TB of Blytheville, Inc. v. Little Rock Sign & Emblem, Inc.

TB of BLYTHEVILLE, INC. and Interested
Underwriters at Lloyd's, London, Signatory
Policy No. 1772 v. LITTLE ROCK SIGN & EMBLEM,
INC.

96-562                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 2, 1997


1.   Sales -- common-law voluntary-payment rule discussed -- rule
     consistent with application of UCC. -- When one pays money on
     demand that is not legally enforceable, the payment is deemed
     voluntary; absent fraud, duress, mistake of fact, coercion, or
     extortion, voluntary payments cannot be recovered; common-law
     principles of law and equity are given full effect unless
     displaced by particular provisions of the UCC; there was no
     support for the contention that the common-law voluntary-
     payment rule was inconsistent with the application of the UCC;
     therefore, the voluntary-payment rule was not displaced by the
     enactment of the UCC.

2.   Sales -- voluntary-payment rule inapplicable -- contract for
     second sign was independent contract for sale of goods. -- 
     The voluntary-payment rule was applied in error by the trial
     court where the first sign was completely destroyed and there
     was no possible way to repair that sign; appellant chose to
     mitigate its damages by procuring a second sign; the purchase
     of the second sign was an independent transaction and a second
     contract between the parties; the purchase of the second sign
     was not a subsidiary action to the first contract but a
     second, independent contract between the parties; because the
     contract for the second sign was an independent contract for
     the sale of goods, that transaction was governed by the UCC;
     therefore, upon acceptance of the second sign, appellant had
     a duty under the UCC to pay appellee pursuant to the contract;
     this legal duty to pay rendered the voluntary-payment rule
     inapplicable to the second contract; in order for the
     voluntary-payment rule to apply, appellant must not have had
     such a duty. 

3.   Jury -- interrogatory regarding voluntary-payment rule
     submitted to jury in error -- rule was inapplicable. --  
     The trial court erred in submitting an interrogatory to the
     jury regarding the voluntary-payment rule because the
     voluntary-payment rule was not applicable; additionally,
     although the interrogatory made reference to an agency
     relationship, the record did not contain any evidence
     establishing such a relationship.   

4.   Parties -- real party in interest must bring cause of action -
     - who is considered to be real party in interest. -- Rule 17
     of the Arkansas Rules of Civil Procedure provides that only a
     real party in interest may bring a cause of action; that party
     is generally considered the person who can discharge the claim
     on which suit is brought, and not necessarily the person
     ultimately entitled to the benefit of recovery.


5.   Parties -- real party in interest as between insured and
     insurance company -- insured is considered real party in
     interest when only partially reimbursed or entitled to
     deductible interest. -- Generally, where an insurance company
     has only partially reimbursed an insured for his loss, the
     insured is the real party in interest and can maintain the
     action in his own name for the complete amount of his loss;
     partial reimbursement includes instances when an insured has
     not been reimbursed for the amount of his deductible; where
     the insured has a deductible interest, he is the real party in
     interest and the action must be brought in his name for his
     own benefit; the insured stands as trustee to the insurer as
     to any amount recovered; the insurer is not a necessary party. 
     
6.   Parties -- insured appellant held deductible interest in
     litigation -- trial court erred in holding that insurer was
     real party in interest and not insured. -- The trial court's
     ruling that the insurer, not the insured business,
     was the real party in interest, was in error where it was
     undisputed that the insured held, at the very least, a
     deductible interest in the litigation; the insured was the
     real party in interest.

7.   Evidence -- relevancy of evidence within trial court's sound
     discretion -- abuse of discretion constitutes grounds for
     reversal. -- Relevancy of evidence is within the trial court's
     sound discretion, subject to reversal only if an abuse of
     discretion is demonstrated.

