, the appellant, Pearl Campbell, was found to be 100% permanently disabled on account of the occupational disease of pneumoconiosis. November 5, 1982, was set as the effective date of the award and the Special Fund ordered to make weekly payments of $190.75 to the appellant. The appellee/em-ployer, Blue Diamond Mining, Inc., was ordered to make weekly payments of $63.58. In total, the appellant was awarded monthly benefits of $1,017.32 under the Workers’ Compensation Act.

Shortly after the rendition of this opinion and award, the appellee/employer filed a motion to reconsider with the Board on the grounds that the amount of benefits accorded to the appellant had been improperly calculated without reference to KRS 342.800, which reads:

Acts 1980, chapter 104 and the other sections of KRS Chapter 342, shall be effective on July 15, 1980 for all claims based upon an injury or last exposure which occurs on or after that date; provided, however that in the event the federal coal mine health and safety act provides that claims covered by the provisions of KRS Chapter 342 may also be filed with a federal agency, then, in that event, the increase in benefits provided by Acts 1980, chapter 104 shall not apply to any individual claim under KRS Chapter 342, if benefits are awarded to and are received by that particular claimant under such federal law. For those claims, the benefits under this chapter shall be sixty-six and two-thirds percent (66⅜%) of the employe’s average weekly wage but not more than seventy-five percent (75%) of the average weekly wage of the state as determined in KRS 342.-740. Anyone who files a claim under this chapter for coal-workers pneumoco-niosis or silicosis benefits must also file and pursue in good faith a claim under the federal coal mine health and safety act. (Emphasis added).

KRS 342.800 was implicated, according to the appellee/employer, due to the fact that on January 13, 1983, the appellant had received an award of $457.40 per month under the Federal Coal Mine Health and Safety Act, 30 U.S.C.S. § 901 et seq. (1979). Like the appellant’s workers’ compensation benefits, this earlier award under the federal law was to be applied retroactively to November 1982. The employer therefore argued that, as the appellant had been awarded and was receiving his federal benefits at the time of the Board’s rendition of its own opinion and award, KRS 342.800 was applicable and the amount of the appellant’s workers’ compensation benefits was limited by that statute to a maximum of 75% of the state average weekly wage, or $190.75 per week. The Workers’ Compensation Board, however, overruled the motion to reconsider and Blue Diamond Mining sought review by the Perry Circuit Court. That tribunal agreed with the argument and reversed and remanded to the Board for specific findings and rulings regarding the applicability and effect of KRS 342.800. The appellant has since brought this appeal before this Court.

In Kentucky, the test for the applicability of the “off-set” provisions to situations in which a claimant has received favorable adjudications on both his state workers’ compensation claim and his federal black lung claim is contained in Wells v. Estridge, Ky., 646 S.W.2d 41 (1982). While the facts in Estridge differ from those in the instant appeal in that the determination that Estridge was eligible for black lung benefits was made after the award of state benefits under KRS Chapter 342, we regard that distinction immaterial and instead focus upon the following language:

Federal black lung benefits must be “received” before the reduction provided for in KRS 342.800 is effected — i.e. federal black lung benefits must exceed state benefits. Estridge, supra, at 43. (Emphasis added).

In the instant appeal, the appellant was accorded $457.40 per month, dated from November 1982, in federal black lung benefits, as compared with $1,017.32 per month in state workers’ compensation benefits, to be timed from the same date. Clearly, the state award far exceeds the federal award in amount thereby rendering KRS 342.800 ineffective to reduce the level of the appellant’s workers’ compensation benefits under the technical requirements established under prior case law.

More important to our decision today is our perception of the underlying purpose of “off-set” statutes such as KRS 342.800. We believe that in enacting KRS 342.800, our legislature did not intend to create a blanket means by which workers’ compensation benefits for pneumoconiosis could be reduced, but rather, desired to prevent the unjust enrichment of claimants in such cases by foreclosing a simultaneous recovery under state compensation laws and federal black lung statutes. Such a purpose is not implicated in the instant appeal as the appellant's eligibility for continued receipt of his federal benefits was by law terminated by the favorable result before the Workers’ Compensation Board. That result is mandated by 30 U.S.C.S. § 922(b) (1979), which reads in part:

... [Bjenefit payments under this section to a miner or his widow, child, parent, brother, or sister shall be reduced, on a monthly or other appropriate basis, by an amount equal to any payment received by such miner or his widow, child, parent, brother, or sister under the workmen’s compensation, unemployment compensation, or disability insurance law of his State on account of the disability of such miner due to pneumoco-niosis_ (Emphasis added).

Under this statutory framework, therefore, the appellant was immediately disqualified from any further recovery under the federal black lung laws. Furthermore, judging from various materials issued by the Federal Department of Labor regarding this matter, the fact that our state’s Workers’ Compensation Board ordered its award to be effective as of November 1982, has made it necessary for the appellant to reimburse the appropriate authorities for any compensation received under the federal black lung program for that same time period. As a result of this requirement, the appellant in a very real sense will never have received benefits under the federal statutes so as to bring KRS 342.800 into operation. Federal law therefore has already fulfilled the purpose of KRS 342.800 by precluding the appellant from enjoying an unduly high level of compensation by recovery under both federal and state law. As the Workers’ Compensation Board did not err when it failed to reduce the appellant’s award pursuant to KRS 342.800, we must reverse the judgment.

All concur.


source: Caselaw Access Project

author: DUNN, Judge.

license: Public Domain

text:
    Chester R. BELL, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Sept. 7, 1984.
    Case Ordered Published by Court of Appeals Oct. 26, 1984.
    Discretionary Review Denied Feb. 20, 1985.
    Sanford L. Berman, Frockt & Klingman, Appellate Public Advocate, Louisville, for appellant.
    David L. Armstrong, Atty. Gen., William L. Davis, Asst. Atty. Gen., Frankfort, for appellee.
    Before HOWERTON, WILHOIT and DUNN, JJ.
   DUNN, Judge.

Bell appeals from a Christian Circuit Court judgment entered on a jury verdict convicting him of second degree manslaughter of his infant son, Anthony, and sentencing him to 18 years imprisonment. He argues three points of error: 1) failure to suppress what he maintains was his involuntary statement, 2) failure to grant his motion for change of venue, and 3) admission of medical records containing improper opinion evidence. We disagree in each instance and affirm.

About 7 P.M. on September 30, 1982, Bell, on leave from the U.S. Army, brought Anthony to Ft. Campbell Hospital emergency room in a comatose state. The admission diagnosis was that of acute subdural hematoma (blood on the brain), respiratory arrest, non-accidental trauma, with suspected maltreatment child syndrome. The child was transferred to Vanderbilt University Hospital where he died two days later on October 2, 1982. An autopsy indicated the cause of death was cerebral trauma with subdural and brain hemorrage, left. In lay terms, this means that the cause of death was from a blow, or blows, to the head. The child also had three broken ribs.

After being advised of his rights, on October 4, 1982, Bell gave a statement to the police. He admitted that on the day he brought Anthony to the hospital he had hit him on the head twice with his open hand, held him by one leg hitting Anthony’s head against the wall, and while carrying him by one leg, head downward, from one room to another, banged the child’s head against a door facing.

He maintains that the trial court erred in failing to suppress this statement in that it was not voluntarily made because of his “emotional state” at the time it was given. To buttress this argument, he points out that the police officer who took the statement had noted “extreme emotion” regarding appellant. However, the transcript of a hearing the trial court conducted to determine the statement’s volun-tariness, other than the officer’s note, is devoid of any evidence that would establish that appellant was under such emotional distress as to render the statement involuntary. We will, therefore, not disturb on appeal the trial court’s finding that the statement was voluntarily made. RCr 9.78; Hamilton v. Commonwealth, Ky., 580 S.W.2d 208 (1979).

He bases his change of venue contention of error on the great publicity given in the trial court’s geographical area to another case of like or similar circumstances. However, he did not request a change of venue of the trial court by motion or otherwise. He did move for a continuance based on that publicity, but, even if that motion was considered as a motion for a change of venue, he did not file any verified affidavit or a verified petition in support of it as required by KRS 452.220(2).

Bell’s allowance of error on the admission of the medical records is specifically directed to their inclusion of the diagnosis of battered child syndrome in three documents. He maintains the conclusion embodied in this diagnosis, or, if you please, opinion, is the ultimate conclusion that should have been reserved for the jury’s determination in its decision as to Bell’s involvement in the child’s death. We disagree.

The ultimate question of fact for the jury’s determination was not was the child abused, as he obviously was, but whether or not Bell caused his death. There seems to be no Kentucky case that addresses the issue of the admissibility in a criminal prosecution for the death of a child of a medical opinion that a child suffered from battered child syndrome. Cases from other jurisdictions are split on the issue. Annot., 98 A.L.R.3d 306 (1980).

In this case, we find no prejudicial error in the admission of the physicians’ opinions that Anthony suffered from battered child syndrome. Bell’s conviction did not result from this proof, or the use of these terms. The injuries which ultimately caused the child’s death were the result of Bell’s admitted mistreatment of the child. Even if these opinions had been omitted from the evidence, Bell’s admission provided more than sufficient evidence upon which the jury could base its finding of guilt.

