Ronald M. Osborne v. Ashley Salmon, John P. Salmon Trust One, and Steven W. Smith, Trustee
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DIVISION II
ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
K AREN R. B AKER, Judge
CA05-821
APRIL 12, 2006
RONALD M. OSBORNE
APPELLANT
v.
ASHLEY SALMON, JOHN P. SALMON
TRUST ONE, and STEVEN W. SMITH,
TRUSTEE
APPEAL FROM THE PULASKI COUNTY
CIRCUIT COURT
[PT 1998-1721]
HONORABLE MACKIE MCCLELLAN
PIERCE, CIRCUIT JUDGE
AFFIRMED
APPELLEES
On its own motion, the trial court in this case set aside a judgment it had entered against a
garnishee to satisfy a child support obligation finding that the payor and payee had colluded to
remove monies from the garnishee trust. Appellant Ronald Osborne, the father of the minor
child and payee, alleges three points of error on appeal: (1) The trial court erred by vacating the
valid judgment against the payor for child support arrears; (2) The trial court erred by vacating
the valid judgment against the garnishee for child support arrears; (3) The trial court erred by
considering hearsay testimony to make a finding of fraud. Two appellees are named on appeal:
Ashley Salmon as the payor of the child support, and Steven W. Smith, Trustee of the John P.
Salmon Trust One as the garnishee. We find no error and affirm.
On February 14, 2003, an order entitled Agreed Order to Modify Child Support was
entered by the Circuit Court of Pulaski County, Ninth Division. This order stated the matter
came before the court with Mr. Osborne and his counsel appearing, with Ms. Salmon not
appearing, and submitted to the court upon Mr. Osborne’s motion, due service, and the testimony
of Mr. Osborne. The order also set forth the following facts: On August 19, 1997, a son was
born to Ronald Osborne and Ashley Salmon. Paternity was established and custody of the minor
child was initially placed with Ashley Salmon subject to the reasonable visitation rights of Mr.
Osborne, and Mr. Osborne was ordered to pay support for the minor child. On January 9, 2003,
an agreed order to change custody and for specified visitation was entered by the court. That
agreed order placed custody of the minor child with Mr. Osborne; however, the parties failed to
address child support in the agreed order. The modification order stated that Ms. Salmon was not
employed, but was able to provide financial support through a managed trust fund, from which
she supports herself. Specifically, the court ordered “[t]hat Ashley Salmon should pay $2,000.00
per month for the support of [the minor child.]”
On July 30, 2004, Mr. Osborne filed a motion to appear and show cause naming Ms.
Salmon and Mr. Smith as Trustee of the John P. Salmon Trust as defendants and asking them to
explain why each should not be held in contempt. The motion states that the trustee had refused
to pay the child support obligation from the trust, that Ms. Salmon had not paid child support,
and that “Steve Smith is the trustee of the John P. Salmon trust in which Ashley Salmon is a
named beneficiary, and he should be required to appear before this Honorable Court and show
cause why he should not be held in contempt.” An order to appear and show cause was entered
on October 6, 2004, naming only Ashley Salmon as a defendant.
On November 3, 2004, a hearing on Mr. Osborne’s motion was held with both Mr.
Osborne and Ms. Salmon present, but no mention of Mr. Smith. On November 4, 2004, an order
and judgment naming only Ashley Salmon as defendant was entered setting the amount of arrears
in the amount of $41,640, for costs of $125, and attorney fees in the amount of $4,164. This
order was signed by the 17th Division judge. In December 2004, the trial court entered a judgment
identifying Ashley Salmon as defendant and John P. Salmon Trust One, Steven W. Smith,
Trustee as garnishee. This judgment found that the garnishee was indebted to defendant in
excess of the judgment and ordered the trustee to release the monies to Ronald Osborn and his
attorneys to satisfy the November 4, 2004, judgment in the amount of $46,276. Then in January
2005, the 17th Division judge signed an order to appear and show cause directing Steven Smith to
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appear and show why he should not be held in contempt for failing and refusing to obey the
court’s previous order.
On April 18, 2005, the trial court entered an order finding that the garnishee Steven Smith
testified that he refused to comply with the garnishment because, Ashley Salmon had advised
him in the last week of December, 2004, that she had colluded with the plaintiff to secure
judgment against the garnishee trust in order to remove monies from said trust. The trial court
further found that the Mr. Osborne and Ms. Salmon had colluded without the knowledge of
attorneys to remove monies from the trust. Based upon these findings, the trial court on its own
motion, set aside the judgment against Ashley Salmon that had been entered on November 4,
2004. The court further dismissed the judgment against the garnishee rendered on December 8,
2004.
When an order setting aside a judgment is entered by a circuit court more than ninety days
after the judgment was originally filed, it is a final and appealable order. Schueck Steel, Inc. v.