8.   Evidence -- abuse of discretion in excluding evidence relating
     to permanent repair of second sign -- costs expended for
     repairs to second sign were relevant to jury's determination
     of damages. -- There was an abuse of discretion by the trial
     court in excluding evidence relating to the permanent repair
     of the second sign where there were two separate contracts
     between the parties; the appellant was entitled to have a jury
     determine whether it should recover damages based upon the
     alleged defects in the first sign that fell and should have
     been allowed to submit to the jury evidence regarding whether
     the second sign was faulty; an important component of such
     evidence included the amount of claimed damages; costs
     expended to permanently repair the second sign were relevant
     to the jury's determination of damages in these issues.

9.   Interest -- prejudgment interest defined -- when it may be
     collected. -- Prejudgment interest is compensation for
     recoverable damages wrongfully withheld from the time of the
     loss until judgment; this interest must be allowed for any
     injury where, at the time of loss, damages are immediately
     ascertainable with reasonable certainty; where prejudgment
     interest may be collected at all, the injured party is always
     entitled to it as a matter of law; the test in prejudgment
     interest cases is whether there is a method of determination
     of the value of the property at the time of the injury; if
     such method exists prejudgment interest should be allowed.

10.  Interest -- amount of property damage was ascertainable --
     prejudgment interest should have been awarded. -- Where the
     amount of property damage was ascertainable from the date of
     the sign falling, prejudgment interest should have been
     awarded.

11.  Interest -- postjudgment interest -- when awarded. --
     Postjudgment interest is to be awarded on the total amount of
     damages, including prejudgment interest, to compensate the
     recovering party for the loss of the use of money adjudged to
     be his; the purpose of awarding interest would be frustrated
     if a party were not compensated for the loss of use of all of
     his money, both before and after judgment; the award of
     interest is necessary to fully compensate an injured party. 

12.  Interest -- prejudgment and postjudgment interest should have
     been awarded upon any jury determination of damages. -- The
     trial court erred by not granting prejudgment and postjudgment
     interest and, upon remand, the supreme court determined that
     interest should be awarded upon any jury determination of
     damages.

13.  Appeal & error -- allegation that trial court erred in denying
     motion to new trial moot -- errors warranted remand for new
     trial. -- The appellant's contention that the trial court
     erred in denying its motion for a new trial was not addressed
     because it was moot in view of the errors which warranted
     remand for a new trial.


     Appeal from Mississippi Circuit Court, Chickasawba District;
John Fogleman and Samuel Turner, Jr., Judges; reversed and
remanded.
     Reid, Burge, Prevallet & Coleman, by:  Robert L. Coleman, for
appellants.
     Rieves & Mayton, by:  Martin W. Bowen, for appellee.

