Court Opinion

ID: 9391802
Source: CourtListenerOpinion
Date Created: 2023-05-03 14:03:17.030828+00
Date Added: 2024-06-11T17:18:15.309384
License: Public Domain

Cite as 2023 Ark. App. 250
                   ARKANSAS COURT OF APPEALS
                                        DIVISION I
                                       No. CV-21-515

 MIKE GRIGSBY AND FREIDA        OPINION DELIVERED MAY 3, 2023
 GRIGSBY
                     APPELLANTS APPEAL FROM THE NEWTON
                                COUNTY CIRCUIT COURT
                                [NO. 51CV-17-11]
 V.

                                   HONORABLE GORDON WEBB,
 LOUISE L. KELLY, CHARLES L. FORD, JUDGE
 SHARON K. BARBER, JAY BARBER,
 BARBARA WOODRUFF, AND DONNA
 MURPHY
                        APPELLEES AFFIRMED

                             ROBERT J. GLADWIN, Judge

       Appellants Mike Grigsby and Freida Grigsby bring this one-brief appeal from a

constructive trust imposed by the Newton County Circuit Court on real property, and in

granting a counterclaim; and denying their petition to partition real property in its order

entered on December 30, 2020. We affirm.

                               I. Facts and Procedural History

       The subject matter of this appeal involves the ownership of three approximately forty-

acre parcels of land in Newton County, Arkansas (collectively the “Land”). The Land is

located in the “Southeast one quarter of the Southwest one quarter of Section 34, T13N,

R19W; the Southwest quarter of the Southeast quarter of Section 34, T13N, R19W; and

Southeast quarter of the Southeast quarter of Section 34, T13N, R19W.” As these
descriptions indicate, the Land comprises three contiguous 40-acre tracts of property on the

southern part of Section 34 of Township 13 North, Range 19 West.

       For the purpose of this appeal, the three 40-acre parcels have been identified as Tract

1, and Tract 2. Tract 1 is the Estalee and Leon Ford home site located in the middle of the

three 40-acre tracts (SW 1/4 of the SE 1/4). Tract 2 comprises the other two parcels: “the

31.99 acres in the SE 1/4 of the SW 1/4 of Section 34 and the 40 acres in the SE 1/4 of the

SE 1/4 of Section 34.” Note that there is an additionally included approximately 3-acre

parcel of land in the “NW 1/4 of the SE 1/4 of Section 34, T13N, R19W” (also referred to

as “Tract 3”), which is in the name of Joe Ford. Joe Ford is the father of Leon Ford, who is

the only child and heir of Joe Ford. All parties to this lawsuit want the court to make

disposition of Tract 3 along with the land in dispute in this lawsuit, Tracts 1 and 2.

       Estalee and Leon Ford built a house on the middle 40-acre parcel, Tract 1, with access

from Highway 16, which runs through all the Land, east to west, more or less. On the

westernmost part of Tract 2, Leon had a hog-farm business that he sold along with between

8 and 9 acres of Tract 2, leaving the Fords with 31.99 acres in Tract 2.

       The Fords had six children: (1) Freida Grigsby, married to Mike Grigsby; (2) Patsy

Louise Kelly, married to Dennis Eugene Kelly (deceased); (3) Charles Ford; (4) Sharon

Barber, married to Jay Barber; (5) Barbara Woodruff; and (6) Donna Murphy. All are parties

in this lawsuit. Leon Ford died in November 1995. Estalee Ford died in October 2006.

       Leon arranged to have their home built on Tract 1 sometime before 1990. Their son-

in-law and    Freida’s husband, Mike, helped build the house in 1977 or 1978. His

                                              2
contribution was significant enough that Leon promised him land on which he could build

and own a cabin, which was confirmed by virtually all of the witnesses. In 1994, Mike built

a cabin on 2 1/2 acres in the part of Tract 2 that is in the 31-acre parcel west of Tract 1.

       In the early 1990s, Leon experienced financial difficulties with his business, which he

sold along with eight plus acres, and sought protection from bankruptcy court. The

bankruptcy was dismissed the following year without discharge. The Fords had a Farm Credit

lien on the Land, but we do not know precisely what property was encumbered.