McCarthy Bros. Co., 289 Ark. 463, 717 S.W.2d 816 (1986). It is within the discretion of the
circuit court to determine whether it has jurisdiction under Rule 60 to set aside a judgment, and
the question on appeal becomes whether there has been an abuse of that discretion. Burns
v. Madden, 271 Ark. 572, 609 S.W.2d 55 (1980); Hendrix v. Hendrix, 26 Ark. App. 283, 764
S.W.2d 472 (1989). Ark. R. Civ. P. 60, which addresses relief from a judgment, was amended in
2000, and the amendment eliminates the distinction between intrinsic and extrinsic fraud.
Rule 60 of the Arkansas Rule of Civil Procedure states in part:
(a) Ninety-Day Limitation. To correct errors or mistakes or to prevent the miscarriage of
justice, the court may modify or vacate a judgment, order or decree on motion of the court
or any party, with prior notice to all parties, within ninety days of its having been filed
with the clerk.
(b) Exception; Clerical Errors. Notwithstanding subdivision (a) of this rule, the court may at any
time, with prior notice to all parties, correct clerical mistakes in judgments, decrees, orders, or
other parts of the record and errors therein arising from oversight or omission. During the
pendency of an appeal, such mistakes may be so corrected before the appeal is docketed in the
appellate court and thereafter while the appeal is pending may be so corrected with leave of the
appellate court.
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(c) Grounds for Setting Aside Judgment, Other Than Default Judgment, After Ninety Days. The
court in which a judgment, other than a default judgment [which may be set aside in accordance
with Rule 55(c)] has been rendered or order made shall have the power, after the expiration of
ninety (90) days of the filing of said judgment with the clerk of the court, to vacate or modify
such judgment or order:
(1) By granting a new trial where the grounds therefore were discovered after the expiration of
ninety (90) days after the filing of the judgment, or, where the ground is newly discovered
evidence which the moving party could not have discovered in time to file a motion under Rule
59(b), upon a motion for new trial filed with the clerk of the court not later than one year after
discovery of the grounds or one year after the judgment was filed with the clerk of the court,
whichever is the earlier; provided, notice of said motion has been served within the time
limitations for filing the motion.
(2) By a new trial granted in proceedings against defendants constructively summoned,
and who did not appear, upon a motion filed within two years after the filing of the
judgment with the clerk of the court, or within one year after a certified copy of the
judgment has been served upon the defendant, whichever shall be the earlier, upon
security for costs being given; provided notice of the filing of said motion has been
served upon the adverse party within the time limitations for filing the motion.
(3) For misprisions of the clerk.
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(4) For misrepresentation or fraud (whether heretofore denominated intrinsic or extrinsic)
by an adverse party.
(5) For erroneous proceedings against an infant or person of unsound mind where the condition
of such defendant does not appear in the record, nor the error in the proceedings.
(6) For the death of one of the parties before the judgment in the action.
(7) For errors in a judgment shown by an infant within twelve (12) months after reaching
the age of eighteen (18) years, upon a showing of cause.
(d) Valid Defense to Be Shown. No judgment against a defendant, unless it was rendered
before the action stood for trial, shall be set aside under this rule unless the defendant in
his motion asserts a valid defense to the action and, upon hearing, makes a prima facie
showing of such defense.
Ark. R. Civ. P. 60(a)--(d) (2004).
The trial court’s order setting aside the earlier
judgments cites Arkansas Rule of Civil Procedure 60 for its authority to do so; however, it
appears to refer to subsection (a) as well. Subsection (a) is not applicable. Under Rule 60(a), a
court may vacate or modify a judgment within ninety days from the date of filing. Because more
than ninety days had elapsed between entry of the original order and entry of the order setting
aside the judgment, the circuit court did not have the authority to exercise jurisdiction under
subsection (a). Furthermore, the court here vacated the earlier order. Thus, the court was not
acting pursuant to Ark. R. Civ. P. 60(b), which authorizes the court to correct clerical mistakes in
the judgment at any time.
The circuit court does, however, have the power to modify or vacate a judgment more
than ninety days after entry of the judgment for reasons other than to correct a clerical error under
the following conditions: (1) granting a new trial based upon newly discovered evidence; (2)
granting a motion for new trial in proceedings against a constructively summoned defendant; (3)
for misprisions of the clerk; (4) for misrepresentation or fraud; (5) for erroneous proceedings
against an infant or incompetent; (6) for the death of a party prior to judgment; or (7) for errors in
judgment shown by an infant within twelve months of reaching majority. Ark. R. Civ. P. 60(c);
Taylor v. Zanone Properties, 342 Ark. 465, 30 S.W.3d 74 (2000).
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Our supreme court recently reiterated that under subsection (c), a circuit court may
modify or set aside its order beyond the ninety-day limitation only if these specifically
enumerated conditions listed in Rule 60(c) exist. New Holland Credit Co., LLC v. Hill, --- Ark.