The Judgment of the Christian Circuit Court is AFFIRMED.

All concur.


text:
    STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. ALLSTATE INSURANCE COMPANY, Christopher D. Knight, Edward Profitt and Rondell W. Wills, Jr., Appellees. ALLSTATE INSURANCE COMPANY and Christopher D. Knight, Cross-Appellants, v. Edward PROFITT, State Farm Mutual Automobile Insurance Company, Rondell W. Wills, Jr., and Guy Hutcheson, Cross-Appellees.
    Court of Appeals of Kentucky.
    Nov. 30, 1984.
    Case Ordered Published by Court of Appeals Feb. 1, 1985.
    Rehearing Denied Feb. 1, 1985.

      William J. Rudloff, Harlin, Parker & Rudloff, Bowling Green, for appellant and cross-appellee State Farm Mut. Auto. Ins. Co. and cross-appellee Guy Hutcheson.
    Kelley Thompson, Jr., Bowling Green, for Edward Profitt.
    David F. Broderick, Cole, Harned & Bro-derick, Bowling Green, for Allstate Ins. Co. and Christopher D. Knight.
    Donald Mintmire, Barnett & Alagia, Nashville, Tenn., for Rondell W. Wills, Jr.
    Before HOWARD, LESTER and WHITE, JJ.
   LESTER, Judge.

This is an appeal in a tort action arising out of an automobile accident from a judgment entered upon a jury verdict and two orders. The defendant, a third party plaintiff and an intervening defendant prosecute the cross-appeal.

On January 12, 1981, while traveling to one of his farms along Morehead Road in Warren County, Edward Profitt observed that an automobile operated by Rondell Wills, Jr., had skidded into a ditch. Also arriving at the scene in a pickup truck was Guy Hutcheson. The group was unable to extract the Wills vehicle from the depression, so they concluded to connect the car to Hutcheson’s truck with a chain and in order to gain traction, Profitt stood in the back of the pickup. At a point in time when the Wills auto was back on the road, Christopher Knight came over the crest of a hill from the opposite direction in a full size Plymouth Fury and, due to the sheet of ice on the pavement, he was unable to stop and struck the Hutcheson truck head-on, injuring Profitt who was still standing in the bed. Appellant, State Farm Mutual, was the insurer of Hutcheson while Allstate was Knight’s carrier.

Profitt sued Knight and the defendant filed a third-party complaint against Wills and Hutcheson. State Farm filed an intervening complaint against Allstate, Knight’s insurer, and Knight, asserting its claim for reimbursement of no-fault benefits paid to Hutcheson and Profitt. However, prior to the institution of the original complaint, Hutcheson executed a release to Knight and Allstate exonerating them for any further liability arising out of the accident. Based thereon, Knight filed a motion to dismiss the intervening complaint of Allstate against him as well as Hutcheson’s counterclaim against Knight. Not to be outdone, Hutcheson and State Farm moved to dismiss the claims of Knight and Allstate against him. Both parties briefed their respective positions as to the effect of the release with State Farm and its insured relying thereon for dismissal of the Allstate-Knight claim against them. Knight, in turn, urged that equitable estoppel precluded his adversaries’ claims since the settlement made by his carrier was without his consent or ratification, meaning that the release had no effect on any claim he had against Hutcheson. The issues were briefed and the court entered an “Interlocutory Order” on April 6, 1983, which, among other things, dismissed State Farm’s intervening complaint against Knight and Allstate with prejudice. In ad-. dition, the court, in the same order, dismissed Knight’s third-party complaint against Hutcheson since the release operated as a settlement of all claims between these individuals; and dismissed Hutche-son’s counterclaim against Knight with prejudice. The case was tried to a jury in July, 1983, which resulted in a verdict for Profitt in the amount of $8,120 ($1,500 medical, $1,620 lost wages and the balance pain and suffering), apportioned 75% against Knight, 25% against Hutcheson, and 0% to Wills. The record reflects that no appearances were made on behalf of appellant.

Subsequent to the entry of the trial order and judgment, State Farm moved to alter or amend the entry requesting the court to allow it to recover from Allstate and/or Knight the $2,350.65 BRBs it had paid Pro-fitt for medical expenses and lost wages. The court, in overruling the motion, made a curious conclusion that its ruling was based upon the premise that “... prior to trial, the Court, on motion of said mov-ant, dismissed it with prejudice” (emphasis added). The court continued by pointing out that appellant “took no part in the trial.” State Farm appeals seeking reversal and remand with directions to the trial court to enter an amended judgment allowing it recovery of the BRBs against Allstate and/or Knight, while the other carrier cross-appeals asking reinstatement of Knight’s claim for contribution and indemnity from Hutcheson and a jury trial.

At the expense of oversimplifying the issues, we believe that the answer lies in Grange Mutual Casualty Co. v. McDavid, Ky., 664 S.W.2d 931 (1984), and Stovall v. Ford, Ky., 661 S.W.2d 467 (1983), neither of which opinions had been issued at the time the court below issued its several orders. Stovall teaches that an insured’s right to BRBs as an element of damages was abolished by KRS 304.39-060(2)(a) and that the only real party in interest is the reparation obligor and it follows that it is the only party which may be awarded that type of damages. See also Progressive Casualty Co. v. Kidd, Ky., 602 S.W.2d 416 (1980). When the insured files suit against the tortfeasor, the “trial court is required by law” to permit the no-fault insurer to “piggyback” its claim against the tortfeasor’s insurer and, as the real party in interest, it is “the only party who could give the tortfeasor and his insurer a release for elements of damages covered by basic reparation benefits.” Grange, supra. Therefore, any release executed by Hutcheson to Knight and Allstate was ineffective as to appellant’s claim for BRBs.

Appellees argue that even though appellant properly filed its intervening complaint, it abandoned this pursuit when it requested, at a hearing, that its claim be dismissed coupled with its failure to participate in the trial. Of course, State Farm denies it moved to dismiss its own action. Allstate relies solely upon the language of the court’s order overruling the motion to alter or amend the judgment. There are several factors that lead us to the conclusion that appellant did not request dismissal. In the first place, Allstate makes no citation to any point in the record where State Farm took the alleged step. Secondly, there is no transcript of the hearing. Thirdly, the court fails to make any mention of a voluntary dismissal in its interlocutory order which was much closer in time to the hearing, if any, than the entry made five months later. Finally, if State Farm had in fact withdrawn its complaint, then why did it, within six working days, file its motion to alter the final judgment? There is every indication that the trial court was mistaken in its belief that appellant requested dismissal of its complaint. In addition, if the parties participate in a hearing involving not one but more motions to dismiss causes of action, they should have the foresight to have a transcript made to protect their positions in the event of appeal.

We put little merit in the argument concerning State Farm’s failure or refusal to participate in the trial. Be it remembered that the trial commenced on July 5, 1983, and that some ninety days prior thereto the court had ordered appellants’ intervening complaint dismissed with prejudice in an interlocutory order. State Farm could not appeal and we dare say it could not force its way into the courtroom and demand participation when in the eyes of the court it was no longer a party. We might add that there is nothing in this record indicating that Hutcheson’s carrier was unwilling to take an active part in the litigation.

Much is argued about the principles of equitable estoppel and ratification concerning the Hutcheson — Knight/Allstate release and their effect thereon. The fact remains that Knight and his carrier paid Hutcheson $844.28 for which the latter executed a release. This brought to a halt any further claims by these parties against each other arising out of the accident in question. However, from what we pointed out above, it does not have any effect on appellant’s claim for BRBs paid against Allstate. We might add, parenthetically, that we, as did the trial court, can find not one shred of evidence indicating that Knight had no knowledge of the execution of the release. On the other hand, that possibility exists, but we look to the record only and agree with the lower tribunal in this respect.

In the event its cause should be reversed on direct appeal, Allstate takes the position that in view of the jury’s apportionment of fault between Knight and Hutcheson that appellant’s recovery of BRBs should be limited to 75% because the panel found 25% of the fault to be Hutcheson’s. Of course, the trial court had no reason and thus no opportunity to pass upon that issue, so we will remand that portion of the case for further consideration.

On direct appeal, the judgment is reversed with directions that the intervening complaint be reinstated and remanded for further proceedings to determine if the basic reparation benefits paid by appellant should be apportioned in conformity with jury verdict. The cause on cross-appeal is affirmed.

All concur.


author: WHITE, Judge.

text:
    James N. HEATON, Appellant, v. DEPARTMENT OF MILITARY AFFAIRS, Commonwealth of Kentucky, the Kentucky Personnel Board, Appellees.
    Court of Appeals of Kentucky.
    Aug. 31, 1984.
    Case Ordered Published By Court of Appeals Oct. 19, 1984.
    Rehearing Denied Nov. 16, 1984.
    Discretionary Review Denied Feb. 21, 1985.

      Edwin A. Logan, Logan & Gaines, Frankfort, for appellant.
    David L. Armstrong, Atty. Gen., Greg Holmes, Asst. Atty. Gen., Frankfort, for appellee, Department of Military Affairs.
    A. James Higgs, Frankfort, for appellee, The Kentucky Personnel Bd.
    Before HAYES, C.J., and COMBS and WHITE, JJ.
   WHITE, Judge.

