*1 100
did violate Fourth Amendment when he not rights Thompson’s case. eyeglasses opened otherwise,
Even we had concluded
if
Thompson’s
convictions could have been affirmed
to the inevitable
pursuant
rule which
evidence is admissi
discovery
provides
suppressed
ble if the State
of the evidence that the
proves
preponderance
would
have
discovered
evidence
lawful
inevitably
police
Williams,
State,
means. Nix v.
467 U.S 431
Brunsonv.
296
(1984);
State,
Ark.
Mitchellv.
S.W.2d
(1988);
For the the trial court’s is affirmed. forgoing ruling BANK, FIRST COMMERCIAL N.A. v. Michael W. WALKER, Inc., Inc., Aearth Development, Preparation, Processors,
and Coal
A
Venture
Joint
96-1495
Supreme delivered Opinion April *3 W, P.A., Barber, McCaskill, &Hale, Glenn by: Jones, Jones John Kolb; Anderson, S. F. & Williams Cherry, Joseph by: Philip *4 Anderson, Holmes, Cloud, S. Leon and Katharine R. for appellant/ cross-appellee. Firm, The Burk Law A Michael G. by: Corporation, Professional
Burk; Black, Black; Burk, Walker & Kendell R. and E. by: James appellees/cross-appellants. Ray Thornton, Plaintiffs, Walker, Michael W. Justice. Inc., Aearth Inc. Aearth (Aearth), Development, Preparation, Processors, action, the Coal brought underlying lender-liability defendant, that actions of First Commercial asserting wrongful Bank and its caused the failure of Bank), (the predecessors plain- tiffs’ coal and sales business in the Arkansas mining, processing, This is the second River Valley. involving appeal disposition of these issues. The first followed court’s chancery appeal in favor of the Bank on all after a allegations twelve-day judgment trial. On court was chal- jurisdiction chancery appeal, erred in and we determined that the lower court transfer- lenged, from circuit court to the court because the case ring chancery v. court lacked See Walker chancery subject-matter jurisdiction. Bank, Ark. 316 (1994) First Commercial S.W.2d We reversed and remanded with instructions to transfer (WalkerI). court, the case to circuit without the circuit court on binding issue decided the chancellor. by
Individual Michael was a Walker stock- plaintiff principal Aearth, holder in which formed a owned wholly subsidiary, Aearth Inc. Aearth entered into a venture with joint Preparation, other to form refer Aearth Coal Processors. We parties jointly Inc., Inc., and Coal Processors Development, Preparation, as “the Aearth business entities.” Aearth held a interest in 75% Processors, Coal and the 25% remaining acquired by George Locke, who is not a to this In addition to party proceeding. being Aearth, a stockholder and officer of Mr. Walker was a guarantor executed *5 either as a stockholder or the same pursue, guarantor, Accord- business entities. the Aearth causes of action asserted by we reverse and dismiss. ingly,
Factual Background Inc., Aearth in 1978. Mr. Walker formed Development, Com- Aearth entered into a venture with Russell Mining joint venture, time of Mr. Walker of Kansas. At the this joint pany Aearth, was held and the balance of the stock owned 40% of sold, three other Some coal was persons. produced primarily markets. In Russell withdrew to charcoal early Mining time, a bull- from the venture. At that Aearth owned small joint dozer, loader, a on con- a front-end scraper, depended their Aearth had not tractors to own yet provide equipment. made a from its An overseas profit operations. purchaser expressed coal, an interest in Arkansas but the coal had a sulfur content high with sulfur the form of sulfur or “fools which pyretic gold,” often the raw prevented meeting product requisite specifications. to enhance the sought development capital quality
its in order to in the market In December product compete place. Collins, Locke, Mr. Walker investment firm of engaged $10,000,000 and Lasater to in devel- assist a obtaining target firm, One financing. opment principals George Locke, became interested in the On personally enterprise. 16, 1980, December Mr. Locke Bank to persuaded grant Aearth, which had no a line of credit of virtually working capital, $500,000, secured of Mr. Locke and personal guarantees Mr. Walker. the full amount of note had By April advanced, been and no had been made on note. repayments Aearth’s and accounts receivable had been inventory pledged Bank, collateral to the and this never security agreement terminated. 20, 1981, Aearth, Locke,
