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April 1981 Vol. 15, No.2




The Lawyer .. . . . . . . . . . . . . . . • . • . . . . . . . . . . . . . . . . . . . . . . . .. 67


Phillip Carroll, President James Cypert, President-Elect


Dennis Shackleford Clint Huey Webster L. Hubbell Gus B. Walton, Jr. David R. Malone Thomas D. Ledbetter Robert G. Serio LeRoy Froman Floyd Thomas, Jr. Chartes Carpenter D. Mac Glover Tommy Womack


Phillip Carroll James Cypert E. Harley Cox, Jr. Don M. Schnipper Herschel H. Friday Louis B. Jones

EDITOR C. E. Ransick

Judge Thomas F. Butt The "Butf' of It All Law Day USA and the Law Theodore I. Koskoff Taxation of Installment Sales Under New Law John B. Peace A Chancellor Looks at Child CustodY, Support and Visitation Judge Robert H. Dudley Book Review: "Appellate Civil Practice Dr. Robert A. Leflar and Procedure Handbook" The Development of the Law of Gambling: Arkansas (III) ....•.•.•....•...•.....•......

48 66 58 69 53 78

REGULAR FEATURES President's Report Phillip Carroll 46 Juris Dictum ........................•.................... 57 Legal Economics . . . . . . . . . . . . . . . . . . . • . • . . . . . . . . . . . . . . .. 64 Law School News 54 Oyez-Oyez .....................•.•.•..........Carol Utley 81 In Memoriam .........................•.................. 85 Executive Council Notes W. C. Barrier 52 Service Directory , . • . . . . . . . . . . . . . . . . . . . . . . . .. IBC Addenda ..............•...•.•...............C. E. Ransick 87 W. Christopher Barrier 62 Context AICLE News Claibourne W. Patty, Jr. 84 The Arkansas Bar Foundation Sidney H. McCollum 75 Advising Innovators ...............•.......Robert R. Keegan 76 Ethics _. . . . . . .. 86 Lawyer's Mart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 67 The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association, 400 West Markham, Little Rock, Arkansas 72201. Second class postage patd at Little Rock, Arkansas. SubsaipHon price to non·members of the Arkansas Bar Association $6.00 per year and to members $3.00 per year included


Robert T. Dawson E. Alvin Schay Cyril Hollingsworth

in annual dues. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association, The Arkansas Lawyer, or the Editorial Committee. Contributions to The Arkansas Lawyer are welcome and should be sent in two copies to the Arkansas Bar Center, 400 West Markham, Little Rock, Arkansas 72201. All inqulrles regarding advertising should be sent to The Arkansas Lawyer. above address.

April 1981/Arkansas Lawyer/45


LEGAL MALPRACTICE A $649,500 jury verdict against a Minnesota lawyer was affirmed in Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W. 2d686 (Minn. 1980). In late 1972, Ted Bucholz phoned his lawyer friend and fellow Rotarian, Jerre Miller, and asked Miller to talk with Joan Togstad, the wife of one of Bucholz's employees who had suffered severe paralysis in his right arm and leg and was unable to speak following treatment for an aneurysm. In a 45-minute conference with Bucholz and Mrs. Togstad, Attorney Miller learned that a neurological surgeon had implanted an adjustable clamp to Mr. Togstad's left common carotid artery with the intention of gradually closing the artery over a period of days. The treatment was designed to eventually cut off the blood supply through the artery and thus relieve the pressure on the aneurysm, allowing the aneurysm to heal. It was anticipated that other arteries, as well as the brain's collateral or crossarterial system would supply the required blood to the portion of the brain which would ordinarly have been provided by the left carotid artery. In the early morning hours of August 29, 1971, a nurse observed that Togstad was unable to speak or move. She called a resident physician who did not adjust the clamp but called the neurosurgeon, Dr. Blake. Dr. Blake arrived about an hour later and opened the clamp. A nurse had told Mrs. Togstad that she had entered Mr. Togstad's room by mistake and found him unable to move or speak. Mrs. Togstad noticed that other nurses were upset and crying. (The nurses were apparently unaware of Murphy's advice, "Never say 'oops' in the operating room.") Attorney Miller testified that he told Mrs. Togstad that there was nothing in the circumstances that told him that she had a case that his firm would be interested in undertaking. Mrs. Togstad understood that he was going to talk to his partner about it and that if he changed his mind, he would call her. No fee arrangements were discussed, no medical authorizations were requested nor was Mrs. Togstad billed for the interview. Mrs. Togstad denied that Miller told her that his firm did not have expertise in the medical malpractice field, urged her to see another attorney, or related to her that the statute of limitations for medical malpractice actions was two years. She did not consult another attorney until one year later when the statute of limitations barred a suit against the neurosurgeon and the hospital. Suit was brought against 46/Arkansas Lawyer/April 1981

Miller and his law firm and at the trial, a physician testified that Mr. Togstad's paralysis and loss of speech was due to the negligence of Dr. Blake and the hospital in failing to open the clamp in time. Specifically, it was claimed that there was negligence in failing to place the patient in intensive care, failing to write adequate orders, faiiing to open the clamp immediately upon discovering that the patient was unable to speak, and failing to provide adequate personnel capable of opening the clamp. The Minnesota court held that Miller had failed to perform the minimal research that an ordinary prudent attorney would do before rendering legal advice in a case of this nature. Furthermore, the evidence justified the jury in finding Miller negligent in failing to advise his client of the two-year medical malpractice limitations. Finally, the court held that the Trial Judge acted properly in refusing to instruct the jury that the plaintiff's damages should be reduced by the amount of attorney fees the plaintiffs would have paid Miller had the latter prosecuted the medical malpractice action to a conclusion. The reduction for lawyer's fees was found to be unwarranted because of the expense incurred by the plaintiff in bringing an action against the attorney. Obviously, the case stands for the proposition that a lawyer cannot reject any case brought to him for consideration by a potential client unless the lawyer makes a careful investigation of the facts and the legal issues involved. If a lawyer rejects a case other than on its merits and advises the client to go to another attorney, he should confirm this advice in writing. The person should also be advised in writing as to the statute of limitations which applies to the case. It has been suggested that every new client contact should be followed up promptly with a letter which describes exactly what the lawyer has undertaken to do. Rejection of employment should also be confirmed by letter. This letter should include any appropriate comment about the advisability of contacting another lawyer and about time limits.

STATISTICS Malpractice claims against lawyers have become a matter of serious concern to all active practitioners. Statistical data

on insurer's claims experience are limited, of doubtful credibility, and show a disturbing degree of variation, even among the figures coming from the same source. From Pfennigstorf, Types and Causes of Lawyers' Professional Liability Claims: The Search for Facts, American Bar Foundation Journal (Spring 1980) 255, 258: "The most alarming statements by representatives of the insurance industry and independent observers have been that the claims frequently quadrupled between 1973 and 1976, from about 1.8 claims to about 7.2 claims per 100 policies; that in 1977, claims would be filed against an estimated 8 out of every 100 practicing attorneys; and that the latest figures available in August 1979 indicated a ratio of 10 claims per 100 policies in 1979. In addition, one major insurer indicated that between 1971 and 1975 the average amount of the claims paid had more than doubledfrom $5,622 to $11,936." The same author refers to the most ambitious study available concerning types of claims filed. Sixty thousand questionnaires were submitted to lawyers in 13 states. The rate of response was only about 48%. A total of 1,811 claims were reported for the six-year period from 1972 to 1977 as follows: Type of Claim


Type of Error 04 05 11

Expiration of statute of limitations


Lack of prosecution


Failure to file or comply within imposed court of admin. order


Failure to file tax returns or other documents within prescribed time Alleged improper representation No coverage in policy No error admitted Unknown


45 203 102 150 61 8 109 39 64 163 39 70 31 87

2.49 11.23 5.64 8.30 3.37 0.44 6.03 2.16 3.54 9.02 2.16 3.87 1.71 4.81



130 20 23 18 54 309

7.19 1.11 1.27 1.00 2.99 16.98

Closer to home, the Insurance Agency of Rather, Beyer & Harper reported in September 1979 concerning 94 claims against Arkansas lawyers who were insured by CNA:

01 02


Type of Error Lost file or document Error in preparation or work done for client Improper interpretation of statute

Claims No. of Claims Expense Claims Paid Only 1






Erroneous advice to client Personal Injury (libel, slander etc.) Defaull judgment


00 Conflict of interest Failure to meet procedural deadline Failure to file required papers Error in preparation of documents Failure to provide services Lost file, document or evidence Fraud or conspiracy Fee dispute Improper interpretation of law FaUlty research or abstract Breach of fiduciary duty Incorrect advice Malpractice during trial Inadequate advice Malicious prosecution or abuse of process Failure to comply with statute of limitations Handling of funds Failure to prosecute Libel or slander Civil rights violation Other

No. of Claims

00 00 00

Claims Claims Expense Paid Only



8 ( 7 ( ( ( (23 ( ( ( 22 ( ( ( ( ( 3 ( ( (

( ( 4

( 3 ( ( ( (14 ( ( ( 5 (

( ( ( ( 1 ( ( ( ( ( 4

4 ( 1 ( ( ( ( 3 ( ( 1 ( ( ( ( ( ( ( ( ( ( (



1 12 5

8 8

94 23 30 Note: Items 11 through 16 all involve lack of timely action by lawyers. 40% of the claims filed and 73% of claims paid were attributable to lawyer procrastination! PREVENTION Two significant efforts are being undertaken by the Arkansas Bar Association to help members recognize and avoid legal malpractice. The Malpractice Education Committee under the leadership of Walter W. Davidson is sponsoring a series of "Prevention of Professional Liability Seminars" to be held throughout the State. Special emphasis is being given to training on docket control since it is obvious that the failure of lawyers to act for their clients in timely fashion is a major problem. CNA (the company whose liability policy is offered to Arkansas Bar Association members through its administrators, Rather, Beyer & Harper) has agreed to afford to its policyholders who attend one of these seminars a 5% premium reduction. Obviously, attendance at one of these seminars is considered to be important by the company that bears much of the risk for lawyer malpractice in Arkansas. The second attack on the problem is being undertaken by the Young Lawyers Section. Harry Truman Moore has agreed to chair a committee to develop a booklet entitled, "Guide to Arkansas Statutes of Limitations." The charge to the Committee is to carefully research the statutes and decisions and provide a comprehensive list of all statutes of limitations and index them for ready reference. These are examples of the many ways in which the Arkansas Bar Association is working for you.


April 1981/Arkansas Lawyer/47

The "Butt" Of It All! By: Judge Thomas F. Butt

One of the frequently vexing and always required elements of a "talk", most of which can hardly be dignified by the term "speech"-and tonight is no exception-is that there must be a subject. Why this is so, I am not sure. There is no law that says so. In many instances, the stated subject bears no discernible reiation to the supposed exposition that follows. For that matter, after having suffered through many of such, one is tempted to challenge the threshold proposition: Why have a talk at all, any old talk, let alone one with a subject? But I am happy to tell you that tonight will be different. To paraphrase and pirate from Mr. Harry Meek, that grand old gentleman of the Little Rock Bar, possessed of stupefying legal lore and delightful Dickensian wit, I have a message to deliver here tonight, a vibrant, dynamic message that will enthrall you, that will entrance and entrap you, and paralyze and anesthetize you; so that, by the end of my peroration, you will find yourselves in a state of mesmeric euphoria. For the next hour and a half, then, lend me your ears. But first, my subject, if there must be one. It must be understood, the spelling and syllabification being the same, that I refer to the noun, sub'ject, rather than to the verb, subject'. With this settled, we may safely proceed: Here, I must digress, parenthetically, to remark that, when asked, nay, implored, to assume the honorific and Brobdingnagian task of addressing this assembly of luminaries, my beseecher, who shall be nameless-a high officer of this organization, shortly to assume its leadership-was precious little help in suggesting a topic. His comment was in essence, "Oh, whatever's right; but be sure to give the Supreme Court 48/Arkansas Lawyer/April 1981

hell." You can readily imagine with what vigor, emphasis and total disdain I instantly rejected this praiseworthystrike that-this unworthy thought. But, to return to my subject: The word subject, as a noun, has various definitions. For our purposes, three will suffice. As do so many of our english words, it takes its origin from the latin, passing through some modifications engrafted by both Old French and Classical French. In this case, its root is subjectum, the neuter past participial form of the verb subjicere, meaning "to place or bring under (as under discussion)"; and currently defined as, "1. That concerning which anything is said or done; the thing or person treated of; matter; theme; topic. "2. The word or word group denoting that of which anything is affirmed or predicated; the word or words, with or without modifiers, construed as the nominative of a verb. "3. In music, the principal theme or melodic phrase, on which a composition or a movement is based; the antecedent, dux, etc., of a contrapuntal work, as a fugue or canon." You will immediately grasp that this third definition is not apropos. I pretend to no musical attainments or expertise. I do not have a counterpoint, as in a fugue or canon; I don't even have a point. So we will throw this one away. As for the second, I do not propose to affirm or predicate anything, nor, unless compelled to it, to mess around any more than the law allows, with words, with or without modifiers, as the nominative of a verb. So, this one can be discarded. By this process of shrewd elimination, we are left with definition number one. It took a deal of doing to find a subject. I felt rather like the little boy

who lost his chewing gum in the chicken house-he thought he'd found it 2 or 3 times. And so to my SUbject: The Care and Feeding of Judges. You will note I say nothing of the creation, propagation and promotion of judges. To do so risks entry into an area fraught with such peril and uncertainty that 1am not prepared to do so; at least not a second time. I pause here. to note that my brothers Bullion, Harris, Digby, Mayfield and I have, at different times, shared a common disaster; that is, failing to ascend to the questionable eminence of the high court. It is only fair to say, however, respecting Judge Mayfield, that having lost his run for the roses the one time, he was later willing to settle for half a loaf; that is, a seat on the Court of Appeals. To return to my subject: What about JUdges; or as the cynic might say, why Judges? Here again, definitions are helpful. We learn, by recourse to Webster. Our word jUdge derives from the Latin judex, in turn from the verb judicere, "to say the law". Mr. Noah Webster was doubtless remiss in not embracing within this definition the attribute of knowing the law. Later editions of his work have strangely perpetuated this error. Judges come in all shapes, sizes, ages and both sexes. These are fairly easy to recognize and classify. Their

myriad temperaments, dispositions and idiosyncracies do not so readily lend themselves to handy classification; though any practicing lawyer, assured of confidentiality and immunity, could display a catalogue of these that would put Winslow Drummond's judges' evaluation poll in the shade. Some of them do so, I am told, without regard to privacy of utterance. In this connection, you will note I said that judges come in all ages; saying nothing about judges going at any age. I put it down as a snide suggestion unworthy of currency or credence that there is any age at which judges should go, on the equally snide notion that some jUdges are over-age in grade. Our jUdges also come in different categories of principal duty. Thus, we have trial court judges and appellate court judges. Our word "trial", in the sense here used, is from the French "trier", to cull, to pick out. Fair-minded persons will at once perceive that the culling process here denoted does not mean, despite some argument to the contrary, that judges are culls; rather, they do the culling of issues tried before them. One of our two principal trial judges is properly styled "chancellor". This title word comes from the Latin "Cancellarius", a minor functionary of the Roman courts, a kind of usher, doorkeeper or janitor; one who stood at the door of the court and was accustomed to carry out the commands of the judges. (See Black's Law Dictionary, Rev. 4th ed. p. 259). Hence, on this historical basis, some lawyers are heard to mutter, following

an adverse ruling in equity, that the chancellor knows about as much law as the janitor. Such remark, it is understood, is one of the milder examples of friendly criticism made of the judge. Those of similar ilk, directed to circuit judges, are, for understandable and more justifiable reasons, considerably harsher in tone. The other of our two principal trial judges is the Circuit Judge, so called, as has long been recognized, because of the circuitous and serpentine, not to say labyrinthine, nature of his reasoning process, if such it can be called, that is so characteristic of this breed of judges. Appellate courts deserve some passing mention. The word "court" is from the Latin "curia", a hall or enclosed space, and was the name given to the Senate Chamber of Republican and Imperial Rome. In England, in later centuries, the "Curia Regis" became and still is, the Court of Queen's Bench. Appellate, as in appellate court, is from the Latin "appellatus", past participle of the verb "appellare", to approach, address, invoke, summon, call names (no, no, that's not right), call, name. Well, anyhow, we are now stuck with two appellate courts. This is all well and good, on the theory of the more the merrier; or that if one is good, two are twice as good. This came about because of the alleged heavy workload of the Supreme Court. Having come to believe its own propaganda that there was too much work for all 7 justices to handle at once, the court engaged in an amoeba-like fission and split itself into

two divisions, with the Chief bouncing back and forth between to make a mao jority offouron each. The ultimate solution was to create the Court of Appeals, carefully placed under the benevolent thumb of the Supreme Court, upon which that court could fob off all the appellate trash the high court didn't want to .mess with. The result is that, as far as the appellate workload is concerned, one is reminded of the old lawyer, giving to indulging his gustatorial propensities, who opined that the two most useless things in the world were a roast turkey and a gallon of whiskey-too much for one and not enough for two. However, all is -not sweetness and light. We also have some 20-odd rules that are supposed to clarify and delineate the roles of the two benches. Unfortunately, things are not quite as clear or as sharply etched as one might desire. All opinions of both courts are required reading; all appear to be equally authoritative, but, some are more equal than others. Some, the trial judges, to say nothing of the lawyers, dare not cite, nor quote, at pain of being in contempt. These are the famous, or infamous, "not to be officially reported" decisions. One result is that a lively black market has sprung up in the use of such opinions. Most of them are replete with citations of other cases. The alert lawyer or trial judge can cull (that word again) from the forbidden opinion citations therein contained to cases that can be used. Adroit marshaling of analogous facts can put these forbidden decisive but non-authoritative

(Editor's Note: We are indebted to Chairman Charles L. Carpenter of the Arkansas Bar Association Judicial Council Uaison Committee for getting Judge Butt's permission to publish his address at the Arkansas Judicial Council banquet, October 16, 1980, in Blytheville, Arkansas. Judge Butt needs no introduction here. Of interest, however, is that he is the senior trial judge in Arkansasserving his sixth term as Chancellor and Probate Judge (13th Chancery Circuit, now 4th Circuit).

