Terry & Stocks v. a.D. Lock et al

• Decision Date: 25 January 2001
• Docket Number: 00-818
• Citation: 37 S.W.3d 202
• Parties: JOE TERRY AND DAVID LEE STOCKS, APPELLANTS, VS. A.D. LOCK, LOCK HOSPITALITY, INC., GREG ENTLER, JOHN DOE, I, JOHN DOE II, AND JOHN DOE III, APPELLEES. 00-818 Arkansas Supreme Court 25 January 2001 APPEAL FROM THE FAULKNER COUNTY CHANCERY COURT, NO.CHARLES E. CLAWSON, JR., JUDGE AFFIRMED. RAY THORNTON, Associate Justice On
• Court: Arkansas Supreme Court

JOE TERRY AND DAVID LEE STOCKS, APPELLANTS VS A.D. LOCK, LOCK HOSPITALITY, INC., GREG ENTLER, JOHN DOE, I, JOHN DOE II, AND JOHN DOE III, APPELLEES

00-818

Arkansas Supreme Court

25 January 2001

APPEAL FROM THE FAULKNER COUNTY CHANCERY COURT, NO. E-99-120, HON. CHARLES E. CLAWSON, JR., JUDGE

AFFIRMED.

RAY THORNTON, Associate Justice

On February 1, 1999, appellants, Joe Terry and David Stocks, were preparing the Best Western motel in Conway for renovation. The motel was owned by appellee, Lock Hospitality Inc., a corporation wholly owned by appellee, A.D. Lock and his wife. The appellants were removing the ceiling tiles in room 118, with Mr. Lock also present in the room. As the ceiling tiles were removed, a cardboard box was noticed near the heating and air supply vent where it had been concealed. Appellant Terry climbed a ladder to reach the box, opened it, and handed it to appellant Stocks. The box was filled with old, dry and dusty currency in varying denominations. Mr. Lock took the box and its contents to his office. Later in the day, appellants contacted the Conway Police Department and informed them of the discovery. The investigating officer contacted Mr. Lock, and the money was counted. The face value of the currency was determined to be $38,310.00.

Appellants filed a complaint in Faulkner County Chancery Court, asserting that the currency "being old and fragile is unique and has numismatic or antique value and may have a market value in excess of the totality of its denominations as collector's funds." Appellants sought a temporary restraining order and an injunction, directing appellees to refrain from spending or otherwise depositing the found money and to pay all of the money to either appellants or into the registry of the court. Appellants' complaint also urged that under the "clean-up doctrine," the chancery court had authority to decide a number of charges sounding in tort. Appellants also sought an order finding that appellees were holding the money in trust for appellants.

On the day the complaint was filed, the chancery court entered a temporary restraining order requiring appellees to deposit the found money with the registry of the court. On February 9, 1999, Mr. Lock and Lock Hospitality, Inc., filed their answer. Appellees raised the defenses of estoppel, laches, failure of consideration, and fraud in their answer. Eventually, all of the named appellees other than Mr. Lock and Lock Hospitality, Inc., were dismissed from the case.

On appeal, appellants now contend that the chancery court did not have subject-matter jurisdiction to hear and resolve the issues that they had asked the chancellor to resolve. We find no merit in this argument and conclude that the chancery court had jurisdiction under the clean-up doctrine to resolve the merits of the matters relating to ownership of the money.

The remaining issue for our review is whether the chancellor was clearly erroneous in characterizing the found money as "mislaid" property and consequently that the interest of Lock Hospitality, Inc., as the owner of the premises, is superior to the interest of appellants as finders of the money. We conclude that the chancellor was not clearly erroneous in finding that the money was mislaid property, and we affirm.

In their first point on appeal, appellants argue that the trial court was wholly without subject-matter jurisdiction to adjudicate the issues involved in this case. We have previously stated that parties may not consent to a court's subject-matter jurisdiction where no such jurisdiction lies, nor may the jurisdiction be waived. Douthitt v. Douthitt, 326 Ark. 372, 930 S.W.2d 371 (1996). A court must determine if it has subject-matter jurisdiction of the case before it. Id. Subject-matter jurisdiction is always open, cannot be waived, can be questioned for the first time on appeal, and can even be raised by this court. Hamaker v. Strickland, 340 Ark. 593, 99 S.W.3d 210 (2000). In fact, this court has a duty to determine whether or not we have jurisdiction of the subject matter of an appeal. Id. Subject-matter jurisdiction is determined from the pleadings; the complaint, answer, or cross-complaint. Maroney v. City of Malvern, 320 Ark. 671, 899 S.W.2d 476(1995).Subject-matter jurisdiction is tested on the pleadings and not the proof. Id.