       By 1993, Leon had become concerned about his health, his ability to protect his home

for the benefit of his wife, and his ability to protect their property from debt if he died or

had to move into a nursing home. He consulted with his son, Charles, about which of his

sons-in-law could be trusted with the task of moving his property out of his name. Charles

recommended titling the Land with Mike because Mike could be trusted.

       Other siblings also remembered hearing Leon talk about putting the Land in Mike’s

name with the idea that he would split it between the siblings after both he and Estalee died.

Barbara testified that she was present when Leon spoke with Mike about this agreement. She

recalled that Mike had agreed to this, saying, “I will, Leon.”

       Two other sisters testified that they knew from conversations with Leon that he

believed that Mike had promised to hold the Land until the death of both of the Fords and

then to split it among all the siblings. Donna said Leon told her this many times, and she

was able to specify the time frame of this type of conversation around when the mortgage on

Tract 1 was signed in 1995 just months before Leon died. Patsy, who, along with the Grigsbys

                                               3
and her husband, refinanced Tract 1 and had it put in their names, stated that she likewise

understood from Leon that the Land was to be divided between all the siblings after the

Fords’ deaths.

       Even Freida testified that she understood the portion of the Land that the Fords

deeded to Mike and her eventually was to be split between all the siblings. Mike also testified

that he understood that in 1995, when Leon deeded Tract 1 to Freida and him along with

Dennis and Patsy, it was for the purpose of refinancing the debt against Tract 1 in order to

protect it so that it could be distributed to all the siblings after the deaths of both Fords.

Mike did claim that he thought the deed to him of Tract 2 was a gift. In his testimony, he

denied that he agreed to split the Land given to him by the Fords with the rest of the Fords’

children, but in a handwritten statement produced during discovery, Mike repeatedly

acknowledged that was what Leon wanted him to do with the Land—without specification as

to which parcels of the Land.

       In 1993, Leon executed a warranty deed for the land in Tract 2 in favor of the

Grigsbys. He—or someone—held the deed until 1996, when the deed was finally recorded. In

June 1995, before Leon died in November, he also deeded Tract 1 to the Grigsbys and the

Kellys. They then refinanced it, put a mortgage on Tract 1, and paid off the existing Farm

Credit loan. Until she died in 2006, Estalee paid the taxes and mortgage payments. After

that, Patsy made the mortgage payments, and eventually paid the mortgage off, in the sum

of $42,891.61. The Grigsbys paid the taxes from 2007 through 2017 in the amount of

                                              4
$6,129.98. They also paid taxes on the two parcels of Tract 2 in the amount of $650.75 and

$1,620.12 (total $2,270.87).

       Mike’s excuse for not having carried out Leon’s wish that the Land be divided

between the six siblings was that not all the “bills were paid.” The primary unpaid “bill” at

issue appears to be for Leon’s funeral expenses dating back to 1995. In written notes he

provided on April 10, 2017, as part of a discovery statement and during his testimony, Mike

indicated his anger toward two siblings who have still not paid all of their respective shares

of the funeral expenses and one other sister who took a long time to pay. However, there is

nothing in the record before us to indicate that Mike’s intention was to never split the Land

between the siblings.

       On March 13, 2017, the Grigsbys filed a complaint for partition against Patsy, the

now single co-tenant of Tract 1. In the original complaint, the Grigsbys sought a sale by

partition of Tract 1 with reimbursement to Patsy for payments she had made toward

refinancing the mortgage they had taken out on Tract 1.

       In the March 31 response and counterclaim, Patsy, joined by the other siblings and

her spouse, expanded this case to include the rest of the Land. The counterclaim argued

entitlement to the Land, which they made claim as heirs. The counterclaim sought (1) deed

reformation and division; (2) entitlement to a constructive trust against Mike due to the

“agreement and understanding” that the Land would be divided; (3) alternative relief for a

monetary judgment as to Tract 1 as reimbursement for money Patsy paid on the mortgage

and partition of Tract 1 against the Grigsbys and in favor of Patsy; or (4) alternative relief in

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the form of division but, if not divisible, that the Land be sold. The counterclaim concerned

an alleged agreement during which time Mike had title and made improvements to property,

having built a home on Tract 1 for the original grantors (the Fords) and a cabin for Freida

and himself on Tract 2.