This appeal arises from the Franklin Circuit Court which approved the action of the Kentucky Personnel Board in sustaining the layoff of appellant James N. Heaton by the Department of Military Affairs. At issue is whether the Board’s Order was procedurally marred. We hold that it was.

A “layoff plan” was submitted to the Department of Personnel on January 16, 1981. Three days later Mr. Heaton received written notification from Billy Well-man, Adjutant General, that a consolidation of duties resulting from an internal reorganization would leave no work to be assigned Mr. Heaton’s position and that it was to be abolished. His layoff was to be effective in two weeks.

As a merit system employee, appellant exercised his right of appeal to the Personnel Board which held in favor of the Department. A subsequent hearing was held on the applicability of KRS 12.060(2). The results of the first hearing included the determination that said statute did not apply. This was reiterated by the second which concluded that “[cjompliance or noncompliance with KRS 12.060 is irrelevant concerning the validity of a layoff plan and/or the layoff of an individual employee.”

KRS 12.060(2) states:

The head of any department, with the approval of the secretary of the executive department for finance and administration, may abolish unneces'sary offices and positions, transfer officers and employes between positions, and change the duties, titles and compensation of existing offices and positions, subject to any provision of law in relation thereto.

At the hearing it was urged that it was standard practice of the Department of Military Affairs to send a copy of its layoff plans to the Department of Personnel; if nothing was heard to the contrary from it, the plan was deemed approved.

This would appear to be an effective procedure; however, it does not comport with the terms of the statute. Testimony was heard that the Department of Personnel some decades ago was included in that of Finance, which explains the statutory requirement of notice and approval by it. We nevertheless must observe that when Personnel was separated from Finance, no amendment recognizing this was made to KRS 12.060(2). Consequently the law remained, and does remain, that the Secretary of Finance approve certain departmental actions. Notice to the detached Department of Personnel does not comply.

Also at the hearing was presented the argument that even were KRS 12.060(2) not met, such did not matter inasmuch as the statute did not apply to layoffs. It was then asserted that the “retirement” of Mr. Heaton was proper because 101 KAR 1:120 § 2(2) was met. That section reads as follows:

Seniority, performance appraisals, conduct, qualifications and type of appointment shall be considered in determining the order of layoffs in a manner prescribed or approved by the Commissioner. No status employee is to be separated by layoff while there are provisional, temporary, emergency, or probationary employees serving in the agency in the same class in the same locality.

Mr. Wellman testified that the considerations of this regulation were reviewed prior to Mr. Heaton’s dismissal. Specifically, he added that there were no others in appellant’s position with whom he could be compared.

We do not deem, however, this to be a layoff in the traditional use of the word, e.g. budgetary cutbacks. It is clear from all the relevant testimony that the “layoff plan” embraced the very factors enumerated in KRS 12.060(2), i.e, a change of duties of existing position and the abolition of an unnecessary office.

Appellee argues that Mr. Heaton was not laid off because his position was abolished but rather his position was abolished because he was laid off for lack of work. Under the facts herein, this is a distinction without a difference. Military Affairs reorganized itself. In the process Mr. Heaton’s position was stripped of all its duties, thereby leaving him with a lack of work. This lack of work was thus used as the basis for his layoff and the similarly timed abolishment of his position.

The genesis of this action was the reorganization of Military Affairs without which Mr. Heaton’s job would still have meaning. His lack of work did not accidentally develop; it was the specific result of the revamping of that department. Although Military Affairs attempts to persuade us that this was a mere layoff, it is self-evident that it was more wide-sweeping than such. A rose is a rose is a rose. This was a reorganization which required compliance with KRS 12.060(2).

This discussion has made apparent that KRS 12.060(2) was not met. Consequently in affirming the dismissal of James N. Hea-ton the Personnel Board acted in excess of its authority and violated appellant’s employment rights. The Franklin Circuit Court erred in sustaining same. Accordingly its Order is reversed and remanded with instructions that this action be resubmitted to the Personnel Board for Mr. Hea-ton’s reinstatement.

All concur.


author: CLAYTON, Judge. LESTER, Judge,

text:
    BULLITT COUNTY BANK, Appellant, v. PUBLISHERS PRINTING COMPANY, INC., Appellee. PUBLISHERS PRINTING COMPANY, INC., Cross-Appellant, v. BULLITT COUNTY BANK, Cross-Appellee.
    Nos. 83-CA-2201-MR, 83-CA-2452-MR and 80-CI-05476.
    Court of Appeals of Kentucky.
    Sept. 7, 1984.
    Rehearing Denied Nov. 9, 1984.
    Discretionary Review Denied Feb. 21, 1985.

      Thomas C. Carroll, Carroll, Steinfeld & Longmeyer, Louisville, for appellant/ cross-appellee.
    Ronald L. Gaffney, Maurice A. Byrne, Jr., Barnett & Alagia, Louisville, John B. Spainhour, Shepherdsville, for appel-lee/cross-appellant.
    Before CLAYTON, LESTER and WIL-HOIT, JJ.
   CLAYTON, Judge.

This appeal is from a summary judgment in favor of Publishers Printing Company, Inc., (Publishers) against Bullitt County Bank (Bank). Final judgment awarded Publishers $147,480.85 plus costs against the appellant bank. The ultimate issue to be resolved is whether summary judgment was proper. Intermediate questions necessarily include (1) determining the standard of care to be exercised by the bank when handling checks drawn to its order by a drawer not indebted to that bank and (2) establishing the effect of alleged negligence upon the part of the drawer (Publishers) in its handling of those same checks prior to their tender to the bank and (3) prejudgment interest raised by the appellee Publishers as cross-appellant.

Publishers Printing Company, Inc., is a closely held printing corporation located in Shepardsville, Bullitt County, Kentucky. The majority of its voting stock, 44,600 shares of the 50,000 shares of issued common voting stock, is owned by Frank E. Simon (Simon), President of Publishers. The other two principal officers of the company are James C. Haberman, vice president and secretary, and Karl Gerhard, Treasurer. Simon, Haberman, and Ger-hard composed the Board of Directors during the entire period involved in this litigation.

Since 1964, Publishers had employed William B. Young. Characterized by the parties at different times as a “chief clerk,” “officer manager,” and “trusted employee,” Young’s primary duties at Publishers appear to have consisted of depositing checks to Publishers’ accounts; cashing small checks which he was required to endorse; and ensuring that account balances were maintained. Depositions of the bank’s tellers indicate that the activities Young conducted at the bank consisted primarily of making deposits. Young was not authorized to cash checks payable to Publishers, nor to endorse or divert them. The bank did not permit him to negotiate loans for Publishers, nor to write checks on its accounts, nor transfer monies from Publishers’ accounts.

However, from October 22, 1975, through January 18, 1980, Young began presenting checks at the bank drawn on Publishers’ accounts made payable to the bank. Apparently it was a common, though questionable, practice for Simon to leave pre-signed blank checks in Young’s possession to which Haberman or Gerhard would co-sign as a matter of routine. Young would then present these cheeks at the bank requesting that it exchange them for cashier checks made payable to Citizens Fidelity Bank, a Louisville Bank where Young maintained a private account.

The common, and equally questionable, policy of the bank with regard to checks made payable to it and drawn by known depositor’s account to exchange for cashier checks was to negotiate these checks without requiring endorsement. None of the tellers handling these transactions questioned Young about his authority to make such exchanges. Nor did any Bank employee notify Publishers or question it concerning Young’s departure from his ordinary routine of making deposits. They apparently assumed that Young was involved in Publishers’ business with Citizens.

During the period of time involved, annual audits of the records and bookkeeping of Publishers were performed by the national accounting firm of Touche, Ross & Co. through their employee, Whelan, who in 1979 became employed by Publishers. Simon also made it a practice to examine the monthly statements provided by the Bank. Neither Touche, Ross & Co. nor Simon discovered the embezzlement during its commission. Neither raised questions about the checks being made payable to the bank, nor the peculiarity that several of the checks were written ostensibly to purchase postage, which Publishers routinely bought directly from the post office in Louisville, Kentucky.

On June 6, 1980, the proverbial “walls came a tumblin’ down.” Publishers filed a complaint in Jefferson Circuit Court against Young. A subsequent first amended complaint was later filed including First National Bank, Bullitt County Bank, and Citizens Fidelity Bank & Trust Company as additional defendants. Allegations of the amended complaint relating to Bullitt County Bank are that the Bank negligently violated its duty and failed to exercise ordinary care in handling the checks, damaging Publishers in the amount of $350,000 plus punitive damages of $100,000. Bullitt County Bank by answer denies all allegations of duty, negligence, and failure to exercise ordinary care. Affirmative defenses of apparent authority, estoppel, laches, negligence, and statute of limitations have also been raised. Both Publishers and the bank moved for summary judgment in their behalf following the dismissal of First National and Citizens Fidelity upon agreed order of settlement. On June 30, 1982, the Jefferson Circuit Court granted summary judgment on behalf of Publishers thus bringing about this appeal.