April 1981/Arkansas Lawyer/49

opinions to some marginal use. But, things are not all bad. There is only so much harm the appellate courts can do. After all, the people of the state hire these appellate judges in lots of six and seven. They work hard once every eight years, and then relax in between. Trial jUdges, on the other hand, work hard all the time. Why, in between sessions of court in their various counties, it's a caution how much time they must spend attending civic club luncheons, Little League ball games, making the rounds of the Courthouse square, and going to rural graveyard association decoration days. Somewhere, they find time to draft instructions to juries, write memorandum opinions, read up on the case files as much as 30 minutes ahead of trial; and take cases under advisement. Now, this matter of taking cases under advisement is the greatest thing that ever came down the pike for trial judges. I venture to say that up to 50% of the trial judge's productive working time is devoted to advisement. It is not entireiy clear with whom he advises; what advice he seeks, or takes; nor how it is done. These things vary with the assiduity and advisement techniques developed by each judge. And this is as it should be. Some find they can advise better on the golf course than at the fishinq hole; or the other way around. Others do better at the judges' school in Reno, 3 or 4 times a year; at Bar conventions, or even at Judicial Council meetings. I know one of our brethren who does some of his best advisement during periodic flying visits to Old Mexico, far from the madding crowd and away from the bothersome clutter of jury trials, reading briefs or studying the law. But, a part from individual touches in the art of advisement, its great and common virtue is that it can be done anywhere, anytime, under any conditions and for such period that best suits the taste of the jUdge. By close adherence to the rigors of advisement, most trial judges can even hold off decisions almost as long as the appellate courts do before they disgorge a 4-3 or a 3-3 split opinion. And herein lies the great and substantive difference between the appellate and trial courts: The decision making process. You see, the trial judge is a court all by himself, whereas, the appellate judge, at most, is only a piece of a court. The trial judge has only himself to persuade, and convince; the appelSO/Arkansas Lawyer/April t981

late judge must somehow browbeat, bamboozle, belittle or shame at least 3 of his brethren into mending their obstreperous, mulish and unenlightened ways so to see the true light of wisdom as diffused from the one's tamp of legal knowledge. But withal, and acknowledging that the course of judging, as that of true love, never runs smooth, let us also agree with the essayist, Joseph Addison, that "There is no virtue so truly great and godlike as justice". Those of us who, by choice or circumstance, are cast for a time in the role of handmaid-

ens to justice, are, I am persuaded, impelled to do our poor but earnest best to fulfill our mission. We see as through a glass, darkly; the mistakes we make, and they are myriad, are those of the head and not of the heart. Each of us, I am assured, is wholly committed to interpreting and applying the laws and ideals of a free society, to the end that that society may endure for the good of the commonwealth. For my part, and I know for yours, I could aspire to no higher calling. I count it an honor and a privilege to be one of you. "

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EXECUTIVE COUNCIL NOTES by W. Christopher Barrier Secretary-Treasurer

The Executive Council met on December 13, 1980, to address some new issues and re-examine some old ones: SYSTEMS: Our systems have passed the point of being a more sophisticated version of Bengal's form book. There is now a need to plug the systems into a variety of word processing systems, without having them retyped in each lawyer's office. Money was appropriated to accomplish this, which will be recouped on sales of the disks, cassettes, floppy disks, etc. MEMBERSHIPS: This may also be a way of attracting memberships, by charging a higher rate to non-members for the systems and CLE as well. As over a fourth of the licensed attorneys in Arkansas are not members of the Association (and as delinquencies among members are higher than ever), the subject certainly needed some attention. FTC and LSC: It looks like the FTC questionnaire (apparently aimed at price-fixing and other nefarious practices) is dead. At least it will not be compulsory. On other federal matters, it appears that another legal services corporation will be chartered in Arkansas, for White, Howard, Nevada, Sevier, and Perry Counties. However, as President Reagan will presumably want one of his own as the chairman of the national Legal Services Corporation, Arkansas will likely lose Hillary Rodham's strong voice in favor of the "judicare" approach, as Chairperson. LEGISLATION: On the state level, as of the meeting, no part of the Association's legislative package had been pre-filed and additional legislation is on the way. Professor Ken Gould presented an eight-part package on juvenile justice aimed at cleaning up the present legislation, which will be 52/Arkansas Lawyer/April 1981

presented to the House of Delegates for approval in January. RETIRED MEMBERS: Because there are no specific guidelines as to when an attorney is entitled to retired member status, (and a reduction in dues from $100.00 to $25.00), the Executive Council continues to grapple with the applications. The thorniest problems arise when the Council is presented with applications from lawyers who have suffered a drop in income due to their age, but are still practicing full time, and lawyers who are retired from the profession but remain

active with investments and are in fact wealthy. ...AND OTHER MATTERS: In other matters, the Council received a report from Charlie Carpenter that the Judical Council was still lukewarm about the judical poll; heard Tom Ledbetter report that bar-related title insurance is on its way; turned down a request for the Association's mailing list from a religious organization; and heard a report from Phil Carroll that the Local Bar Conference was a "splendid" program, despite the fact that it was attended by fewer people than were putting it on.


"CHrISTIan Lawyers have unique responsibilities and opportunities

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State Chairman: Jay Dickey, Jr., P.O. Box 6038, 208 East Fifth Street, Pine Bluff, Arkansas 71601, 501/534-6302




BOOK REVIEW' Arkansas lawyers, and lawyers practicing in other states as well, should know about this handbook, published by Prentice-Hall, Inc. in 1975. The author and editor is a lawyer with long experience in the practice of law, inclUding appellate practice, in this state. Apart from her legal practice, she is a charming lady, and one of our bar's most industrious laborers in law. As the title indicates, the volume is not a treatise on appellate practice, but rather a handbook. It is in two major parts, the first dealing with state 'supreme court appeals and the second with civil appeals in the federal court system. In each part, the author has collected references to the court rules that govern the successive appellate steps from filing the appeal to presentation of argument, both written and oral, in the court to which appeal is taken. Throughout the book, there is emphasis on the times within which, under the various rules, the successive steps must be taken. The possible penalties for delay are made clear. Matters covered include such details as checking on costs and fees, understanding the organization of the court system, mastering the rules of the court to which appeal is taken, preparation of the record in different kinds of cases, different elements in the record such as table of contents, cross-references, the form of transcripts, and the like. Special mention is made of records to be filed in forma pauperis and other appeals involving indigents. In a single chapter, citations and quotations appear giving illustrations from the states of Utah, Kentucky, Nevada, Colorado, California, Arkansas, Wyoming, Rhode Island, and Alaska. Illustrations from other states appear in other chapters. The forms of briefs filed for different appellate purposes are also taken up. A number of briefs filed in different

courts are reprinted in full, to show the reader what briefs, presumably successful ones, are like. They are included not so much for the legal arguments presented in them as for their organization, though the two aspects, of course, bear upon each other. The correlation between briefs and oral argument is also dealt with, with a usefullist of do's and don'ts for beginners (or even for old hands) engaging in oral argument. Special sections take up the procedures governing in certiorari appeals, writs of prohibition, rehearings, and for amicus curiae briefs. The allowable lengths of briefs and the amounts of time permitted for oral argument are given for a number of different states, as are details in their rules governing other aspects of the appellate process. In the part of the book dealing with civil appeals in the federal courts, the necessity for full acquaintance with the

Federal Rules of Civil Procedure is made clear, but it is also brought out that the United States Court of Appeals Circuits each have their own rules, as do Bankruptcy and other specialized courts. These are summarized. The procedure for taking federal certiorari is also outlined. A list of forms and tables included in the table of contents aids the reader in ready access to key features of the handbook. The same author's earlier book, Family law Practice and Procedure, is now out of print. Copies of the 1975 book are available, however, from the author herself, at her office, 722 W. Markham St., Little Rock, AR 72201. Members of the Arkansas Bar, and particularly of the Arkansas Women Lawyers Association, can be proud that one of their number has produced this volume, as well as the earlier book on Family Law.


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'Dr. Robert A. Lellar April 1981/Arkansas Lawyer/53

LAW SCHOOL NEWS Dean David G. Epstein Assistant Dean Ellen Brantley

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS, FAYETTEVILLE While this column appears in the "April issue" of The Arkansas Lawyer, it was written in late December to meet the printer's (and the Colonel's) deadlines. The focus on November, December, and January events does not mean that nothing happened in February, March, and April. It just hasn't happened yet. Rest assured that "wonderful things" (or things that an enthusiastic dean will try to describe as "wonderful") did happen in those months. 8th Circuit Visit On Monday, November 17th, the United States Court of Appeals for the Eighth Circuit held oral arguments at Waterman Hall. Students and faculty filled the law school courtroom to hear lawyers from Arizona, Arkansas, Kansas and Missouri argue cases (1) challenging the constitutionality of the Missouri abortion statute. (2) alleging violation of civil rights by prison officials apprehending escaping inmates, and (3) questioning the propriety of grand jury action in a tax fraud prosecution. The attorneys talked informally with students in the breaks between cases. And, after the third argument was completed, the three judges-Judge Oren Harris of EI Dorado, Judge J. Smith Henley of Harrison, and Judge Donald Lay of Omaha, Nebraska-answered questions from students about the judicial decision-making process and the role of appellate courts.

After observing lawyers argue real cases on appeal, our law students will be "given the opportunity" to make an appellate argument. Each second year student is required to 54/Arkansas Lawyer/April 1981

take a course in Appellate Advocacy; the course requires the preparation of a brief to an appellate court and the presentation of an oral argument. This spring, the case that will be argued by Arkansas Appellate Advocacy students is the case that will be used by the American Bar Association's National Moot Court Competition. An intraschool competition will be held to determine who will represent Arkansas in the national competition. Judge Gabrielle McDonald, federal district judge in Houston, and Judge Dickson Phillips of the United States Court of Appeals for the Fourth Circuit have agreed to judge the final round of our intraschool competition. Continuing Legal Education The Law School organized and present two major continuing legal education programs in late fall. Almost four hundred lawyers from Arkansas and neighboring states attended our Irving Younger Trial Tactics program in Little Rock on October 31, 1980.

Late in November, the Law School brought Professors Wylie Davis, Eric Holmes of Georgia, and Bill Young of Columbia along with Sid Davis of the Fayetteville Bar and Doug Hearne of the Austin Bar to Fort Smith for an Insurance Program. Expanded versions of Professors Davis, Young, and Holmes' talks will be published in the Arkansas Law Review. U of A law faculty members are also playing an important part in AICLE ContinUing Legal Education programs. David Newbern spoke at the December Appellate Procedures seminar. Milt Copeland, John Eldridge and Jake Looney will

be speaking at the Midyear Meeting Program on Arkansas Creditors/Debtors .Rights, and Phil Norvell will be speaking to the National Resources Law Institute. The Law School was the site for two bar programs this fall: the Arkansas Bar Foundation's Professional Responsibility Program and an AICLE regional seminar on domestic relations. We are looking forward to having the Fall Legal Institute in Fayetteville in 1981.

Faculty Publications It is, not unusual for law professors to be writing articles and books. As regular readers of the Law School News Column realize, faculty members of both law schools are engaged in research and writing. Each issue of the Law

School News lists names of U of A and UALR law faculty members and their publications. It is, however, unusual for a professor who is new to teaching to have an articie accepted for pUblication by a major law review. And, it is unusual for Harvard to accept an article by a new teacher. Accordingly, we are unusually proud of Joan Hartman who joined us in August. Joan's article has been accepted for publication in the next issue of the Harvard issue of the Harvard International Law Journal.

Agricultural Law The Law School has received clearance from both the American Bar Association and the Association of American Law Schools to begin an LL.M. program in Agricultural Law in August of 1981. This will be the first such program in the country. Its objective is to prepare a small number of carefully selected attorneys as specialists in the legai problerns of agricultural production, distribution, and rnarketing. New courses are being developed in areas such as agricultural finance and credit, cooperatives, and farm estate and business planning. The program is designed to provide intensive instruction to a limited number of students. It is anticipated that no more than 10 students will be admitted in the first year and no more than 15 in subsequent years. If you are interested in more information about our Agricultural Law Masters Degree program, please call or write, Professor J. W. "Jake" Looney, University of Arkansas School of Law, Waterman Hall, Fayetteville, Arkansas, 72701 (501 )575-5602.

SCHOOL OF LAW, UNIVERSITY OF ARKANSAS AT LITTLE ROCK Legal Clinic Highlights For the third consecutive year, the School of Law's Clinical programs have received a grant from the U.S. Department of Education under Title XI of the Higher Education Act of 1965. The grant for 1980-81 was increased by more than 50% over the 1979-80 year grant. It is used to pay the salaries of two clinical supervisors: Paula Casey, who is in her second year with the law school and Larry Jegley, a 1977 UALR School of Law graduate who recently left private practice to join the clinic. Mr. Jegley, who was a member of the UALR Law Journal staff, replaces Marsha Yowell, who returned to her position as a staff attorney with Central Arkansas Legai Services. In addition, grant funds are being used to purchase additional videotape equipment for the clinic's law office. The clinic already has an interview room with an enclosed videotape camera and microphone where all student interviews are, with the client's consent, videotaped. The tapes are then used for individual critique and classroom teaching. The Director of the Clinic, Professor Kenneth Gould, and the Associate Director, Assistant Professor Norman Stein presented a program, "Classroom teaching in a Clinical Program: Goals and Techniques," at the 1980 Southwest Clinical Teachers Conference held in Columbia, South

Caroiina in November. Their program featured classroom materials and videotapes developed at the UALR Clinic. Professor Gould is a member of the American Association of Law Schools Section of Clinical Legal Education's Nominating Committee, and has visited several law schools as a member of American Bar Association accreditation teams. Professor Stein is chairman of the American Association of Law Schools Section's Committee on Classroom Teaching and Teaching Materials.

Professor Arthur Miller to be Altheimer Lecturer Professor Arthur R. Miller of Harvard Law School will deliver the Spring, 1981, Altheimer Lecture on Wednesday, March 25, 1981. Professor Miller, an expert on privacy, will speak on "The Media and Privacy." Professor Miller is a graduate of the University of Rochester, where he was elected to Phi Beta Kappa and of the Harvard Law School. He served as articles editor of the Harvard Law Review. He practiced law in New York city and then served as Associate Director of the Columbia Law School Project on International Procedure. He served on the April 1981/Arkansas Lawyer/55

faCUlty of Columbia Law School, the University of Minnesota Law School, and the University of Michigan Law School before he joined the faculty of the Harvard Law School in 1971. Professor Miller has spoken and written widely in the field of privacy, information, and computer technology. In addition, he is the coauthor of the leading casebook in civil procedure and of a multi-volume treatise on federal practice and procedure. Professor Miller is host of the television series "Miller's Court" broadcast weekly on Boston's ABC affiliate WCVB. Scholarship Fund Established in Judge Mehaffy's Honor A perpetual scholarship fund to provide financial aid for students at the UALR School of Law has been established in honor of Judge Pat Mehaffy of Little Rock. Dean Robert Walsh said scholarships will be supported by interest earned on an endowment that has been created through donations from friends of Judge Mehaffy. Judge Mehaffy is a native of Little Rock and a 1927 graduate of Arkansas Law School at Little Rock. He served as an assistant state attorney general and as chief deputy prosecutor for the 6th Judicial District before his election as prosecutor in 1939. He then went into private practice and founded the law firm that became what is now the largest law firm in the state, Friday, Eldredge, and Clark. Judge Mehaffy was appointed to the 8th U.S. Circuit Court of Appeals in 1963 and served until 1974, the last two years as chief judge. "We are extremely proud to have this new scholarship fund because of the outstanding career of Judge Mehaffy that the fund will permanently honor," Dean Walsh said. Spring Visitors Associate Professor Susan Webber is serving as visiting professor at the Ohio State University School of Law for the Spring semester, and Assistant Professor L. Lynn Hogue is visiting at Emory University. During their absences, the School of Law has two visiting professors: former Chief

Justice John A. Fogleman and Professor Morris (Buzz) Arnold of the University of Pennsylvania. Professor Fogleman is teaching a course in Judicial Administration; Professor Arnold is teaching Property and American Legal History. "The School of Law is proud to have two such distinguished scholars on our faculty this semester," said Dean Robert Walsh. Coming Events Dean Robert Walsh has announced that the finals of the Moot Court Competition will be held at 3:30 p.m. on April 3, 1981. The competition will be followed by a reception. The Eighth Circuit Court of Appeals will sit at the Law School on Friday, March 6. Arguments begin at 9 a.m. All members of the Association are invited to attend both events. Faculty Notes Professor Eugene Mullins has accepted an appointment to serve on a special committee established by the National Academy of Sciences to study ways and means to improve safety in underground coal mines. Professor Jason Reynolds spoke at the Second Annual Public Defender Seminar held Friday, October 24. He discussed the preservation of error for the record in criminal cases together with analysis of common mistakes made by counsel in this area. An article, "Credit Life and Disability Insurance Disclosures Under Truth-in-Lending: The Triumph of Form Over Substance", by Professor John M. Sheffey was published in the Florida State University Law Review. Assistant Dean Ellen B. Brantley was appointed by Chief Judge G. Thomas Eisele to the Federal Practice Committee for the Eastern District of Arkansas. The committee will advise the Court of means to improve the administration of justice in the Courts. Among the projects the Committee will undertake is arranging a conference on federal practice.


Presentation of first Rose Law Firm and U. M. Rose scholarships-Dean Robert K. Walsh, Vince Foster and Gaston Williamson of the Rose Law Firm, and recipients: Willie E. Larry of Doddridge, Linda G. Johnson of Little Rock and Bruce D. Maloch of Magnolia. 56/Arkansas Lawyer/April 1981



JURIS DICTUM by Robert L. Lowery Executive Secretary, Judicial Department

There have been many changes of late in all branches of govemment. Of particular import are the judicial changes, particularly on the appellate level, where all positions are now held byelected justices and judges. The extent of the change is obvious when we consider that of the thirteen appellate positions in Arkansas, nine are newly elected, including Chief Justice Richard B. Adkisson of the Supreme Court and Chief Judge Melvin Mayfield of the Court of Appeals. Swearing-in ceremonies for the new justices were held January 1, 1981 in the Supreme Court Room. Chief Justice John A. Fogleman administered the oath of office to Justice Robert Dudley and Justice Steele Hays. He then ended his long and distinguished service on the Supreme Court with the performance of his last act as Chief Justice, the giving of the charge of office to his successor, Chief Justice Richard Adkisson. Chief Justice Adkisson then administered the oath of office to the six members of the Court of Appeals in the old Supreme Court Room in the Capitol Building. The biographical sketches of Justices Adkisson, Dudley and Hays were reported in the Association's News Bulletin, December 1980. Justices Darrell Hickman and John I. Purtle will be covered in a subsequent issue. At this time, the presentation of Justices George Rose Smith and Frank Holt is in order: JUSTICE FRANK HOLT Justice Frank Holt was one of eleven children born to Bud and Adeline Moore Holt of Harrison, Arkansas. He was graduated from Harrison High School with honors and as president of the student body. After graduation he attended the University of Arkansas where he was an honor roll student; president of Pi Kappa Aipha; vice president of his senior class and a member of Blue Key. Following graduation from the

University School of law, he studied intemational law in Switzerland on a scholarship and returned to the private practice of law in Little Rock. In 1942 he entered the army where he served in the Military Intelligence Branch. He was married that same year to Mary Reid Phillips of Little Rock. After his discharge from service he returned to his law practice. In 1947 Justice Holt began his political career as Deputy Prosecutor for the Sixth Judicial District. In 1954 he was elected Prosecuting Attorney serving three terms; served as Attorney General from 1960 to 1962; was elected Associate Justice of the Arkansas Supreme Court where he served until 1966 when he resigned to run for Governor. After suffering his first defeat for an elective office, Justice Holt again ran for a position on the Supreme Court in 1968 and was elected for an 8 year term. Justice Holt ran successfully for re-election in 1976 and is currently serving another 8 year term which expires 12-31-84. Justice Holt is a member of the Pulaski County, Arkansas, and American Bar Associations; licensed to practice before the U.S. Supreme Court; Past President of the Arkansas Prosecuting Attorneys Association; has served as Chairman, Arkansas Committee on Special Services for Juveniles; Director, National Association of Prosecuting Attorneys; delegate to the 1960 White House Conference on Children and Youth; and was made an honorary member of Phi Alpha Delta, national legal fraternity in 1964. Throughout his career Justice Holt has been active in numerous community affairs and is a member of the Baptist Church. He has served as Pulaski County Red Cross Chairman; Advanced Gifts Chairman, Pulaski County March of Dimes Co-Chairman; State Multiple Sclerosis Campaign; active member of the American legion, serving four times as Chairman, Committee on Americanism for the Arkansas Department of the American le-

gion, and recipient of the legion's Americanism Award for 1971 ; Member of the National Membership and Post Activities Committee, American legion; Radio Free Europe State Fund Chairman; and served as a member of Freedom's Foundation Awards Jury, 1970. The Holts have two daughters, lyda and Melissa. Justice Holt and his wife Mary live in 'Littie Rock. JUSTICE GEORGE ROSE SMITH A student of the history of the Arkansas Supreme Court might say with some truth that it seems to be almost a tradition to have a justice named Smith as a member of that tribunal. Justice George Rose Smith, now the senior member of the court, is one of the five Smiths (all unrelated) who have served on the court. Since 1912, there has continuously been at least one Smith on the court at all times, and occasionally two and even three at once. At the expiration of Judge Smith's present term of office, a Smith will have been on the court for more than half the time since Arkansas became a state in 1836. Not only is Justice Smith the senior member of the Arkansas Supreme Court but, he is now the senior Supreme Court Justice, in years of service, among the 300-odd justices of all the courts of last resort in the United States. Justice Smith's current term of office expires December 31, 1986. A native of Little Rock, Justice Smith was born in 1911, the son of Reverend and Mrs. Hay Watson Smith. After attending Washington and lee University for three years he graduated with honors from the University of Arkansas law School in 1933. Except for some four years in the military service Justice Smith practiced law with the firm of Rose, Hemingway, Cantrell, and loughborough from 1933 until he became a Justice in 1949. He and the former Peg Newton were married in 1938. They have one daughter, laurinda. (continued on page 74) April 1981/Arkansas Lawyer/57

TAXATION OF INSTALLMENT SALES UNDER NEW LAW By: John B. Peace John B. Peace is a partner ofthe firm of Moody & Peace, Attorneys-at-Law, and practices in Uttle Rock, Arkansas. He is a Certified Public Accountant and served as Co-chairman of the 1980 Arkansas Federal Tax Institute. Lecturer-legal accounting-UALR School of Law. Author-"Federal Tax

Consequences of Ufe Insurance in Estate Planning", 1 UALR Law Journal 63. He is a member Qf the Arkansas Bar Association Section on Taxation, Trust and Estate Planning. This article is another in the current series furnished by the Section on Taxation, Trust and Estate Planning.