     W.H."Dub" Arnold, Chief Justice.
     This appeal involves an action brought by TB of Blytheville,
Inc. (Taco Bell) seeking damages against Little Rock Sign & Emblem
(LR Sign) for two allegedly defective signs sold by LR Sign.  Taco
Bell initiated this action under the theories of negligence, breach
of warranty, and strict product liability.  A trial was held in
which a jury rendered a verdict for Taco Bell for $3,892.19.  Taco
Bell appeals asserting several trial court errors and requests a
new trial.  We agree that the trial court erred in several of its
rulings and therefore, we vacate judgment and remand this action
for a new trial.
     In October 1991, Taco Bell purchased a one-hundred-foot sign
from LR Sign that was installed on its restaurant premises.  Taco
Bell paid $28,269.36 for the sign.  On March 18, 1992, the sign
fell to the ground, and it was destroyed.  
     Taco Bell contacted its insurer Interested Underwriter's at
Lloyds, London (Lloyd's).  Lloyd's then began an investigation
which was joined by LR Sign's insurer, Travelers, to determine the
reason for the sign's falling.  Lloyd's hired an adjusting firm,
Gay & Taylor.  Lloyd's and Travelers' jointly hired a metallurgist
to determine the cause of the sign's falling.
     Approximately six weeks after the first sign falling, LR Sign
installed a second sign on the premises.  An invoice for $25,086.85
for this sign was sent to Gay & Taylor.  The invoice was
resubmitted to Edmondson Management, Inc., the financial management
firm for Taco Bell, and it was paid.  Around this time, Lloyd's
issued a check to Taco Bell as an insurance payment for the damage
of the first sign for $24,086.85, the cost of the second sign,
minus Taco Bell's $1000 deductible.    
     In March of 1993 during a wind storm, the second sign began to
lean and shake; Taco Bell hired Hinson Display & Sign Service of
Blytheville to immediately make temporary repairs so that the sign
would not fall.  These repairs cost $1,068.19.  Hinson determined
that the post of the sign was not sturdy enough to support the
sign's height, so they permanently lowered the sign to a height of
sixty feet to ensure that it would not fall.  The costs of the
permanent repairs were $5,281.35.      
     Taco Bell initiated suit against LR Sign seeking damages
sustained in the failure of both the first and second signs.  Taco
Bell sought damages which included reimbursement for the $1000 for
its deductible and for the expenditures for the temporary and
permanent repairs of the second sign, and also, for other damages
to its property caused when the first sign fell.  Additionally,
Taco Bell sought repayment of the $24,086.85 on behalf of Lloyd's
for the claim it paid arising out of the falling of the first sign.
     A jury trial was held.  The jury returned a verdict awarding
Taco Bell the sum of $3,892.19 and dismissing Lloyd's claim.  Taco
Bell and Lloyd's appeal various rulings of the trial court and
request a new trial.
     Taco Bell asserts six points of error on appeal.  First, Taco
Bell asserts that the trial court erred in ruling that the common
law voluntary-payment rule governs the transaction for the second
sign and bars recovery absent instances of fraud or duress. 
Second, Taco Bell contends that the trial court erred in submitting
an interrogatory to the jury which stated that Mr. Glenn Norwood,
an employee of the adjusting firm Gay & Taylor was an agent of
Lloyd's of London.  Third, Taco Bell asserts error in the trial
court's ruling that Lloyd's was the real party in interest. 
Fourth, Taco Bell contends that the trial court erred in excluding
evidence regarding the costs of permanent repairs to the second
sign.  Fifth, Taco Bell asserts error in the trial court's failure
to award pre- and postjudgment interest. And lastly, Taco Bell
appeals the denial of its motion for a new trial because the jury's
verdict was against the undisputed evidence.
                    I. Voluntary Payment Rule
     The trial court ruled that Taco Bell was barred from recovery
for the amount paid for the second sign because of the common-law
voluntary-payment rule.  Appellant requests that we find that the
voluntary-payment rule has been displaced by the enactment of the
Uniform Commercial Code and is not controlling in instances
involving the sale of goods.  
     In Boswell v. Gillett, 226 Ark. 935, 940, 295 S.W.2d 758
(1956), we applied the common-law voluntary-payment rule and noted,
"When one pays money on demand that is not legally enforceable, the
payment is deemed voluntary.  Absent fraud, duress, mistake of
fact, coercion, or extortion, voluntary payments cannot be
recovered."  According to the UCC, common-law principles of law and
equity are given full effect unless displaced by particular
provisions of the UCC.  Ark. Code Ann.  4-1-103 (1991)(emphasis
supplied).  While the UCC has given buyers and sellers specific
remedies for breach of sales contracts and the warranties therein,
we find no support for the contention that the common-law
voluntary-payment rule is inconsistent with the application of the