I. THE STANDARD OF CARE OF THE BANK.

We begin with an analysis of the nature and extent of the duty owed to Publishers by Bullitt County Bank. In brief, that duty is to exercise good faith and use ordinary care in handling the accounts of its customers. Bank of Southern Maryland v. Robertson’s Crab House, Inc., 39 Md.App. 707, 389 A.2d 388, 391 (1978) [citing Taylor v. Equitable Trust Co., 269 Md. 149, 304 A.2d 838 (1973)]. While the Uniform Commercial Code (U.C.C.) as adopted in Kentucky does not expressly state that a collecting or payor bank is liable for negligently paying on an instrument, numerous U.C.C. provisions indirectly indicate that this is so. These begin with KRS 355.1-103 incorporating the common law rules of negligence into the U.C.C. § 3-419(3); KRS 355.3-419(3) speaks also of limiting recovery against collecting banks for conversion where they have acted in good faith and followed reasonable commercial standards. Section 3-406, dealing exclusively with material alterations and unauthorized signatures, guarantees a payor, who has paid in good faith and in accordance with reasonable commercial standards of his business, protection from assertions of material alteration or unauthorized signature by parties whose negligence substantially contributed to his injury. Finally, under § 4-103(1) a bank may not disclaim its own lack of good faith or failure to exercise ordinary care, thus implying that such duties do indeed exist.

Outside the provisions of the U.C.C., further indication of the Bank's duties of good faith and ordinary care can be found in the inherently contractual relationship of a bank to its depositor. See Hileman v. Hulver, 243 Md. 527, 221 A.2d 693 (1966). “Implicit in the contract is the duty of the bank to use ordinary care in disbursing the depositor’s funds.” Bank of Southern Maryland v. Robertson’s Crab House, Inc., supra 389 A.2d at 392 [citing Commonwealth Bank of Baltimore v. Goodman, 128 Md. 452, 97 A. 1005 (1916)].

In situations such as that arising between Publishers and the Bullitt County Bank, the bank’s duty of ordinary care has been effectively summarized,

Where a check is drawn to the order of a bank to which the drawer is not indebted, the bank is authorized to pay the proceeds only to persons specified by the drawer; it takes the risk in treating such a check as payable to bearer and is placed on inquiry as to the authority of the drawer’s agent to receive payment. 9 C.J.S. Banks and Banking § 340 (1938).

This general proposition enjoys the unwavering support of a vast body of judicial opinion originating both before and after the creation of the U.C.C. See Bank of Southern Maryland, supra 389 A.2d at 393 (citing numerous opinions so holding). We have yet to discover a single decision holding to the contrary, nor has one been cited to us. The decisions relied upon by the Bank all involve altered or improperly signed checks and are therefore inapplicable to the controversy at hand. See Smith v. First National Bank of Horse Cave, Ky., 217 Ky. 471, 290 S.W. 346 (1927); Winn v. First Bank of Irvington, Ky.App., 581 S.W.2d 21 (1979).

There is little doubt, given the law and the facts involved, but that the Bank violated its duty of ordinary care. No employee of the Bank ever notified Publishers of Young’s strange departure from his regular banking duties following 1975. The tellers’ deposition testimony indicates that they simply assumed he was acting on behalf of Publishers. Mechanically following Bank policy these employees customarily exchanged unendorsed checks drawn to the order of the Bank without question. Such custom has been judicially labeled unreasonable and condemned. See Main Belting Co. v. Corn Exchange Nat’l. Bank & Trust Co., 325 Pa. 168, 188 A. 865, 868 (1937). As Main Belting Company, supra, 188 A. at 868 explains,

The manner in which Smith [the employee embezzler] was able to use these checks without earlier discovery illustrates its unreasonableness [the bank’s check policy]. The checks drawn on defendant show that they were not endorsed either by the payee or by Smith. On their return to the plaintiff for vouching without endorsements, the plaintiff would find nothing on them to show who had received or what had become of the proceeds directed by the checks to be paid to defendant.

Applying the general proposition and decisions cited above, we now hold the failure of the bank to notify its depositor regarding the checks involved to be a violation of its duty of care under the circumstances involved.

This holding does not foreclose the issue of Bank’s liability however. The general principle set out above has an equally dignified corollary, which if applicable, would relieve the bank of the consequences of its unreasonable policy. This corollary provides that if a drawer cloaks his agent in apparent authority to receive the proceeds of checks made payable to the bank’s order, the drawer acts at its own risk. Bank of Southern Maryland, supra, 389 A.2d at 393 [citing 5A Michie, Banks and Banking § 183 (1973)]. Thus, if Publishers, through Simon, Gerhard or Haberman, manifested to the bank that Young had the power to cash checks such as those involved, the bank could not be held liable for paying the proceeds of the checks to the agent.

The bank’s forceful arguments notwithstanding, the record contains no evidence that any such apparent authority was manifested by Simon or any other employee of Publishers. Simon was never asked nor did he ever volunteer that Young had such authority. The sole basis of the bank’s claims to the contrary seems to have been the joint appearances of Simon and Young at the bank. As the trial court notes, “the mere going into the bank with the company’s owners would be insufficient to submit to the jury.”

The mere fact that Simon refers to Young as a “trusted employee” is not dis-positive of the issue of apparent authority. See Fidelity & Casualty Co. of New York v. Hellenic Bank & Trust Co., 181 Misc. 40, 45 N.Y.S.2d 43 (City Ct. of N.Y.1943). Trust in many cases may lead to authority but the two concepts are not synonymous in the law. The confidence reposed in a trusted employee may naturally be thought of as trust within the confinement of that individual’s expressly authorized powers. Obviously, Simon “trusted” Young to deposit checks, cash endorsed small checks, and maintain account balances. This does not imply that Young was ever authorized, either expressly or apparently, to draw checks to the Bank’s order and exchange them for cashier checks. The course of dealing between Young and the bank, and the signature card of Publishers on file at the bank, indicate that this is so. We therefore conclude and so hold, that no apparent authority existed to relieve the Bank of its duty to notify Publishers.

II. THE NEGLIGENCE OF PUBLISHERS.

The bank alleges that Publishers’ negligence prior to and subsequent to the check transactions bars its recovery. We disagree. Just the opposite, the Bank’s negligence estops it from asserting the company’s negligence as a defense to liability. This principle finds ample support in Graham v. Southington Bank & Trust, 99 Conn. 494, 121 A. 812, 817 (1923), discussing the common law concept of estoppel in these situations, and Bank of Southern Maryland, supra, 389 A.2d 396-98, discussing negligence as estoppel under the U.C.C.

Graham, supra, 121 A. at 817, bluntly states the status of the common law in this regard,

It is universally held that a bank is not entitled to claim estoppel against a depositor in regard to examination of bank statements, unless the bank was free from negligence in regard to failure to acquire the information, ignorance of which it claims the depositor was equitably bound to dispel....

When a bank through its negligence fails to learn of material facts regarding its depositors’ accounts the common law imputes constructive knowledge of such facts to the bank, Id.

Bank of Southern Maryland, supra, rendered upon indistinguishable facts, states matters just as clearly. “Sections 3-406 and 4-406(2) do not bar ... recovery for two reasons.” The opinion proceeds to point out that these sections only apply to the negligence of persons asserting an unauthorized signature or alteration, and then only when the bank makes payment in accordance with reasonable commercial standards or with ordinary care. Id. 389 A.2d at 397. Therefore, we hold that “there is no balancing test or rule of contributory negligence. If the bank failed to use ordinary care it always loses, whether the customer was negligent or not.” Bank of Southern Maryland, supra, 389 A.2d at 397 [citing Whaley, Negligence and Negotiable Instrument, 53 N.C.L.Rev. 1, 14 (1974) ]. We believe this principle to be in accord with the public policy and common sense given the tremendous trust the public is necessarily forced to repose in banking institutions and the commensurate financial benefits those same institutions enjoy.

The bank’s arguments of laches, improper venue, reversible error in adopting the findings and conclusions of the appellee’s judgment, and statute of limitations are unpersuasive and have all either been waived, unsupported in fact or law, or untimely and improperly asserted.

III. PREJUDGMENT INTEREST.

Publishers on cross-appeal contends that since the amounts of the funds diverted were all clearly represented on the negligently exchanged checks, it was entitled to prejudgment interest on each instrument as a matter of right. The trial court’s refusal to grant such interest is allegedly an abuse of discretion. We agree and reverse the trial court to the extent its judgment denies Publishers prejudgment interest. Without undue discussion, we refer simply to the various persuasive authorities found in the cross-appellant’s brief. See Von Gohren v. Pacific National Bank of Washington, 8 Wash.App. 245, 505 P.2d 467 (1973); National Bank of Georgia v. Refrigerated Transport, 147 Ga.App. 240, 248 S.E.2d 496 (1978); Aetna Casualty & Surety Co. v. Hepler State Bank, 6 Kan.App.2d 543, 630 P.2d 721 (1981).

The judgment of the Jefferson Circuit Court is affirmed on direct appeal and reversed on the cross-appeal.

WILHOIT, J., concurs.

LESTER, J., dissents.

LESTER, Judge,

dissenting.

I must commend my colleagues upon their well-written opinion, but I feel constrained to differ with them on two points, namely, the apparent authority of William B. Young and the negligence of Publishers acting through its principal owner and chief executive officer, Frank E. Simon.