A person who sells real or personal property is generally subject to federal income tax on the gain resulting from the sale of the property. The gain is based upon the difference in the amount he receives for the property and his adjusted tax basis (normally, cost less depreciation) in the property. However, if an installment sale is used, the Internal Revenue Code' contains certain provisions permitting the taxpayer to recognize portions of the gain over the period in which the payments are received, rather than recognizing the entire gain in the year of sale. This so-called "installment method" of reporting avoids bunching of income in the year of sale and, due to the progressive tax rates, can result in less tax being paid on the gain. It also avoids the problem of having to pay tax on the gain when payments under the sales contract may not have been received, with the resulting cash not being available to pay the tax.

$10,000.00 Tax basis $50,000.00 Contract price $40,000.00 Gross profit Gross profit ratio ($40,000 ..,. $50,000) 80% (5) Gain reportable in 1980 ($10,000 $ 8,000.00 x 80%) (6) Gain reportable in years 1981 and thereafter ($5,000 x 80%) $ 4,000.00

The "installment method" may be defined as a method under which the income to be recognized for any taxable year from a disposition of property is a percentage of the payments received in that year. The percentage is determined by dividing the gross profit (realized or to be realized when payment is completed) by the total contract price.' For example, assume that T owns a tract of land in which he has a tax basis of $10,000.00. T sells the property in 1980 for $50,000.00, with $10,000.00 in cash being received during 1980 and the balance due in eight annual installments of $5,000.00 each. Assuming the contract otherwise qualifies for installment sale treatment, the amount reportable as gain in 1980 would be $8,000.00, and the amount reportable as gain in each year thereafter would be $4,000.00. These amounts are determined as follows: 58/Arkansas LawyerlApril 1981

(1) (2) (3) (4)

The Installment Sales Revision Act of 1980 (Public Law 96-471), signed into law by President Carter on October 19, 1980, makes substantial changes in the area of installment sales. The Act generally applies to sales occurring on or after October 19, 1980, with certain exceptions. The remainder of this article will be devoted primarily to a discussion of some of the more important changes in the law.

OLD LAW To understand the new Act, it might be helpful to first look briefly at how installment sales were treated under the old law. Under old Code Section 453 the installment method was available on a sale of real property, or upon a casual sale of personal property (other than inventory) for a price exceeding $1,000.00. However, the installment method was available only if the payments in the year of sale did not exceed 30 percent of the selling price. For purposes of the 30 percent rule, an assumption of a mortgage or other encumbrance on the property by the purchaser was not treated as a payment in the year of sale. To qualify for the installment method, an affirmative election was required by the taxpayer on the tax return for the year in which the sale was made.

30 PERCENT RULE The 30 percent rule has been eliminated in the new Act. The amount of payment received in the year of sale is no longer relevant, and the taxpayer can receive 50%, or even 99% of the contract price in the year of sale, and still qualify for the installment method. Under the old law, the 30 percent rule often amounted to a trap for the unwary, and many taxpayers who thought they qualified for the installment method later learned that they did not. One case in which the 30 percent rule was often overlooked was where the taxpayer coordinated the installment sale provisions with an exchange of "like-kind" property.' It was possible to receive tax-free exchange treatment on a portion of the sale, while electing installment method treatment for the balance. However, often overlooked was the fact that the value of the likekind property was taken into account in determining the amount of payments received in the year of sale for purposes of the 30 percent rule.' With the elimination of the 30 percent rule by the new Act, this is no longer a problem. THE TWO-PAYMENT RULE The old law had been interpreted to require that there had to be two or more payments spread over two or more years in order to qualify for installment sale treatment. This requirement has been eliminated in the new Act.' The only requirement is that at least one payment be made in a taxable year after the year of sale. Thus, a seller could receive no payments in the year of sale, with the entire balance due at the end of five (5) years, and qualify for installment reporting. In this case, the entire gain would be reported in the fifth year, rather than the year of sale. ELECTION Under the old law, an affirmative election was required in order to take

advantage of the installment method. Under the new Act, installment treatment is automatic unless the taxpayer elects otherwise. An election not to have the installment method apply to a particular sale must be made on or before the due date (including extensions) for filing the income tax return for the year in which the sale occurs. The Internal Revenue Service is charged with promulgating regulations prescribing how the election is to be made. Congress intends by making installment treatment automatic to bar the so-called "cost-recovery" method of reporting gains from sales of property, except in extraordinary cases involving sales for a contingent price.' Under the cost-recovery method, a seller first recovers his entire adjusted basis in the property before recognizing any gain at all. This method was sometimes used by sellers who sold property on a contract to sell, where payment of the purchase price was not assured. With the Congressional intent being clearly spelled out in the new Act, the costrecovery method would now be extremely difficult to justify. It should be noted that the installment method is now automatic on all installment sales of real and personal property which meet the requirements (unless the election out is made), and the $1,000.00 minimum sale price on casual sales of personal property has been dropped. Installment sales of real property and personal property (other than inventory) are now treated similarly.

SALES TO CLOSELY-RELATED PARTIES Under the old law, a high bracket taxpayer could sometimes sell property to a child or other related party in a lower tax bracket on an installment basis, and the related party could in turn resell the property for cash. The result was that the high bracket seller recognized gain on the difference between his adjusted basis and the seIling price on the installment basis, the related party received a stepped-up tax basis equal to the purchase price, and the related party normally recognized no gain on the sale to the outside party since he typically sold the property for the same price at which it was purchased from the high bracket taxpayer. This nearly always resulted in a substantial reduction of taxes to be paid by the family unit, although it had con-

verted the property to cash. The installment sale from the high bracket taxpayer was often made to a trust for the benefit of several beneficiaries. The trust would then sell the property for cash, with the proceeds being reinvested, and the income on the investments would be taxed to the trust or its beneficiaries who were typically in lower tax brackets. Alternatively, the proceeds could be invested in taxexempt securities on which no tax was paid. This technique is no longer available under the new Act. If the related party purchaser disposes of the property within two years of the initial sale, and before the initial seller (the high bracket taxpayer in the above example) has received all payments due him, then the amount realized on the second disposition will be treated as received at that time by the initial seller.' This has the effect of accelerating the recognition of the installment gain to the initial seller. A second sale made more than two years after the date of the initial transfer will not be subject to the above rules. However, in the case of marketable securities, the resale rule would apply without a time limit for resales occuring before the installment obligation to the initial seller is satisfied. The resale rules are subject to various exceptions, including any transfer after the death of the initial seller or the related party purchaser, and will also not apply to a second disposition if it is established to the satisfaction of the Internal Revenue Service that neither first or second disposition had one of its principal purposes the avoidance of Federal income tax. A related subject is the sale of depreciable property between certain closely-related parties. In such case, the Act provides that the installment method of treating the gain is not available.' All installment payments to be received are deemed received in the taxable year in which the sale occurs. This has the effect of converting the taxpayer to the accrual method of accounting for deferred payment sales of depreciable property between closelyrelated parties. The purpose of this rule is to eliminate those transactions which are structured so as to give the related purchaser the benefit of higher depreciation deductions based upon a stepped-up tax basis before the seller has been required to pay tax on the gain. The term "depreciable property" means property which is depreciable in

the hands of the transferee. The Code defines a "related party" differently for purposes of the resale rule discussed above and the rule on sales of depreciable property. Both rules apply to sales between spouses, and the resale rate also applies to sales between parents and children. The resale rule applies to sales between an individual and a corporation in which the individual owns directly or indirectly 50% or more of the stock in the corporation, while the rule on sales of depreciable property applies to sales between an individual and a corporation of which 80% or more of the stock is owned directly or indirectly by the taxpayer. There are numerous other "related party" definitions, and the law should be consulted for specific fact situations.' INSTALLMENT OBLIGATIONS DISTRIBUTED IN A 12-MONTH CORPORATE LIQUIDATION One of the most important changes made by the new Act is the change in tax treatment on disposition of installment obligations in connection with a complete liquidation under Code Section 337. Under that Section, a corporation desiring to sell all or some of its assets to an outside party, followed by a complete liquidation of the corporation, is entitled to exclude gains realized on sales of property within the 12-month period beginning on the date of adoption of the plan of liquidation. However, under the old law, if the assets were sold on an installment basis, and the installment obligations were distributed to the shareholders as a part of the complete liquidation, the shareholders were required to include the full amount of the installment obligations received in exchange for their stock in the corporation. Thus, there was no way the shareholder receiving the installment obligations could defer reporting the gain. The new Act changes this rule, and makes it retroactive for distributions of installment obligations after March 31 , 1980." Under the new rule, the shareholder reports gain from the exchange of his stock on the installment method, recognizing the gain as payments are received on the installment obligations received as part of the liquidating distribution. Before the new Act, the owners of a closely-held corporation were in somewhat of a quandary if they wanted to sell the corporation to an outsider by April 1981/Arkansas Lawyer/59

selling its assets. As a result, sellers were often forced to sell their stock in the corporation under an installment sale rather than selling the assets of the corporation. However, buyers are normally hesitant to buy stock in a closely-held corporation because of the possibility of unknown or hidden liabilities of the corporation. The result was that many sellers had to accept a reduced price for the stock, or enter into personal indemnity agreements binding them to reimburse the buyers for any unknown or hidden liabilities of the corporation. DISPOSITION OF INSTALLMENT OBLIGATIONS A disposition or cancellation of an installment obligation before all of the gain has been recognized will trigger the recognition of the unrecognized portion of the gain on the date of the disposition or cancellation." This will occur whether the disposition is by sale, gift or otherwise, except for the transmission of installment obligations at death. If an installment obligation is transmitted at death, the recipient will recognize gain only as payments under the obligations are received. This rule has not been changed by the new Act. " However, if the obligation is left to the obligor, it had previously been argued under the old law that because there was a merger of interests between the obligor and obligee, this did not amount to a disposition of the obligation." The obligor under such circumstances would have acquired a cost basis for depreciation and resale purposes based upon the higher price at which he purchased the property, but no income tax would have been incurred with respect to the unrecognized gain by the seller at the time of his death. Congress has made it clear in the new Act that the disposition rules discussed above apply equally to the cancellation of an installment obligation resulting from the death of the seller." This, of course is one instance where the new Act operates as a disadvantage to the taxpayer.

as ordinary income. Thus, it would appear to benefit the seller to increase the sales price of the property by the amount of the interest to be paid over the life of the installment obligation. In this way, he could convert what would otherwise be ordinary income into capital gain. However, Code Section 483 prohibits a taxpayer from doing this to a certain extent. That Section provides that where the installment contract fails to specify any interest, or specifies a rate equal to less than 9% simple interest, interest will be imputed at 10% compounded semi-annually (6% and 7%, respectively, for sales and written contracts made before September 29, 1980)." This has the effect of reducing the selling price of the property by the amount of the imputed interest. Before the new Act, this could have resulted in payments in the year of sale exceeding the 30 percent of selling price limitations, but this danger is eliminated in the new Act because of the elimination olthe 30 percent rule. The seller should nevertheless consider the imputed interest rules when deciding what interest rate to place on the installment obligation.

CONCLUSION The Installment Sales Revision Act of 1980 is still new, and some ambiguities or inconsistencies will most surely be discovered as practitioners begin to work with it. However, the Act is for the most part pro-taxpayer, and it should simplify greatly the task of the attorney representing both buyers and sellers in installment sales of real and personal property. ~ FOOTNOTES 1 I.R.C. Sec. 453 (all references herein to

the Code or l.R.C. shall refer to the Inter· oa! Revenue Code of 1954, as amended

by the Installment Sales Revision Act of 1980).

2 LRC. Sec 453(c). 3 See generally, I.R.C. Sec. 1031, for tax·

free exchanges.

4 Rev. AuL 65-155,1965·1 Cum. Bull. 356. 5 LRC. Sec. 453(b)(1). 6 See Senate Report, p. 24.

7 LA.C. Sec. 453(e)(1). 8 I.R.C. Sec. 453(9)(1). 9 LR.C. Sec. 453(1)(1) and LA.C. Sec. 453(9)· 10 LRC. Sec. 453(h). 11 LRC. Sec. 4538. 12 LRC. Sec. 4538(c). 13 See Miller v. Usry, 160 F. Supp. 368 (W.O. La. 1958). 14 See Senate Report, p. 27.

15 Proposed Reg. §1.483·1(d)(1)(ii)(C).

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Jim Teator (501) 378-7038-Servlce (501) 753-9123 IMPUTED INTEREST Under most circumstances, gain recognized on an installment sale of property held for investment will be taxed at the more favorable capital gains rates, while interest received on the installment obligations wll be taxed BO/Arkansas Lawyer/April 1981

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AprillgBI/Arkansas Lawyer/51

CONTEXT By W. Christopher Barrier

THROUGH A LOOKING GLASS (DARKLY) There is, of course, a certain irony in the fact that a discussion of legal writing which should perhaps take only one column in fact will take at least two. But, words (written and spoken) are the primary means by which lawyers relate to their various publics, and perhaps so important a subject warrants some redundancy. Then, too, an audience composed overwhelmingly of lawyers should be more tolerant. In my column entitled "The Language of the Tong", I passed along the comments of lawyers, teachers, judges and a writing consultant. Professor David Newbern of the Fayetteville law faculty is a number of talents rolled into one lawyer-a teacher, a writer and an appellate judge (not to mention a singer and banjo picker). I discussed the subject of legal writing with him after completing the previous column. His comments further illuminate the subject. The good, the bad, and the homely. According to Professor Newbern, his months on the bench taught him that there are three groups of lawyerwriters: A few lawyers write very well. A few lawyers write very poorly. The vast majority of lawyers do an adequate job, but with very little grace. Part of this is apparently a byproduct of the Tong mentality which afflicted the profession for centuries. In other words, when the profession was closed, it made a fetish of arcane language and obscure usage. Our professional veneration for precedent and the past has caused the perpetuation of these deficiencies. American law schools are working on the deficiency, according to Professor Newbern, and "simple and direct writing is encouraged and taughf' at Fayetteville. "Woefully unprepared to write..•" However, he also notes that some of the problems may be basic, as noted by my sources in the previous column. Many law students evidence a "lack of knowledge of essential rules of grammar," which leaves them "woefully unprepared to write ...". Professor Newbern doubts that law school is the appropriate place for remedial courses in grammar, although I suspect that students might well benefit from exposure to non-lawyer grammarians during their law school careers. 62/Arkansas Lawyer/April 1981

Well-trained secretaries may help with grammar rules, but Professor Newbern doubts that they can help much with the overuse and the misuse of legal terms. He does believe that teaching lawyers to write simply and directly may reduce the impact of broken grammar and eliminate the worst abuses of the lang uage. "The most common difficulty..." George D. Gibson, a member of the Virginia and District of Columbia bars, apparently would agree with Professor Newbern's observations and those of my prior panel of commentators. However, Mr. Gibson, writing in the November 1980 Business Lawyer, reaches a more fundamental point and cuts closer to the bone. According to Mr. Gibson, the most "common diffiCUlty in speaking or writing clearly lies in not knowing clearly what one wishes to say." Ouch. The corollary is, of course, that one who does not know clearly what he wishes to say is doomed to say a great deal no one wishes to hear. Patrick Ryan, writing in the Smithsonian Magazine, points out that the U.S. Government specifications for mouse traps at one time were embodied in a document weighting two pounds. According to Mr. Ryan, the document was recently reduced to a single page. However, even when a lawyer knows what he wishes to say, according to Gibson, getting it said simply and directly does not necessarily flow from that intention. Many lawyers are guilty of careless usage. (Who among us has not been "appraised" of a fact or situation when all we really wanted was to be "apprised"? Or had funds "dispersed" when we wanted them "disbursed"?) The only answer is scrupulous use of the dictionary and refusal to use words whose meanings are in doubt. "Being old and dingy.. ." Even when we lawyers know the meaning of words, we are not always able to put them together in sentences in a sensible manner, according to Gibson, a failing not limited to our profession. He cites the following example: "Being old and dingy, I was able to buy the house cheap." My own observation would be that commas and semi-colons cause lawyers as much trouble as the words themselves. Lawyers

frequently string together seemingly endless processions of words, commas, semi-colons, and parentheses, which cry out for the judicious application of a number of periods. Lawyers (and other writers) also fail to remember that paragraphs are suppose to contain complete thoughts. Writing for several pages without an indentation may simply tell us we have not completed our thought. Neither left nor right. Gibson would have us determine the point we wish to make, and proceed in logical sequence to that point throughout our writings, waivering neither to the left nor the right, nor straying into ambiguity. This involves a sense of flow in our writing and a conscience avoidance of ambiguity. However, most of us frequently get too close to our subject when we are writing briefs. It is difficult to be an advocate and a critic of our own writing at the same time. It helps, I think, to lay aside a draft of a brief or an opinion letter for several days before proceeding to a final draft. Rough edges and ambiguities which escape our notice in the heat of drafting may become more obvious when our words have cooled. Unfortunately, this approach requires a leisure more reminiscent of the closed profession described by Professor Newbern than modern practice. The lack of leisure makes it mOFe imperative that we observe Mr. Gibson's maxim that we know clearly what we want to say before we start saying it. (Mr. Gibson, by the way, generally sticks to his own precepts, but interestingly the result is a style that is simple to the point of abruptness, and direct to the point of preachiness.) On our feet. .. Mr. Gibson would add one dimension to the discussion which had not occurred to me, but which now seems perfectly obvious: the rules for speaking are exactly the same as those for writing. Whether you are addressing a jury, a luncheon meeting, or an appellate court on oral argument, you should (a) think through clearly what you wish to say before speaking or writing, (b) express yourself as simply and succinctly as possible, (c) use words that say what you mean, (d) arrange them carefUlly in sentences and paragraphs, and (e) proceed directly to the point which you wish to make.

newspaper articles that were hardly concise, and a string of questions raised by the decision as to its actual impact that left its precision in doubt. Mr. Justice Holmes used to enjoy what he called "bully generalizations" but he tried to keep them out of his opinions. •..and out of "Context." I do, in fact, have some sympathy for the Court. An earlier column entitled "Members of the Club" dealt with the entry of increasing numbers of blacks and females into a profession which has been traditionally white and male. An experienced female lawyer advised me that the article had "startled" her with its "accurate depiction" of her own experience. A relatively new female practitioner commented that the article might help to dispel "generalizations about women and blacks." Almost at the same time, a female lawyer with several years experience advised me coolly that she agreed with "some" of the article. Further, I was advised that two members of the Arkansas Association of Women Lawyers had volunteered to "write a retort" to the article. I was somewhat at a loss as to which part of the article had warranted a retort. The varying responses certainly made me wonder whether I had made myself as clear as I had intended to. Go ask Alice. In any event, before sitting down to transfer our thoughts into words, judges, lawyers and column-writers should heed the teachings of Professor Newbern and Mr. Gibson and should also renew their interest in Lewis Carroll. In a heated dialogue with the Queen of Hearts, Alice is asked whether she always means what she says. Alice answers yes. She is then asked whether she always says what she means. Alice asks indignantly what the difference is. The difference is very real, of course, perhaps as real as the difference between thoughts as they arrange themselves in our heads and the words which we arrange upon the page in an attempt to convey those thoughts...