A court of chancery or equity may obtain jurisdiction over matters not normally within its purview pursuant to the clean-up doctrine, our long-recognized rule that once a chancery court acquires jurisdiction for one purpose, it may decide all other issues. Douthitt, supra. Generally, the clean-up doctrine allows the chancery court, having acquired jurisdiction for equitable purposes, to retain all claims in an action and grant all the relief, legal or equitable, to which the parties in the lawsuit are entitled. See Fulcher v. Dierks Lumber & Coal Co., 164 Ark. 261, 261 S.W. 645 (1924); see also Bright v. Gass, 38 Ark. App. 71, 831 S.W.2d 149 (1992).

In Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986), we noted that:

unless the chancery court has no tenable nexus whatever to the claim in question we will consider the matter of whether the claim should have been heard there to be one of propriety rather than one of subject-matter jurisdiction.

Id.

We have further noted that an error in bringing a suit in equity when there is an adequate remedy at law is waived by failure to move to transfer the cause to the circuit court; where the adequacy of the remedy at law is the only basis for questioning equity jurisdiction the chancellor's decree is not subject to reversal for failure to transfer the case, unless the chancery court is wholly incompetent to grant the relief sought. Titan Oil & Gas, Inc. v. Shipley, 257 Ark. 278, 517 S.W.2d 210 (1974). Some examples of courts granting relief which they were "wholly without jurisdiction" to grant would be a chancery court trying a criminal case or a chancery court hearing a probate matter. See Dugal Logging. Inc. v. Arkansas Pulpwood Co., 66 Ark. App. 22, 988 S.W.2d 25 (1999).

We have also noted that when the issue is whether the chancery court has jurisdiction because the plaintiff lacks an adequate remedy at law, we will not allow it to be raised for the first time on appeal. Liles, supra. It is only when the court of equity is wholly incompetent to consider the matter before it that we will permit the issue of competency to be raised for the first time on appeal. Finally, we have held that it is a well-settled rule that one who has invoked the assistance of equity cannot later object to equity's jurisdiction unless the subject matter of the suit is wholly beyond equitable cognizance. Leonards v. E.A. Martin Machinery Co., 321 Ark. 239, 900 S.W.2d 546 (1995).

Keeping in mind the foregoing applicable principles of law, we turn to the case now on review. In this case, appellants filed their complaint in Faulkner County Chancery Court. Looking at the pleadings filed in this case, we conclude that the chancery court properly had subject-matter jurisdiction to address the matter. The appellants' complaint sought the following equitable remedies: (1) an injunction; (2) specific performance; and (3) the imposition of a constructive trust. Additionally, appellants asserted in their complaint that they were seeking equitable relief. Specifically, their complaint states: "the cash money, referred to herein above, being old and fragile is unique and has numismatic or antique value and may have fair market value in excess of the totality of its denominations as collector's funds and therefore plaintiffs move for specific performance...[.]"

From the pleadings, it appears that appellants sought equitable remedies in the chancery court. As a result, when the chancery court addressed these remedies, that court then acquired jurisdiction over the remaining tort claims pursuant to the "clean-up doctrine." Accordingly, we hold that the trial court was not wholly without subject-matter jurisdiction over this case.

The argument that the court should have transferred the case to circuit court is one of propriety rather than one of subject-matter jurisdiction. Appellants did not request that their case be transferred to circuit court at the trial court level. Because this issue was not raised below we may not consider it now for the first time on appeal. See, Titan Oil & Gas, supra; see also Liles, supra. Accordingly, the trial court is affirmed.

In their second point on appeal, appellants contend that the trial court's finding that the property involved in this case was "mislaid" property was erroneous. Specifically, the trial court found "that the money in question was intentionally placed where it was found" and that when "money is mislaid, the finders would acquire no rights." The trial court then concluded that "Lock Hospitality, Inc., as the owner of the premises is entitled to possession." Appellants argue that the found property was not "mislaid property" but instead was "lost property," "abandoned property," or "treasure trove" and that the trial court's finding that the money was "mislaid property" is clearly erroneous. We disagree.

The standards governing our review of a chancery court decision are well established. We review chancery cases de novo on the record, and we do not reverse unless we determine that the chancery court's findings of fact were clearly erroneous. Newberry v. Scruggs, 336 Ark. 570, 986 S.W.2d 853 (1999).

We have not previously analyzed the various distinctions between different kinds of found property but those distinctions have been made in the common law, and have been analyzed in decisions from other jurisdictions. The Supreme Court of Iowa has explained that "under the common law, there are four categories of found property: (1) abandoned property, (2) lost property, (3) mislaid property, and (4) treasure trove." Benjamin v. Linder Aviation, Inc., 534 N.W.2d 400 (Iowa 1995...