The doctrine of apparent authority as set forth in Restatement (Second) of Agency § 27 and 49 (1958) as approved in Union Central Life Ins. Co. v. Glasscock, 270 Ky. 750, 110 S.W.2d 681, 685 (1937), is nothing new or novel to this jurisdiction for it is discussed in Hurst Home Ins. Co. v. Ledford, 207 Ky. 212, 268 S.W. 1090, 1091 (1925), and even earlier cases cited therein. It is unnecessary to set forth the principle for the able counsel involved in this litigation, but I do believe that several of the comments or portions thereof are particularly applicable here. In comment a (analogy to authority) under § 27, Creation of Apparent Authority: General Rule, is noted the following:

So, too, a person who permits another to do an act in such a way as to establish in a community a reputation for having authority to act, either by directing the agent so to represent, or by directing him to act and doing nothing to prevent the spread of such information by the agent or by others, creates apparent authority with respect to those who learn of the reputation,

while comment d contains:

d. Third persons who know of agent’s employment but not of his authority. The position of those who do not know of the prior conduct or reputation of the agent is to be distinguished from those who know of this but are not familiar with the extent of the powers of the kind of agent he appears to be. As to these the agent has apparent authority. Thus, a manager has apparent authority to do those things which managers in that business at that time and place customarily do, as to persons who know that he is a manager, although they do not know what powers managers in such a business have. In such cases the manifestation is interpreted as meaning that the agent has the powers which such managers have, and those dealing with him are entitled to rely upon this as to the extent of the agent’s authority, even though they do not know the powers of such managers. This result is consistent with the interpretation of authority.

Under § 49, we note comment g to the effect:

Where agent acts for his own purposes. As stated in Section 39, an agent is authorized to act only for his principal’s benefit. However, the fact that an agent secretly intends to act for a purpose of his own or otherwise to disobey the principal does not prevent the existence of a power to bind the principal to one who relies upon the facts which indicate apparent authority, unless the one dealing with the agent has notice of such intent. See § 165.

Treating an agent with apparent authority as one who is a “disclosed agent,” I refer to § 165, dealing with an agent acting for an improper purpose and find comment d thereunder to be significant in this appeal. That comment teaches:

Checks. Where an agent, having authority to draw or to endorse checks in his principal’s business, makes or endorses a check payable to himself, one taking such check for a private purpose of the agent is put upon inquiry as to a possible breach of trust by the agent. However, the bank upon which such check is drawn is not, from the fact that a check is drawn payable to the agent’s own order, put upon inquiry; nor is a bank which accepts for deposit to the private account of the agent a check endorsed by such agent put upon inquiry either as to the authority of the agent to draw checks for his own purposes or to deposit such checks to his own account, or as to the intent of the agent to misappropriate the funds.

It should be recalled that the U.C.C. (KRS 355.1-101) does not displace the law of principal and agent, KRS 355.1-103, so therefore, the Restatement (Second) of Agency §§ 27 and 49 remain applicable in this jurisdiction. With this in mind, not only did Young, as characterized by the majority, in his capacity of

... “Chief Clerk”, “office manager” and “trusted employee” ...

deposit checks to Publishers’ accounts, cash small checks requiring endorsement by him, insuring balances were maintained, but he also appeared at the bank in the company of Simon who freely admitted that the personnel of the Bullitt County Bank had been given the impression that Young was clothed with the authority, whether limited or otherwise, to transact appellee’s financial business. Therefore, I would conclude that based on the principles of agency, appellant should prevail.

I now turn to the matter of Publishers’ and Simon’s negligence. At oral argument, it was represented to this court by appellee that Simon was an astute businessman who paid close attention to the financial affairs of his company. The record belies that concept. Recalling that the management of the company was lodged in Simon, Haberman, and Gerhard who made up the entire board of directors, it is at once perceivable that this was a small closely knit corporate enterprise. These three individuals lodged the conduct of the daily affairs in Young. It was Simon’s long-standing custom to presign checks and either one of the other two officers “would co-sign as a matter of routine.” In my opinion, this was negligence in and of itself. Be that as it may, it was that habit or conduct that put Young in a position for a period of four years and three months to divert funds from the corporation to himself in varying amounts (up to $6,000) for a total of $184,000.00. That fact coupled with consistent audits by one of the most efficient and reputable accounting firms in the nation leads me to believe that there was significant negligence imputed to Publishers. The majority absolves appellee of any negligence primarily upon inferences to be drawn from several sections of the U.C.C. as corrolated in Bank of Southern Maryland v. Robertson’s Crab House, Inc., 39 Md.App. 707, 389 A.2d 388, 24 U.C.C.Rep. 702 (1978), but in that opinion Judge Melvin pointed out that:

The officers and employees of the Bank of Southern Maryland were aware that Hanson had no authority to sign checks on behalf of Robertson’s.
and
In the instant case, it is clear that Hanson had no actual or apparent authority to receive the proceeds of the eleven checks here involved.

Notwithstanding Fidelity & Casualty Co. of New York v. Hellenic Bank & Trust Co., 181 Misc. 40, 45 N.Y.S.2d 43 (City Ct. of N.Y.1943) to the contrary, I would conclude that Young had been given the apparent authority and thus apply the principles embodied in Cairo Cooperative Exchange v. First National Bank of Cunningham, 4 Kan.App.2d 458, 608 P.2d 1370 (1980), and reverse the decision of the trial court.

One other point I consider worth of comment. The majority distinguishes authorities cited by the appellant for its parties in that they “all involve altered or improperly signed checks and are therefore inapplicable to the controversy at hand.” True enough, there is no alteration of a signature or a forgery in those precise concepts in the case at bar. I would extend KRS 355.4-406 to include such an act as Young committed because this extends beyond the alteration of an instrument for it is an alteration of an account by depletion. The Kentucky Commentary following the statute cited above indicates that the principle of at least subsection (5) might be extended “to other types of claims of customers against banks and defenses to these claims,

Without elaborating, I think there is merit in appellant’s plea of laches.

The purpose of my comments is to point out, in the event of appeal to our court of last resort, the inconsistencies of the law pertinent hereto and the need for an ultimate solution.

For the foregoing reasons, I respectfully dissent.


author: McDonald, judge. GUDGEL, Judge,

text:
    Susan H. BURCHELL, Appellant, v. Delbert A. BURCHELL, Appellee. and Susan H. BURCHELL, Petitioner, v. Honorable Raymond E. LAPE, Jr., Circuit Judge, Respondent.
    Court of Appeals of Kentucky.
    Sept. 21, 1984.
    Reconsideration Denied Oct. 1, 1984.

      A. Neal Herrington, Pedley, Ross, Zielke & Gardner, Miles H. Franklin, Gary D. Phillips, Greenbaum, Young, Treitz & Mag-giolo, Louisville, for appellant.
    James Rowland, Ron Parry, Covington, for appellee.
    Before GUDGEL, McDONALD and MILLER, JJ.
   OPINION AND ORDER

McDonald, judge.

This is an appeal from the judgment of the Kenton Circuit Court, entered after a postdissolution proceeding, and an original action brought by the appellant seeking a writ of prohibition enjoining the circuit judge from proceeding to enforce the order from which the appeal is taken. Because of the similarity of the parties and the subject matter, we have consolidated these matters before this court.

The marriage of the appellant, Susan H. Burchell, and the appellee, Delbert A. Burc-hell, was dissolved on August 9,1983. The property settlement agreement entered into by the parties, found by the court not to be unconscionable, was incorporated into the decree of dissolution. The portion of the agreement pertinent to the appeal is as follows:

Custody and Visitation 1. The parties hereto shall have joint custody of the three infant children of the marriage as follows:
d. Petitioner and Respondent shall consult with one another regarding elementary and secondary schooling for the infant children, and regarding any elective medical or dental or surgical procedure. Petitioner will make the decision as to the above matters based on his thoughts about the children’s well being and will not unreasonably withhold such decision. If Respondent objects to petitioner’s decisions in the matters, and if after consultation they are unable to reach an agreement, then the matter will be submitted to a mutually agreeable third party, or if no third party can be agreed upon, then the matter submitted to the Court.

When the oldest of the parties’ three children, Tad, reached the age to attend first grade, the Burchells were unable to agree where Tad should attend school or on who would arbitrate the issue. Thus, pursuant to the agreement, they submitted the matter to the court for a decision. They met with the judge, without their respective counsel, and apparently without a court reporter as we have not been presented with a transcript of the hearing.

On August 26,1983, the court entered its order that Tad should be enrolled in St. Pius X, the parochial school desired by the appellee. According to the record no action was taken until October 5, 1983, when the parties jointly moved the court to amend the order. The amended order, also entered October 5, is identical to the August 26th order with the addition of language of finality. The appellant alleges that she asked the court to make findings pursuant to CR 52.04 by letter addressed to the court, dated September 1, 1983, although such request is not included in the court’s record. She filed her notice of appeal on October 12, 1983.