As Professor Newbern has aptly put it, "understanding is the goal in any attempt to communicate" and writing or speaking "which makes achievement of that goal less likely is poor." ..•on the bench... These rules may seem simple enough to follow, but even brevity and simplicity do not always guarantee adequacy of communication, whether by judges or writers of columns. In an editorial appearing on January 1, 1981, the Arkansas Gazelle commented that the" 1874 Constitution is as precise as the Beatitudes.. ." in defining usury. The Commerce Clause of the United States Constitution is a mere handful of words. Finally, the decision of the Arkansas Supreme Court in Mcinnis vs. Cooper Communities, Inc. runs barely four pages, even in its amended and expanded form. Even so, the precision, breVity and simplicity of these three documents, read in conjunction with one another, produced a spate of briefs that were hardly brief, a series of April 1981/Arkansas Lawyer/53

LEGAL ECONOMICS By Thomas S. Clay @1980, Altman & Weil, Inc. Management Consultants Ardmore, Pennsylvania

Billing Client Disbursements Most law firms pass through the cost of some items of case-related expenditures. These costs may include filing fees, notary fees, travel expenditures, photocopy charges, telephone toll charges, word processing costs, secretarial time and overtime, case-opening charges, messenger expense, Lexis or Westlaw costs, telecopy or telex charges, and postage. Recently, Altman & Weil, Inc., was engaged by a law firm that generaliy did not charge the clients for either cash or non-cash disbursements. During the last few years, net income to the owners of that firm declined. Analysis indicated that several factors, such as low hourly rates, discounting of bills and poor biliing procedures ali contributed to the problem. Improvement in such areas usualiy takes time. There was one area, however, in which the firm could improve immediately-the charging of case-related costs (disbursements) to the client. The firm had no policy with respect to charging of disbursements and left the decision up to individual lawyers. Some lawyers charged for certain costs when they required a firm check. Others charged for none at all. There was no central accounting system to charge disbursements to individual clients and matters. Analysis revealed that approximately $4,500 per lawyer, per year of client costs were being borne by the law firm. The firm owners quickly mandated a crash program to account for both cash and non-cash disbursements. Within a few months, the firm had begun to improve its financial position. Kinds of Disbursements Disbursements are generaliy classified as either cash expenses (any item that requires a disbursement of firm 64/Arkansas Lawyer/April 1981

funds directly, i.e., fees and travel) and non-cash expenses (those which are hidden in general expense items, i.e., photocopying, telephone, and word processing). Almost all firms bili, in some way, for the cash expense items, but the practices as to non-cash items vary greatly from firm to firm. The American Bar Association's Model Code of Professional Responsibility delineates in Disciplinary Rule 2-1 06(B) the basic criteria to be used in determining the reasonableness of an attomey's fee, and DR 5-103(B) lists permissable advances in contemplated or pending litigation. The Disciplinary Rules establish no other guidelines regarding disbursements. It is left up to law firms to make this decision for themselves. What Is Proper? Lawyers often ask what costs are proper to charge a client. The answer must be considered in light of the client's understanding of the fee arrangement. A safe rule of thumb would be to charge only those costs that the client has specificaliy been informed he wili be required to pay. To do otherwise creates the potential for a fee dispute. The increasing pressure to hold down hourly rates mandates that, in order to keep up with infiation,law firms must examine ways in which cash and non-cash items may be charged fairly to clients. Lawyers who can hold down their hourly rates and charge separately for appropriate expenses will find themselves in a better position when discussing rates with clients. Some clients, also, wili recognize that they will be paying for only those cost items that their work requires, not sharing the overhead burden placed on the firm through requirements of other

clients and reflected in increased hourly lawyer rates. If clients do not understand this fact, they should be furnished with a written explanation of how the firm charges and why. In the discussion of various cost charging systems which follows, it must be assumed that the most equitable method of charging for costs is on the basis of actual usage by clients. This means that, if the client's work demands incurring a cash or non-cash cost, the client should pay for that cost. Clients who do not require the cash or non-cash outlay, should not pay for it. To charge otherwise is to penalize the client whose work does not require the expenditure. Percentage of Legal Fees Some firms charge the client a percentage of the total legal fee as "disbursement." For example, if legal fees equal $100 and the firm's disbursements average percentage is 4%, the total bili would be $104. The advantage of such an approach is that the firm need not account for and control disbursements on a client-byclient basis. Some firms are asking their computer vendors to write special programs to calculate costs based upon a percentage the firm has derived. Charging the client a percentage of the legal fee as cost does not consider what the client actually incurred in terms of non-fixed overhead costs. This method penalizes those clients who have a routine matter not requiring use of word processing, photocopies, etc., and undercharges those clients whose work requires incurring these additional costs. Many lawyers and other consultants have argued that sophisticated, financial analyses have been performed in reaching such aver-

age percentages. In fact, there is no analysis that can be performed that can accurately reflect the non-quantifiable cost required of the different areas of law practice within a firm. If a firm practiced in only one area of law and every case required the same expenditure of cash and non-cash costs, there could be some argument for utilizing such a system of client disbursement accounting, but there are few firms that fall into this category. Accordingly, the "percentage of legal fee" method can be extremely inequitable to firm clients. Fixed Cost by Area of Law This method of cost recovery involves charging the client a fixed cost based upon the area of law. Usually this cost is determined by working out the average cost to handle a certain type of case. Typically, the client will be charged for additional costs that exceed the fixed cost. Some firms utilize this method, which is a variance of the percentage of legal fee method, by endeavoring to determine the average total costs incurred, per case, in area of law. Although this method may be more equitable than the percentage of fee method, it is quite difficult in most instances to derive the fixed cost figure. Accurate cost data must be maintained for many years in order to determine the cost factor. Additionally, the factor must continually be re-evaluated and adjusted to take into account changes in costs (i.e., phone rates, word processing costs, etc.). By way of illustration, it might be said that a collection practice may lend itself to charging for standard costs. However, it would be much more difficult to make such charges in a defense litigation practice where charges could run from virtually nothing to thousands of dollars. This method can easily result in unfairness either to the client or to the law firm. Fixed Cost-Per-Hour of Lawyer Time Using this method, the client is charged for "X" dollars per hour for

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each hour worked by a lawyer, I.e., if25 hours of lawyer time were required in a case, the firm would charge 25 times the fixed cost-per-hour. Typically, firms have performed financial calculations to determine the average cost-perhour of lawyer time. Utilizing this method, some firms have derived what they believe to be an average amount of disbursements associated with each hour of lawyer time worked. This exhibits many of the inequalities intrinsic in the percentage of fee method. A client's work could require many hours of a lawyer's time and incur lillie or no costs, just as the reverse could be true. The Estimate Method Sometimes lawyers will estimate disbursement figures based upon prior experiences with certain kinds of cases. This method requires a minimum of effort on the part of the billing lawyer and staff. Generally, the estimate method is used by lawyers in practice in smaller firms and where the firm has had a great number of years experience with particular cases. In many instances, the clients are undercharged. Charging of Costs Based Upon Actual Usage Most firms, to some degree, utilize actual cost figures in charging client disbursements. Examples include: keeping track of long distance telephone calls, reconciling the bill and charging the total costs to each client; keeping track of total photocopies and multiplying by a rate, e.g., 20¢ per copy. More and more firms are beginning to recognize that such items as secretaries' and word processing operators' time, and the like are costs utilized to different degrees by different clients. Accordingly, firms are beginning to keep track of these costs and to

charge them to those clients who use them. Firms that do this are charging their clients equitably. Those firms who are more diligent in accounting for clients' costs on the basis of usage come to understand the economics of law practice bel1er and eventually improve those economics. Billing Costs Separately From Fee In order to improve cash flow and to limit the number of monthly outstanding advances to a client's account, more and more firms are instituting separate, monthly client billing of costs advanced, even when a bill is not sent for the lawyer's time. Exceptions are made by these firms only in the case of very important, large fee producing clients, who will not agree to accept monthly costs billings. A side benefit of the monthly billing costs, is that it tells the client monthly that work is being performed on his case or cases, and it may serve as a status report to the client. A notation on the bill that a court filing fee was paid, for example, tells the client that papers have been filed in his behalf during the month. The procedure for monthly, separate cost billing, can, therefore, have a good public relations effect in addition to easing the inflationary pressures on a law firm. Summary Most lawyers are extremely conscientious in charging the client a fair legal fee. To charge a client for costs in a manner which does not relate to the client's usage regarding those costs may be both unfair to some clients and financially unsound for the firm. Any disbursement accounting method that seeks to circumvent proper and diligent itemized accounting of client costs should be avoided.


April 1981/Arkansas Lawyer/65

LAW DAY USA AND THE LAW. If we are to speak of the law as our mistress, we who are here know that she is a mistress only to be wooed

• • • • • •

with sustained and lonely passion, only to be won by straining all the faculties by which man is Iikest to a god. Oliver Wendell Holmes

On June 15th in the year Twelve Hundred and Fifteen in a beautiful meadow at Runnymede, England, the first step in the birth of modern democracy took place. The occasion was the signing of the Magna Carta by King John of England. The Charter, now a shriveled document in the British Museum, contains 63 covenants, many of them not of lasting importance. Three of the most important are: "No free man shall be arrested, imprisoned, outlawed or deprived of property except by judgment of his equals or the law of the land; "Justice shall not be sold, delayed or denied to any free man; "No taxes, except the customary ones, shall be levied except with the consent of the council of prelates and greater barons." The Charter did not grant democracy as such to the English people, for many of them continued to live in great inequality for hundreds of years. But the Charter is still an outstanding document in the history of human liberty; it took away the absolute power of the king over his subjects, guaranteed certain rights to free men, and in essence gave to our civilization the basis of our most precious right of trial by jury. Our modern Bill of Rights in America, won nearly 600 years after the Magna Carta, is incorporated in the first 10 amendments to the Constitution. Similar provisions exist in the constitutions of the states. The Bill of Rights guarantees freedom of religion, of speech, of the press, of assembly, and of petition to the government. It provides for fair arrest and trial of persons accused of crimes and forbids courts to impose cruel and unusual punishments. It asserts the rights of citizens to bear arms. The last two amendments in the Bill of Rights make it clear that all rights and powers not mentioned in the Constitution continue to belong to the citizens and to the individual states. Indeed, it is these rights that prompted Musmanno to write "of all of the jewels in the crown of liberty, none shines so bright as the right to be left alone." The idea that people have certain rights which should not be taken from them goes back to the 1600s. In 1690 in the Second Treatise on Government, noted British philosopher John Locke argued that people may give certain rights to government, such as the right to tax and declare war. How-

ever, said Locke, other rights are inalienable, meaning that they cannot be given away by a people either for themselves or for their descendants. This idea is expressed in the Declaration of Independence in these words: "We hold these truths to be self-evident: That all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty and the pursuit of happiness." These rights were not easily gained for us. They represent the imagination, the dreams, and the blood of patriots over hundreds of years. It is fitting that we should pause one day a year-Law Day-to reflect upon the meaning of law to our everyday lives. The obvious oversimplification of this reflection is that without law there is anarchy and chaos. But law represents to us in our everyday living a more complicated and sophisticated part of our lives. Our law is living and changing all of the time as the needs of our people change. It represents the greatest interplay and interdependel'lce that exists anywhere in the world between government and people. It answers the needs of the people. Nowhere is this more clear than in the operation of the courts and the jury system. Thomas Jefferson wisely said: "Freedom of the press, freedom of the person under the protection of habeas corpus and the trial by juries impartially selected-these principles form the bright constellation which has gone before us and guided our steps through an age of revolution and reformation. The wisdom of our sages and the blood of our heroes have been devoted to this attainment. Should we wander from them in moments of error or alarm, let us hasten to retrace our steps and regain the road which alone leads to peace, liberty and safety..." . Jury trials are a precious heritage for which our forefathers fought, and they must be retained despite the present illadvised attacks on them. To the public the retention of jury trials is the constitutional safeguard of their rights and liberties. The law is a breathing, living phenomenon and our Constitution is not a mere lawyers' document; it is, as Woodrow Wilson said, "[AJ vehicle of life, and its spirit is always the spirit of the age." The advocacy system is the shield that protects our rights. Since classical times the noble profession of advocacy has continued on page 68

(Editor's Note: This guest column is by ATLA President Theodore I. Koskoff, and is reprinted by permission from TRIAL magazine, April, 1980, The Association of Trial Lawyers of America.) 66/Arkansas Lawyer/April 1981

And "The Lawyer" I


No lawyer can study this oil painting without personal involvement. The painter, R. C. Rothchild, has caught a very private moment in every practitioner's career. Is Rothchild merely displaying the solitude of the lawyer at the end of the

day leaving the Courthouse? Or perhaps, the gray head indicates the end of a career. Whatever! The Lawyer is from the national art competition and exhibition WEST '79/THE LAW, sponsored by West Publishing Company in cooperation with the Minnesota Museum of Art. The Lawyer is the third contemporary art work from WEST '79/THE LAW highlighted on the cover of The Arkansas Lawyer. Nine Very Human Men graced the July 1980 issue; Where Law Ends, the April 1980 issue. The Lawyer has appeared on the front cover of the ABA Journal and the back cover of Judicare. It was also used by West Publishing Co. on the front of its impressive 1980 Law Day card. The Lawyer deserves this attention. We are publishing The Lawyer at this time to focus attention on Law Day '81. "Law-The Language of Liberty" is the theme for Law Day '81. The framers of the Declaration of Independence and the United States Constitution were, for the most part, lawyers. While it is said that "the objective of Law Day '81 is foster greater public understanding of the principles on which our Nation was founded"''', we would-for a change-like to honor the lawyer at this time. None gives more of time, talent and treasure to maintain our liberty. We are indebted to West Publishing Co. for the permission and priVilege of using The Lawyer on the cover of The Arkansas Lawyer.


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LAW DAY USA AND... continued from page 66 been described in many ways. Plato's dialogue says, "There are many noble things in life, but to most of them attach evils which corrupt and spoil them. Has not justice been the civilizer of humanity? And is not that noble? And must not the profession of an advocate be also noble?" What substantive part does the advocate play in the jUdicial system? The independence of the Bar is probably the most important element in our judicial system. Coupled with a totally free and independent Bench, it makes our system work. This independence means dedication to all classes of people in our society and to the preservation of justice for all. For the last 100 years it is the American trial lawyer, through the courts, who has had such an enormous influence on the social architecture of those times in the fight for justice and equal opportunity for all. Because of powerfUl forces at work in our society, both good and bad, the next 100 years will require even greater commitment on the part of lawyers to basic human equality in our society. We must be the instrument of changes in the law, just as we must give the assurances of law's stability. Roscoe Pound said that lawyers should "think of legal principles as instruments rather than as eternal pigeonholes into which all human relations must be made to fit." Our profession has had good times and bad times. We always shall, but we have always steadfastly stood as the shield between organized power and the individual. It was this stand that caused Shakespeare to write his famous "Kill all the lawyers" comment in Henry VI, for lawyers are the bulwark and the symbol of organized society. In order to break down organized sodety, you would have to kill all the lawyers. We now live on the edge of danger. Destroy our profession and every light will turn into a funeral torch. Preserve the advocacy system and the gates of opportunity will remain open for all. We must work to preserve this system. ''This is no life of cloistered ease to which you dedicate your powers," said Benjamin Cardozo. "This is a life that touches your fellow men at every angle of their being, a life that you must live in the crowd, and yet apart from it, man of the world and philosopher by turns." Law Day is a day of celebration. We honor our countryand it is rightly so. We honor our judiciary-and it is rightly so. We honor our colleagues-and it is rightly so. We honor . our judicial system-and it is rightly so.

FEDERAL JURISDICTION: TensiQns in the Allocation of Judicial Power By Martin H, Redish

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I think I speak for most lawyers living when I say that our America is Here, is Now and beckons on before us, and that this glorious assurance is not only our living hope but our dream to be accomplished. So, once again, on Law Day USA, we are reminded of the various freedoms and privileges that are afforded to us all by our Constitution. The Connecticut Court once said it this way: "Our country and our Constitution are inseparable. The Constitution has held our past, it now holds our present and if we keep to its defined course, it will sustain our future ..." , 68/Arkansas Lawyer/April 1981



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A CHANCELLOR LOOKS AT CHILD CUSTODY, SUPPORT AND VISITATION By: Judge Robert H. Dudley Child custody cases can be brutal and they can be difficult. They are becoming more frequent. In this state (Arkansas), as in all others, there are thousands of children suffering severe psychological damage as a direct result of events surrounding divorce and child custody cases. Dr. Lee Salk, a child psychologist, in his book What Every Child Would Like Parents to Know About Divorce, states that children wonder what part of the blame they share in causing their parents to become divorced. They know their parents have stopped loving each other, and are vexed about whether the parents will stop loving them. This fear of abandonment can be damaging to the child. Dr. Salk discusses the stress on the competing parties as being second only to that found in the death of a loved one. Lawyers talk about these being their most bitter cases. Judges discuss the difficulty of these trials. Hopefully, this paper will give you an instrument to clarity, for attorney and jUdge alike, the normative analysis of the value conflicts in these cases. Perhaps some day our friends in academia will offer a solution to our real problem. That is, domestic relations cases are not just a part of the judicial process, but a moral concept. These cases are a way of life for the children and for the competing parties. The inevitable value conflicts presently are

mediated through a brutal advisary system. Some of you may not have yet heard of a bomber. A bomber is a lawyer who advises his or her new client; "You've come to the right attorney; I'll get his stocks, bonds, money, the farm, the house, and his blood. If there is any hope left, I'll get that too." Some day we may find a system that displaces the bomber. Until then, any help that we judges can give 'you in presenting your cases is time well spent, both for you and for us. Child custody cases are different from other cases because they are entirely factual presentations. To emphasize this there is no citation of an Arkansas case in this paper. Our legal training has been to research and then to apply the law to the facts. The legal issue in custody cases is quickly found and easily grasped. It is simply "The best interest of the child." Analyzing and presenting those facts is the gravamen in properly trying a custody case. Psychological, social, and emotional values are judged as a result of the facts presented. As said before, hopefUlly this morning's session will lead to a standardized instrument to assist the attorney and judge in analyzing those facts. Each Chancellor and combined Chancellor and Circuit Judge has been asked to give the criteria that he or she uses in deciding custody cases. Twenty-two out of thirty have re-

c sponded in writing and three have responded by telephone. It is obvious that while procedure may vary from district to district, there is statewide uniformity in the factors considered in custody cases. Their responses have been analyzed, compiled, and will be presented in this paper. The title of this paper should be changed to A Composite Judge Looks at Child Custody, Support and Visitation. Statistics are not available giving the number of trials in which custody is contested. Most of the custody cases are not contested and are decided on the recommendations of the parents. This is important because if the custodial arrangement is agreeable to and recommended by the parties, they will be motivated to make it work. Trial Tactics The judges responses contained two frequent comments about trial tactics. The first can be styled, "Let the witness testify." All judges feel a heavy responsibility to make a correct decision. After only a few hours testimony the fate of a child will be decided. The judge knows the testimony of each witness is based on his or her (1 ) ability to observe, (2) ability to recall in detail that observation, and (3) the ability to narriate that recollection. The jUdge must weigh the ability or lack of ability to testify, and why he or she has that ability or lacks it. For this function continued on page 70

