Thompson v. Potlatch Corp.

Larry THOMPSON, et al. v. POTLACH CORPORATION

95-386                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered October 14, 1996


1.   Process -- service -- record did not reflect issuance of
     summons -- necessary to satisfy due process -- chancellor
     correctly denied motions to strike and for default judgment. -
     - The supreme court declined to address the substance of
     appellants' argument concerning the chancellor's denial of
     their motion to strike and motion for default judgment because
     the record did not reflect the issuance of a summons; ARCP
     Rule 4(d)(5) requires that a corporation be served by
     delivering a copy of the summons and complaint to the
     appropriate person; a certificate of service, such as the one
     used in this case, is no substitute for a summons, which is
     necessary to satisfy due-process requirements; compliance with
     the technical requirements of a summons must be exact; because
     appellants failed to issue an appropriate summons, the
     chancellor was correct in denying their motion to strike and
     their motion for a default judgment.

2.   Appeal & error -- review of trial court's findings -- ample
     evidence to support. -- The appellate court does not reverse
     a trial court's findings of fact unless they are clearly
     against the preponderance of the evidence; in this case, there
     was ample evidence to support the chancellor's findings where
     conflicting accounts were given of a 1989 meeting between
     appellant hunting-club officer and appellee's land
     representative, whose statement that no promise of a right of
     first refusal and no offer to lease were made to appellant the
     chancellor chose to believe; moreover, the documentary
     evidence indicated that appellee made its decision to begin
     leasing hunting rights in 1992 and, even then, cautioned
     interested parties that it was not making a promise or
     commitment regarding the leases; additionally, the letter sent
     to appellee by appellant in early 1990 indicated an awareness
     on appellant's part that a leasing program was, at that time,
     a mere possibility. 

3.   Appeal & error -- witness credibility -- deference given to
     superior position of chancellor. -- Deference is given to the
     superior position of the chancellor to judge the credibility
     of witnesses.

4.   Appeal & error -- issues must be brought to chancellor's
     attention to be reviewable. -- Issues that are raised during
     the course of trial proceedings must be brought to the
     attention of the chancellor for a ruling before they are
     reviewable on appeal.


     Appeal from Bradley Chancery Court; Jerry Mazzanti,
Chancellor; affirmed.
     Wells Law Office, by: Bill G. Wells, and Bowden Law Firm, by:
David O. Bowden, for appellants.
     Haley, Claycomb, Roper & Anderson, by: Richard L. Roper, for
appellee.

     Bradley D. Jesson, Chief Justice.
     Appellant Larry Thompson, an officer of the Pair-O-Geese
Hunting Club, claims that the Potlatch Corporation orally agreed to
lease the club hunting and trapping rights to certain lands in
Bradley County.  When Potlatch leased the rights to others,
Thompson filed suit for specific performance.  The chancellor ruled
against the club, finding that no contract had been formed between
Pair-O-Geese and Potlatch.  We affirm.
     Hunting clubs such as Pair-O-Geese have, for many years,
hunted the woods of Bradley County on land now owned by Potlatch. 
In 1989, rumors began to circulate that Potlatch would begin
formally leasing the hunting rights to its land.  Larry Thompson,
as a representative of Pair-O-Geese, visited the Potlatch offices
to make an inquiry.  He spoke with Curtis Blankenship, a Potlatch
land representative.  According to Thompson, Blankenship told him
the following:  that Potlatch was talking about leasing but didn't
know when that might happen or how much would be charged to
lessees; that Thompson should submit a letter requesting a lease
and containing a legal description of the land desired; that
Thompson should incorporate the hunting club; and that existing
clubs would be given the right of first refusal.  Blankenship's
account of the meeting differs markedly.  According to him,
Thompson was told that if he forwarded a letter and a map of the
desired area, Potlatch would keep it on file, as it did in the case
of many other interested parties.  Blankenship denied that he told
Thompson to incorporate the club or that existing clubs would have
right of first refusal.
     In early 1990, Thompson incorporated the club.  He sent the
incorporation papers to Potlatch, along with the following letter:

     This letter is to request that Pair-O-Geese Deer Club
     have a chance to lease the highlighted areas indicated on
     the attached map when and if Potlatch decides to lease
     the land.  We have been hunting this area for the past 40
     years and would like to continue if you would allow us to 
     do so.

