First National Bank of DeWitt v. Cruthis

• Decision Date: 10 February 2005
• Parties: FIRST NATIONAL BANK OF DEWITT, Appellant, v. Claude CRUTHIS, Catherine Cruthis, Bill Cruthis, Terry Cruthis, Cruthis Brothers, Riceland Seed Company and Stratton Seed, Appellees,
• Court: Arkansas Supreme Court

203 S.W.3d 88

360 Ark. 528

FIRST NATIONAL BANK OF DEWITT, Appellant, v. Claude CRUTHIS, Catherine Cruthis, Bill Cruthis, Terry Cruthis, Cruthis Brothers, Riceland Seed Company and Stratton Seed, Appellees,

04-448

Supreme Court of Arkansas

Opinion Delivered February 10, 2005

JIM HANNAH, Chief Justice

The First National Bank of DeWitt (FNB) appeals a judgment on a jury verdict and alleges that the circuit court erred in submitting an equitable issue for decision by the jury, in denying motions for judgment notwithstanding the verdict and new trial, and in failing to modify the jury verdict to conform to the jury's intent. We hold that the circuit court erred in submitting to the jury the equitable issues contained in Count I of FNB's Amended Complaint. Our jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(a)(1) and (b)(1).

Facts

This case involves money lent by FNB to Claude Cruthis, Catherine Cruthis, Bill Cruthis, Terry Cruthis, individually, and as partners of Cruthis Brothers, a partnership (Cruthis). The loans were used to fund farming operations. FNB lent Cruthis a total of $148,500 through six loans extended between 1993 and 1996. The loans were variously secured by personal and real property. In 1996, when Cruthis's wheat and oat crop were planted and growing, Cruthis told the FNB that due to a lack of funds, operations would cease. Cruthis sold some but not all property in which FNB held a security interest and forwarded the proceeds to FNB. This did not satisfy the total loan obligation. FNB decided to protect its exposure on the outstanding loans by finishing Cruthis's wheat and oat crops, which required an investment of more than $14,000. Wheat prices were rising during this time, and Cruthis approached FNB and asked that a portion of the future crop be committed to Bunge Corporation to obtain the higher price then available. FNB obligated itself to Bunge to acquire a higher price than might exist when the crop was actually harvested. However, Cruthis had previously obligated some portion of the crop to Riceland Seed Company d.b.a. Stratton Seed Company (Stratton). Cruthis alleges that only a small portion of the crop was promised to Stratton, and that there was more than sufficient grain to meet both the obligation to Stratton, as well as make an offer to Bunge. When it came time to harvest, Cruthis stopped FNB from harvesting the grain and delivering it to Bunge, threatened prosecution for criminal trespass, rented equipment, harvested the grain, and delivered it to Stratton. Stratton sold the grain and received funds in the amount of $ 50,618; Stratton issued checks for the $50,618 and delivered the checks to FNB, however, the checks were not cashed, were never negotiated and Stratton retains the $50,618 today. In 1998, Cruthis brought an action in Monroe County against FNB in conversion, interference with contract, and breach of fiduciary duty. The Monroe County case resulted in a dismissal of Cruthis's complaint because it should have been brought as a compulsory counterclaim in the case before us, an already existing action filed in chancery court in Arkansas County on May 30, 1997. See First National Bank of Dewitt v. Cruthis, 352 Ark. 292, 100 S.W.3d 703 (2003)

. In the present action, by way of its Amended Complaint filed August 8, 2003, FNB sought restitution including an equitable lien, damages for breach of contract, damages for conversion, and damages for breach of warranty.

After dismissal of the action in the appeal noted above, Cruthis filed a counterclaim in the present action asserting causes of action for conversion, fraud and misrepresentation, tortious interference with contract, cause of action based on undue control and breach of fiduciary capacity. A jury demand was included in the counterclaim. Cruthis filed a motion to dismiss FNB's action in chancery for failure to assert that there was no adequate remedy at law. By the time the court heard the matter, Amendment 80 had taken effect, and the chancery court had become a circuit court. The circuit court stated that there was merit to the claim that FNB failed to assert a lack of an adequate remedy at law and concluded that there was an adequate remedy at law. However, rather than dismiss the case, the circuit court stated that the case would be decided at law rather than at equity.

Following a jury verdict, FNB filed a motion for judgment not withstanding the verdict, or in the alternative, for a new trial. FNB alleged that there was a lack of substantial evidence supporting the jury verdict. More specifically, FNB argued that there was a lack of substantial evidence supporting the jury's verdict that Stratton was not unjustly enriched. Alternatively, FNB argued for a new trial based on an error in the jury's assessment "due to an erroneous conclusion as to the effect of their verdict form."