Editor's Note: Arkansas Supreme Court Justice Robert H. Dudley presented this paper at the 1980 Fall Legal Institute on Arkansas Domestic Relations Law and System. Dudley was elected Chancellor of the 8th Circuit Court in 1970. In the reorganization of the State's court districts In 1979, Judge Dudley was elected Chancellor of the 3rd Circuit Court. He had no opposition to his election to the Arkansas Supreme Court in 1980. Judge Dudley's other vitae was presented in a recent News Bulletin. Permission to publish the paper in The Arkansas Lawyer was obtained through the Association's Family Law Section-Ben D. Rowland, Jr., Chairman.) April 1981 IArkansas Lawyer/59

to be performed properly there must be fair questioning of the witnesses. It is clear from a reading of the responses that leading your witness is a poor trial tactic. The second observation about trial tactics is that judges have strong feelings about closing arguments. They appreciate a sensible argument pointing out the facts presented during the trial and the comparative strengths and weaknesses of the parties. The bombastic Fourth of July speech is ineffective, at best. The deliberate misstatement of facts is detested. So, let the witness testify and then make truthful and sensible arguments. A Chart and The Custody Decision There is surprising uniformity among the different judges on the factors oonsidered to determine custody. Many judges chart those factors during the trial. A composite chart will be described. This chart is the instrument which, hopefUlly, will help all of us perform better. A similar chart was proposed by Shirley J. Burgoyne in her 1976 article entitled Child Custody and the Rule of Common Sense: SUbjecting Your Custody Case to Realistic Analysis. 2 Family Law Reporter 4051. Mrs. Burgoyne labeled her chart the Legal 50cial Study. One Chancellor has written that he keeps this article with him on the bench for easy reference. Two of the quotations in this paper are taken from the Burgoyne article. I will outline for you the type of chart used daily by judges. If you will prepare your case using a similar instrument, it will improve your performance and should improve the analysis by the judge. In the center of the top line write the word plaintiff. On the right side of the top line write the word defendant. Interestingly, most judges who formally write a chart say they usually use "mommy" and "daddy". On the left side of the second line write a key word for the first factor considered. For example, write moral fitness on the left side olthe seoond line. The chart works the same whether the case is one deciding which parent is more fit, or one deciding which is more unfit. As a chart is described, key words will be emphasized for those of you taking notes. Moral Fitness The first group of factors considered are those to determine moral fitness. 70/Arkansas Lawyer/April 1981

So write moral fitness on the left side of the second line. After the judge has oonsidered all of the factors making up moral fitness, some positive or negative notes will be made on the line to the right of this key word under either the label plaintiff or under the label defendant. In some cases a simple plus or minus is sufficient. Under the general topic of moral fitness, a number of specific factors are weighed. Style the first factor integrity. Some judges label it honesty, some call it trustworthy, but no matter what key word is used to describe integrity, it is a heavy factor. The attorney should frame a group of questions to develop proof to demonstrate this quality in his client, and the converse for the oompeting party. The responses of the judges manifest a belief "As the twig is bent, so grows the tree." A devastating rating on this factor can be caused by the failure to tell the truth about a material matter during the trial. Character is the next factor to be considered. The distinction between integrity and character is vague, butthe term is used to describe the words temperament, sensibleness, percepti-

bility, independence, and resolution. In one response it was labeled "class". There exists a feeling on the bench that "character is caught, not taught." Good trial strategy requires that the attorney ask questions to prove or disprove this quality of character. If one of the oompeting parties rates a plus and the other a minus it is significant. This evidence in child custody cases should not be confused with the character evidence for the purpose of supporting or attacking credibility of a witness nor should it be confused with reputation evidence of character. Compassion is one of the elements frequently mentioned in determining moral fitness. One judge labels it warmheartedness. Which of the competing parties will take the time to read to the child, to teach the child the values of life, and let the child understand security? Habit of sobriety-No judge intends to sentence a child to the abuses of an alcoholic or a chronic drug abuser. The embarrassment and stress of divorcing parents is enough. The continued embarrassment of alcohol or drug abuse by the custodial parent will exacerbate the emotion for

CUSTODY CRITERIA Moral Fitness Plaintiff Integrity Character Compassion Sobriety Religious training Newly acquired partner on above Stability Emotional stability Work stability Financial stability Residence and school stability Health Partner stability Love and Affection Fault in divorce Attention given Discipline Attitude toward education Social attitude The Child Stated preference Age Sex Health Testing and evaluation Child care arrangements The Home Location Room for child Gender


the child. The attitude of a newly acquired partner is another element considered. The attitudes of the new partner toward discipline, diet, and education is considered. Does he or she feel any resentment or jealousy toward the child? Religious Training-The education and raising of a child in its religion, or creed, is given some consideration. The judge will look at each of these specific factors and then decide if either party is to be favored in the sphere of moral fitness. If so, the judge will make the appropriate notes on his chart on the bench. Stability The second most important group of values is labeled stability. The most frequently mentioned of the stability factors is emotional stability. Extensive questioning to demonstrate the emotional stability or instability of the competing parties is helpful. The maturity or immaturity of the parties is sometimes easily proven. Testimony from the disciplines of psychiatry, psychoiogy, theology, or social work is helpful in delineating this factor. A frequent change in jobs by the custodial parent can lead to an insecure childhood, so testimony should be adduced from which work stability can be determined. If one of the competing parties consistently has had more expense than income, and that pattern continues, there will be an emotional strain in that household. Judges want to know other things about financial security. Will the child be taught thrift? Will he or she receive any type of practical home economic education? While financial security is a consideration, the personal wealth of the competing parties is of no significance. The history of past child support is important in demonstrating financial responsibility in a petition for change of custody. Residence and school stability are indicators considered. Frequently moving from house to house is undesirable. Normally this results in a child attending different schools and encountering difficult adjustments. The child also can be deprived of the benefit of lasting friendships. Partner stability is one of the most watched of the stability factors. Perhaps one of the parties has switched from partner to partner since the separation or the divorce. Perhaps one

has remarried and now has a stable relationship. This new entry into the child's life should be rated. Obviously, the physical health is a consideration in the stability grouping. Love and Affection Often the only question asked in this third group of factors is "Do you love your child, and do you want custody?" In other cases an adroit examiner might leave no doubt that one party wants custody solely to keep the other party from having it. Judge William G. Callow defined the factor of love in his article The Custody of the Child and Uniform Marriage and Divorce Act 18 S.D.L. Rev. 551 (1973) as follows: "Custody should relate to love. If a parent loves a child more than himself or herself, the best interest of the child is protected. This is usually clearly visible. Those who choose to avoid seeing that which is so visible thereby demonstrate their lack of concern for the child. A perceptive judge can usually see this." On occasion love and affection is exemplified by fault in the divorce action. Perhaps one party has been away from home long and late hours or has been indiscrete about extramarital relationships. This demonstrates whether the parent cares more for himself than the child. It also is associated with the reasonableness of either party. The attention given the child is a component of love and affection. Questions along this line vary from demonstrating the amount of quality time given the child to types of meals prepared. Questions should be asked which cause the testimony to demonstrate which of the competing parties has the ability and will take the time to meet the cultural needs of the child. Attitudes toward discipline are indicative of love. A parent who cares for the child will, in one way or another, teach a sufficient amount of discipline. Comments from judges indicate this is a serious concern. Probably it is because they know a large percentage of juvenile delinquency cases come from broken homes. Discipline of older boys is more difficult for mothers in some cases, and in those cases, it is necessary to change custody to the fathers. Proper questioning usually easily demonstrates when this is the situation.

Attitudes toward education are also indicative of love and affection. If the child is young, the judge would like to know which parent has helped with homework. Can and will one see that a formal education is had? Social or anti-social attitudes of the competing parties on occasion may be a guide in determining custody. The Child and the Residence Most judges dislike interviewing young children. First, they have problems in establishing the appropriate procedure. If the interview is in the courtroom in front of the competing parties, the stated preference can be against the person the judge thinks best serves the interest of the child. This can create an intolerable situation. If the judge takes the child into Chambers alone, there is no record for appeal purposes, and the judge does not have the benefit of questions suggested by attomeys. The most common procedure is to have the interview on the record with only the attorneys present. After these problems are met, the child does not want to choose, in the majority of cases, and still wants to live with both parents. The prospect of an interview affords some parties an additional reason to pull and tug the child one way and then the other. Children should be separated or split only in exceptional cases. During an interview the judge must be alert to the possibility of children differing in their preferences. This can become a catalyst for sibling dislike. Yet, in many cases, the interview is productive. Quoting from Child Custody and the Rule of Common Sense; Subjecting Your Custody Case to Realistic Analysis, 2 F.L.R. 4051: "Not only the preference of the child but also the basis for the preference, is important, Justice Jefferson of the California District Court of Appeals made this statement in considering the preference of an eleven year old boy in 1963: "The boy expressed a preference to live with his father stating his father helps him with his studies, engages in sporting events with him, keeps his clothes clean, cooks for him, takes him and his friends on trips and flies kites with him. continued on page 72 April 1981/Arkansas Lawyer/71

Chris stated his mother embarrasses him by constantly criticizing him in front of his friends; she yells at him and pushes him around; she had on occasions threatened him and on one occasion, choked and slapped him when she became angry even though he had not done anything wrong. She told him that if he continued to live with his father she would never see him again. When he told his father this, his father told Chris that she was just bluffing." Briscoe vs, Briscoe, 34 Cal.L.Reptr. 663, 665, 221 A2d 668 (1963). As the child matures beyond 12 years of age, the child's inclination toward one of the parents becomes more and more important. This type of interview is also less fraught with problems. The attitude of the child toward a newly acquired step-parent needs to be explored. If possible questions should be framed to show prospective behavior by demonstrating past behavior. The age, sex and health of the child are elements that are considered. III health requires extra attention, time and devotion. Some parties are not capable of meeting these needs, while others seem to respond to this challenge. If every1hing else Is equal, the age and sex can still be factors, although their importance has diminished in recent years. This is discussed later in more detail under the topic 'gender'. Adequate housing is highly desirable. If possible, a child should have his or her own room. It is good if the home ultimately chosen is near relatives-especially grandparents. The nearness to school and bus routes is good, while a lengthy bus ride can be detrimental to a child's performance. Babysitting or child care arrangements have grown in consideration because a high percentage of custodial mothers now work. Occasionally the only difference between competing parties is the child care arrangement. Testing and evaluation of the child by persons in the discipline of psychiatry, psychology, theology, education or social work can be persuasive. This testimony is well received by the judges. There is a great difference from districtto district in the reliance placed on 72/Arkansas Lawyer/April 1981

an investigation by the Arkansas Department of Social Services. The comments range from "waste of time" to " ... 1do rely a great deal on home study reports from Childrens Services and in a proper case on psychological testing and evaluation of both the children and the parents through the...Mental Health Center." Gender There is no statutory preference of the mother for children of tender and immature years. Yet, young children need the close emotional ties of a mother. This is not to say all mothers fill these ties or that all men cannot fill them. Two quotes seem to express the feelings of the trial judges on gender discrimination: "I try to regard the facts without emphasis on parental sex, but if all else is equal and the child is very young, I prefer the mother as the principal custodian." Another states "I have a feeling about my mental gymnastics in custody cases: that the mother is still favored, notwithstanding the constitutional restraints and constraints. This favoring of the mother is dimmer and dimmer, however, and I consciously try to overcome my training in the old constitutional law. In these cases I do consider which parent is better equipped to serve the needs of the child, and, in the usual case, that parent is the mother; and in more than 99% of the cases, the father agrees that such is the case." A few comments indicate that a male is disfavored more than a female for never having worked and habitually drawing public assistance. This attitude may be partially based on the gender based practice in divorce cases which tacitly infers that failure to provide support is a ground of divorce for women only. The statute has never so provided. Ark. Stat. Ann. 34-1202 (9). Two judges state that they try not to discriminate by sex, but they are more at ease in giVing custody to a man when there is another psychological mother type in the plan, perhaps a second wife, perhaps a grandmother, or even a good baby sitter. You now have all the elements used daily by judges to decide custody cases. Some of the factors are always present, some are seldom present. Some overlap others, and some are clear while others are nebulous. Before your ability to use the chart is complete

some discussion of the weight to be attached to each factor is needed. The components making up moral fitness, stability, and love and affection are the most important. Tangibles such as location of the home, or the child having his or her own room are weighed the least. This is because many of the intangibles are weighed in the dimension of time. The competing parties are changing and will continue to change. For example, perhaps both parties, because of immaturity rate poorly on the chart, but one is beginning to show maturity. This changing ingredient could be the most important of all factors in a given case. Decisions are based on past or present facts and how the judge perceives them as affecting the future. Stated differently, custody decisions are the judge's prognosis of the future actions of the parties and the child. Those factors which predict the child will be a well adjusted person a few years hence are the ones considered most important. The use of common sense along with the consideration of the dimension of time will give you the value rating to be put on the various components. With this weighing of the factors your use of the chart will be complete. The discussion of the use of the chart has assumed an award of sale custody to one parent. The "father's rights" movement and some lay persons have recently advanced joint custody or split custody as a viable alternative to sale custody. The Supreme Court of Arkansas has never followed those states holding that a joint custody award is an abuse of discretion as a matter of law. Although our trial courts have the discretion to allow joint custody, they seldom so rule. The imminent child psychologists, Joseph Goldstein, Anna Freud and Irving Sol nit, in their provocative book Beyond the Best Interests of the Child, Yale University Press (1977) state, at page 6, that: "Psychoanalytic theory provides a valuable body of generally applicable knowledge about a child's needs, knowledge which may be translated into guidelines which facilitate the making of decisions which must be made. It establishes, as do developmental studies of students of other orientations, the need of every child for unbroken continuity of an affectionate and stimulating

relationship with an adult. .. It calls into question those custody decisions which split a child's placement between two parents." (Emphasis added,) Bodenhamer in Progress Under the Uniform Child Custody Jurisdiction Act and Remaining Problems; Punitive Decrees, Joint Custody and Excessive Modifications.' 65 Calif. L. Rev. 937 (1977), states: "Joint custody, sometimes referred to as divided custody, gives both parents legal responsibility for the child's care and alternating companionship of the child. The concept is not new, but in the past an award of joint custody was often a matter of form rather than substance; it was often combined with an award of physical custody to one of the parents so that actual custody was in fact iodged in one parent. In the past, courts have generally resisted true joint custody arrangements, in which both parents actually have equal responsibility and alternating companionship and control of the child, finding such plans detrimental to the child's interests. Today courts are under increasing pressure to recognize parental equality by permitting joint legal and physical custody, and they are awarding joint custody in a somewhat larger number of cases. Such an award is most likely when both parents join in presenting a plan of cooperative parenthood, but joint custody has occasionally been won in adversary contests. Professional and popular opinion on the desirability of joint custody is divided, but most psychiatrists and many family law practitioners seem to oppose it. Unquestionably, some exceptionally mature parents are able, through a great deal of effort, self-discipline and emotional control, to handle a joint custody arrangement. The effect upon the children, however, is not at all clear. .." These two quotes articulate the feelings of trial judges toward joint custody. They presume it is against the best interest of the child, but if special circumstances can be shown this presumption can be overcome. There are four criteria that parents must meet before obtaining a joint custody decree.

The first one is that it is a mutual proposal; almost never will a joint custody decree be had in a contested case. Second, the parents or other custodees must demonstrate more maturity than normal. They both must demonstrate the emotional stability necessary to make joint custody work. Third, they must geographically live close to each other. If the child is about to start, or has started, school they should live in the same school district. Fourth, there must be a fair division of periods relating to events in the child's life, such as birthday, school vacation, Christmas, etc. On rare occasions the children are divided between the parents or other custodees. Two factors contribute to these rulings. The age and desire of the children. If the children are becoming independent enough to cause the judge concern about their running away, and if they simply will not live together, then the judge will split them. Conclusion on Custody There are no painless solutions to the difficult custody cases. No solution is offered to the fact that we divorce families, not just husband and wife. This may be a problem without a solution. Nevertheless, we judges hope that the outline or chart given today will be of assistance and will help both the bar and the bench in improving our performance. Child Support "Child Support" is one term most frequently misused by the layman. All of us see the petition for modification of child support and the custodial parent says "I can't get by on the child support". It is usually the mother and she unfortunately has missed two concepts. First, there was no alimony for her to "get by on", it was only an award of child support. Secondly, when the non-custodial parent is ordered to pay the child support, it does not mean that amount is sufficient to support the child. It simply means that person is ordered to pay a set amount upon what the costs of raising a child might be. Judges guess that the custodial parents pay between one third and one half of the real costs of raising the child. Parties frequently think they settle the amount of child support when they only make recommendations to the court. This is a particularly wicked bit of misinformation. If they think they made

a child support agreement or contract, then it is natural that they think they can modify that contract by mutual agreement. This leads to disaster as the Chancellor in a normal case cannot remit, abate or suspend any part of the amount due under the original decree. Their attempted modification is ineffectual and one of the parties has a judgment on the arrearages against himseif or herself. Every judge responding uses the child support chart found in the Arkansas Domestic Relations Manual. This use of the chart varies from being a "general guide" to "strictly adhere to". One judge stated the majority position as follows: "I use the support chart in every case except the unusual one. I find that the lawyers' knowledge that I use a support chart in the ordinary case settles a large majority of the cases without even a preliminary hearing. In the average case there is never enough money to go around and I find the support chart to be as fair as any method I know to divide what little there is. In the exceptional case, perhaps a child with some handicap requiring special care, I will consider testimony about the expenses and needs of the child. Otherwise, I discourage any detailed testimony about actual or projected expenses." The responses demonstrate a common dislike for the practice of bringing to court a detailed list of expenses, and spending many questions on the list, when the attorney knows the figures on this list amount to twice as much as the non-custodial parent earns. In those districts where the chart is only as a guide, the child support is based upon the additional following criteria: 1. The income of the non-custodial parent is the most important single factor. 2. The number of children. 3. The financial circumstances of the custodial parent. 4. The current and projected expenses, inclUding medical insurance. 5. The debt outstanding. 6. The amount necessary to leave the non-custodial parent some chance to re-establish his or her life. Time does not permit an examination of collection methods and the attitudes of the judges toward collection continued on page 74 April 1981/Arkansas Lawyer/73

procedures, nor does it permit discussion of when child support orders terminate. Visitation All judges prefer that the decree provide that the non-custodial visitor have a right of reasonable visitation, and that the parties control their emotions, exercise self-discipline and allow reasonable visitation. This is the situation in the majority of cases. In a few pilot programs in other states, compulsory counseling with social scientists is required so that the parties understand visitation before the troubles begin. This counseling is to demonstrate the desirability of amicable visitation, and its maturing effect on the child. It is also designed to show that a continued stressful situation is harmful to the parties and to the child. It is explained that a decree setting specific visitation does just that, and is not flexible, but that the parties are flexible and continually changing. Perhaps the child is 6 months old and now with the mother. Probably no judge is going to take the child away from the mother overnight, but three years from now, when the child is 3V2 years old, probably no judge would deny the father overnight visitation. Parties often relocate after divorces, especially the non-custodial parent. The visitation set by the court when both parents lived in the same school district may no longer be appropriate. A new hearing, with its attendant stress is required. Unfortunately, some non-custodial parties, usually fathers, realize for the first time during visitation that they have become divorced not just from their former spouse, but from their entire family. A friend recently said he didn't realize he was divorcing his son along with his wife. Counseling could help these people anticipate their problems, and perhaps they would have made 'reasonable visitation' work. If there are two loving parents, visitation can be worked out between the parents even though they no longer live together. Regretfully, in some cases the court must set specific periods for visitation. The decision on when to set visitation is dependent principally on two factors, age of child and location of the parties. Often there are two or more children in the family unit. This makes the decision immeasurably more difficult. Perhaps the six month old child mentioned before has a 10 year old brother and the father is coming 250 miles to see them. Perhaps the 10 year old fre74/Arkansas Lawyer/April 1981

quently cares for and supervises the 6 month old child. The decision is no longer as clear as it was with only one child. The age of the child is the single most important factor, but as you can see we are dealing with a family unit and often there is no one single age for determining visitation. A guideline for visitation according to the age of a single child is as follows: Under one year, visits only at the home of the custodial parent; one to three years, the visits can be away from the custodial home, but not overnight. By age 3 overnight visitation and short summer visitation is allowed. By age 6, weekend, holiday and a month's summer visitation can be allowed. By age 12 the wishes of the child must be considered. Sometimes they want longer visitation, but normally they don't desire to stay with the noncustodial parent as long as that person wishes. The second major factor is the location of the parties. It is obvious that there can be short frequent visitation if both parents live in Pocahontas, but if one parent lives in Pocahontas and the other in Little Rock, the visitation cannot be as often, and still more seldom if one of the parents lives in Alaska. Normally, if that parent in Alaska is to have any visitation, it will be a longer but less frequent visit. Visitation is to be for the child as well as the non-custodial parent. Perhaps the father can afford to drive the child from Little Rock to Fayetteville and back each weekend, but the benefit of that weekly visitation against the child's traveling 11,000 miles per year must be considered. The mental and physical health of the child and the non-custodial parent are taken into account, as are the past child care characteristics. That is, a child who was molested by her father is not going to be forced to visit with him alone, but in a case where the father spent more time with the child than the mother, and has shown a capacity to care for the child, the visitation can be frequent and include a lengthy summer vacation. There is not time enough to discuss enforcement of visitation orders in detail. Two comments are salient, even though short. First, judges will enforce visitation orders in the same manner they do support orders. There usually must be an order setting specific periods of visitation before a respondent can be held in contempt. Secondly, the failure of the non-custodial parent to pay support is not justification

for the custodial parent to deny visitaConclusion tion. It is hoped by all the judges who hear domestic relations cases that today's presentation will help you in presenting your cases, and that, in turn, will aid in our decisions. (1) This quotation was approved in Previn vs. Previn, 264 Ark. 551, 572 SW 2d 853 (1978).