UCC; therefore, the voluntary-payment rule has not been displaced
by the enactment of the UCC.
     Despite the fact that the voluntary-payment rule can apply in
situations involving a sale of goods, it is not applicable to the
facts of this case.  It is obvious that the UCC applies to the
contract for the sale of the first sign; likewise, the sale of the
second sign also was a transaction governed by the UCC.  As the
trial court found, the purchase of the second sign was an
independent transaction and a second contract between Little Rock
Sign and Taco Bell.  The contract for the second sign was evidenced
by the invoice that required Taco Bell to pay $25,086.85 for the
"new unit."  In testimony at trial, the second sign was referred to
as a "new" unit.
     Appellee contends that the sale of the second sign was merely
a repair of the first faulty sign that is not governed by the UCC. 
The UCC applies to original goods; therefore, if the second sign is
a repair, then the UCC does not apply.  We do not think that the
purchase of the second sign was a "repair."
     The definition of "repair" from Black's Law Dictionary is "to
mend, remedy, restore, renovate, to restore to a sound or good
state after decay, injury, dilapidation, or partial destruction." 
It is our interpretation that the word repair "contemplates an
existing structure . . . which has become imperfect and means . .
. to restore the existing structure to a condition in which it
originally existed, or as near as can be attained."  Black's Law
Dictionary 1298 (6th ed. 1990), citing, Childers v. Speer, 63 Ga.
App. 848, 12 S.E.2d 439, 440 (1940).  See also,  Kuras v. Kope, 533 A.2d 1202, 1209 (Conn. 1987); Wroblewski v. Grand Trunk Western
Railway Co., 276 N.E.2d 567, 574 (Ind. 1971).  
     When the first sign fell, it was completely destroyed; only a
small portion of the post remained.  There was no possible way to
repair that sign.  At that time, Taco Bell had the option to pursue
an action for damages based upon the insufficiency of that sign. 
In fact, during this time both parties' insurance carriers became
involved and were trying to determine fault.  At the moment the
sign fell, Taco Bell was faced with the possibility of lost profits
due to the fact that there was no sign to advertise its presence in
that location.  Despite the possibility of pursuing an action
regarding the first sign, Taco Bell mitigated its damages by
procuring a second sign.  This sign was not purchased as a repair
to the first sign but as a new sign that was needed to sustain
business.  The fact that the first sign fell gave rise to the need
for the second sign; however, the purchase of the second sign was
not a subsidiary action to the first contract but a second,
independent contract between the parties.  
     Because the contract for the second sign was an independent
contract for the sale of goods, that transaction is also governed
by the UCC.  Therefore, upon the execution of the sales contract,
all the duties of buyers and sellers under the UCC governed the
parties.  Upon acceptance of the second sign, Taco Bell had a duty
under the UCC to pay LR Sign pursuant to the contract.  According
to Ark. Code Ann.   4-2-607(1)(1991), the effect of Taco Bell's
acceptance of the sign is the obligation to pay "the contract rate
for any goods accepted."  This legal duty to pay renders the
voluntary-payment rule inapplicable to the second contract.  In
order for the voluntary-payment rule to apply, Taco Bell must not
have had such a duty.  Therefore, the trial court erred in holding
that the voluntary-payment rule applied. 
                 II.  Agency of Claims Adjuster 
     Appellant also contends that the trial court erred in
submitting an interrogatory to the jury regarding the voluntary-
payment rule, which states: "Glenn Norwood was acting within the
scope of his authority as an agent of Interested Underwriter's at
Lloyd's, London, and while acting within the scope of his authority
as an agent . . . had prior knowledge of (and)(or) consented to the
payment..."  
     We agree that there was error in submitting this
interrogatory.  Foremost, this was error because the voluntary-
payment rule is not applicable to the case before us. 
Additionally, the record does not contain any evidence establishing
an agency relationship between Mr. Glenn Norwood, an employee of
Gay & Taylor, and Interested Underwriter's at Lloyd's.  There is
nothing in the record to establish that an agency relationship
existed between Mr. Norwood and Lloyd's.  
                  III.  Real Party in Interest
     On the morning of the trial, the trial court ruled that
Lloyd's was the real party in interest, not Taco Bell.  Appellant
argues that the trial court erred in this ruling.  We agree.
     Rule 17 of the Arkansas Rules of Civil Procedure provides that
only a real party in interest may bring a cause of action. That
party is generally considered the person "who can discharge the
claim on which suit is brought, and not necessarily the person
ultimately entitled to the benefit of recovery."  Childs v.