On Mr. and Mr. Walker May a second fine credit from the Bank in the amount of acquired $800,000. No were made on this loan. repayments Aearth entered venture Arkala into with joint June venture, 'Processors, Coal This Coal named Mr. Company. joint *6 assistance, Mr. Locke’s the as With joint Locke managing agent. Bank, the an venture obtained two lines of credit from aggregating $1,475,000 in of to be used a coal- additional sum constructing The notes for these lines of credit were washing facility. signed by Aearth, Locke, Walker, Mr. and Mr. as well as by principals advanced and were Arkala. These notes were by fully replaced 30, 1981, Processors, note, executed on November Coal single Locke, Walker, Mr. and Mr. others. among made several loan
Notwithstanding agreements promises the Bank to refrain from into other loan with entering agreements Bank, assets collateral to already encumbering pledged Aearth, Walker, with Mr. Locke and Mr. entered into together two with other creditors some of separate agreements using 23, same assets as Aearth executed a note on December security. 1981, $716,000 Bono, in the amount of to DiGiglia, Leving- Louisiana; however, $500,000 ston of about of this note was only 9, 1982, advanced. On Aearth also executed a actually January its assets to security agreement pledging Taylor Machinery $662,667.36 for that security Taylor Machinery Memphis advanced to Aearth. 10, 1981, December the Bank advanced on to
Additionally, $150,000. Coal Processors an additional The note for this advance 10, was due on March Aearth executed another note to the 1982. 9, 1982, $300,000 loan, Bank on for a which was due on April 10, 1982. the Aearth business entities were May By April, default on all loans note that was due this on except May $2,925,000, and the entities owed Bank interest. plus $272,000 On Aearth borrowed from Dan April Lasater, Bank, who borrowed this amount from the for personally two due installments on Coal Proces- purpose paying past $1,475,000 sors’ note to the Bank. Mr. Lasater’s demand note to the Bank was due on or and the Bank before to May agreed subordinate its to funds received from Aearth Mr. right any Lasater. Aearth committed Mr. Lasater this debt would be coal, from the first of a sale of and Aearth paid proceeds specified $272,000 instructed broker for the of the coal that purchaser were Mr. Lasater. proceeds payable entities had also proceeds business pledged the Aearth While creditors, and other coal to Machinery the sale of this Taylor did not to the broker instructions given specific these funds to Machinery. Taylor distribution provide were $245,823.96 from the first sale deposited When the proceeds *7 Bank, the Bank these at the proceeds an escrow account applied loan. to Mr. Lasater’s concerned about repay- had become Machinery
Taylor 6, advance, $662,667.36 or about and on Taylor ment of its April $300,000 fine credit from the a had drawn down Machinery $360,000. Bank, had to about orally its reducing exposure of coal from the first sale that some of proceeds represented claims, and when these be to Machinery’s would Taylor applied told Aearth were not Machinery orally funds forthcoming, Taylor of the financial some resolution to park equipment pending weeks, have After several Taylor Machinery arranged problems. and returned to its Memphis. equipment picked up and The Aearth business entities discontinued operations in November 1982. In filed 11 bankruptcy proceedings Chapter court converted the December the bankruptcy Chapter 1984, Mr. to a Walker Chapter liquidation. May proceedings filed a 7 bankruptcy petition. personal Chapter and the Parties
Standing Capacity of whether, We first consider under of Arkansas principles law, had or an action for plaintiffs standing capacity lender the Bank. Plaintiffs that these issues argue liability against are not for our review. We The issue of preserved disagree. and a motion for a standing timely capacity preserved directed verdict that was renewed at the conclusion of the case. further that the issues were resolved in Walker
Plaintiffs argue I, that the did not have and that court chancery by determining we decided these issues sub silentioand jurisdiction, subject-matter have as a result of the law of standing capacity the case and res This also lacks merit. judicata. argument doctrine of law of the case does an