Pursuant to the court’s order of August 26, 1983, Tad attended St. Pius X for the 1983-84 school year. Prior to the start of his second year, and while her appeal was pending, the appellant attempted to enroll Tad in a public school. The appellee moved the trial court to again hear the parties and determine where the child should attend school. He also moved the court to issue a rule requiring the appellant to show cause why she should not be held in contempt and for a restraining order. In turn the appellant filed her petition for a writ of prohibition and for intermediate relief. On August 22, 1984, this court temporarily enjoined the Kenton Circuit Court from taking further action in the matter until a decision on the merits of the petition could be addressed by a panel of this court. The appellee has moved to intervene in this action, and having received no objection, we GRANT his motion and ORDER that his tendered response be FILED as of the date of the entry of this opinion and order.

We are dismissing the appeal on our own motion as the appellant has failed to comply with CR 73.02(l)(a) which requires that a notice of appeal be filed within 30 days from the date of judgment or order from which it is taken. A final judgment was rendered in this matter on August 26, 1983. The order was noted on the clerk’s docket sheet that same day. The court’s amended order, adding words of finality, was superfluous and of no legal significancé. As this is not a matter concerning multiple claims or multiple parties no additional language was necessary to render the August 26th order final and appealable. Furthermore, the record does not contain any “timely motion” which would terminate the running of the time for the appeal pursuant to CR 73.02(l)(e). Even if the letter of September 1, 1983, requesting the court to make findings, had been filed of record, a request made pursuant to CR 52.04 does not stop the running of time to appeal. Id.

Filing of the notice of appeal within the time prescribed by CR 73.02 is mandatory and jurisdictional. Cobb v. Carpenter, Ky.App., 553 S.W.2d 290 (1977). This court thus lacks the requisite jurisdiction to entertain an appeal unless the notice is seasonably filed. Jurisdiction may not be conferred on this court by consent of the parties or by waiver. See Moore v. Lee Court Realty Company, 240 Ky. 835, 43 S.W.2d 45 (1931). The trial court may extend the time for taking an appeal for ten days only “upon a showing of excusable neglect on a failure of a party to learn of the entry of the judgment,” CR 73.02(l)(d), and it cannot indirectly extend the time by a repetition or a renewal of an otherwise final order.

Although we are compelled to dismiss the appeal, we note, for the benefit of the parties, that appellant’s arguments are without merit. She argues that as under the terms of the separation agreement she has physical possession of the children on all school days throughout the year, K.R.S. 403.330(1) mandates she be allowed to determine where the children should attend school. K.R.S. 403.330(1) provides as follows:

(1) Except as otherwise agreed by the parties in writing at the time of the custody decree, the custodians may determine the child’s upbringing, including his education, health care, and religious training, unless the court after hearing, finds, upon motion by the noncustodial parent, that in the absence of a specific limitation of the custodian’s authority, the child’s physical health would be endangered or his emotional development significantly impaired. [Emphasis added.]

Clearly this statute is not applicable to this matter as the parties agreed they would have joint custody of the children and specifically agreed to jointly make those decisions involving their children’s education and health care needs. That the appellant has physical possession of the children does not accord her superior authority to determine how the children will be raised. Although she is responsible for their day-today care while they are in her possession, major decisions affecting the children must be made in concert with their other parent, the appellee.

Joint custody is an arrangement whereby both parents share the decision making in major areas concerning their child’s upbringing, a role traditionally enjoyed by both parents during the marriage, but which is usually reposed solely in one parent following dissolution. See R. Petril-li, Kentucky Family Law § 26.8(b) (1969 and Supp.1983). The benefits to be gained by the children of divorced parents, the parents themselves, and society in general, by the continued involvement of both parents in the vital decisions to be made have been extolled in the popular media as well as legal treatises. See C. Bratt, Joint Custody, 67 Ky.L.J. 271 (1978), and H. Robinson, Joint Custody: An Idea Whose Time Has Come, 21 J.Fam.L. 641 (1983).

If, as in the instant case, the parties to a joint custody agreement are unable to agree on a major issue concerning their child’s upbringing, the trial court, with its continuing jurisdiction over custody matters, must conduct a hearing to evaluate the circumstances and resolve the issue according to the child’s best interest. Once the parents have abdicated their role as custodians to the trial court, its decision is binding on the parties until it is shown that the decision is detrimental to the child physically or emotionally, or is no longer in his best interest.

Finally, in regard to the appeal, the court’s error below to make in-depth findings of fact was not preserved for our review as the request for such findings is not contained anywhere in the court’s record. Furthermore, had the court made specific findings we would be unable to determine them to be clearly erroneous as the appellant, as stated, neither presented us with a transcript of evidence, nor a narrative statement. See Clay v. Clay, Ky., 424 S.W.2d 583 (1968).

We thus ORDER the appeal be DISMISSED.

In her original action, the appellant/petitioner asserts that the trial court is without jurisdiction to entertain the motions made by the appellee to force her to comply with its order pending the outcome of the appeal in this court. She further alleges she will suffer irreparable harm if she is not allowed to exercise her parental right in determining where Tad will attend the second grade.

It is clear to us that the petitioner has not shown that she is entitled to the extraordinary relief sought. The issuance of a writ of prohibition is only appropriate when the trial court is acting without jurisdiction, or is proceeding erroneously within its jurisdiction and the petitioner has no adequate remedy at law. See Lexington v. Cox, Ky., 481 S.W.2d 645 (1972). As the appellant’s notice of appeal was untimely, jurisdiction, as discussed, was never conferred upon this court and remained in the circuit court. Furthermore, even if an appeal had been properly before us it is well settled that the trial court has the authority to enforce compliance with its orders in domestic relations matters during the pendency of an appeal. Penrod v. Penrod, Ky., 489 S.W.2d 524 (1972). Although the Penrod case was decided before the vast changes in our divorce law enacted by the 1972 General Assembly, the holding therein was reaffirmed by our Supreme Court in Peniston v. Peniston, Ky., 511 S.W.2d 675, 676 (1974). Finally, the alleged irreparable harm experienced by the petitioner because of her inability to solely determine where her children will attend school, is not the result of any action of the trial court the petitioner desires to prohibit, but of her voluntary agreement to have joint custody with the appellee.

It is ORDERED that the petition for writ of prohibition be DENIED, and we regret any inconvenience we may have caused the trial court by granting the petition for intermediate relief.

MILLER, J., concurs.

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

GUDGEL, Judge,

concurring in part and dissenting in part.

I concur in the portion of the majority opinion which dismisses this appeal because appellant failed to file a timely notice of appeal. I dissent from the portion of the opinion which gratuitously addresses the merits of this case. Agreements of parents to share joint custody are not binding on the trial court. KRS 403.180(2). Further, even if such an agreement is initially approved, it is subject to modification. KRS 403.180(6). Moreover, a trial court may not grant or approve any agreement for joint custody unless it finds that joint custody is in the best interests of the child. KRS 403.270(3).

This case demonstrates the need for the statutory restrictions and limitations with respect to agreements for joint custody. Like so many theories which have a noble purpose they often prove to be unworkable when tested in a practical world. Although the parties in the instant action agreed to share joint custody, and their agreement was approved by the trial court, it did not take long for the agreement to become unworkable. Presently the Burchells are unable to agree on the basic issue of whether their child should attend a church school or a public school. Pursuant to their agreement a circuit judge has undertaken to make that decision for them. I simply cannot accede to the proposition that the joint custody agreement in the instant action is sustainable as being in the child’s best interests. In effect, under the terms of the agreement, the circuit judge has agreed to assume a role as Tad’s parent. I believe that it is an abuse of discretion for a circuit judge to voluntarily assume a parental decision making function for himself under the terms of a joint custody agreement. Further, I believe that any such agreement is unenforceable against the parent having physical custody of the child. KRS 403.330 confers a right to determine a child’s education on the child’s custodial parent unless the parents agree otherwise in writing. Here, the parties did not have such an agreement. They only agreed that if they could not agree as to the child’s education the court would determine the issue for them. The agreement contemplated by the statute, however, is one by which the custodial parent unconditionally agrees to permit the noncustodial parent to determine issues as to the child’s education. Thus, contrary to the majority’s conclusion, I am of the opinion that KRS 403.330 is applicable to this case. Appellant has a statutory right absent a finding that Tad’s physical health will be endangered or his emotional development impaired, to enrol Tad in the school of her choice. Wilhelm v. Wilhelm, Ky., 504 S.W.2d 699 (1973). Accordingly, I respectfully dissent from the portion of the majority opinion which reaches a contrary conclusion.


author: COMBS, Judge.

text:
    LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, et al., Appellants, v. Dr. Joseph Murray HAYSE and The Board of Trustees of the Lexington Public Library, Appellees. Dr. Joseph Murray HAYSE, Cross-Appellant, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, et al., Cross-Appellees. BOARD OF TRUSTEES OF the LEXINGTON PUBLIC LIBRARY, Cross-Appellant, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, et al., Cross-Appellees.
    Court of Appeals of Kentucky.
    Sept. 28, 1984.
    Rehearing Denied Nov. 30, 1984.
    Discretionary Review Denied Feb. 21, 1985.