       The Grigsbys filed a motion to dismiss, an answer to the counterclaim, and a cross-

petition to quiet title on April 24, raising the defenses of statute of limitations or,

alternatively, laches, noting the conveyances at issue occurred in 1993 and 1995—the

counterclaim action was brought twenty-five years after the first deed and twenty-two years

after the second—and asserting that claims for contribution should have been brought within

three years. On September 11, a hearing was held on the Grigsbys’ motion to dismiss. On

June 18, 2018, the circuit court entered an order denying the motion to dismiss because it

reasoned that factual issues existed that required a trial.

       The trial was held on May 9, 2019. On November 7, the circuit court issued a letter

ruling that included the following findings:

              This Court, after considering all of the testimony and exhibits, finds that the
       clear and convincing evidence shows that there was an “agreement” between Leon
       Ford and Mike Grigsby that the land in Tract 1 and Tract 2 would be deeded to Mike
       and Fr[ei]da Grigsby to get it out of Mr. and Mrs. Ford’s name due to concerns over
       debt the Fords owed. And, Mr. Grigsby knew, or understood, he was holding the
       property for all six children of the Fords.

               Due to [the] confidential trust relationship between Mr. Ford and Mr. Grigsby,
       his son-in-law, the Court will impose a constructive trust. All the land of Tract 1 and
       all of the land in Tract 2, except a 2 1/2 acres area around the Grigsbys’ cabin, shall
       be placed in the constructive trust.

              Mr. Grigsby, as owner of the 2 1/2 acres south of Highway 16 is ordered to be
       surveyed and to situate the boundary of his parcel upon which the cabin is located.

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He is also entitled to a designated 25′ easement of land in Tract 2 to give access to his
parcel by the most direct route from Highway 16. If the Grigsbys already have an
access road, from Highway 16, that will be the designated easement, if it is not on the
2 1/2 acres.
        Mr. Grigsby is to deed all of Tract 1 and Tract 2, not including the land and
the easement, designated above, to the children of Leon and Estalee Ford as tenants
in common. The Tract 2 portion of the deed will need to have its description
amended to exclude the 2 1/2 acre parcel and cabin of the Grigsbys and should reflect
the access easement to the cabin.

         Identified in the pleadings and the testimony is an additional and separate
parcel of land, Tract 3. This land, consisting of less than 3 acres, more or less, is
located in the NW 1/4 of the SE 1/4 of Section 34, T13N, Ra[n]ge 19W and is
adjacent to and north of Tract 1. According to the pleadings and testimony, this land
is titled in the name of Leon Ford’s father, Joe Ford. Leon Ford was an only child
and his father’s only heir, making Mr. Ford’s six children the heirs to this small parcel.
The Court feels it should be included in the disposition of the other land and directs
counsel to work together to see that that occurs.

       The original plaintiff[s] sought partition of Tract 1. The [d]efendant[s] through
their counterclaim sought partition of both Tract 2 and 3 in addition to Tract 1.
Because the testimony showed that there is no way to divide this land fairly and
equally among the six children, the Court believes a partition sale is necessary. The
Court so orders.

       The proceeds of the sale, after the costs of the sale are paid in full, are to be
distributed as follows:

       Ms. Patsy Kelly is to be reimbursed $42,891.61 for her expenditures in paying
       off the mortgage on Tract 1:

       Mike and Fr[ei]da Grigsby are to be reimbursed $8,400.75 for their payment
       of real estate taxes on Tract 1 and 2;

       Both counsel for the plaintiff and for the defendants are to be paid a
       reasonable attorney’s fee for their efforts in partitioning and selling the
       property;

       The rest of the proceeds are to be divided into six equal shares and distributed
       to each of the children of Leon and Estalee Ford.

                                        7
       On March 5, 2020, the Grigsbys moved to reopen the record for supplementation of

evidence related to the survey of the Tract 2 property surrounding Mike’s cabin as previously

ordered by the circuit court. The siblings filed a response on March 9, agreeing with the

Grigsbys’ motion. The circuit court filed a supplemental letter ruling on December 22

addressing that motion, denying the Grigsbys’ request for additional land for the cabin site,

and ordering a survey.

       On December 30, the circuit court entered an order expressing the above-referenced

findings, denying the Grigsbys’ petition to partition the Land, and granting the siblings’

counterclaim. The Grigsbys filed a timely notice of appeal on August 2, 2021, following the

filing of a survey in the final supplemental order entered on July 16.