Juris Dictum continued from page 57 Justice Smith's judicial opinIOns have been characterized from the beginning by their comparative brevity, averaging less than three printed pages apiece. He has written two small books on Arkansas law and a number of law review articles. Two of his best known and widely reprinted articles have to do with the preparation of judicial opinions. The Current Opinions of the Supreme Court of Arkansas-A StUdy in Craftsmanship, 1 Ark. L. Rev. 89 (1947); a Primer of Opinion Writing, For Four New Judges, 21 Ark. L. Rev. 197 (1967). The Judge himself says, however, that he is likely to be remembered best as the author of the opinion in Poisson v. d'Avril, which may be found in 22 Arkansas Law Review at page 741 (1969). That was an April Fool opinion which was published in the official advance sheets and caused much consternation among lawyers, when it appeared at first blush that the court was solemnly declaring that the Arkansas le9islature had repealed every statute on the books prior to 1945. Justice Srnith and his wife Peg reside in Little Rock ........

Innovators, continued from page 76 company. Thus, a company's patent policy (which should be at least outlined in writing) should be tailored to company needs by company management in consultation with legal counsel. For best operation, it is important that management, general counsel, and patent counsel are familiar with the overall operation of the patent policy so that each may fulfill its role under the direction of management. There is no doubt that a well formulated and executed patent poiicy will produce results far better than merely struggling with each such problem or emergency as it may arise. ' "

ARKANSAS BAR fOUNDA rlON By: Sidney H. McCollum Chairman

BOARD OF DIRECTORS' MEETING Arkansas Law Center January 16, 1981 Minutes BOARD MEMBERS PRESENT: Sid McCollum, Herman Hamilton, Randy Ishmael, Cyril Hollingsworth, Dennis Shackleford, Jim Sharp, Neva Talley, Phil Carroll (Ex Officio), and Boyce R. Love (Ex Officio). The following Committee Chairmen also were present: John Gill (Court Standards), David Malone (Oral History), and Robert L. Brown (Public Education). Other persons present were Jim Cypert and Colonel C. E. Ransick. 1. Approval of Past Minutes and Presentation of Financial Report. The June 4, 1980, minutes were approved as submitted. The interim financial statement for the period ending December31, 1980, was reviewed and a copy is attached to these minutes. Colonel Ransick commented on the sound financial condition of the Foundation and noted the letter of the auditors, Cullum, Keen & Mcilroy, of August 28, 1980, which audit certification letter has no exceptions. A copy of such letter is attached to these minutes. Colonel Ransick also noted the fine job and services rendered over a number of years by John L. Johnson in preparing the tax returns for the Foundation. As part of the financial report discussion, there was some general discussion regarding the status of Fellows of the Foundation as well as the sustaining members program. 2. Magna Carta Project. Bob Brown reported on the possibility of the Foundation's undertaking a public education effort by bringing the Magna Carta to Little Rock for pUblic display in the capitol rotunda in early April. He suggested that such a program could inaugurate a month of activities leading to Law Week 1981, Law Day being May 1. The Board discussed this proposal, Including the benefits to public education and the fact that such a project promotes the goals and purposes of

the Foundation. Dennis Shackleford moved, Jim Sharp seconded, and the motion carried that the Foundation undertake this project as the sponsoring authority and commit funds up to the cost of exhibiting the Magna Carta one day, the amount of such contribution being dependent upon contributions received from other sources. 3. Public Education Pamphlets. Colonel Ransick reported that funds already had been committed for various pamphlets which will be important in public education. The handbook for the elderly should be ready by Law Day. The handbook for Arkansas personal representatives has been prepared and a copy was distributed to Board members. The Legal Services pamphlet is being prepared. 4. Scholarships and Memorials. Colonel Ransick reviewed with the Board the Arkansas Bar Foundation scholarships being administered for the University of Arkansas Law School and the UALR Law School. Colonel Ransick noted that the Rose Law Firm scholarships for the University of Arkansas Law School were made directly to that institution as part of a matching program, and consequently are not being administered by the Association and do not show in the total for that institution as do the Rose Law Firm scholarships at the UALR Law School. The Board discussed the need to emphasize the Foundation as a vehicle for administration of scholarships. The Board particularly noted the proliferation of scholarship solicitations and the role the Foundation performs as the logical entity for handling scholarships. Colonel Ransick discussed the application of members of Delta Theta Phi at the UALR Law School for the Foundation to administer scholarship funds in the approximate amount of $2,500, which scholarship would go to a member of that fraternity. Following discussion of the normal $5,000 level for administration of scholarships,

upon motion by Herman Hamilton, seconded by Neva Talley, and duly carried, the Board authorized the Foundation to accept such scholarship funds in the approximate amount of $2,500. Colonel Ransick noted that a bequest from the Will of Joe Barrett would establish a substantial scholarship. The Chairman emphasized the importance of bequests to the Foundation. 5. Public Service Television Spots. David Malone discussed the possibility of producing ten programs of broadcast quality which would be shown on the Arkansas educationai television network and which would be owned by the Foundation so that such videotapes could be used for public education in the future. Mr. Malone indicated the cost would be $7,500 for ten programs and that the programs would involve Arkansas lawyers and location shots as well as panel discussions. Following discussion of the proposal, on motion of Herman Hamilton, the Board approved the surn of $750 to produce a pilot tape which would be presented and shown to the Board and to Committee Chairmen at a meeting called specifically for that purpose. 6. Legal Writing for Law School Program. The entry for this writing program was reviewed and the $150 award was approved. 7. Chairman's Report. Sid McCollum reported that the Arkansas Bar Association Ethics Committee had adopted the program of presenting seminars around the state on the subject of malpractice. This effort will help promote the Foundation emphasis this year of improving professionalism of lawyers, and there seems to be no need for the Foundation to duplicate such efforts. The Chairman noted the significant undertaking by the Foundation connected with the Magna Carta project. The Board also discussed briefly the possibility of a pamphlet on professionalism.


April 1981/Arkansas Lawyer/75

ADVISING INNOVATORS by Robert R. Keegan CoPyri9ht 1981 Robert R. Keegan

More Company Patent Policy The matter of establishing a profit from inventions has been discussed in a previous article. Now avoiding losses due to liability for patent infringement needs equal time. It goes without saying that due consideration should be given to the rights of others in the patent, trademark, and copyright field. Potential problems are probably more difficult to analyze in the patent area than in the other areas. The giant industrial corporations make a practice of thoroughly investigating the patent situation whenever they undertake the development and marketing of a new product. A "right to use study" on a new product involves research of subsisting patents and careful analysis of their possible applicability to the product. The expense of such a right to use study may well be in the tens of thousands of dollars, or more. An effort of such magnitude is hardly practical for a small or medium size company as a regular procedure. More realistically, the small company should undertake right to use studies in special situations where the stake is high and the probable risk is greater than ordinary. Factors which would indicate at least a modest effort toward investigating the company's right to use certain technology would include the following: 1. A new product feature to be incorporated is also present in a product introduced by another company (and possibly advertised as "patented" or "patent pending"). 2. The company anticipates large investments in tooling and/or marketing and would thus face a substantial loss if a product had to be discontinued. 3. There is in the industry a prior history of aggressive patent enforcement on the part of another company which may 76/Arkansas Lawyer/April 1981

have patents in the field. In all events, it is important that engineering and management frankly face up to potential difficulties. The first step in attacking any problem is to know what the problem is. This is a primary function of the right to use study. In many cases, a way can be found to use the technology which the company wishes to use without infringing valid patent rights of others. Just as the company will find it difficult to obtain a patent which effectively blankets an area of technology, it is equally difficult for other companies; and the vast majority of patents leave adequate room to operate in the technological area without infringing, if the company has access to the relevant information and knowledgeable advice. In some situations, there may be a significant risk of litigation, even after the best efforts have been made to avoid infringing valid rights of other companies. In such case, consideration should be given to establishing a reserve (which would be taken into account in cost analysis) for the possibility of legal expenses and/or patent royalties. A newly established company based on a single new product may choose to assume the risk of patent liability along with the many other risks of a new enterprise. Even though the ultimate risk is an injunction foreclosing production and sale of the product, the probability of occurrence may be low. Failure of the enterprises is far more likely from other reasons such as faulty cost analysis and pricing, inadequate capital or the like. Fear of patent liability may be compared to fear of lightning; the danger is real enough, but one's every action should not be overshadowed by such an usually remote possibility. A special problem exists with outsider inventions which may be disclosed to the company for "confidentiai" consideration. The law imposes a

very strict standard upon a company which accepts such a confidential disclosure. As a result, the company may be liable for use of an "invention" so disclosed, even though it is not an entirely new idea, and without any requirement that it be patentable. The company may thus be in a position of paying to use an idea which others may use freely. A procedure should be set up for submission of outside inventions to handle this problem. Usually an agreement absolving the company of any liability except for that arising under the patent law is required by the company before evaluating an outside disclosure. The other face of this coin is that an outside submission of value may be discouraged. It is better to have a policy with possible exceptions, however, than to have no policy at all. The related problem of new employees with confidential information from a prior employer was discussed in the preceeding installment. One simple principle will serve to avoid most problems with copyrights of others. This rule, is simply, do not copy any literary or artistic material bearing a copyright notice (which consists of a 漏, or the word COPYRIGHT with the name of the copyright owner and, frequently, the year of publication). Anytime the business of the company seems to require that copyrighted material should be copied from, especially where it is to be republished in a company publication, immediate and thorough consultation with legal counsel is indicated. Trademarks also can produce legal problems, but they are of such a different sort that it is not fruitful to include such subject matter with other intellectual property discussed above. It is obvious from the above comments that each company will have its own characteristics and its own em路 phasis in its operations which will dictate differences in patent policy for the continued on page 74



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(EDITOR'S NOTE: This is the third and concluding segment of the 1976 Report by the Commission on the Review of the National Policy Toward Gambling as it pertains to Arkansas. The first two sections were pUblished in The Arkansas Lawyer, July 1979 and October 1979, respectively.) F. Lotteries As early as 1865; the then existing Constitution of Arkansas provided that "[no] lottery shall be authorized by this state, nor shall the sale of lottery tickets be allowed. ">0 That Constitution was replaced by the second Reconstruction Constitution in 1868, which was itself negated by the Constitution of 1874. This document, still in force today, continued many Reconstructionist additions, including the lottery provision. ~34 While lottery activity was arguable covered by the general wagering statutes enacted in the eighteen hundreds, legislation in 1939 specifically made it unlawful for any person to keep a place for the sale of lottery tickets, to sell or otherwise dispose of such tickets, or to even possess them. Violators were guilty of a misdemeanor and could be fined from fifty to five hundred dollars." ~35 The Arkansas Court of Appeals defined the term "lottery" as a species of gaming where prizes were distributed by chance among persons who paid or agreed to pay consideration for the opportunity to obtain the ~33

prize. 72

78/Arkansas Lawyer/April 1981

G. Search and Seizure '136 In Albright v. Karston," the court handed down a landmark decision concerning the measures allowed the state in its battle against gambling. Here, an injunction was sought against the Arkansas State Police to prevent them from seizing property from a bookmaking establishment without the proper affidavit for a search warrant. The court refused to issue the requested order. The court observed: ... we have a suitor who impliedly admits that he has been maintaining a public nuisance, and has been committing a felony in doing so, coming into a court of equity and asking that he be protected in his continued maintenance of this nuisance and in his continued commission of a felony.... A court of chancery is a court of conscience and can never be called into activity for the protection of an enterprise that is not only wrong in itself but made a felony by statute." ~37 A second case in 1943 further strengthened the hand of enforcement agencies. In Albright v. Muncrief," an action was brought to recover two teletype machines which had been seized by the Arkansas State Police. The police contended that they were empowered to seize the machines because their owner was using them for bookmaking purposes. The court agreed with the police, conceding that although the machines were not gambling devices per se, they were seizable because they had been used in gambling activity. Anyone who purposefully

adopted such devices for illegal purposes was said to have forfeited all property rights in them and they were therefore subject to summary seizure without a valid search warrant." ~38 Both of these cases remain good law today. However, in 1951, the court declined to extend the holding in Albright to make it a crime to possess gambling equipment such as was invoived in that case, I.e. a device not per se illegal, but one merely "intended" to be used for gambling. To support a conviction, held the court, the equipment involved had to be actually "used" as a gambling device." ~39 The thrust of these search and seizure cases was somewhat undercut by legislation which decriminalized the possession and operation of many amusement devices. A 1939 act" distinguished lawful amusement games from those devices outlawed by prior legislation. It provided that all lawful amusement games were to be licensed and taxed in accordance with the Internal Revenue Code. By 1959, comprehensive legislation was enacted licensing and regulating the operation of amusement games and levying taxes thereon.". After the enactment of this statute, an owner, operator, or leasee of such equipment could not forfeit his property as a public nuisance unless he had not obtained the proper Iicense. 80 H. Judicial Extension of Gambling House Prohibitions '140 The issue of the definition of a

"gambling house" was placed before the court in 1951. The case may have little precedential effect, however, since overtones of racial discrimination are starkly suggested. In Colbert v. State," Everett Colbert was convicted of operating a "place" of gambling. Under the Act of 1913," the penalty for keeping a gambling "house" was conviction of a felony. The penalty for keeping a gambling "device," however, was conviction of a misdemeanor. Colbert was convicted as a felon for crap shooting in the woods, along with several Black companions, who had congregated with him. The dissent observed: I am unable to join the majority in solemnly declaring that our lawmakers intended that a few planks set up under the trees, and on which the game of "shooting dice" is played, should constitute a gambling house within the common sense meaning of that term.

I. Parimutuel Betting By an act of 1935, OJ the Arkansas legislature legalized parimutuel betting, and, in the case of Longstreth v. Cook," the statute weathered constitutional attack. In that case, parimutuel betting was distinguished from an illegal lottery on the ground that in horse racing, skill, rather than chance, was the determining factor. 42 By an act of 1957, however, known as the" Arkansas Horse Racing Law," the 1935 act was repealed and the Arkansas Racing Commission was established.·' The commission was to have sole jurisdiction over the business and/or sport of thoroughbred horse racing in Arkansas whenever such racing was permitted for any stake, purse, or reward. While not necessarily limited to its enumerated powers, the commission has these statutory powers: ~41

(1) To grant franchises to conduct horse races; (2) To approve dates for each racing meet, and issue the necessary permits; (3) To issue licenses to horse owners, horse trainers, jockeys and jockeys' agents; (4) To collect and deposit in the State Treasury all fees for franchises and licenses, and all taxes and any other money due Arkansas in relation to horse racing; (5) To conduct hearings; and (6) To take such other action, not inconsistent with law, as it may

deem necessary or desirable to supervise, and regulate, and to effectively control in the public interest, horse racing in Arkansas. 86 43 In accordance with act, parimutuel wagering was authorized at licensed tracks.·' However, wagering and conducting wagering operations outside of the approved method, at any licensed track are felonies." ~44 In 1957, the legislature also enacted the Arkansas Greyhound Racing Law,·' giving the Racing Commission jurisdiction over greyhound racing under the same rules laid down for horse racing. Since that year, no changes have been made in the state's parimutuel betting system.

J. Gambling Information 45 An act of 1953 was created in response to a legislative fear that widespread gaming and bookmaking establishments could be set up in the state, competing with licensed parimutuel betting, if then present laws were not clarified. The act forbade the transmission or receipt of information relating to any sports or games for the purpose of gaming, with numerous activities specifically mentioned." Penalties under this provision, however, were expressly inapplicable to radio stations or newspapers disseminating such information as news, entertainment or advertising." In addition, the law declared that any teletype, telegraph ticker tape or similar machine, used in the receipt or transmission of such gambling information, was to be considered a "gambling device."" This definition, of course, subjected such devices to summary search and seizure. Operators of such equipment came under earlier criminal sanctions as well. A commission conducting a legalized race meet was exempted from this provision." K. Hot Springs 46 On March 8, 1964, Wallace Turner of the New York Times introduced the country to the "biggest illegal gambling operation in the U.S.,"" Hot Springs, Arkansas. Turner reported that big time illegal gambling existed in the resort city of Hot Springs since the Civil War despite state prohibitory legislation. The enterprises flourished with the support of local citizens, as city business people seemed convinced that cessation of the gambling would cause serious economic consequences. Prosecution was blocked at the state and local level through working

agreements between the three major casinos and Arkansas politicians. Indeed, a city ordinance taxed gambling operations in total disregard of a state ruling that such a tax was illegal, and local gamblers paid the tax willingly. The total city revenue from gambling came to $140,000 yearly in the early sixties, and such taxes built the city auditorium in 1959. ~47 Local gamblers and city officials claimed that Hot Springs gambling was not connected with national underworld syndicates, but federal officials believed otherwise. The Justice Department's efforts to prosecute local gamblers under the federal law forbidding the use of interstate commerce to further gambling failed in 1963. Federal officers could prove that some players in Hot Springs casinos had bought chips with out-of-state checks, and that these checks were sent through interstate commerce for payment. The federal judge presiding over the Hot Springs grand jury, however, blocked indictment through a questionable instruction which held that the law required proof that gambling profits had moved through interstate commerce. 1148 Perhaps spurred by the New York Times article, the Arkansas House of Representatives passed a resolution calling for Hot Springs officials to close the illegal gambling." A day after the House's action, Governor Faubus ordered the shut-down and warned that local disregard of his order would force him to bring in state police to accomplish the necessary enforcement. Hot Springs gambling establishments complied with the governor's order, but local officials quickly moved to establish a petition campaign aimed at legalizing Hot Springs gambling through passage of a November statewide referendum'· The referendum, in the form of a constitutional amendment, failed decisively.·' Conclusion 49 The 1960s and 1970s saw vast changes in Arkansas. For the first time, more citizens lived in urban areas than in rural parts of the state. Industry began to predominate over agriculture in the state's economy. The general economic underdevelopment of the state was also attacked through the use of local bond issues to attract industry, with promising results. ~50 Yet many things have stayed the same. Ninety-nine percent of Arkansas' total population was born in the United States. Although a Republican continued on page 80 April 1981/Arkansas Lawyer/79


which held that a citizen had no right to interlere with an officer seizing property upon a search warrant which was unlawfully obtained. Said the justice: The effect of these two cases together means that if an officer wllh a

continued from page 79

held a term as governor, Democratic control of Arkansas politics looks as firm as ever. And the state's stance on gambling has also remained remarkably stable, as most of the early prohibitions of the late nineteenth and early twentieth centuries remain in force in their original form. In fact, the last legislative action in the field came in 1961, when the legislature strengthened the old anti-lottery law. This act authorized chancery courts to enjoin the operation of such activities as public nuisance, and raised the penalties for operators to a fine of one thousand to five thousand dollars and/or a prison term of up to two years." 51 However, there are some indications that this stability may not last. For one thing, Arkansas shows some signs of becoming a Midwestem retirement mecca; presumably the outsiders, many from urban and ethnic backgrounds, may show less hostility to gambling than their more rural and fundamentalist fellow citizens. More importantly, recent Arkansas Governors, especially Dale Bumpers, have moved to expand social services, education, and welfare programs. While Arkansas has an income tax and assesses property tax at a somewhat higher rate than other southern states, the growing burden on the state's fiscal situation may lead to pressure from both the public and politiciar:ls for the "easy money" gambling might provide. The future of gambling in Arkansas, then, is uncertain.

void search and seizure warrant

77. 78. 79.