The prevent and decided in the first raised in a issue raised being appeal State, Bennett v. 308 Ark. 825 S.W.2d subsequent appeal. However, our decision in WalkerI was predicated had on the issue whether court chancery subject-matter solely stated that we “need not address We jurisdiction. expressly other issues in view of the on this issue.” Walker ruling dispositive Bank, at at v. First Commercial 880 S.W.2d 317. determination that the court was without Our chancery jurisdic tion afforded the trial court clean slate on which to consider case, entire motions to dismiss for lack of including standing, matters, and all motions for other summary judgment, though Therefore, court had not acted at all. our review of chancery not barred is the law of case. standing capacity doctrine res likewise does not bar judicata the circuit court’s or our consideration of capacity. For res the claim must have been on judicata adjudicated apply, *8 merits; the this that the court in which requirement presupposes the claim was had over those litigated properly jurisdiction pro Wilson, Brown, Crockett & P.A. v. ceedings. Here, the
S.W.2d 244 court rendered a (1993). chancery judg merits, ment for the Bank on but we reversed that decision for Therefore, lack of the circuit court subject-matter jurisdiction. was not the doctrine of res to on by required judicata adopt remand of the Chancellor’s holdings. of is that the Bank’s gravamen plaintiffs’ complaint entities, actions the Aearth business breached
wrongful damaged an to to the alleged agreement provide long-term financing entities, Aearth business their to obtain other impaired ability others, interfered their with contracts with and financing, wrong- funds to business entities to a debt fully belonging applied below, owed the business entities. For the reasons stated we Walker, individual, have determined that Mr. as an lacked standing to this action the Bank for against compensatory puni- tive that the Aearth business entities suffered. damages allegedly stockholder Walkeras individual Michael W. A. Standing of businessdebts or comaker guarantor claims, each of three tort at the underlying Looking the Bank’s wrongful was based on claims allegations plaintiffs’ claimed that Plaintiffs the Aearth businessentities. conduct against relations interfered with its contractual regard the Bank tortiously coal and the of contracts to sell performance ing performance All of these allegations other contractual commitments. of various the Aearth busi Bank’s actions with were based on the respect To their with third entities’ contracts parties. ness performance relation, a a claim for interference with contractual on a prevail failed that a third must evidence party present prove plaintiff as a result of with the claimant to continue contractual relationship conduct. Navorro-Monzov. the defendant’s Hughes, improper Plaintiffs did not Ark. 763 S.W.2d allege a con caused a third to fail to continue the Bank’s actions party Walker, Mr. but rather asserted that the tractual with relationship a contractual Bank’s conduct caused a third to discontinue party the Aearth with business entities. relationship claim, fraud that the Bank they alleged plaintiffs’ induced them to enter into the November fraudulently loan agreement promising provide long-term financing all debts of Aearth business entities. Similarly, only claim. There business entities could assert this tort was no that the Bank had made or breached allegation any promise individual; rather, to Mr. Walker as an the claim provide financing was that there was a breach of a to enter into promise long-term with the Aearth business entities. The Aearth business financing *9 Walker, Locke, entities’ loans were Mr. Mr. guaranteed by others; however, the Aearth business entities were the primary of the loans and the holders of title to the assets obligors legal the for of the loans. pledged repayment The third claim that the that the Bank went to jury $245,000 converted to the Aearth business allegedly belonging entities that had been in an Aearth escrow account. deposited Plaintiffs asserted that the of these premature crediting proceeds the sale of coal to reduce Mr. Lasater’s debt to the specified to withdraw its result-
Bank caused
Machinery
equipment,
Taylor
that Mr. Walker
in Aearth’s downfall. There is no allegation
ing
interest in these funds for his own individual
asserted
or
any right
benefit; therefore,
were
the
the Aearth business entities
again
only
assert, owners,
the
who could
as
Bank’s actions consti-
parties
the
account.