                           II. Standard of Review and Applicable Law

       In this appeal, the circuit court denied a petition for land partition and instead

granted a counterclaim sounding in a constructive trust. The Arkansas Supreme Court stated

in Betts v. Betts, 326 Ark. 544, 548, 932 S.W.2d 336, 338 (1996):

              To impose a constructive trust, there must be full, clear, and convincing
       evidence leaving no doubt with respect to the necessary facts, and the burden is
       especially great when a title to real estate is sought to be overturned by parol evidence.
       The test on review is not whether the court is convinced that there is clear and
       convincing evidence to support the chancellor’s finding but whether it can say the
       chancellor’s finding that the disputed fact was proved by clear and convincing
       evidence is clearly erroneous, and we defer to the superior position of the chancellor
       to evaluate the evidence. A finding is clearly erroneous when, although there is
       evidence to support it, the reviewing court on the entire evidence is left with the
       definite and firm conviction that a mistake has been committed.

(Internal citations omitted.)

                                               8
                                          III. Discussion

       The Grigsbys’ trial counsel asked the circuit court to partition and sell Tracts 1 and

3, to quiet title in Tract 2, and to dismiss the siblings’ counterclaim. Instead, the circuit court

granted that counterclaim and found there was a constructive trust. The Grigsbys argue that

the evidence does support that there was a constructive trust. Moreover, they argue that even

if there was evidence to support the circuit court’s finding of a constructive trust, the siblings’

counterclaim is barred by waiver, estoppel, and laches.

                    A. Statute of Limitations Related to the Counterclaim

       The Grigsbys focus a great deal on the length of time between the conveyances in

dispute and the date of filing of the counterclaim. In this case, the conveyances in issue were

in 1993 and 1995, so the counterclaim was brought twenty-five years after the first deed and

twenty-two years after the second, and the Grigsbys argue that any claims for contribution

should have been brought within three years. They note that Patsy relied on an agreement

that she acknowledged was made sometime between November 1995 and June 2015. The

Grigsbys argue that the statute-of-limitations and laches issues were critical in this case,

maintaining that the circuit court erred in its ruling because of the siblings’ inexcusable delay

in bringing their counterclaim. They submit that it is settled in Arkansas jurisprudence that

waiver, estoppel, and laches each may constitute a complete bar and that such exists in the

present case. See Ark. R. Civ. P. 8(c) (2021).

       The Grigsbys submit that this was a straightforward petition for partition in which

they asked the circuit court to divide Tract 1 and reimburse Patsy for any mortgage payments

                                                 9
she made with respect to it. They note that the counterclaim likewise requested that same

relief because Patsy sought reimbursement. The Grigsbys assert that the record clearly

indicates that their partition action should have been allowed and that the circuit court erred

in finding there was a constructive trust because it is apparent the parties could not even

agree on the dates or the terms of the agreement allegedly entered into between Mike and

Leon.

        We note that the Grigsbys focus the majority of their argument on equitable defenses

that they claim bar enforcement of the agreement. Although their argument on a potential

bar related to the applicable statute of limitations was brought before the circuit court, their

arguments related to waiver, estoppel, and unjust enrichment are not properly preserved for

our review. Although they make up the bulk of the argument on appeal, those arguments

were neither argued before nor ruled on by the circuit court. See Brown v. Towell, 2021 Ark.

60, at 8, 619 S.W.3d 17, 22.

        The Grigsbys argue that the counterclaim was barred by the three-year statute of

limitations on an oral promise because it involves conveyances made decades ago. See Ark.

Code Ann. § 16-56-105 (Repl. 2005). The allegations arose from conduct alleged to have

occurred more than twenty years ago, and the statute of limitations begins to run when there

is a complete and present cause of action. See Hunter v. Connelly, 247 Ark. 486, 446 S.W.2d

654 (1969). And the Grigsbys argue that, absent fraudulent concealment, there is no tolling

of the limitations period.

                                              10
       The Grigsbys’ claim is that because the siblings were on notice of the grantees in the

deeds in question, their claims are barred. They urge that filing a deed places one on

constructive notice, and if one seeks to overturn a deed, the burden is clear and convincing

evidence. See generally, Betts, supra (noting such proof is especially difficult by parol evidence).