Philpot, 253 Ark. 589, 487 S.W.2d 637 (1972).
     In Farm Bureau Ins. Co. v. Case Corp., 317 Ark. 467, 878 S.W.2d 741 (1994), we held that the general rule is that where an
insurance company has only partially reimbursed an insured for his
loss, the insured is the real party in interest and can maintain
the action in his own name for the complete amount of his loss. 
McGeorge Contracting Co. v. Mizell, 216 Ark. 509, 226 S.W.2d 566
(1950).  Partial reimbursement includes instances when an insured
has not been reimbursed for the amount of his deductible.  This
court has held that where the insured has a deductible interest, he
is the real party in interest and the action must be brought in his
name for his own benefit.  Page v. Scott, 263 Ark. 684, 686, 567 S.W.2d 101 (1978); Washington Fire & Marine Ins. Co. v. Hammett,
237 Ark. 954, 377 S.W.2d 811 (1964); see also Thompson v. Brown, 5
Ark. App. 111, 633 S.W.2d 382 (1982).  The insured stands as
trustee to the insurer as to any amount recovered; the insurer is
not a necessary party.  Id. 
     In this case, it is undisputed that Taco Bell holds, at the
very least, a deductible interest in the litigation.  Following
prior rulings of this court, Taco Bell is the real party in
interest.
              IV.  Trial Court Rulings on Evidence
     Appellant contends that the trial court erred in excluding
evidence related to the costs of making permanent repairs to the
second sign.  Relevancy of evidence is within the trial court's
sound discretion, subject to reversal only if an abuse of
discretion is demonstrated.  Potlatch Corp. v. Missouri Pac.
R.R.Co., 321 Ark. 314, 902 S.W.2d 217 (1995); Turner v. Lamitina,
297 Ark. 361, 761 S.W.2d 929 (1988).
     We give deference to the judgment of the trial court in
matters regarding the admissibility of evidence; however, in this
instance, we think there was an abuse of discretion in excluding
the evidence relating to the permanent repair of the second sign. 
As we have discussed supra, there were two separate contracts
between the parties.  Taco Bell is entitled to have a jury
determine whether it should recover damages based upon the alleged
defects in the first sign that fell; additionally, Taco Bell should
be allowed to submit to the jury evidence regarding whether the
second sign was faulty, and an important component of such evidence
includes the amount of claimed damages.  Costs expended to
permanently repair the second sign are relevant to the jury's
determination of damages in these issues.
               V.  Pre- and Postjudgment Interest
     Prejudgment interest is compensation for recoverable damages
wrongfully withheld from the time of the loss until judgment. This
interest must be allowed for any injury where, at the time of loss,
damages are immediately ascertainable with reasonable certainty.
Where prejudgment interest is collectible at all, the injured party
is always entitled to it as a matter of law.  Wooten v. McClendon,
272 Ark. 61, 612 S.W.2d 105 (1981).  We stated in Lovell v.
Marianna Federal Savings & Loan Association, 267 Ark. 164, 589 S.W.2d 577 (1979): "The test in prejudgment interest cases is
whether there is a method of determination of the value of the
property at the time of the injury. If such method exists
prejudgment interest should be allowed."
     We believe that the amount of property damage was
ascertainable from the date of the sign falling and prejudgment
interest should have been awarded in this case.
      Postjudgment interest is governed by Ark. Code Ann.
16-65-114(a) (1987), which states:
    Interest on any judgment entered by any court or
    magistrate on any contract shall bear interest at the
    rate provided by the contract or ten percent (10%) per
    annum, whichever is greater, and on any other judgment
    ten percent (10%) per annum, but not more than the
    maximum rate permitted by the Arkansas Constitution . . . .
     Postjudgment interest is to be awarded on the total amount of
damages, including prejudgment interest, to compensate the
recovering party for the loss of the use of money adjudged to be
his.  Hopper v. Denham, 281 Ark. 84, 661 S.W.2d 379 (1983). The
purpose of awarding interest would be frustrated if a party were
not compensated for the loss of use of all of his money, both
before and after judgment.  The award of interest is necessary to
fully compensate an injured party.  Chambers v. Manning, 315 Ark.
369, 868 S.W.2d 64 (1993)  See also, Wooten v. McClendon, 272 Ark.
61, 612 S.W.2d 105 (1981).
     The trial court erred by not granting prejudgment and
postjudgment interest.  Upon remand, interest should be awarded
upon any jury determination of damages.
                    VI.  Motion for New Trial
     Taco Bell contends that the trial court erred in denying its
motion for a new trial.  This issue will not be addressed because
it is moot in view of the discussion supra of errors which warrant
the remand for a new trial.
     For the foregoing reasons, we reverse and remand this action
for a new trial consistent with this opinion.
     Reversed and remanded.