Amendment 80

This case involves a question of whether the circuit court erred in trying the case as one at law rather than at equity. This implicates Amendment 80 to the Arkansas Constitution and its effect on jurisdiction formerly residing in circuit and chancery courts. Amendment 80 is now part of our constitution. In interpreting the constitution on appeal, our task is to read the law as it is written and interpret it in accordance with established principles of constitutional construction. Smith v. Sidney Moncrief Pontiac, Buick, GMC, Co., 353 Ark. 701, 120 S.W.3d 525 (2003); Brewer v. Fergus, 348 Ark. 577, 79 S.W.3d 831 (2002). It is this court's responsibility to decide what a constitutional provision means, and we will review a lower court's construction de novo. Id. We are not bound by the decision of the circuit court; however, in the absence of a showing that the circuit court erred in its interpretation of the law, that interpretation will be accepted as correct on appeal. Id. Language of a constitutional provision that is plain and unambiguous must be given its obvious and common meaning. Smith, supra; Worth v. City of Rogers, 341 Ark. 12, 14 S.W.3d 471 (2000); Daniel v. Jones, 332 Ark. 489, 966 S.W.2d 226 (1998). Neither rules of construction nor rules of interpretation may be used to defeat the clear and certain meaning of a constitutional provision. Id.

As we previously stated:

The passage of Amendment 80 on November 7, 2000 was a watershed event in the history of the Judicial Department of this state. Jurisdictional lines that previously forced cases to be divided artificially and litigated separately in different courts have been eliminated. This fundamental change naturally brings with it a whole host of issues, both theoretical and practical, concerning the form and structure of our court system.

In Re Implem. of Amend. 80, 345 Ark. Appx. 664, 47 S.W.3d 262 (2001). Amendment 80 to the Arkansas Constitution merged the chancery and circuit courts. Summit Mall Co. v. Lemond, 355 Ark. 190, 211, 132 S.W.3d 725 (2003); United Food & Com. Workers, Int. Union v. Wal-Mart, 353 Ark. 902, 120 S.W.3d 89 (2003). Section 6(A) of Amendment 80 to the Arkansas Constitution provides "Circuit Courts are established as the trial courts of original jurisdiction of all justiciable matters not otherwise assigned pursuant to this Constitution." As a consequence of Amendment 80, courts that were formerly chancery and circuit courts are now referred to as circuit courts. Id. Because Amendment 80 states that circuit courts assume the jurisdiction of chancery courts, circuit courts simply have added to their already existing jurisdiction as a court of law the equitable jurisdiction which chancery courts held prior to adoption of the Amendment. Ark. Prof'l Bail Bondsman Licensing Bd. v. Frawley, 350 Ark. 444, 453, 88 S.W.3d 418 (2002). In other words, no new or expanded jurisdiction beyond that formerly existing in the chancery and circuit courts was created through Amendment 80. Rather, circuit court jurisdiction now includes all matters previously cognizable by circuit, chancery, probate, and juvenile court. See Amendment 80, § 19(B)(1); Administrative Order No. 14, §§ 1(a) and (b), 344 Ark. Appx. 747-48 (2001). See also Moore v. Sipes, 85 Ark. App. 15, 106 S.W.3d 903 (2004)

.

Prior to adoption of Amendment 80, a choice had to be made by a plaintiff of whether it was best to file suit in chancery or circuit court. The clean-up doctrine was used to allow a chancery court to decide law issues because under that longstanding rule, once a chancery court acquired jurisdiction for one purpose, it could decide all other issues. Douthitt v. Douthitt, 326 Ark. 372, 930 S.W.2d 371 (1996). The doctrine reached the point in recent years that unless the chancery court had no tenable nexus to the claim, this court would consider the matter of whether the claim should have been heard in chancery to be one of propriety rather then one of subject-matter jurisdiction. Douhitt, supra; Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986). Further, it was possible to sever claims at law to be tried in circuit court. Tyson v. Roberts, 287 Ark. 409, 700 S.W.2d 50 (1985); see also Spitzer v. Barnhill, 237 Ark. 525, 374 S.W.2d 811 (1964)

.

There is no longer a need to elect in which court to file a lawsuit. See Clark v. Farmers Exchange, Inc., 347 Ark. 81, 89, 61 S.W.3d 140 (2001)

. However, as already discussed, Amendment 80 did not alter the jurisdiction of law and equity. It only consolidated jurisdiction in the circuit courts. Therefore, matters that could be submitted to a jury for decision and the matters that must be decided by the court remain unaltered.

The circuit court submitted this case to the jury, although FNB sought restitution and an equitable lien in Count I. FNB did not request a jury and argues on appeal that submission of restitution to the jury was error. Cruthis requested a jury in their counterclaim. Cruthis argues that it was not error to submit the case to the jury. The right to a jury trial set out in the Arkansas Constitution in ...