       The Grigsbys submit that in this case, because there is no evidence of fraudulent

concealment, the applicable statute of limitations began running at the time of the action,

not when later discovered. Hampton v. Taylor, 218 Ark. 771, 887 S.W.2d 535 (1994). When

the warranty deeds were filed, all the siblings were on constructive notice of the Grigsbys’

claims to the Land, as that knowledge is imputed from the filing. Once it is clear from the

face of the complaint that the limitations period has run, the burden shifts to show it was

tolled. Meadors v. Still, 344 Ark. 307, 40 S.W.3d 294 (2001). Here, the Grigsbys argue that

because the siblings failed to meet that burden, their counterclaims for reformation arose

long ago, and the counterclaim is time-barred.

       In its November 7, 2019 letter opinion, the circuit court addressed this issue as

follows:

              In making its ruling, the Court is rejecting the plaintiff’s legal arguments based
       on any of several statutes of limitation or equitable principles of laches. The Court
       finds there was an agreement based on a promise by Mr. Grigsby to hold the land for
       the siblings. The Court finds Mr. Grigsby never repudiated his promise. Therefore,
       none of the asserted periods of limitations started to run. The Court found Mr.
       Murdoch’s brief and Davidson case cited therein very convincing.

       Davidson v. Sanders, 235 Ark. 161, 357 S.W.2d 510 (1962 ), involved heirs who had

obtained title to property on which delinquent taxes were owed. A bank was unwilling to

                                                11
enter into a loan for the purpose of paying those taxes because of the number of principals.

Accordingly, the heirs agreed to convey the land to one of the heirs, a grandson, who then

purportedly agreed to convey the property back once the loan was repaid. The heirs later

demanded the agreed-upon conveyance, and the grandson refused. The property in question

was later sold. The Arkansas Supreme Court held that legal title was in the grandson but was

subject to a trust for the heirs and that the grandson stood in a confidential relationship to

those heirs, who put their trust and confidence in him. Id.

       We agree that the Davidson facts are similar to the facts in this case, including that the

grandson pleaded laches, estoppel, statute of limitations, statute of frauds, and almost every

other equitable defense against the other heirs. Another similarity between the two cases is

that the original owner of the land had been about to lose the land due to financial

difficulties—specifically, the inability to pay taxes and assessments on the land. The supreme

court noted that the action was not filed for a period of fourteen years after title was

obtained, which caused the grandson’s successor in title to raise the various defenses

previously described.

       At the time of the appeal, the underlying indebtedness that was the catalyst of the

entire agreement had not been paid. The Davidson court, quoting Walker v. Biddle, 225 Ark.

654, 284 S.W.2d 840 (1956), and Matthews v. Simmons, 49 Ark. 468, 5 S.W. 797 (1887), held

that it was the refusal of the promise that brought the trust into agreement; thus, the

fourteen-year delay was immaterial. Further, it noted that while no specific documents

evidenced the promise in question, other documentation did support the existence of the

                                              12
agreement, and without a repudiation, no statute-of-limitations bar could occur. See also

Gregory v. Gregory, 2013 Ark. App. 57, at 8, 425 S.W.3d 845, 850 (holding that because it

was the transferee’s repudiation of his oral promise that brought a constructive trust into

being, the statute of limitations in favor of the constructive trustee could not commence

earlier than the date of such repudiation).

       Because the Grigsbys principally rely on the statute-of-limitations defense to the

siblings’ counterclaim, they were required to show that Mike repudiated the agreement

between Leon and him to start the three-year period running, and there is no evidence of

that before us. Silence does not equal repudiation. The agreement could not even be

considered to run until both Leon and Estalee died because that was the catalyst for Mike’s

division of the Land between the siblings. The earliest date this could have occurred was on

Estalee’s death on October 31, 2006. However, at that time, there still existed the remaining

expenses from Leon’s funeral to be repaid, which Mike referred to in exhibit 8. Additionally,

there was evidence regarding the family meeting about the division of the Land in 2007 and

the subsequent related listing agreement as well as Mike’s critically important

acknowledgement in exhibit 8 stating that he had never said he would not distribute the

Land among the siblings.

