Case Name: Bill SMITH v. Louise RAMSEY
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1974-07-22
Citations: 256 Ark. 1098
Docket Number: 74-84
Parties: Bill SMITH v. Louise RAMSEY
Judges: FOGLEMAN. J., dissents.
Reporter: Arkansas Reports
Volume: 256
Pages: 1098–1104

Head Matter:
Bill SMITH v. Louise RAMSEY
74-84
513 S.W. 2d 501
Opinion delivered July 22, 1974
Albert R. Hanna, for appellant.
Nolan, Alderson & Jones, for appellee.

Opinion:
Frank Holt, Justice.
Appellee brought this action against the appellant seeking possession of' certain cattle of the alleged value of SI,750. The appellant controverted the alleged ownership of the cattle. A jury resolved the issue in appellee's favor by awarding her $1,800, which was reduced by the trial court to $1,750 to conform to the amount sought by the appellee in her complaint. Appellant contends for reversal that the trial court erred in failing to grant a mistrial following the testimony of one of appellee's witnesses indicating that appellant had discussed with him a settlement offer. Likewise, error is asserted in overruling appellant's motion for a new trial.
Appellee's witness McCormick is related by marriage to appellee. He testified that following appellant's "first trial" that he told appellant that the cattle belonged to appellee, his relative. The appellant responded by claiming ownership. The appellant later came to him, McCormick, and offered $1,250 "to compromise" the case. At this point the appellant moved for a mistrial. The court then conducted an in chambers examination of McCormick. There he testified that he had discussed with appellant the disagreement of ownership three times since the controversy arose. One of these occasions was two or three days before the appellant's first trial pertaining to the possession of the cattle. Since then he had asked the appellant twice to make a compromise offer because his relative, the appellee, didn't want to send the appellant "to the pen". The offer of $1,250 compromise was finally made to him to transmit to the appellee. The trial court determined in chambers that the offer to compromise to appellee's "agent" was inadmissible. The court then proceeded to give a very comprehensive cautionary instruction to that effect and enunciated the policy reasons as to why compromise offers are inadmissible: i.e., it permits complete freedom of negotiations between parties and, therefore, discourages or settles litigation. When he inquired of the jurors if they could disregard the inadmissible testimony there was no response. The court told the jurors that he understood their silence to mean they could totally disregard the testimony about any offer of compromise.
Offers of compromise are inadmissible as evidence of liability because of the strong policy interest in the settling of disputes before a trial. We have so held on several occasions. Strahan v. Webb, 231 Ark. 426, 330 S.W. 2d 291 (1959); Folsom v. Watson, 217 Ark. 158, 228 S.W. 2d 1006 (1950); Cunningham v. Davis, 203 Ark. 982, 159 S.W. 2d 751 (1942); Lake v. Wright, 186 Ark. 227, 53 S.W. 2d 233 (1932); Hinton v. Brown, 174 Ark. 1025, 298 S.W. 198 (1927). The rule is really akin to a privilege rather than a rule of competency. McCormick, Evidence § 273 (2nd. Ed. 1972). The one to whom or through whom the offer is made is not the decisive factor. The controlling consideration is the policy encouraging friendly adjustments of potential or actual litigation. Otherwise litigation would be instituted finally resulting in court trials with additional expense to the parties as well as further overloading our court dockets. The fact that the compromise offer in the instant case was not communicated to the appellee by an agent does not render it admissible. See e.g., Pentz v. Penn. Fire Ins. Co., 92 Md. 444, 48 A. 139 (1901), where plaintiff's question to defendant's agent as to whether the agent had been authorized to offer a compromise was properly excluded, and Harrison v. Dist. of Columbia, 95 A. 2d 332 (D.C. Mun. Ct. App. 1953), where appellant denied paternity of an illegitimate child but offered to pay a thousand dollars to settle to the mother's brother who was neither the complaining witness nor her representative, held, evidence of offer was inadmissible.
In the case at bar, we note that appellee's counsel elicited from McCormick before the jury that he had discussed the ownership of the cattle with the appellant after "the first trial" at Farmerville. Appellant maintained the cattle were his. The witness was then asked if appellant later came to him and said anything further about the cattle. It was then that the witness responded that the appellant had made the 11,250 compromise offer. The jury returned a verdict of $1,-800 which was reduced to $1,750 to confrom with the allegations in the complaint.
Appellee agrees that a compromise offer as a general rule is inadmissible because of the strong policy reasons which encourage settlement of potential as well as actual litigation. However, appellee asserts that the cautionary instruction given by the trial court was sufficient to remove any prejudicial effect. In the circumstances, we cannot say with confidence that the prejudicial effect of the compromise offer was completely removed and extinguished despite the meticulous and very thorough cautionary instruction. Appellant's motion for mistrial as well as his motion for a new trial based upon the prejudicial effect of the compromise offer should have been granted. It follows that the judgment is reversed and the cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.
FOGLEMAN. J., dissents.