Cupples Farms Partnership v. Forrest City Production Credit Ass'n

• Decision Date: 12 October 1992
• Docket Number: No. 92-150,92-150
• Citation: 839 S.W.2d 187,310 Ark. 597
• Parties: CUPPLES FARMS PARTNERSHIP, Appellant, v. FORREST CITY PRODUCTION CREDIT ASSOCIATION, et al., Appellees.
• Court: Arkansas Supreme Court

Page 187

839 S.W.2d 187

310 Ark. 597

CUPPLES FARMS PARTNERSHIP, Appellant, v. FORREST CITY PRODUCTION CREDIT ASSOCIATION, et al., Appellees.

No. 92-150.

Supreme Court of Arkansas.

Oct. 12, 1992.

Robert S. Irving, Little Rock, Roy C. Lewellen, Marianna, for appellant.

William A. Waddell, Jr., Wright, Lindsey & Jennings, Little Rock, for appellees.

BROWN, Justice.

Cupples Farms, a partnership, appeals from an order denying its motion to intervene in ongoing litigation as a matter of right and its petition to be subrogated to the cross-claim of Forrest City Production Credit Association against Cargill, Inc. We agree with Farms that the circuit court's order was a final order which determined the rights of Farms in the litigation. Farms, however, failed to establish a right to subrogation; nor was its motion to intervene timely. For these reasons, we affirm the circuit court's decision.

In 1979, a separate partnership, Cupples Brothers, was farming in several Arkansas counties and had bumper soybean crops. The principal partners in Brothers were Horace Cupples and Jacob Cupples. As a result of the record crop, Brothers decided to store 11,778 bushels with Blanton Grain Company in Hughes; 7,267 bushels with a storage concern in Memphis, Tennessee; and 50,000 bushels at its farm headquarters in Crittenden County. In February 1980, Brothers borrowed $407,587 from Forrest City PCA to finance the crop that year. An additional $25,000 was borrowed from PCA in July 1980. Both loans were secured by the previously stored soybeans and future proceeds.

The year 1980, however, proved to be disastrous for soybeans due to hot weather, and in order to pay off the PCA loans, Brothers decided to sell the soybeans in storage. Unbeknownst to Brothers, during the summer of 1980, Hubert Blanton, Jr., sold the 11,778 bushels stored at his company to Cargill, Inc., of Memphis, Tennessee and converted the proceeds of that sale to his own use. Blanton then persuaded Brothers to sell the remaining soybeans to Cargill. Brothers agreed, and Blanton did so, but when he was paid by Cargill, he again converted the proceeds. As a result of Blanton's actions, Brothers and PCA received none of the proceeds from these sales. PCA then demanded payment from Brothers on the 1980 loans.

In April 1981, Horace Cupples and Jacob Cupples formed a new partnership called Cupples Farms. When PCA made demand on Brothers, Farms negotiated a loan with Farmers Home Administration in the total amount of $851,690. The loan involved three promissory notes, all signed by Horace Cupples and Jacob Cupples as partners in Farms. The notes were secured by farmland owned by Farms. In May 1981, Farms used part of the loan proceeds to pay off the 1980 debt owed by Brothers to PCA.

Brothers and Horace Cupples filed suit against PCA, Cargill, and Hubert Lee Blanton Jr. and Hubert Lee Blanton, Sr. on August 1, 1983, for negligence and various intentional torts resulting in the loss of the soybeans. Thereafter, PCA cross-claimed against Cargill for negligence in not observing reasonable commercial standards in determining ownership of the soybeans and PCA's lien and counterclaimed against Brothers and Horace Cupples. In an amended counterclaim in 1984, PCA referred to Farms as "the surviving entity" of Brothers. Horace Cupples on behalf of Brothers answered the counterclaim in part by stating that the assets and debts of Brothers and Farms were not the same.

In 1990, Farms filed for bankruptcy protection under Chapter 12. That same year Jacob Cupples died leaving Horace Cupples as sole partner of both Brothers and Farms. On March 6, 1991, Farms sought to intervene as a matter of right under Ark.R.Civ.P. 24(a) in the original lawsuit filed by Brothers and Horace Cupples and to assert subrogation rights to PCA's cross-claim against Cargill. A hearing was set on the motion to intervene and petition for subrogation on July 29, 1991, but before the hearing, PCA and Cargill informed the circuit court that they had settled the cross-claim. The hearing proceeded in any event, at which time Horace Cupples testified that Brothers ceased to exist in early 1980 and Farms began winding up its affairs in 1990 after Jacob Cupples' death.