       To reiterate, certain portions of Mike’s written statement in exhibit 8 indicate that

the triggering event for the division of the Land would be the payment of the remaining

indebtedness related to Leon’s 1995 funeral expenses owed to him by siblings Charles and

Barbara. No one disputed that Charles and Barbara still owed their respective shares of the

                                              13
expenses and should pay their portions. This evidence also helps to explain Patsy’s statement

that the Grigsbys “held the [L]and hostage” as no one else could receive their portion until

all of Leon’s funeral indebtedness was repaid. The record supports that evidence of an

agreement between Leon and Mike for Mike to divide the Land among the siblings was

presented to the circuit court, not only by way of the testimony from all the parties but also

by the various exhibits that were introduced into evidence, all of which show an agreement

that, pursuant to the language in Eexhibit 8, had not been repudiated by Mike. Had no one

filed an action related to the Land, as was done in this matter, the promise and agreement

likely still would not have been repudiated to this date. However, on March 13, 2017, the

Grigsbys filed their original petition in this action against Patsy, which could be viewed as a

repudiation of Mike’s agreement to divide the Land among the siblings after the death of

both of the Fords. Patsy brought in the remaining siblings in her response to the petition

and counterclaim less than three weeks later, on March 31, well within three years from that

date. Accordingly, we hold that the circuit court did not err in rejecting the Grigsbys’ claim

based on the defenses of statute of limitations or laches.

                                     B. Constructive Trust

       The Grigsbys also argued in their motion to dismiss the siblings’ counterclaim that

Count II of the amended counterclaim fails to state facts on which relief can be granted

pursuant to Ark. R. Civ. P. 26 (2021) and that it also fails to state facts that give rise to

constructive fraud on behalf of the siblings to impose a constructive trust. See Waller v. Waller,

15 Ark. App. 336, 639 S.W.2d 61 (1985). The Grigsbys specifically argue in their brief before

                                               14
this court that the siblings failed to meet their burden of proof to establish a constructive

trust. We disagree.

         On page 2 of Mike’s written statement dated April 10, 2017, exhibit 8 that was jointly

introduced by the parties at trial, he acknowledges that there was an agreement between

Leon and him that the Land would be divided, stating that “I’ve never denied what Leon

told me to do with the [L]and,” and “He told me to divide the [L]and between the kids after

paying all bills by selling land, if any land was left. There was never discussing about how to

divide, that was left up to me.” We hold that the circuit court reasonably could have found

that Mike’s acknowledgment dismisses any argument he now raises regarding a constructive

trust.

         In order to impose a constructive trust, there must be full, clear, and convincing

evidence leaving no doubt with respect to the necessary facts. Betts, 326 Ark. at 548, 932

S.W.2d at 338. In addition, the burden is especially great when title to real property is sought

to be overturned by parol evidence. Id.

         The supreme court held in Davidson, supra, that fraud was not essential to the

establishment of a constructive trust and that one will be imposed if it is shown by clear and

convincing evidence that the conduct was either fraudulent or that the grantor and grantee

were in a confidential relationship. 235 Ark. at 172–73, 357 S.W.2d at 516–17. This court

in Gregory, 2013 Ark. App. 57, at 8, 425 S.W.3d at 850, likewise held that proof of fraud is

not essential to the establishment of a constructive trust. One can occur as a result of

circumstance. And in Waller, supra, we noted:

                                               15
               Constructive trusts are said to arise and be imposed in favor of persons entitled
       to a beneficial interest against one who secured legal title either by an intentional false
       oral promise to hold title for a specified purpose, and having thus obtained title,
       claims the property as his own, or who violates a confidential or fiduciary duty or is
       guilty of any other unconscionable conduct which amounts to constructive fraud.

15 Ark. App. at 339, 693 S.W.2d at 63 ( citations omitted in original). The record supports

a finding by the circuit court that Mike violated the confidential relationship he had with

Leon and their agreement that he was to divide the Land among the siblings. Accordingly,

the circuit court was within its authority to order a resulting or constructive trust as the result

of the circumstances and actions of the parties.

       Here, the circuit court had not only an abundance of written statements and

testimony from the witnesses to consider but also exhibits generated at the instance of the

Grigsbys—who oppose the imposition of the constructive trust—show actions inconsistent

with their testimony and actually support implementation of a constructive trust.

       Affirmed.

       HARRISON, C.J., and WOOD, J., agree.

       Roberts S. Tschiemer, for appellants.

       One brief only.

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