     In 1991, Potlatch management gave its approval for a hunting
lease program.  On November 6, 1992, over 1,000 letters were mailed
to sportsmen who had expressed an interest in leasing hunting
rights from Potlatch.  The letter read, in pertinent part, as
follows:


     Dear Sportsman:

     For several months Potlatch management has been
     considering the possibility of beginning a hunting lease
     program.  After careful deliberation a decision has been
     made to initiate a hunting lease program for the Southern
     Division of Potlatch Corporation in 1993.

     As you are probably aware, for several years our Land
     Agent has been keeping a file of requests from hunters to
     lease hunting rights for specific areas of interest to
     them.  From this file interested parties are being
     notified of Potlatch's policy change along with the     
     basics of the program.

     1. Leasing priority will be given to individuals and/or
     clubs that are already utilizing Potlatch's land.  Other
     criteria will also be considered in determining the award
     of leases.

     2. The cost of the program to the Lessee will be $2.50
     per acre.  Applications will be accepted on any size
     tract, but no lease shall cost less than $100.

     3. Lessee will be required to be incorporated as a not-
     for-profit corporation under the laws of the State of
     Arkansas.

     4.  Lessee will not be required to furnish liability
     insurance.

     5. There will be no subleasing of the leased lands.

     Enclosed is a self-addressed postcard which should be
     completed and mailed back to Potlatch by December 1. 
     This postcard will provide Potlatch with a current
     mailing address and indicate whether or not you desire to
     continue with the lease application process.  For
     interested parties a lease application packet containing
     instructions for continuing with the lease process will
     be mailed in early 1993.  The application packet will
     provide information but will in no way constitute a
     promise or commitment for a lease from Potlatch.

     After mailing the postcard, you should not contact
     Potlatch.  You have done all that is necessary at this
     time. (Emphasis in original).


     The letter was signed by Potlatch representatives William
Pope, Curtis Blankenship, and Gary Thornton.
     Over 900 interested parties, including Pair-O-Geese, responded
to the letter.  Potlatch, in turn, sent a mailing to the interested
parties on January 12, 1993.  The mailing contained, among other
things, a leasing-priority list and a hunting-lease application
form.  The priority list provided that applications would be ranked
with preferences for established deer camps, adjacent landowners,
local residents hunting on Potlatch lands, and other interested
parties.  The hunting-lease application requested general
information about the prospective lessee and contained the
following language just above the applicant's signature line:

     I understand this application provides information and in
     no way constitutes a promise or commitment from Potlatch
     Corporation.


     In April of 1993, Thompson noticed that other hunting clubs
had received their leases but Pair-O-Geese had not.  He contacted
Gary Thornton at Potlatch and was told that his club would not
receive a lease.  Through his attorney, he sent a letter to
Potlatch expressing a desire to lease the hunting rights to 354.3
acres and enclosing a check for $885.75.  Potlatch returned the
check.
     On September 15, 1993, Thompson and other club members filed
suit against Potlatch, William Pope, Curtis Blankenship and Gary
Thornton in Bradley County Chancery Court.  The complaint alleged
that Thompson's 1989 conversation with Blankenship constituted an
offer to lease and that the club's subsequent incorporation
constituted acceptance and consideration.  No summons was issued
for Potlatch.  Instead, the complaint contained a certificate of
service signed by the plaintiffs' attorney stating he had hand-
delivered a copy of the complaint to Richard Roper, an attorney in
Warren, Arkansas.
     Potlatch responded to the complaint on October 11, 1993, by
filing a motion to dismiss for failure to state facts upon which
relief could be granted.  See ARCP 12(b)(6).  The motion was signed
by attorney Roper.  The appellants filed a motion to strike and a
motion for default judgment claiming that Potlatch had missed the
twenty-day deadline for responsive pleadings.  See ARCP 12(a).  The
chancellor denied the motions on two grounds:  one, no complaint
and summons were properly served on Potlatch or a person legally
authorized to accept service, and two, under the case of Citicorp
Industrial Credit, Inc. v. Wal-Mart Stores, Inc., 305 Ark. 530, 809 S.W.2d 815 (1991), Potlatch had thirty days to respond to the
complaint.  The order, which was filed December 6, 1993, also
denied Potlatch's Rule 12(b)(6) motion to dismiss.  Potlatch
thereupon filed its answer on December 16, 1993.
     A trial of the matter was held before the chancellor on
September 26, 1994.  After hearing testimony and reviewing the
documentary exhibits, the chancellor requested briefs from the
parties.  The appellants' brief contained not only their arguments
for specific performance, but, for the first time, alleged an
entitlement to a lease through the doctrine of prescriptive
easement.   On November 18, 1994, the chancellor made the following
findings:

     Plaintiffs seek specific performance of a purported
     contract based on a conversation between Plaintiff Larry
     Thompson and Potlatch representative, Curtis Blankenship,
     in late 1989.  The testimony of Larry Thompson and Curtis
     Blankenship was at odds as to the content of that
     conversation.