80. 81. 82. 63. 84.

Footnotes (Shepardized through June 1975) 70. Constitution of Arkansas, 1865, Article VIII, Section 6. 71. Act of March 9,1939. no. 209, §§ 1-7 (1939) Ark. Acts 517-18 (codified in Ark. Stat. Ann. §§ 41-2024 to -2029 [1964]). 72. Burks v. Harris, 91 Ark. 205, 207,120 SW. 979, 980 (1909). 73. Albright v. Karston, 206 Ark. 307, 176 SW.2d 421 (1943). 74. Id. at 312, 176 SW.2d at 423. 75. Albright v. Muncriel, 206 Ark. 319, 176 SW.2d 426 (1943). In Albright v. Karston, 209 Ark. 352, 190 S.W.2d 450 (1945) dicta suggests that the summary seizure approved in

8O/Arkansas Lawyer/April 1981

cision is somewhat hard to explain,


criel applied only to gambling devises and not to wagered money. See footnote 44. 76. Two strong dissents were made to this holding. Justice McFadden had serious constitutional objections, He was concerned about the implications of the holding in light of an earlier decision

takes the property of the citizen, the citizen cannot resist the officer at the time, and cannot later recover his property. Such a holding is so foreign to my ideas ot the rights of citizens that I must and do disagree with the majority holding to that effect. Under the good Intention ot destroying the gambling racket, the majority may be setting up a precedent that undermines the constitutional guarantee of property. Burnside v. State, 219 Ark. 596, 599, 243 SW.2d 736, 739 (1951). Act of March 9, 1939, no. 201, § 2 (1939) Ark. Acts 491-92 (codified in Ark. Stat. Ann. § 84-2611 [1980]). Act of February 26, 1959, no. 120, §§ 1-13 (1959) Ark. Acts 336-41 (codified in Ark. Stat. Ann. §§ 84-2622 to -2632 [1980]). Id. § 8. Colbert v. State, 218 Ark. 790, 796, 238 SW.2d 749, 752 (1951). See note 54, supra. Act of February 16, 1935, no. 46, §§ 1-26 (1935) Ark. Acts 90-112 (repealed, 1957). Longstreth v. Cook, 215 Ark. 72, 220 SW.2d 433 (1949). Longstreth was the SUbject of vigorous criticism by Chief Justice Griffin, concurring in Townes v. McCollum, 221 Ark. 920, 922,256 SW.2d 716, 717 (1953), and the court limited Longstreth somewhat in State Racing Commission v. Southland Racing Corp., 295 SW.2d 617,620,226 Ark. 995, 1001 (1956) where the validlly of the state's law making greyhound racing legal was tested. The court held that the burden was on those seeking a racing license to show that skill was involved in wagering on the dogs; if such a showing were not made, the law would be invalid under the Constitution as a lottery. Such a showing was a question of fact, the court said, and remanded the case for further consideration. The de-


86. 87. 88.

since nothing in the Longstreth case would indicate that the establishment of the "skill" element in racing required extensive documentation. Perhaps the best explanation is that the judges, stuck with an unsatisfactory rationale in Longstreth, wished to atone to Fido for their cavalier treatment of Flicka. Act of February 15, 1957, no. 46, §§ 1-33 (1957) Ark. Acts 145-67 (codified in Ark. Stat. Ann. §§ 84-2727 to -2756 [1960]). Id. § 8. Id. § 22. Id. § 22.

89. ActolMarch8,1957, no. 191, §§ 1-30 (1957) (codified in Ark. Slat. Ann. §§ 84-2816 to -2842 [1960]). 90. Act of March 28, 1953, no. 355, §§ 1-5 (1953) Ark. Acts 1018-19 (codified in Ark. Stat. Ann. §§ 41-2034 to -2036 [1964]). 91. Id. § 1. 92. Id. § 2. 93. Id. § 3. 94. "Hot Springs: Gambler's Haven," Wallace Turner, N.Y. Times, March 8, 1964, 1:3. 95. N.Y. Times, March 28,1964,1:7. 96. N.Y. Times, March 29, 1964, 32:2. 97. N.Y. Times, Nov. 4, 1964, 6:3. 98. Act 01 February 6, 1961, no. 49, §§ 1-3 (1961) Ark. Acts 101-02 (codified in Ark. Stat. Ann. §§ 41-2037 to -2039 [1964]).

PARAGRAPH INDEX: Arkansas Bribery-22 Children-13 ConfiSC<!tion of property-<i, 23-26, 36-38, 45 Decriminalization-9, 39, 48 Economic background-<i, 9, 11, 12, 20, 46-50 Enforcement-7, 21, 22, 46-48 Forfeiture of property-<i, 23-26, 36-38, 45 Futures-30, 31, 32 Gambling -generally-4, 9, 10, 14, 15, 17 -<:asin0-46-48 Gambling devices-<i, 9, 13, 23-26, 36-38, 39, 45 (machinery and paraphernalia) Gambling inforrnation-45 Gaming house-;;, 21, 27, 40 Geography-<i Historical background-2, 3, 8, 9, 11, 12, 20, 21, 46-50 Horse racing -9ame vs. sport-16, 28, 29, 41 -bookmakins----28, 29 -licensing (parimutuel betting system}-41-44 Lottery -prohibition-33, 34, 35, 47 Municipal regulalion-48 Nuisance law-28, 29, 47 Piace exemptions-46-48 Political background-2, 3, 8, 11, 12,46-50 Population data-<i, 20, 46 Presumptions-10, 22 Professional gamblins----21, 46-48 Scope of constitu1ional prohibrtion--33, 34 (self-execution) Sentencing-;;, 13,47 Special legislation-48 Taxation-39 Transactions ~lIateral contracts-5 ~ntractual validity-5, 18,31,32 (enforceable vs. void) -recovery of losses-18 -stakeholder-19 Vagrancy-<i





By: Carol Utley Publications Assistant

TERRY A. ELLIOT was recently installed as the new president of the Optimist Club of Greater Little Rock. He is a partner in the firm of ERNST and WHINNEY. Attorney JULIUS KEARNEY of Pine Bluff, made a presentation to in-school youth participants at the Pine Bluff Opportunities Industrialization Center in December. Officers for the Southeast Arkansas Arts and Science Center for 1981 were installed December 17th. Pine Bluff attorney TED DRAKE is the organization's new vice-chairman. JOHN M. PITIMAN is now a Chancery and Probate Judge for the First Judicial Circuit in West Helena. His new address is P.O. Box 2668, West Helena, Ark. 72390. MARKHAM LESTER has joined H. WILLIAM ALLEN in the private practice of law. Lester was graduated from the University of Virginia School of Law in May 1979. Allen was associated with the Wright, Lindsey and Jennings firm. The new firm is known as ALLEN and LESTER and is located on the 12th Floor of the Worthen Bank Building in Little Rock. ROBERT L. LOWERY was approved in December as executive secretary of the state Judicial Department by the Arkansas Judicial Council, Inc. He was Little Rock city attorney in 1971 and has been a deputy public defender and has served as deputy prosecutor in the Sixth Judicial District since that time. CHARLES A. BANKS, MIKE GIBSON and MIKE BEARDEN have formed a new law firm in Osceola. The firm's office is located at 400 W. Hale Street, Osceola. HARRY MEEK, a veteran Arkansas bank lawyer, was honored on his 90th birthday in December with a luncheon hosted by Commercial National Bank in Little Rock. He is a counselor for the Arkansas State Bank Department. W. B. GUTHRIE, JR. announces the association of ROBERT M. ABNEY with his law firm in Des Arc. Abney is a 1977 graduate of the University of Central Arkansas and the UALR School of Law. CHARLES E. SCHARLAU, Chairman of the Board, President and Chief Executive Officer of Southwestern Energy Co. and Arkansas Western Gas Co. at Fayetteville, has been named a director of the C. H. Heist Corp. of Clearwater, Florida. ELIZABETH BROOKS of Little Rock, was honored with a president's tea during December. She is serving as president of the Women's City Club. Arkansas Insurance Commissioner WILLIAM H. L. WOODYARD III of Little Rock, was elected President of the National Association of Insurance Commissioners at their meeting in December. He is the youngest president in the history of the organization and the first Arkansan to hold the office. JOE BRIDGFORTH was promoted in November to division counsel of Georgia Pacific Corporation's Crossett Division. JEANNE ELIZABETH RICHARDS of Gould, a 1980 graduate of the U of A School of Law at Fayetteville, has joined the firm of GILL and JOHNSON in Dumas. JUDGE HENRY L. JONES, JR., U.S. Magistrate for the Eastern District, was featured speaker on October 18th at a Men's Day service at the

Mount Zion Baptist Church in Little Rock. An 85-year-old Victorian home in Benton has become the object of Extensive restoration efforts by two Benton lawyers. SAM ED GIBSON and GEORGE ELLIS have purchased the historic Gann House that is listed on the National Register of Historic Places and plan to renovate the first floor for a law office. MACKIE M. PIERCE has joined the law firm of RICE and BATION in Jacksonville. Pierce served as law clerk to Fifth Division Circuit Judge Lowber Hendricks before entering private practice. ROBERT LYNN COLEMAN, a native of Forrest City, has joined the law firm of REID, BURGE & PREVALLET in Blytheville. With the State Supreme Court ruling, recording and photographing equipment will be allowed in Arkansas courtrooms on a one-year trial basis. Arkansas judges for the first time in Arkansas history, will be conducting trials under the one-eyed scrutiny of cameras. NAPPER, WOOD, HARDIN, GRACE, DOWNING and ALLEN have named PHILIP RAJA director of administration for the North Little Rock law firm. ROBERT S. LINDSEY has been named to the board of trustees of Doctors Hospital in Little Rock. Lindsey is a senior partner in the law firm of WRIGHT, LINDSEY and JENNINGS. PHILIP E. DIXON of the Little Rock firm of HOUSE, HOLMES and JEWELL, and Chancery Judge Thomas A. Glaze of Little Rock, were speakers during December at the third annual Arkansas Association of Legal Secretaries seminar held at the UALR School of Law. ROY JOE WHITEHEAD has opened a law office in Ozark at 220 West Commercial. He recently retired from the Marines where he received his law degree while in service. CHIEF JUSTICE JOHN A. FOGLEMAN is a visiting professor at the University of Arkansas School of Law in Little Rock this semester. He is teaching a course in judicial administration. He served on the Arkansas Supreme from 1967-1980 and was appointed Chief Justice by former Gov. Bill Clinton after the retirement of the late Carleton Harris. BAIRD KINNEY has joined the law firm of Kinney and Easley in Forrest City. He was graduated from the University of Arkansas School of Law at Fayetteville in May of this year. Newport attorney, JIM McCLARTY, chairman of the Newport Airport Commission and a pilot, is actively promoting the expansion of the Newport Airbase with a new terminal bUilding as the commission's first goal. McClarty says the new facilities could attract industrialists to the area. WOODY BASSETI and TOO C. BASSETI, of Fayetteville, announce the opening of their new law office at 39 East Center Street for the general practice of law. Woody Bassett had previously been associated with the Fayetteville firm of Davis, Bassett, Cox & Wright, and Tad Bassett is a 1980 graduate of the University of Arkansas School of Law at Fayetteville. Correspondence should be addressed to Post Office Drawer 1768, Fayetteville, Ark., 72701. The law firm continued on page 82 April 1981/Arkansas Lawyer/81

Oyez, Oyez, continued from page 81 of SPEARS, SLOAN, & JOHNSON announce that they have moved to 301 East Broadway and that ROBERT J. LAMBERT, JR. is now associated with the firm. DAVID V. CAPES has been appointed as Lecturer in Law at the Washington University School of Law in St. Louis, Missouri, where he will teach in the Graduate Tax Program. Capes recently left the U.S. Attorney's Office, where he was head of the tax section, to enter private practice. STUART W. HANKINS, BASIL V. HICKS, JR., and ROBERT DITTRICH formerly practicing under the name Hankins, Wilson & Hicks, announce that HAROLD W. MADDEN has joined the firm. The firm name is now Hankins, Hicks, Madden & Dittrich. HILLARY RODHAM of Little Rock, opened a series of lunch-time seminars on Women in the Work Force on October 22 in Pine Bluff. The seminars were held every other Wednesday at the Jefferson County Courthouse during October and November. TAYLOR ROBERTS, Executive Secretary of the Supreme Court's Committee on Professional Conduct, announces that DALE PRICE is the new Chairman of the committee, and SUSAN P. MILLER is its new Secretary. Both are Little Rock attorneys. WYMAN R. WADE, JR. is now associated with the firm of DAILY, WEST, CORE, COFFMAN and CANFIELD in Fort Smith. The Arkansas Association of Criminal Defense Lawyers elected officers for the 1981 term. They are: VIRGINIA ATKINSON, President; RICHARD N. MOORE, JR., VicePresident; HENRY OSTERLOH, Treasurer; and RICHARD D. O'BRIEN, Secretary. The association is open to all attorneys who would like to participate and meetings are held on the third Thursday of every month. DAYTON G. WILEY of WILEY, GARWOOD, HORNBUCKLE, HIGDON & JOHNSON, in San Antonio, announces that TERRENCE J. MARTIN, THOMAS J. WALTHALL, JR. and ERIC D. WILSON have become associated with the firm. Martin was Chief of Medical Law at Wilford Hall USAF Medical Center and a member of the State Bars of Missouri and Texas. Walthall recently was graduated from the University of Texas School of Law and Wilson from St. Mary's University School of Law. FRED ROBERSON JR. of Little Rock, has been appointed tax shelter coordinator in Arkansas for E. F. Hutton Financial Services, a division of E. F. Hutton & Co. Inc. KIM G. LASHLEE formerly of Malvern, has joined the law firm of SLINKARD and LINGLE in Rogers. Lashlee was graduated from the U of A at Fayetteville School of Law and the University of Florida School of Law where he received his masters of law degree in taxation. RICHARD D. O'BRIEN has joined the law firm of BARRON, COLEMAN & BARKET In Little Rock at Suite 305, Three Hundred Spring Building, Little Rock, Ark. 72201. SAMUEL F. BELLER has opened his law office in Ash Flat. The office is located on Hwy. 167N across from the Sharp County Courthouse. He is a graduate of the University of Arkansas School of Law at Fayetteville and has served as staff attorney for the Committee on Legislative Research for the Missouri Legislature. He was formerly associated with the law firm of Sullivan and Beller in Ash Flat. WILLIAM MILLS, JOHN PATTERSON and PHIL SHOFFNER have recently formed a new law partnership in Searcy. Mills and Patterson were both graduated from Hendrix College and the University of Arkansas School of Law. Shoffner was graduated from Arkansas State Teachers College and the University of Arkansas School of Law. The office is located at 103 N. Main, Searcy, Ark., 72143. Mena attorney, DAVID MADDOX, moved into a 82/Arkansas Lawyer/April 1981

new office bUilding in October. The office is located at the corner of Church and DeQueen Streets in Mena. JONATHAN P. SHERMER, JR. has opened an office forthe private practice of law at 110 South Commerce Street in Russellville. Shermer had been Deputy Prosecuting attorney for the Fifth Judicial District since April of 1974. JOHN M. STEPHENS has joined DAVID MATTHEWS and CRAIG CAMPBELL as a partner in the law firm of Matthews, Campbell and Stephens in Lowell, Ark. Stephens was graduated from Dartmouth College in 1973, and Harvard Law School in 1977. He was staff attorney for the United States Nuclear Regulatory Commission until his appointment as Special Counsel in 1978. STAN MILLER, President of CLARK & MILLER, announced recently the MICHAEL R. JONES of North Little Rock has joined the firm in Hot Springs. Jones, a Hot Springs native, was graduated from the University of Arkansas School of Law. JOHN FORSTER JR., North Little Rock lawyer, was one of the first lawyers in the nation to receive national certification as a criminal trial specialist by the National Board of Trial Advocacy. Certification is achieved by meeting the requirements of the NBTA which include a comprehensive written examination on criminal law, continuing legal education participation, trial experience, authorship of legal articles and professional peer review. Little Rock attorney ROGER B. HARROD is the new vice president for development at Ouachita Baptist University at Arkadelphia. GEORGE HOWARD JR. became the first black Federal Judge in Arkansas in October. A Pine Bluff native, Howard was graduated from the U of A School of Law at Fayetteville and practiced law in his home town. He has served as state Claims Commissioner, on the state Appeals Court and the Arkansas Supreme Court. Former Fayetteville resident and attorney RICHARD E. GATHRIGHT has moved to Billings, Montana, where he will be associated with Producers 88 West, an oil and gas company. R. CLINT SAXTON and WILLIAM C. AYRES announce the opening of their law office at 410 West Tyler, Suite 11, West Memphis, Ark., 72301. The new vice president for development at Hendrix College is G. DAVID GEARHART. He served as director for development for two years before being named vice-president. He was graduated from Westminster College in Fulton, Missouri and the University of Arkansas School of Law. JOHN ARTHUR SKAGGS announces the opening of his new law office in Bentonville. Star City has a new lawyer in town. He is BOB REMET, formerly of Arlington, Virginia. Remet was graduated summa cum laude from George Mason University School of Law. Welcome! MARY THOMASON announces the opening of her law practice in association with WORTH CAMP, JR. in EI Dorado. She was graduated from the University of Arkansas Schoo! of Law at Fayetteville in May of 1980. ROBERT L. BROWN of Little Rock, has been chosen Law Week chairman for Arkansas. Law-the Language of Liberty is the theme for this year's observance during the week of May 1st. Suite 1151 of the First National Building is now occupied by W. RUSSELL MEEKS, III, who is now in private practice in Little Rock. MICHAEL E. IRWIN, of the firm REED & IRWIN, announces the association of J. RUSSELL GREEN. The firm is located at 407 West Searcy Street, Heber Springs, Ark. GALE STEWART has a new address in Little Rock. Correspondence should be addressed to: Gale Stewart, 301 S. Louisiana, Little Rock, Ark., 72201. Officers for the Arkansas Chapter of the American Board of Trial Advocates for 1981 are: President, WINSLOW DRUMMOND; Vice-president, OTIS H. TURNER; Secretary-Treasurer, DONALD J. ADAMS. The


A.B.O.T.A. is an organization established in 1958 to improve both the ethical and technical standards of the administration of justice. Membership is limited to lawyers and judges who have been actively involved in the trial of lawsuits. HARVEY L. BELL resigned as state securities commissioner in October, after six years, to enter private practice. A native of El Dorado, Bell was graduated from the University of Arkansas School of Law and Southern Methodist University where he received his master's degree in law. He was appointed to the position of state securities commissioner in 1974 by then Governor Dale Bumpers. Lawyers in Rogers and Lowell have formed a local bar association to help area attorneys keep abreast of new developments in the law. The Rogers-Lowell Attorneys Association plans to meet every Tuesday except the first Tuesday of each month. New officers for the association are President, JOHN BURNETT of Rogers; SecretaryTreasurer, JOHN M. STEPHENS of Lowell; and Librarian, RICK HARDWICK of Rogers. In addition, the association will have three standing committees: Continuing Legal Education, chaired by EUGENE KELLEY; Case Law Update, chaired by STEPHEN GEIGLE; and Social Activities, chaired by DAVID MATTHEWS. KAY CLARK has been appointed Coordinator of Regulatory Affairs for Arkansas Blue Cross and Blue Shield in Little Rock. She will serve as liaison officer between the company and state and federal regulatory agencies, Congress and the state legislature. Mrs. Clark received her Juris Doctorate in 1971 from the U of A School of Law at Fayetteville and since 1977 has served as human rights advocate and legal counsel for the state Department of Human Services. In 1971, she taught at the U of A School of Law at Fayetteville and in 1976 served as research librarian for the school's law library. She previously served as assistant city prosecutor for the City of Fayetteville and as county juvenile probation officer. THURSTON A. THOMPSON has joined the Springdale law firm of HERDLINGER, JACOWAY and STANLEY. Thompson was graduated from the University of Nebraska at Omaha and received his master of science degree at the Air Force Institute of Technology at Dayton, Ohio and a master of arts degree from Ball State University at Muncie, Ind. He served as squadron comman-

der at Cannon Air Force Base from 1970-72; as director of services for the USAF in England from 1972-75; and as chief of nuclear munitions material at

Kelly AFB, San Antonio, Texas from 1975-77. He was graduated from the University of Arkansas School of Law at Fayetteville in June 1980.