tuted a conversion of
escrow
is a near universal rule that a
There
corporation
entities,
and its stockholders are
and distinct
even
separate
though
a stockholder
own the
of the stock. Banks v.
may
majority
Jones,
A
239 Ark.
A recent federal case some on a similar guidance provides Ass’n, See & Seedv. First Tenn.Bank Nat’l Taggart question. Taggart F. Ark. (E.D. 1988). defendant Supp. Taggart, bank had with an line $18 million of credit and provided plaintiffs of the funds advanced were guaranteed by repayment corpora- tions’ shareholders Charles principal Tommy Taggart, Taggart, their as other well loan was further guarantors. spouses, facilities, secured pledge corporation’s equipment, The bank considered that an act default had inventory. occurred and terminated The note was agreement. repaid in. full, and line secured another of credit. The corporation and the filed a individual stockholders and lender-lia- guarantors *10 faith, bad action, misrepresenta- including with allegations bility fraud, with contractual interference tion, deceit, constructive relations, loss. Id. and economic all to dismiss motion parties the bank’s court granted the that court stated Id. The district the corporation.
except claims suffered damages that they the individual guarantors further to lend money of its the bank’s breach promise because of their claims on “an attempt piggyback to the corporation that the noted inju- Id. at 234. The court Seed’s.” Taggart top derivative “incidental to and were the individuals alleged ries that .... To allow the entity of the alleged corporate injury [the . . . names would this action in their own to prosecute individuals] to a to redress universal rule that an action injuries the near violate Id. name.” be must brought corporate corporation were the claims of the individual that plaintiffs concluding dismissed, the district court stated: properly of the as guarantors status of some of plaintiffs [T]he them standing does not give loan agreement April, contend that they .... he do not guarantors this action [T] The corporate toward the note. repayment contributed interest, Seed, Inc., & is the real party entity, Taggart Taggart even a contingent liability who no have longer not guarantors that were ever called on on the note and who do not allege they for its repayment.
Id. at 235. there in the case before us
As in is no showing Taggart, of the that Mr. has made contribution toward Walker payment even it that Mr. Walker notes that he though guaranteed, appears above, Also, as stated has been discharged bankruptcy. not to redress were injuries, sought wrongs as an individual. to Mr. Walker injuries asserted that that Mr. Walker also We recognize loans, he should have because he was a various guarantor However, to the loan agreements. “party” debtor, here the Aearth business enti of the undertaking principal ties, Mr. Walker. of the is guarantor, independent promise Inc., v. First American Nat’l Bank Coffey-Clifton, *11 112 contract, A is one who a
S.W.2d
makes
(1982).
guarantor
which is distinct from the
to be
obligation,
principal
collaterally
hable to the creditor if the
debtor fails to
Id.
principal
perform.
H.E.
10 Samuel Williston
Walter
A Treatise on
(citing
Jaeger,
1211,
the Law
at
ed.
Contracts
685-86
see also First
(3d
1967));
§
of
Solomon,
Nat’l Bank
v.
Ark.
Helena
[Appellants’]argument
when
charter
corporation’s
fees,
was revoked for failure to
franchise
the officers and
pay
shareholders were considered to be
the business as a
operating
and were
liable for the
partnership
individually
obligations of the
corporation,
since
were
they
subjected to individual
defacto
allowed,
fairness,
liability
they
to be
partners,
ought
to bring
novel,
suit in the same
while
capacity.
argument,
is without
merit....
The effect of revocation was that the
lost
corporation
sue,
its
to
capacity
this
particular type
cause
corporate
ceased to exist. To allow the individual
to
this
appellants
bring
cause of action would
reverse
law which
effectively
prior
prohib-
its suits
aby
whose charter
corporation
has been revoked ....