     The burden of proof to establish the existence of a
     contract rests upon the Plaintiffs in this case.  That
     burden is not met relying solely on the testimony of Mr.
     Thompson and Mr. Blankenship.  Further, that burden is
     not met by considering the remainder of the evidence
     presented in this cause.  In fact, much of the
     documentary evidence introduced into evidence
     preponderates against the formation of a contract in late
     1989. (See first page of Defendant's Exhibit 1
     [Thompson's first letter to Potlatch], Plaintiffs'
     Exhibits C and D) [Potlatch's January 12, 1993 letter and
     the Hunting Lease Application].

     Also, there was no evidence presented by Plaintiffs as to
     when the purported contract was to begin, how long it was
     to last and what compensation would be paid.  There was
     no evidence of a "meeting of the minds" on these matters.

     Plaintiffs failed to prove their case by a preponderance
     of the evidence.  Therefore, their complaint for specific
     performance should be denied.

     Counsel for Defendant should prepare a proposed order
     pursuant to these findings and submit it to the Court,
     with a copy to opposing counsel.  If there are any
     objections, they should be made known to the Court
     immediately.


     The findings were incorporated into an order which was filed
on December 16, 1994.  The record reflects no objection from the
appellants.
     The first issue on appeal concerns the chancellor's denial of
the appellants' motion to strike and motion for default judgment. 
The appellants claim that, despite our holding in Citicorp, supra,
a foreign corporation located in Arkansas is not entitled to thirty
days to respond to a complaint.  We decline to address the
substance of that issue because the record does not reflect the
issuance of a summons.  Rule 4(d)(5) of the Arkansas Rules of Civil
Procedure requires that a corporation be served by delivering a
copy of the summons and complaint to the appropriate person.  See
also ARCP Rule 4(d), which provides that the summons and complaint
shall be served together.  A certificate of service, such as the
one used in this case, is no substitute for a summons.  A summons
is necessary to satisfy due process requirements.  Meeks v.
Stevens, 301 Ark. 464, 785 S.W.2d 18 (1990).  Rule 4(b) of the
Arkansas Rules of Civil Procedure sets out the technical
requirements of a summons, and compliance with those requirements
must be exact.  See Carruth v. Design Interiors, Inc., 324 Ark.
373, 921 S.W.2d 944 (1996).  Since the appellants failed to issue
an appropriate summons, the chancellor was correct in denying their
motion to strike and their motion for a default judgment.
     Next, the appellants contend that the chancellor erred in
finding that no contract existed between Pair-O-Geese Hunting Club
and Potlatch.  We do not reverse a trial court's findings of fact
unless they are clearly against the preponderance of the evidence. 
ARCP 52(a).  In this case, there was ample evidence to support the
chancellor's findings.  Conflicting accounts were given of the 1989
meeting between Thompson and Blankenship.  According to
Blankenship, there was no promise of a right of first refusal and
no offer to lease made to Pair-O-Geese.  The chancellor chose to
believe Blankenship.  Deference is given to the superior position
of the chancellor to judge the credibility of witnesses.  Riddick
v. Streett, 313 Ark. 706, 858 S.W.2d 62 (1993).  The chancellor
also noted, and we agree, that the documentary evidence belied any
notion that Potlatch had made a contractual offer to Pair-O-Geese
in 1989.  Those documents indicated that Potlatch made its decision
to begin leasing hunting rights in 1992 and, even then, cautioned
interested parties that it was not making a promise or commitment
regarding the leases.  Additionally, the letter sent to Potlatch by
Thompson in early 1990 indicates an awareness on Thompson's part
that a leasing program was, at that time, a mere possibility.
     The appellants make two final arguments on appeal, but we
cannot address those arguments because they were not ruled upon by
the chancellor.  No findings were made regarding the appellants'
claim that a contract was formed through their detrimental reliance
on Blankenship's alleged promises, nor were any findings made
concerning their prescriptive easement claim.  Issues that are
raised during the course of trial proceedings must be brought to
the attention of the chancellor for a ruling before they are
reviewable on appeal.  Britton v. Floyd, 293 Ark. 397, 738 S.W.2d 408 (1987).
     Affirmed.
     Roaf, J., not participating.