      Terry Sellars, Suzanne Shively Havens, Lexington, for appellants/cross-appellees, Lexington-Fayette Urban County Government.
    William C. Jacobs, Wilson, Jacobs & Wilson, Lexington, for appellee/cross-appel-lant, Dr. Joseph Murray Hayse.
    J. David Porter, Martin, Ockerman & Brabant, Lexington, for appellee/cross-appellant, Bd. of Trustees of the Lexington Public Library.
    Before COMBS, DUNN and WHITE, JJ.
   COMBS, Judge.

The trial court granted summary judgment requiring the Lexington-Fayette Urban County Government to appropriate out of its general funds to the Lexington Public Library an amount consistent with KRS 173.360(1).

The government argues on appeal that “roll-back” provisions of KRS ch. 132 apply to KRS 173.360, and the suit was improperly designated as a class action. The library and the library patron argue on cross-appeal that the trial court improperly denied retrospective relief.

In 1968, the library filed suit against the City of Lexington for the minimum funding under KRS 173.360 of five cents per $100 worth of property assessed for local taxation. This suit was settled and an agreed order was entered.

In 1979, this action was commenced as a class action by a library patron. He sought a class action to hold the agreed order null and void, for additional funding from 1974, and a finding by the court that the KRS ch. 132 “roll-back” provisions are inapplicable to KRS 173.360. The trial court’s judgment was favorable to the library patron and the library, except that the additional funding was granted only prospectively.

The roll-back provisions of KRS ch. 132 would apply to tax levies to maintain public libraries. Under KRS ch. 132 a taxing district’s revenue from ad valorem taxes is limited. This chapter has the effect of rolling back the tax rate to maintain a constant revenue. Taxes levied to support a library created under KRS 173.310 or KRS 173.450 would have to comply with KRS ch. 132.

The Lexington Public Library is not maintained by a tax levy, but by appropriation of funds from the local government. KRS 173.310 does not mandate a levy to maintain libraries created under that section. The last paragraph of that statute reads as follows:

When any one (1) of the above methods has been complied with, the legislative bodies of the governing units shall at once make the necessary appropriation or levy to establish and maintain such library service annually and perpetually. (Emphasis added).

The statute does not mandate a levy, but gives the government the option of funding by levy.

It is also noted that when a KRS 173.310 library is merged with a public library district that “... any tax levied under KRS 173.310 ...” is removed. KRS 173.395. The use of the word “any” as opposed to a word such as “the” would indicate the optional nature of the levy.

The government argues that to appropriate funding required by KRS 173.360 when its ad valorem taxes are restricted by the roll-back provisions would lead to the absurd result that the library would be funded a greater percentage of the general fund with the passage of time. The General Assembly has provided a solution to this problem. KRS 173.360(1) reads, in part, as follows:

“... In those instances where county library service has been established on the initiative of the fiscal court and when an appropriation of less than the minimum amount required by this subsection is proposed, the minimum amount of support for county library service may be determined annually through a mutual agreement of the county library board, the county fiscal court, and the department of library and archives. This agreement shall be reflected in the records of the legislative body of the governmental unit making the appropriation.”

We find that the General Assembly enacted this provision for the parties named in the statute to enter into good faith negotiations to solve the problem pointed out by the government.

The trial court has not erred in allowing the library patron to maintain this suit as a class action. Notice to members of the class is not required in an action under CR 23.02(b). It would not be necessary to maintain this action as a class action, but it is allowable.

The trial court properly denied retrospective relief. Buchignani v. Lexington-Fayette Urban County Government, Ky.App., 632 S.W.2d 465 (1982).

The filing of additional brief as requested by the library patron is unnecessary.

The judgment of the Fayette Circuit Court is affirmed.

All concur.


text:
    CINCINNATI, NEW ORLEANS AND TEXAS PACIFIC RAILWAY COMPANY; and Southern Railroad Company, Appellants, v. KENTUCKY DEPARTMENT OF REVENUE, Appellee.
    No. 84-CA-701-MR.
    Court of Appeals of Kentucky.
    Sept. 28, 1984.
    Discretionary Review Denied Feb. 21, 1985.

      Robert L. Maddox, Richard W. Iler, Charles R. Simons, Wyatt, Tarrant & Combs, Louisville, James W. McBride, William C. Antoine, Laughlin, Halle, Clark, Gibson & McBride, Washington, D.C., for appellants.
    Nathan Goldman, Legal Services Section Revenue Cabinet, Frankfort, for appellee.
    Before COMBS, DUNN and WHITE, JJ.
   COMBS, Judge.

The appellants, Southern Railway Company, and its wholly-owned subsidiary, Cincinnati, New Orleans and Texas Pacific Railway Company, operated railroads in Kentucky and other states.

These appeals concern Kentucky income tax for the years 1969 through 1973.

Following an audit, the Department of Revenue found that appellants owed additional income taxes. Appellants appealed to the Kentucky Board of Tax Appeals which entered an order favorable to appellants on three issues. The Department appealed the order to the Franklin Circuit Court which reversed the board on each of the three issues. The judgment of the trial court against Southern was in the amount of $342,228 plus interest, and against Cincinnati, New Orleans and Texas Pacific in the amount of $67,852 plus interest.

Because the appellants do business in Kentucky and other states, their income must be apportioned for income tax purposes. KRS 141.120 is the Kentucky version of the Uniform Division of Income for Tax Purposes Act. Generally, the statute provides that income taxable by Kentucky is a proportion of business income that is attributable to the taxpayer’s business activities in Kentucky. The proportion is determined by a formula in which property, payroll and sales in Kentucky are compared with the total property, payroll and sales of the multi-state business. Non-business income is taxable by Kentucky to the extent that the income-producing property is located or used in this state.

The appellants along with other subsidiaries of Southern operate their railroads by “pooling.” The corporations have common management and the employees of one company may do work for another. When an employee of one company does work for another, the company compensating the employee is reimbursed by the company for whom the labor is performed.

The trial court held that compensation of Southern’s employees for services performed for the benefit of the subsidiary is to be included in the apportionment of Southern’s income, and not in the apportionment of the subsidiary’s income. Appellants argue that the compensation should be included in the formula of the company for which the service was performed.

Although we have found no case law on point, the Department has interpreted in prior audits the statute in the manner urged by appellants. An administrative agency’s interpretation of the law is of great weight, and in this case the General Assembly has not by amendment or adoption of superseding statutes mandated a different interpretation.

The purpose of KRS 141.120 is to adopt a formula to determine the business income attributable to activity in Kentucky. To include the compensation of the employees in the formula of the company for whom service was performed would promote this purpose.

The payroll factor is determined by comparing the “compensation” paid in Kentucky and the total “compensation” paid. KRS 141.120(l)(c) defines compensation as follows:

... wages, salaries, commissions, and any other form of remuneration paid or payable to employees for personal service.

Because the subsidiary indirectly compensated the employees whose activities they controlled when the employees performed services for them and because Southern did not profit from loaning their employees to the subsidiary, we find that the subsidiary was the employer of Southern’s employees when they performed services for the subsidiary. On this issue we agree with the board and reverse the trial court.

The appellants receive income that the Department found to be non-taxable in Kentucky. Of course, the expense to produce non-taxable income cannot be deducted from taxable income. The Department determined that a percentage of this income would be approximately equal to the expense to create it.

The appellants argue and the board found that the actual expense was $24,000 for both appellants. The board held that the Department’s formula should not be used when the actual amount can be determined. We agree. The finding of the amount by the board is supported by sufficient evidence. We must reverse the trial court on this issue. KRS 131.370(3)(d).

The appellants invest in short-term securities from revenue they receive in the railroad business. They claim that part, if not all, of income from these investments is non-business and non-taxable in Kentucky. KRS 141.120(l)(a) defines business income as follows:

... income arising from transactions and activity in the regular course of a trade or business of the taxpayer and includes income from tangible and intangible property if the acquisition, management, or disposition of the property constitutes integral parts of the taxpayer’s regular trade or business operations.

The appellants argue that they are in the railroad business, not the securities business, but the statute does not limit business income to the income from taxpayers’ trade. Appellants’ investments are an integral part of their regular business operation. See Square D Company v. Kentucky Board of Tax Appeals, Ky., 415 S.W.2d 594 (1967); Annot., 8 A.L.R.4th 934 (1981). On this issue, we affirm the trial court’s judgment.

The parts of the Franklin Circuit Court judgment denying the Cincinnati, New Orleans and Texas Pacific Railway Company from including in its apportionment formula the compensation paid to Southern Railway Company for use of its employees and subtracting from the appellants’ deductions the percentage of non-business income rather than actual expense are reversed and remanded for proceedings consistent with this opinion. The remaining parts of the judgment are affirmed.

All concur.


author: HOWARD, Judge.

text:
    Mary H. STASER, Individually and as Administrate of the Estate of Jessica Rachael Staser and Melissa Ann Staser, by Her Next Friend, Mary H. Staser, Appellants, v. William L. FULTON, III, Administrator of the Estate of Robert Michael Staser and State Farm Fire and Casualty Company, Appellees.
    Court of Appeals of Kentucky.
    Nov. 16, 1984.
    Discretionary Review Denied Feb. 21, 1985.
    John S. Hoffman, Sheffer, Hoffman, Neel & Wilson, Henderson, for appellants.
    Lee E. Sitlinger, Jr., Bennett, Bowman, Triplett & Vittitow, Louisville, John L. Dorsey, Jr., Henderson, for State Farm Fire & Cas. Co.
    Before HOWARD, LESTER and WHITE, JJ.
   HOWARD, Judge.

