David R. Williams and Superior Products USA v. Golf Cars of Arkansas, Inc.

Annotate this Case









JUNE 1, 2005



(NO. CV2001-424),



Sam Bird, Judge

This case arises from a default judgment in favor of Golf Cars of Arkansas, Inc., (Golf Cars) against David R. Williams & Associates and Nina Williams, and from the subsequent garnishment of a bank account belonging to Superior Products USA at Metropolitan National Bank. For the reasons explained hereunder, we dismiss the appeal as to Superior Products USA. We find no merit to the points asserted by the appellant David R. Williams on appeal, and we affirm as to him.

Procedural History

On January 12, 2001, appellee Golf Cars filed in the Circuit Court of Pulaski County a complaint styled Golf Cars of Arkansas, Inc. v. David R. Williams & Associates and Nina Williams, and, on May 10, 2001, David R. Williams was served by certified mail with a summons and complaint. The complaint alleged that after Golf Cars employed David R. Williams & Associates and its employee, Nina Williams, to perform basic accounting and bookkeeping services, Nina failed to perform those services. The complaint also alleged that a breach of contract had occurred, that Nina Williams's conduct fell below the minimum standards for accountants in the community, and that Nina's negligence resulted in the inability of Golf Cars to provide financial information in a financing agreement and its loss of opportunity to sell Yamaha golf cars to country clubs and golf courses throughout the state. The complaint additionally asserted that Nina Williams's conduct was imputed to David R. Williams & Associates through the doctrine of "respondent superior." Golf Cars asked for compensatory damages, including lost profits and damages to its reputation, IRS penalties for late filings and expenses for correcting those filings, and expenses for correcting, updating, and reconstructing accounting books. Neither of the defendants filed an answer to the complaint. On June 8, 2001, the circuit court entered a default judgment against David R. Williams & Associates and Nina Williams, and, following a hearing on July 30, 2001, entered judgment against them for $71,375.01, plus interest and costs.

Beginning in April of 2003 and continuing for several months thereafter, Golf Cars caused writs of garnishment to be issued to several garnishees in an effort to collect the judgment. Only two of the writs are pertinent to this case. On April 15, 2003, a writ was issued to Superior Products USA (referred to herein as Superior). David R. Williams filed written answers to the writ on behalf of Superior, stating that Superior owed nothing to and held no funds belonging to the defendants. Thereafter, Superior was subpoenaed to appear at a hearing on June 27, 2003, to be examined about the truthfulness of its answers to the writ. David R. Williams appeared at the hearing, where he testified that he was the trustee of Superior Products USA, that as an individual he did not control Superior Products USA's bank accounts, but that such accounts were controlled by David R. Williams, trustee.

At a subsequent hearing requested by Williams, he argued that David R. Williams & Associates was a pure trust of which he was a trustee and certificate holder, that Golf Cars had no claim against him individually, that the judgment against David R. Williams &Associates was not a judgment against him personally, and that Superior's funds in Metropolitan National Bank could not be garnished to pay a debt against David R. Williams & Associates. The trial court ruled from the bench:

[T]he judgment rendered against David R. Williams & Associates and Nina Williams, the default judgment that was entered against them, was, in fact, a judgment rendered against you individually because David R. Williams & Associates is not an incorporated entity. That being the case, any personal assets you have are subject to garnishment to satisfy that judgment.

Following the hearing, Golf Cars caused a writ of garnishment to be issued to Metropolitan National Bank, alleging that Superior was an unincorporated entity under the control of David R. Williams & Associates, and seeking to determine the nature and amount of any funds held for or owed by the bank to the defendants or to Superior. On August 26, 2003, the bank answered the writ, acknowledging that it had an account in the name of Superior Products USA that contained funds in the amount of $954.31. On September 10, 2003, an order was entered directing Metropolitan to pay that sum to Golf Cars. The order also included the following:

[T]he judgment rendered herein on July 30, 2003 is, as a matter of fact and of law, a judgment against David R. Williams, personally. For that reason, the funds held by Garnishee in an account of Superior Products, which is an unincorporated business under the control of David R. Williams are subject to garnishment herein.

On September 25, 2003, the court denied two motions for reconsideration filed by David R. Williams, one filed personally and one filed as purported trustee of Superior.

The appeal challenges the order of garnishment issued to Metropolitan against the account of Superior. As they did below, appellants argue that David R. Williams & Associates is a pure trust, and that David R. Williams, neither individually nor as a trustee of the trust, is personally liable for the obligations of the trust. Appellants also argue that because the funds in Superior's bank account at Metropolitan National Bank were held byWilliams as trustee of the trust, the trial court erred in ordering those funds to be paid to Golf Cars for application on the judgment against appellants.

Before we address appellants' arguments, we must note that the appellate brief before us is divided into Part A and Part B, each involving separate appellants. The notice of appeal for Part A is filed by David R. Williams, trustee, on behalf of Superior Products USA. The cover sheet of Part A, styled Superior Products USA v. Golf Cars of Arkansas, Inc., reflects the filing by "Superior Products USA/ Trste.David Ray Williams," and both the brief and certificate of service are signed by David Ray Williams as trustee of Superior Products USA. The notice of appeal for Part B is filed by David R. Williams on behalf of himself as appellant. Part B, styled David Ray Williams v. Golf Cars of Arkansas, Inc., is filed pro se by David Ray Williams, who also signed the brief and the certificate of service.

Part A

David Ray Williams, trustee of Superior Products USA, has filed the brief in Part A seeking relief on behalf of appellant Superior Products USA. However, Mr. Williams is not a licensed attorney authorized to practice in the state of Arkansas.