                 Tom Glaze, Justice, dissenting.

     First, Taco Bell, as I understand the record, argued that, if
Glenn Norwood was Interested Underwriter's agent, a fact issue
existed whereby the jury could find (and did) that Norwood (and
thereby Interest Underwriters) consented to Taco Bell's voluntary
payment for the second sign.  Thus, I fail to see how this court
can reverse based upon Ark. Code Ann.  4-2-607(1) (Repl. 1991). 
In other words, if Taco Bell's second sign is a repair, not an
original good, the Uniform Commercial Code ( 4-2-607) does not
apply, and the trial court's ruling was correct that the common-law
voluntary-payment rule bars Taco Bell's recovery.  
     While the majority attempts to recharacterize Taco Bell's sign
replacement as resulting from Little Rock Sign's sale to Taco Bell
of a new sign or original good governed by Ark. Code Ann.  4-2-
607(1), the evidence decidedly supports the view that the second
sign resulted from repair work.  In fact, the trial court, without
objection as I read the record, instructed the jury that to assess
Taco Bell's damages, it must fix the amount of money which would
reasonably and fairly compensate Taco Bell for the reasonable
expense of necessary repairs to the area surrounding the fallen
sign and expenses for necessary repairs to the second sign.  In
addition, by interrogatory number one, the jury was asked to
determine if Norwood acted within the scope of his authority for
Interested Underwriters and if Interested Underwriters consented to
the payment of $25,086.85 for the second sign.  The jury answered
yes.  Examples of the evidence supporting the jury's decision are
as follows:  
    *Laverne Lovette, Little Rock Sign's officer manager, averred
that, on March 18, 1992, the sign and support post broke and fell. 
She said Taco Bell requested Little Rock Sign repair the broken
sign, and, as a result, Little Rock Sign repaired the sign and
post.  She further averred that Little Rock Sign sent a bill in the
amount of $26,085.85 for the repair work it had performed.
    *Glenn Norwood, General Adjuster, testified he saw Little Rock
Sign's itemization for what the sign replacement would be and
determined the cost was in line for what a sign replacement should
be.  Norwood said he was advised that a sign had been put back in
place, and he knew that Little Rock Sign was the one that put it
back in place.  He further said that he told Little Rock Sign the
person they needed to bill was the person who had hired them to do
the repairs.  Norwood identified a proof of loss statement that the
full cost of repair or replacement was $25,086.85.  
    *Darrell Glover, owner of Little Rock Sign, testified and
identified the invoice for reinstallation of the damaged sign and
said that immediately after the sign was damaged, "We started
repairing and building a new sign."  He further stated he replaced
the parts that needed replaced and the amount of the bill was for
all the work done in removing the damaged parts.
    *Mark Turner, General Manager of Edmondson Management, said,
"We told Glover that the sign fell and we wanted him to put the
sign back up for us," and he did that.  According to Turner's
notes, the re-erection of the sign was completed on May 1, 1992. 
Turner later expressed that he had done enough for Glover by paying
him twice for a sign that never was put up right.  (Emphasis
added.)
     While other like repair evidence is dispersed throughout the
record, the foregoing is sufficient to support the trial court's
ruling (and jury's decision) that Taco Bell's second sign was the
result of repairs performed by Little Rock Sign, making the
voluntary-payment rule, not the UCC, applicable to the facts of
this case.  That being so, I respectfully dissent and would affirm
the trial court's holding that the voluntary-payment rule applied. 
In sum, because the jury in considering interrogatory number one
found that (1) Norwood was Interested Underwriters' agent, and (2)
Norwood acted within the scope of such authority when he consented
to Taco Bell's voluntary payment to Little Rock Sign for the repair
of the second sign, this court, on review, is obliged to affirm
those decisions.
     Newbern, J., joins this dissent.