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AICLE NEWS by Claibourne W. Patty, Jr. Executive Director Arkansas Institute of Continuing Legal Education

FALL 1980-MOST ACTIVE IN AICLE HISTORY Other than the usual Fall Legal Institute and Annual Practice Skills Course already reported in a previous issue of the Arkansas Lawyer there was considerable activity in a variety of CLE subjects. The first of such programs was the conference on Developmental Disabilities and the Law, jointly sponsored with the Arkansas Bar Association Committees on the Mentally Disabled and Legal Services for the Deaf and the Governor's Developmental Disabilities Planning Council; and was held at the Camelot Inn, Little Rock, on October 10, and the UALR School of law on Saturday moming, October 11, 1980. As projected in the last issue of the Arkansas Lawyer this program was indeed innovative and unique not only to the United States as a CLE offering but also to the state of Arkansas. This program was highlighted in a news article of a recent issue of the Association of Continuing Legal Education Administrators Newsletter, and your Executive Director has received enquiries from CLE organizations in two provinces of Canada for further information concerning putting on this type of program. The attendance at this program amounted to approximately 125 paid registrants plus some additional members of the deaf community in Little Rock who were invited to attend the Saturday morning session. Another timely program held this Fall was a Banking Law Seminar, cosponsored by AICLE and the Banking Law Committee of the Arkansas Bar Association, which was held at the Camelot Inn, Little Rock, Arkansas on October 17, 1980. The topics of the program have already been discussed in a previous issue of the Arkansas Lawyer, but to bring you up-to-date approximately 150 registrants attended made-up almost equally of 84/Arkansas Lawyer/April 1981

bank counsel and bankers, who were also invited through the membership of the Arkansas Bankers Association. The Arkansas-Federal Tax Institute, cosponsored with the Arkansas Society of Certified Public Accountants, was conducted November 13-14, at the Camelot Inn, Little Rock. The total enrollment was in excess of 300 registrants, approximately 15% of whom were lawyers. The percentage of lawyers attending was less than at the Federal Tax Institute conducted a year ago, however, the subject matter was more accountant oriented than it was the year previous. Nevertheless, the total registration broke all preexisting records and indicates the continuing success of this program, especially since it has been moved from Hot Springs to Little Rock. The program planning is an equal responsibility of two cochairmen, one selected by the Arkansas Society of CPA's and the other by the Arkansas Bar Association. It so happened this last time that each of the cochairmen were lawyers, although one of the cochairmen representing the CPA's is also a CPA. A final program was held on December 5, at the Camelot Inn in Little Rock concerning appellate advocacy and use of the Appellate Procedure Handbook which was jointly sponsored with the Civil Procedure Committee of the Arkansas Bar Association. This was a one time program which was designed to utilize the Appellate Advocacy Handbook prepared by Jacqueline Wright, which was recently mailed to all Arkansas attorneys licensed to practice before the Supreme Court of Arkansas. This program was attended by approximately 125 registrants, most of whom are actively involved in an appellate advocacy practice.

In addition to the above programs four regional seminars were conducted at Fayetteville, Jonesboro, Monticello and Magnolia between the dates of November 7 and December 12, which . included the videotape replay of the Thursday portion of the Fall Legallnstitute program on Arkansas Domestic Relations Law with live commentary by at least one and often two local chancery judges for the benefit of those members of the Bar Association who were unable to attend the Fall Legal Institute held at Little Rock. This was a first in the area of using videotape replays for regional seminars in Arkansas and was enthusiastically received by the total of approximately 125 registrants attending the four workshops. Due to this enthusiastic response the Family Law Section and AICLE are cosponsoring a one-day videotape replay workshop in Little Rock on March 20, 1981, at the Camelot Inn for the benefit of those lawyers in central Arkansas who did not get to attend either the Fall Legal Institute or regional workshops. Three of the four chancery judges in Pulaski County plus Supreme Court Justice Robert Dudley, Appellate Judge Tom Glaze (both of whom are former chancery judges), along with Chancery Judge Eugene Harris of Pine Bluff, will provide the live commentary and discussion for the benefit of the practitioners from central Arkansas who will be attending. Brochures on the Annual Labor Law Institute to be held at DeGray Lodge, Arkadelphia, April 2-3, 1981; a one-day LandlordfTenant Seminar to be held at the Camelot Inn, Little Rock, on April 10; and the Annual Tax Awareness Institute to be held at the Camelot Inn, Little Rock, May 1-2, 1981; will be mailed to the Bar membership within the next sixty days.


3Jn jMemoriam They that be wise shall shine as the brightness of the firmament. Daniel 12:3



WILUS B. SMITH 1903-1980

JOE C. BARRETT 1897-1980


President, 1959-60 Artlansas Bar Association

President, 1943-44 Arkansas Bar Association

Chief Justice, 1956-80 Arkansas Supreme Court

Outstanding LawyerCitizen Award-1980

Outstanding Lawyer Award-1960

Outstanding Lawyer Award-1974

"The highest reward that can come to a lawyer is the esteem of his professional brethren. That esteem is won in unique conditions and proceeds from an impartial judgment of professional rivals. It cannot be purchased. It cannot be artificially created. It cannot be gained by artifice or

contrivances to attract public attention. It is not measured by pecuniary gains. It is an esteem commanded solely by integrity of character and by brains and skills in the honorable performance of professional duty. " --<;harles Evans Hughes

Truly, JUdge Harris, Mr. Barren and Mr. Smith were held in such esteem.

April 1981/Arkansas Lawyer/85

CODE Of PROfESSIONAL RESPONSIBILITY FEDERAL JUDICIARY DISCIPLINE The Judicial Councils Reform and Judicial Conduct and Liability Act of 1980 was signed into law by the President on October 15, 1980 (P.L. 96-458). Effective 1, 1981, a new mechanism for dealing with judicial misconduct and disability in the federal judiciary will be in force. Also, the current judicial councils will be revised to include federal district court judges; and the roles of the circuit chief judges, the current councils, and the Judicial Conference of the United States concerning procedures on misconduct and disability complaints are clarified. The new law gives the judicial councils the power to discipline-but not to remove-federal judges for misconduct. It represents a compromise between those who wanted a special court to decide misconduct and disability cases, and those who wished to let each circuit decide what to do about misconduct cases. As outlined in the Judicial Conduct Reporter, Fall 1980, of the American Judicature Society, the new law provides:

• Any person can submit to the clerk of the circuit court a complaint charging that a judge is disabled or "has engaged in conduct that is prejudicial to the effective and expeditious administration of the business of the courts." • The chief judge can dismiss the complaint at this stage if it is frivolous, if it is not a charge of misconduct or disability, or if it is "directly related to the merits of a decision or a procedural ruling." But he must explain such decisions in writing. • Otherwise, the chief judge appoints a special committee, which includes the chief judge and an equal number of circuit and district judges, to investigate the complaint and present its findings and recommendations to the circuit council. • The council may certify that a judge is disabled, thus subjecting him to the disability procedure already enacted (28 U.S.C. 372 (b)); it may request the judge to "voluntarily resign," in which case the judge will receive retirement benefits, no matter how long he or she has served; it may lift the judge's caseload for a specific period: or it may issue a private or public censure or reprimand. • "[I]n no circumstances may the council order removal from office of any judge appointed to hold office during good behavior." • Finally, the Judicial Conference of the U.S. will decide any complaint which the circuit councils consider a basis for impeachment or any complaint the councils cannot resolve. The chief justice can appoint a standing committee to help the conference in these matters. 86/Arkansas Lawyer/April 1981

Procedures. The new law covers circuit judges, district judges, bankruptcy judges and magistrates, and judges of the special federal courts in Washington. It will protect both the complainant and judge through several features: • A judge must be given notice of the investigation and an opportunity to appear before the investigating panel, to present evidence, to compel witnesses to appear, and to cross-examine witnesses.

• A complainant may appear if he or she "could offer substantial information" to the panel. • All proceedings remain confidential unless the judge is impeached or unless he or she authorizes disciosure. • Each order that the councilor the conference issues must be "made available to the public." • A complainant or a judge can petition the councilor the conference to review earlier action. Finally, the law requires the director of the Administrative Office of the U.S. Courts to list in his annual report the number of complaints filed, their general nature, and the outcomes. FEDERAL PROSECUTION PRINCIPLES PUBLISHED The Department of Justice is issuing to all federal criminal lawyers a statement of principles of federal prosecution to promote the reasoned exercise of prosecutorial authority and contribute to the fair administration of the criminal laws. The 56-page publication will provide for the first time in a single source, federal prosecutors with a statement of prosecutorial policies and practices for particularly important areas of their work. Attomey General Benjamin R. Civiletti, in announcing the principles, said they will serve the important purpose of "ensuring the fair and effective exercise of prosecutorial responsibility and promoting confidence on the part of the public and individual defendants that prosecutorial decisions will be made rationally and objectively on the merits of each case." The principles contain statements in initiating or declining prosecutions; selecting charges; entering into plea agreements; opposing nolo contendere pleas; entering into nonprosecution agreements in return for cooperation; and participating in the sentencing process. The principles also set forth statements of department policy; general considerations to be taken into account in reaching decisions; and suggested or required practices concerning such matters as the level at which decisions are made, review decisions, and documentation of decisions. Copies are available from the Office of Public Affairs, U.S. Department of Justice, Washington, D.C. 20530. ' "

ADDENDA by C. E. Ransick Editor

WILL ADVERTISING EXPOSE LAWYERS TO GREATER MALPRACTICE LIABILITY? In 1977, the Supreme Court gave lawyers the right to advertise, and indications are that this has helped to lower the costs of legal services to consumers. But will advertising have an effect on the malpractice exposure of lawyers who advertise? David J. Beck, writing in the November 1980 issue of The Brief, suggests that it will. Beck, past chairman of the Economics of Law Practice Committee of the American Bar Association's Tort and Insurance Practice Section (TIPS), warns that lawyers who advertise may find themselves liable under an expanded list of malpractice theories. These may include, he says, false or deceptive advertising, stricter negligence standards for advertising a specialty, or in some instances even a warranty theory. Beck notes, for example, that in medical malpractice cases some jurisdictions hold specialists to a higher standard of care than is applied to general practitioners. In the past, this has not been true in legal malpractice actions, but Beck argues that since the ABA Code of Professional Responsibility now allows a lawyer to advertise his or her specialty, and "since many jurisdictions now officially recognize an attorney's specialized skill or knowledge, a higher standard of care will probably eventually be recognized. A client who retains an attomey specializing in the area in which the client has a problem is certainly entitled to expect the attorney to possess a greater degree of competence." Advertising could also open lawyers to totally new theories of liability. A claim for false advertising, for example, would be inconceivable if there were no advertising. A client trying to use a false or deceptive advertising statute could have a problem, because most such statutes only provide for a criminal penalty. Beck notes, however, that they generally do not exclude the possibility of a person using them to maintain a private suit, and says that, "until a court in a particular jurisdiction concludes that. .. no such implied cause of action exists, it is certainly arguable that violation of a faise advertising statute by an attorney also subjects him or her to civil liability." The same issue of The Brief includes an article by Bert M. Thompson, chairman-elect of the TIPS Committee on Public Regulation of Insurance, on "Professional Liability Insurance in the 1980's," and an article by Jeffrey M. Smith, an Atlanta attorney specializing in legal malpractice, on "Preventing Legal Malpractice, Its Claims and Litigation." The Brief is a quarterly newsmagazine published by the ABA's Tort and Insurance Practice Section.

MORE ON PROFESSIONAL LIABILITY INSURANCE Members of the Arkansas Bar Association have the very best malpractice insurance coverage available under the Association-sponsored group insurance plan with CNA. Only two state bar associations (Arkansas and Illinois) are able to offer their members "occurrence-type" coverage. We have been cooperating for the past 10 years with CNA in trying to keep the Arkansas experience factor down- e.g., AEGIS and related articles in The Arkansas Lawyer; and the recent legal malpractice seminars. These seminars not only educate the lawyers, but also provide for a 5% premium deduction for attendance (5% each lawyer; 5% firm's total premium if half the firm's members attend). We are publishing for the benefit of our members a series of articles by Howard H. Braverman, ISBA General Counsel, on legal malpractice. The following article is particularly important to the practitioner.

PROTECTION REQUIRES AFFIRMATIVE ACTION The need to protect one's self from the pitfalls which may occur in the private practice of law is ever expanding. It almost requires lawyers to consult lawyers on the potential of liability for malpractice arising out of the acceptance-Qr even nonacceptance-Qf a case. By way of example, many of you may be aware of the malpractice verdict of $650,000 against a Minnesota lawyer' recently sustained by that state's supreme court. In that case the lawyer had been consulted about the likelihood of prosecuting a successful malpractice claim against a doctor and hospital who treated the plaintiff's husband. The lawyer informed the plaintiff that such actions were not handled by his firm but that he would consult other local lawyers with experience in the area and get back to her. From there on there is some disputed evidence about advising plaintiff to see another lawyer. However, the point is that defendant did not further communicate with the plaintiff. The plaintiff, after the medical malpractice statute of limitations expired, consulted other counsel who instituted a lawyer malpractice action. The trial court jury concluded that but for the negligence of the defendant-attorney, the medical malpractice suit could have been sustained and awarded a judgment of $650,000. William H. Gates,' a member of the ABA Lawyer Malpractice Committee, analyzed the appellate court's decision and concluded that particularly where proffered employment is declined, three very clear lessons are to be learned from this case, i.e. April 1981/Arkansas Lawyer/87

(1) If a lawyer undertakes to listen to a client's account of the facts with the idea that he may consider taking the case it becomes incumbent upon the lawyer that he independently investigate the facts and legal issues before rejecting it, since the conclusions expressed to the client becomes a professional responsibility which he assumes toward the client. (2) Furthermore, if the lawyer rejects the matter, he should clarify to the client his reasons for rejection, I.e. either because the facts do not warrant pursuing an action or because he does not handle such cases. (3) Lastly, the client should be advised of the conclusion in writing, with reference, if necessary, as to how long the client has to commence an action. Mr. Gates recommends that lawyers give serious consideration to utilizing "engagement" and "nonengagement" letters to each client who consults them. No better suggestion could be made. Today, lawyers must be cautious--:-perhaps even over cautious-about the subjective question of when an attomey-client relationship begins. The relationship can begin in unusual places and under unusual circumstances. If there is any doubt in your mind, resolve it subjectively against yourself and advise the "client" in writing. There is another protection which is offered to lawyers but frequently rejected. That is the protection against SEC claims offered with most lawyer malpractice policies. Many lawyers feel that if they are not involved in stock and bond transactions that they are not susceptible to SEC liability. But that conclusion is not justified under existing case law. At a recent ABA seminar it was pointed out that courts have held that limited and general partnership agreements, real property management and marketing shares, recreational club memberships, notes to banks and sales of franchises and distributorships all may involve securities law problems. Illinois, for example, has held that an agreement to form a partnership may be a "security" under-our-Iaw;' the sale and lease of oil pumps based on oil sales through the pumps were held to possibly be a proper subject for suit under securities law as a security contract.' Also note that trusts receipts may be held to be a security' as may be investment in a share of a motel.' If your practice encompasses any commercial activity, you should promptly review your malpractice policy and if it does not provide for SEC protection, get it amendedpromptly.

1. Togstad v. Mlller._ _Minn..---(l980). 2. Legal Malpractice Review, May/June, 1980.

3. Curtis v. Johnson. 92111. App.2d 141;234 N.E.2d 566 (1968). 4. Rice v. Bogart. 272 III. App. 292 (1933). 5. Supra. Note 3. 6. Polikoff v. Levy. 204 N.E.2d 807 (1965).

BB/Arkansas Lawyer/April 19B1

HONORED NATHAN G. GORDON of Morrilton is one of five native Arkansans recently introduced into the new Arkansas Aviation Hall of Fame, organized by the Arkansas Aviation Historical Society. Gordon is the only Arkansan ever to be awarded the Congressional Medal of Honor for heroics in aerial operations against the enemy. He was awarded the Country's highest military award for "ex1raordinary heroism above and beyond the call of duty" as Commander of a Catalina patrol plane rescuing pilots of the Fifth Air Force shot down over Kavieng Harbor in the Bismark Sea on February 15, 1944. His citation describes the daring rescue: "Lt. Nathan Gordon unhesitatingly responded to a report of the crash and flew boldly into the harbor, defying close range fire from enemy shore guns to make three separate landings in full view of the Japanese and pick up nine men, several of them injured...With his cumbersome flying boat dangerously overloaded, he made a brilliant takeoff despite heavy swells and almost total absence of wind and set a course for base, only to receive the report of another group stranded in a rubber raft 600 yards from the enemy shore... "Lt. Gordon turned back again, risking his life to set his plane down under direct fire and take aboard six more survivors, and cooly making his fourth dextrous takeoff with 15 rescued officers and men. By his exceptional daring, personal valor and incomparable airmanship under most perilous conditions, Lt. Gordon prevented certain death or capture of our airmen by the Japanese." We need add no more.

DR. ROBERT A. LEFLAR was again praised in the Institute of Judicial Administration's IJA Report, Summer 1980 for his continuing efforts in connection with the Appellat~ Judges Seminars at the NYU School of Law. Now in their 25th year, the Seminars have been attended by more than half the appellate judges in the United States. The IJA Report states, "The Law Enforcement Assistance Administration's number one rating of the Seminars is a timely tribute to Professor Leflar who this year celebrated his twenty-fifth anniversary with the Seminars, having served first as Director and who serves now as ConSUlting Director of the Seminars. Perhaps more than anyone person, Professor Leflar is responsible for the development of the Seminars so that they are now officially recognized as the finest appellate judicial education program in the country.",",








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Black Beauty is America's most popular corporale outfit. Here are some of the reasons• Everything (including seal) is inside the "allin-one" corporate outfit.• Improved corporate record book and slip case in lustrous black vinyl with high quality gold stamped border. The sturdy, dust proof slip case reserves place on shelf when corporate rec0rd book is removed .• Hidden rivets and gold label window on spine for attractive appearance and quick identification. • Interior pocket neatly holds documents that cannot be ~~",,,,,,,,,,~",

reimbursement plan, appendix of forms , in,

structions, worksheets, and 20 blank sheets. Minutes and By-Laws available for CA, CT, DE, FL, IL, Nj, NY, PA, TX and Blank State (Model Business Corporation Act) .• Our exclusive corporate record tickler.• Mylar reinforced tab indexes with five positions and stock transfer ledger.


Complete Black Beauty. Outfit No. 70 (Green No. 71)

50 sheets blank minUfe paper

No. 80 (Green No. 81) with

$31 $33


printed minutes and by-laws . Charge to your American Exp~, Master Charge or Visa cards

You may also select Green Beauty with the same fine features.

Shipment within 24 houn.

~---------------TO, EXCELSIOR.LEGAL SOUTHWEST,INC. P.O. Bo. 5683 ArlinllfOn, TX 76011

-----------------------------------------------------------------, o No. 70 0 No. 71.. $31 I Please Ship: 0 No. 80 D No. 81..



Year: I I

(Print corpOJ1.lte name exaclly ason certificate oflncorpomtion. If lon~ than is charac.u::rs and spaces, add$5. 75 (or 2" diesc:al.)

Shipment free when you encloae check. I I I I I I I


authorized shares



Cenificates signed by President and


0 PV

=;:--_ each

$ __

Capitalization $

(Secretary. treasurer, un less otherwise specified)

DIRe § 1244 complete sct-resoL dir. min .. treatise, law, etc., $3.95 extra. o AMEX I

0>Ship to

8 Me




Ship via Air-$2.00 extra


For delivery in TX add saLes tax.


_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ZipCode


_ AK


APRIL 1981  

When you need abank that offers professionalism to professionals, call The Trust Bank. It is our continuing effort to be simply, The Best. C...