No person shall be licensed or permitted to practice law in any of the courts of record of this state until he has been admitted to practice by the supreme court of this state. Ark. Code Ann. ยง 16-22-206 (Repl. 1999); see also Roma Leathers, Inc. v. Ramey, 68 Ark. App. 1, 2 S.W.3d 82 (1999) (appeal dismissed where the abstract was flagrantly deficient, no authority was offered for arguments, and appellant's representative had engaged in the unauthorized practice of law). In Arkansas Bar Association v. Union National Bank, 224 Ark. 48, 273 S.W.2d 408 (1954), the supreme court discussed the unauthorized practice of law with regard to court processes:

[W]hen any person seeks to invoke the processes of the court in any matter pending before it, that person is engaging in the practice of law. To us this conclusion is obvious. Courts are constituted for the purpose of interpreting and administrating the laws passed by the law making body and the rules announced by the judiciary, and they must necessarily be governed in their operation by rules of procedure. Attorneys are officers of the court and are able by special training and practice to know the law and rules of procedure, and are thereby in position to render a service to the court. Therefore anyone who assumes the role of assisting the court in its process or invokes the use of its mechanism is considered to be engaged in the practice of law.

224 Ark. at 53, 273 S.W.2d at 411. Further, although individuals may represent themselves, corporations must be represented by licensed attorneys. All City Glass & Mirror, Inc. v. McGraw Hill Info. Sys. Co., 295 Ark. 520, 750 S.W.2d 395 (1988). We see no reason why this principle would not also apply to trusts.

The appellant in Part A of this appeal is Superior Products USA, a party that is not represented by an attorney. David R. Williams, as trustee for Superior, and not as a licensed attorney, has undertaken to represent Superior and has invoked the processes of this court by filing its brief. The unauthorized practice of law is a serious matter that we will not countenance. See Roma Leathers, Inc. v. Ramey, supra. Because the appeal of Superior Products USA comes before us as a result of the unauthorized practice of law, Part A of the appeal is dismissed.

Part B

The trial court found that David R. Williams & Associates was not an incorporated entity; that the principals of an unincorporated entity are liable for its obligations; and that a default judgment had been "rendered against David R. Williams individually through the judgment of David R. Williams & Associates." Appellant David Ray Williams asserts that the assets of Superior Products USA could not be seized to satisfy the judgment against him. He also asserts that the trial court never established jurisdiction over the person, David Ray Williams, and could not have done so because of the prohibition of Betts v. Hackathorn, 159Ark. 621, 252 S.W. 602 (1923); that the default judgment was invalid because the actual defendant was not served on May 10, 2001; and that the abuse of process violated his due process and equal protection rights.

Williams relies primarily on Betts v. Hackathorn, id., where the issue was the personal liability of trustees and certificate owners in a concern doing business under a written declaration commonly known as a Massachusetts Trust. He cites the following authority to argue in Part B that, as a certificate shareholder of a pure trust, he was immune from all liability in the default judgment: "Arkansas has the long standing constitutional common law contract pure trust mandate and I claim Betts, as my trust here interacts with Part A."

The trust instrument in Betts provided:

The trustees under this agreement shall have the sole legal title to all property, in any part of the United States of America, or in any foreign country, at any time held, acquired, or received by them as trustees under the terms of this agreement, or in which the shareholders under this agreement shall have any beneficial interest as such shareholders, and they shall have and exercise the exclusive management and control of the same, in any manner that they shall deem for the best interest of the shareholders, with all the rights and powers of absolute owners thereof....

Shareholders hereunder shall not be liable for any assessment, and the trustees shall have no power to bind the shareholders personally.

Id. at 624, 252 S.W. at 603. Despite the provision purporting to exempt the trustees from personal liability, the supreme court held that they were personally liable for indebtedness of the concern:

A general rule in the law of trusts is that a trustee is a principal and not an agent for the cestui que trust. It follows from this rule that the trustee and not the cestui que trust is personally responsible for an indebtedness growing out of transactions in relation to the trust estate. The creditor's guarantee is the personal liability of the trustee. We see no reason why the trustees here should be exempt from this general rule. Their declaration exempting them from personal liability cannot prevent individual liability from attaching as the law fixes the liability of trustees. According to the declaration, they are self-appointed trustees, with absolute authority over the trust business and property.

Id. at 625-26, 252 S.W. at 604. We agree with appellee that the holding of Betts, that a trustee of a Massachusetts business trust can be personally liable for the debts of such a trust, is not helpful to appellant.

Appellee points out that David R. Williams & Associates was not incorporated, that it had no employees, and that fees it received were jointly received by Nina Williams and David Williams. The record contains an affidavit of service on David R. Williams, a cover letter enclosing the complaint and summons via certified mail, and a receipt showing that David Williams signed for the complaint and summons. Upon the foregoing evidence, we hold that the trial court did not clearly err in finding that appellant was a judgment debtor in this case.

As for Williams's argument that the default judgments of June 8 and July 31, 2001, are invalid, Williams did not undertake to challenge the validity of the default judgments in the trial court. Rather, he argued that his individual assets and the assets of his pure trust entity were not subject to garnishment in satisfaction of the judgment. We will not consider issues raised for the first time on appeal. See Smith v. Sidney Moncrief Pontiac, Buick, GMC Co., 335 Ark. 701, 120 S.W.3d 525 (2003). Furthermore, Williams cites no authority and makes no convincing argument why the judgments are invalid; it is not apparent without further research that the argument is well-taken, and we therefore will not consider it. See Utley v. City of Dover, 352 Ark. 212, 101 S.W.3d 191 (2003).

Affirmed in part; dismissed in part.

Pittman, C.J., and Gladwin, J., agree.