This is an appeal from a declaratory judgment of the Henderson Circuit Court in which it was declared that the Kentucky Motor Vehicle Reparations Act (KMVRA), KRS 304.39-010 et seq., does not preclude application of the household exclusion provision in automobile insurance policies written in excess of the minimum for statutory tort liability insurance limits contained in KRS 304.39-110(1).

This case arises out of a motor vehicle accident that occurred on August 8, 1981, at or near the intersection of U.S. Highway 41 south of Anthoston, Henderson County, Kentucky, involving a motor vehicle operated by Robert Staser and in which his wife, Mary H. Staser, and his daughters, Melissa Ann Staser and Jessica Rachael Staser, were riding as passengers.

Appellants, Mary H. Staser, Melissa Ann Staser, by her next friend, and the estate of Jessica Rachael Staser, brought an action for damages against the estate of Robert Staser for alleged negligence in the operation of his motor vehicle in said accident.

At the time of the accident, Appellee State Farm Fire and Casualty Company (hereinafter State Farm) had in full force and effect a policy of automobile insurance issued to Robert M. Staser insuring the 1973 Dart automobile which he was driving at the time of the accident.

The policy of automobile insurance contains the following exclusionary language commonly referred to as the “household exclusion:” “There is no coverage ... for any bodily injury to ... any insured or any member of an insured’s family residing in the insured’s household.”

By stipulation of the parties hereto, it was established that at the time of said automobile accident, Mary H. Staser, Jessica Rachael Staser and Melissa Ann Staser, were members of the named insured Robert Staser’s family and resided within his household.

A justiciable issue arose between the parties as to the amount of available liability coverage under said policy of automobile insurance in view of the Kentucky Supreme Court’s opinion rendered in Bishop v. Allstate Insurance Company, Ky., 623 S.W.2d 865 (1981).

It was the position of appellee, State Farm, that the maximum liability coverage available under the KMVRA and its aforementioned policy of insurance for the claims is $10,000.00 for all damages arising out of bodily injuries sustained by any one person and $20,000.00 for all damages arising out of bodily injuries sustained in said accident. These amounts were the minimum limits set forth for tort liability insurance of car owners pursuant to the KMVRA.

Appellants contended that since the State Farm policy allowed $50,000.00 for all damages arising out of bodily injuries sustained by any one person and $100,000.00 for all damages arising out of bodily injuries sustained in an accident, and since Bishop voided the household exclusion clause, the full policy limit could be reached.

The Henderson Circuit Court declared that the KMVRA did not preclude application of a household exclusion provision in auto insurance policies to the excess of the statutory liability limits of KRS 304.39-110(1). This appeal now arises. We affirm.

Bishop stood for the proposition that family or household exclusionary clauses in insurance contracts that dilute or eliminate the minimum requirements of basic reparation benefits or tort liability coverage of the KMVRA were void and unenforceable. Appellants would have us interpret this holding to, in effect, read out the household exclusion entirely from the policy and free them to pursue the maximum limits of the tort liability in the policy. We do not believe that Bishop went this far.

The Court in Bishop, after recognizing the past cases which upheld family exclusion provision in insurance contracts prior to the enactment of the MVRA, stated:

The cases which uphold the validity of family exclusion provision are overruled to the extent that they dilute or eliminate the minimum coverage requirements of the MVRA. [Emphasis in original].

We interpret this statement to allow the insurer and insured the freedom to limit coverage in excess of the minimum required limits. This also would serve to effectuate the purpose of the no-fault act by balancing the necessity of obtaining the minimum liability coverage against the ability to obtain lower premiums because of the exclusion of high insurance risks.

We find that the household exclusion clause of State Farm is void only so far as it eliminates the minimum security for tort liability required by the KMVRA, but is otherwise valid in that liability is limited to the statutory minimum rather than the larger limits provided in the policy.

The judgment is therefore affirmed.

All concur.


author: HAYES, Chief Judge.

text:
    Robert Sam DILLINGHAM, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Dec. 28, 1984.
    Rehearing Denied Feb. 8, 1985.

      Richard H. Shuster, Appellate Public Advocate, Louisville, for appellant.
    David L. Armstrong, Atty. Gen., Ethyle Noel, Asst. Atty. Gen., Frankfort, for ap-pellee.
    Before HAYES, C.J., and DUNN and HOWARD, JJ.
   HAYES, Chief Judge.

This is an appeal from an order of the Daviess Circuit Court denying an RCr 11.-42 motion to vacate judgment. The issues are whether the trial court erred (1) by finding appellant received effective assistance of counsel and (2) by finding the trial court did not lose jurisdiction to sentence the appellant.

In March, 1980 the appellant was indicted for the offenses of robbery and of being a first-degree persistent felony offender. He was convicted of those offenses and received an enhanced sentence of eighteen (18) years. His conviction was affirmed on direct appeal to this court and remanded for the limited purpose of conducting a resentencing hearing in conformity with KRS 532.050, 620 S.W.2d 337 (1981). In 1983, appellant filed a pro se RCr 11.42 motion, which was denied following a hearing. This appeal followed.

Appellant’s ineffective assistance argument is based on trial counsel’s failure to object to the following: (1) the qualifications of the interpreter for the victim, who is a deaf-mute; and (2) the use of an un-qualifying prior felony. In his direct appeal the appellant raised the issues of the interpreter’s qualifications and an unquali-fying prior felony. However, because these errors were not preserved for review, they were not discussed in this court’s opinion. This apparently prompted the appellant to allege in his RCr 11.42 motion that his counsel was ineffective for failing to preserve these issues. This forces us to examine the merits of these issues and whether the appellant would have succeeded if these issues had been preserved.

We find that he would not have succeeded in his attack on the interpreter. We have reviewed the interpreter’s qualifications, the victim’s testimony as translated by the interpreter, and the fact that the interpreter knew the victim through their church affiliation, and we find no abuse by the trial court in accepting this interpreter’s qualifications.

However, we do find merit in the allegation that one of the felony convictions used to support the appellant’s first-degree PFO conviction did not qualify. The felony conviction in question was obtained February 15, 1980. However, the principal offense (second-degree robbery) was committed January 1, 1980. Therefore, one of the felony convictions supporting appellant’s first-degree PFO conviction was obtained after the commission of the principal offense. We find that KRS 532.-080 requires that all prior felony convictions used as a basis for enhancing a present felony conviction must have been obtained prior to the date of the commission of the present felony.

The appellant cites White v. Commonwealth, Ky., 379 S.W.2d 448 (1964), and Cobb v. Commonwealth, 267 Ky. 176, 101 S.W.2d 418 (1937), as standing for the proposition that it is not the act but the conviction which must precede the commission of a present offense in order to trigger a persistent felony offender charge. The Commonwealth attacks these cases as being inapplicable because they were decided under the former habitual criminal statute (KRS 431.190). We have compared KRS 431.190 with the present statute, KRS 532.-080, and find that the principles enumerated in White and Cobb are consistent with KRS 532.080. Also see Satterly v. Commonwealth, Ky., 437 S.W.2d 929 (1968).

The Commonwealth argues that it is not required to show that all previous felony convictions occurred before the commission of the principal offense. Because the appellant was on parole at the time he committed the offense which resulted in his conviction of February 15, 1980, the Commonwealth contends that under KRS 532.-080(3)(c)(2) the appellant’s February 15, 1980 conviction can be used to support a PFO charge for an offense committed January 1, 1980. This is an erroneous interpretation of the statute. That section does not authorize use of a conviction occurring subsequent to the commission of the principal or current offense to support a PFO charge. Rather, it relates to the status of the offender at the time he committed the current offense and requires only that his status be shown with respect to any, not all of the previous convictions. Howard v. Commonwealth, Ky.App., 608 S.W.2d 62 (1980).

We hold that appellant’s counsel was ineffective under the standard of Henderson v. Commonwealth, Ky., 636 S.W.2d 648 (1982), for failing to challenge appellant’s first-degree PFO charge because one of the two supporting felony convictions was obtained after the commission of the principal offense. Canary v. Bland, 583 F.2d 887 (6th Cir.1978); Ivey v. Commonwealth, Ky.App., 655 S.W.2d 506 (1983).

We will address briefly appellant’s second issue on appeal, which we find to be without merit. He argues that the trial court lost jurisdiction to resentenee him when two years passed from the date this court remanded his case to the trial court for resentencing in accordance with KRS 532.050 and the actual date he was resen-tenced. This court remanded on May 15, 1981, and the trial court resentenced him to eighteen years’ imprisonment on June 3, 1983. The appellant alleges no prejudice from this delay, and we do not find the delay unreasonable.

Because appellant’s first-degree PFO conviction was supported by only one valid prior felony conviction, the order of the Daviess Circuit Court entered June 20, 1983, is reversed with directions that the trial court enter an order vacating the portion of the judgment entered June 3, 1983, pertaining to appellant’s first-degree PFO conviction. The trial court is directed to grant the appellant a new trial on the offense of PFO second-degree.

All concur.