On September 17, 1991, the circuit court denied Farm's motion noting that "Horace Cupples still has his original and amended action pending against PCA and Cargill." The court found the motion to intervene to be untimely as a matter of law. It further found that Farms and Brothers were distinct entities and that Farms had no legal obligation to pay off Brothers' debt, thus rendering subrogation unavailable to Farms. On January 22, 1992, the circuit court dismissed the crossclaim of PCA against Cargill at PCA's request.

I. APPEALABILITY OF ORDER DENYING INTERVENTION AS A MATTER OF RIGHT

PCA argues that Farms' appeal is from an interlocutory order that did not resolve all of the issues among all of the parties. While issues involving the parties remain to be decided in this case, the circuit court's order denying intervention to Farms as a matter of right precludes any other avenue for a Farms appeal.

Farms moved to intervene under Ark.R.Civ.P. 24(a):

Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of this state confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

Farms now urges that intervention is the only practical and effective means for it to protect its claimed interest in the litigation. This view was espoused in a recent Pennsylvania case. See Van Den Heuval v. Wallace, 382 Pa.Super. 242, 555 A.2d 162 (1989), where an insurance company petitioned to intervene in a workers compensation case and to be subrogated to the employee's tort claim against a third party. The trial court denied intervention. The Superior Court held that the order was appealable and reversed on the basis that there was no other way for the denied petitioner to appeal from that order. The court stated:

It is unrealistic to suggest that [the carrier's] interest can be protected by a subsequent action against [the employee]. If the third party action is settled without notice to [the carrier], its subrogation claim is at the mercy of the employee who, having received payment, can dispose of the settlement proceeds as he chooses. The order of the trial court which denied intervention, therefore, has the practical effect of denying relief to [the carrier], which cannot fully protect its subrogation interests in any other way.

555 A.2d at 163. Other jurisdictions agree that an order denying intervention as a matter of right is appealable. See, e.g., Hines v. D'Artois, 531 F.2d 726 (5th Cir.1976); New York Public Interest Research Group v. Regents, 516 F.2d 350 (2d Cir.1975); Ashland Public Library Board v. Scott, 610 S.W.2d 895 (Ky.1981); but see United States v. United States Steel Corp, 548 F.2d 1232 (5th Cir.1977) (denial order not appealable when intervention petition filed after judgment).

We are aware that this view on the appealability of an intervention-of-right order is not unanimous. An alternative view maintains that the potential intervenor should have a legal right in fact to intervene as opposed to claiming a legal right to intervene. See, e.g., Brotherhood of RR Trainmen v. B & O R.R. Co., 331 U.S. 519, 67 S.Ct. 1387, 91 L.Ed. 1646 (1947). But that requires a merits determination, and our rule is clear in stating that the movant need only claim a legitimate interest to warrant review. Additionally, it appears somewhat self-defeating to grant review conditioned on whether the movant has an actual claim and then undertake a full-blown analysis of whether the claim is valid in order to determine appealability. This same point was made in the Editorial Comment to an ALR annotation:

As a matter of procedural economy, it seems incongruous to condition the permissibility of an appeal upon the same facts upon which its merits depend. Since in any event the court has to examine the two fundamental questions above stated [whether intervention is a matter of law or whether denial is an abuse of discretion], it is believed the better view [is] to hold that orders denying the right of intervention are appealable.

Appealability of Order Granting or Denying Right of Intervention, 15 A.L.R.2d § 2, pp. 342-343. Moreover, this court and the Arkansas Court of Appeals, while not confronting the issue of appealability directly, have entertained an appeal in several cases from the denial of a motion to intervene. See, e.g., Polnac-Hartman & Assoc. v. First National Bank in Albuquerque, 292 Ark. 501, 731 S.W.2d 202 (1987); Billabong Products, Inc. v. Orange City Bank, 278 Ark. 206, 644 S.W.2d 594 (1983); Bank of Quitman v. Phillips, 270 Ark. 53, 603 S.W.2d 450 (1980).

The Third Circuit Court of Appeals is of like mind. That court held in a suit interpreting intervention of right under Federal Rule 24(a), which is identical to our rule, that an order denying intervention of right is final and appealable. Pennsylvania v. Rizzo, 530 F.2d 501 (3d Cir.1976). In so holding, the Third Circuit rejected the older rule that hinged appealability on whether the intervenor, in fact, did have a right to intervene and stated: "It is sufficient that intervention of right was sought and denied to render the denial appealable." 530 F.2d at 504.

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