Id. at
Mr. Walker’s status as a shareholder does not majority vest him with to causes of standing action that pursue belong Likewise, funds, borrowers. Mr. borrowing Walker acted as a of the Aearth business entities and representative as a of the debt. he guarantor was shown as a “maker” Although documents, on some of the loan he does not have standing maintain this action because the Aearth business were the entities borrowers and sole of the borrowed funds. principal recipients Mr. Walker acted as a even on only guarantor, those notes he business of Aearth and as a individually representative signed entities. did not have that Mr. Walker
We conclude and officer either as an individual stockholder this action debts the Aearth business entities or as guarantor Aearth business entities. Entities
B. the Aearth Business Capacityof *12 was November before the On original complaint matter, in charters of Aearth filed this Development, corporate Inc., Inc., and Aearth were revoked for nonpayment Preparation, Processors, of franchise taxes. The other business Coal plaintiff, Inc., and was a venture with Aearth joint Development, George Locke as the venturers at the time the Aearth business entities joint 4, filed on November 1982. voluntary bankruptcy petitions venture, Under the terms of the agreement creating joint venture dissolved and was terminated joint upon bankruptcy, or dissolution of either venturer. As insolvency, involuntary joint in 11 U.S.C. 301 the commencement of a vol- (1994), provided § constitutes an untary bankruptcy adjudication bankruptcy, the revocation of the charter in the resulted additionally corporate dissolution of the entities. corporate whether a that had ceased considering corporation lawsuit, to exist could initiate a we have stated: ruled, trial that a judge not quite properly, corporation [T]he existence could not initiate a lawsuit. This is the law. In Sulphur Camden, 713, Park, Recreational Inc. v. 247 Ark. Springs City 447 (1969), S.W.2d 844 we affirmed a trial court’s dismissal of a because the complaint, charter was not in corporate existence when the suit filed was .... A suit must be initiated by natural person, or artificial. Fausett & Co. v. 285 Ark. Bogard, 124, S.W.2d (1985). Hamilton, 283, Committee Inc. v. 284- Utility Trimming 718 S.W.2d We determined that the corpo- ration’s dismissed because our law complaint properly pro- vides that a cannot file a after it court corporation complaint ceases to exist Id. legally. cases, that
From these we conclude all of the Aearth business entities lost the to file suit the dissolu capacity following venture, Processors, tion of the Coal and the revocations of joint Inc., charters of Aearth and Aearth Development, Inc., on November 1984. Preparation, Issues
Other and Conclusion The Bank advanced a that the doctrine of separate argument bars claims in this case. Plaintiffs judicial estoppel plaintiffs’ declared to the court had no bankruptcy they lender-liability Bank, claim or that such a claim had a zero value. This against was made under and if representation penalty pegury, plaintiff in this case had their of action cause standing capacity bring Bank, we would consider whether the cir- against carefully cumstances of this case call for us to the doctrine of apply judicial estoppel.
However, determined that Mr. Walker did not have having this action that the Aearth business entities *13 suit, had their lost to we need not determine capacity bring whether the would bar these principles judicial claims estoppel or address the issues to us for remaining decision. presented
We reverse and dismiss.
Glaze, Brown, not Imber, JJ., participating. Klappenbach and Mark Greene, Special Jr., Justices J.W. in this join opinion. Hani W. Hashem concurs.
Special Justice
Hani W.
Hashem,
I
with
Justice,
Special
concurring.
agree
However,
decision
majority
this case.
reversing
dismissing
I write
Parkerson,
to
this case from Calandro v.
briefly
distinguish
that,
attorney
false
which
knowingly
representations, upon
had relied
they
to their detriment. This Court
ruled that
simply
there was a sufficient
of fact
question
regarding
allegations
false
representation
the trial court’s decision on
reversing
Calandro,
deceit
claim.