---, --- S.W.3d --- (May 12, 2005) (citing Slaton v. Slaton, 330 Ark. 287, 956 S.W.2d 150
(1997)).
All of the issues raised in the court below are before us for decision, and a trial de novo
on appeal in equity cases involves the determination of fact questions as well as legal issues. See
Jones v. Abraham, 341 Ark. 66, 15 S.W.3d 310 (2000). We will uphold the trial court's decision
unless it is clearly erroneous, and we can affirm a trial court if it reaches the right result for the
wrong reason. Hooten v. Jensen, --- Ark. App. ---, --- S.W.3d --- (Feb. 8, 2006) (citing Middleton
v. Lockhart, 355 Ark. 434, 139 S.W.3d 500 (2003)). In this case, it is clear from the context of
the trial court’s findings and remarks that it was setting aside the earlier judgment because it
believed that the parties were perpetrating a fraud upon the court.
The trial court in this case took the matter under advisement before issuing its ruling.
Prior to dismissing the parties from the hearing, the court stated, “I want to see the child
supported properly, but I don’t want this court to be utilized as a mechanism to perpetrate a fraud
in any manner.”
The trustee had testified that he had not paid pursuant to the order because he
believed that a fraud was being perpetrated against the trust and the court. This belief was based
upon Ms. Salmon’s admission to him that she and Mr. Osborne had concocted a scheme to agree
to $2000 a month child support and split the money distributed by the trust, and that they had
conspired together after the trustee had begun withholding monies from the trust following his
determination that funds were being wasted. Therefore, the trial court was setting aside the
earlier judgments based upon Rule 60(c)(4).
First, we address appellant’s third argument that the trial court erred by considering
hearsay testimony to make a finding of fraud. The trial court did not err in admitting this
testimony. Arkansas Rule of Evidence 804(b)(3) allows a hearsay statement to be admitted if the
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declarant is unavailable and if the statement, at the time of its making, was so far contrary to the
declarant's pecuniary or proprietary interest that a reasonable person in the declarant's position
would not have made the statement unless he or she believed it to be true. Furthermore, we have
held that such declarations against interest are admissible against all who succeed to the
declarant's interest or who claim under him. Smith v. Clark, 219 Ark. 751, 244 S.W.2d 776
(1952). See also Easterling v. Weedman, 54 Ark. App. 22, 922 S.W.2d 735 (1996) (holding that
testimony concerning the decedent's statement that he did not want his son to be a beneficiary or
payee of certain annuities was admissible because the statement was against the interest of his
estate). Here, Ms. Salmon was unavailable because no one knew her location and attempts to find
her had proved unavailing. Ark. R. Evid. 804(a)(4). Moreover, Ms. Salmon’s statements that she
had colluded with Mr. Osborne were admissible because such statements were declarations
against the pecuniary interest of her estate. See O'Fallon v. O'Fallon ex rel. Ngar, 341 Ark. 138,
14 S.W.3d 506 (2000).
Therefore, the trial court did not err by admitting Ms. Salmon’s
statement to the trustee. Furthermore, the statement supports the trial court’s finding that Mr.
Osborne and Ms. Salmon were perpetrating a fraud upon the court.
That finding also supports the trial court’s vacating the judgment for child support arrears
and the judgment against the garnishee. Rule 60(c)(4) of the Arkansas Rules of Civil Procedure
authorizes the trial court to modify or vacate an order, at any time, for fraud practiced by the
successful party in obtaining the judgment.
In this case, the two conspired to obtain a garnishment against the trust. That was
accomplished by first obtaining a judgment against Ms. Salmon for child support arrears and then
against the garnishee for payment of the arrearage. The trial court recognized that the collusion
threatened the integrity of the court. The court’s action was consistent with its statement that it
did not want the court system to be used as a mechanism to perpetrate a fraud. Manipulation of
the judicial system to gain an unfair advantage is unacceptable. See Lewis v. Crelia, --- Ark. ---,
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--- S.W.3d --- (Feb. 16, 2006) (noting that the doctrine of judicial estoppel is to be applied only
when the conduct is tantamount to a knowing misrepresentation to or even fraud on the court).
Under these circumstances, we find no error in the trial court’s decision to vacate the
judgment for child support arrears and the subsequent judgment against the trustee. See Schaap
v. Robinson, 133 Ark. 113, 201 S.W. 292 (1918)(holding that agreement between two creditors
to bid at bankruptcy sale so as to give false appearance of competition and thus induce
confirmation of sale is not void against public policy, but constitutes fraud authorizing court
refusal to confirm sale or enforce contract). We note that the trial court did not vacate the
underlying child support obligation and our opinion does not address that issue.
Accordingly, we affirm.
PITTMAN , C.J., and ROBBINS, J., agree.
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