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July 1985Vol. 19, No. 3

LCtARKANSAS romCERS

William R. Wilson. Jr.. PresidentDon M. Schnipper. President-ElectAnnabelle D. Clinton. Sec·TreasurerDavid M. "Mac" Glover. Council Chair

Wm. A. Martin, Executive DirectorJudith Gray, Assistant Executive

Director

EXECUTIVE COUNCIL

Jack A. McNultyW. Kelvin WyrickGary NutterWilliam Russ Meeks.IIIKaye S. OberlagTom OverbeyRobert S. HargravesRobert HornbergerJoe ReedDavid SolomonStephen M. ReasonerJames A. McLarty

EX-omCIO

William R. Wilson. Jr.Don M. SchnipperDennis L. ShacklefordAnnabelle D. ClintonMartha M. MillerDavid M. "Mac" Glover

EDITOR

Ruth M. Williams

THE PUBUCATION OF THE ARKANSAS BAR ASSOCIATION

SPECIAL FEATURES REGULAR FEATURES

107 President's Report

108 Point of View/Letters

Generations in the LawW. Harold Flowers: Mentor.

112Advisor and Inspiration byAndree Roof

117 Law. Literature & LaughterToward the Bicentennial

Part II by Robert D.118Cabe and G. Ross Smith

The Grand Gulf Cases:A Summary

123by Dana Daniels Nixon

128 Lawyers' Mart

New Arkansas Bar Association 129Officers for 1985-86

130 In Memoriam

Changes in Divorce Taxation:The Tax Reform Act of 1984

132by William T. Marshall

135 Executive Director's Report

136 tYoung Lawyers' Update

137 Arkansas Bar Foundation

138 In-House News

The Arkansas Lawyer (USPS 546-040) ispublished quarterly by the ArkansasBar Association. 400 West Markham,Little Rock. Arkansas 72201. Secondclass postage poid at Little Rock.Arkansas. Subscription price to non­members of the Arkansas Bar Associa­tion SIS.00 per year and to members$10.00 per year included in annualdues. Any opinion expressed herein isthat of the author. and not necessarilythat of the Arkansas Bar Association. orThe Arkansas Lawyer. Contributions toThe Arkansas Lawyer are welcome andshould be sent in two copies to theArkansas Bar Center. 400 West Mark­ham. Little Rock. Arkansas 7220 I.

All inquiries regarding advertisingshould be sent to The Arkansas Lawyerat the above address. Pat Patterson

ON THE COVER:The Arkansas Bar Association's newly elected

president. Don M. Schnipper, and his wile MaryAnn, of Hot Springs, are pictured al the HotSprings National Park's promenade on NorthMountain. Behind them slands the ArlingtonHotel on Hal Springs' Central Avenue. PresidentSchnipper assumed his position on June 8 at theclose of the Association's Annual Meeting. Other1985-86 oflicers elected are Richard F. Hatfield, ofSearcy. president-elect, Annabelle DavisClinton, of Little Rock, to a fourth term as sec­retary-treasurer. Richard L. Ramsay, of PineBluff. chair of the Young Lawyers' Section, andMarlin G. Gilbert, of Pine Bluff. president of theArkansas Bar Foundation. Philip E. Dixon, ofLittle Rock, was named chair of the ExecutiveCouncil by Schnipper in April.

July 1985/Arkansas Lawyer/l05

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THE PRESIDENT'S REPORT

In Honor or Defenseof the ACLU

By William R. Wilson, Ir.

There are many mundane,bread-and-butter issues facingthe organized bar which probablyneed comment; but, somehow, mymuse has nudged me to write inhonor of (in defense of?) theAmerican Civil Liberties Union.

As we all know, this organiza­tion is the favorite whipping boyof many poli ticians and the con­servative media. Despite the con­stant abuse heaped upon it, theACLU is this country's foremostadvocate of our Bill of Rights (in atime when, as one pundit re­marked, the Bill of Rights couldn'tget out of committee today).

Of course the freedoms guaran­teed in our Constitution are con­stantly extolled, in general. in po­litical speeches, but honoringthem in action is often a horse of adifferent color. To talk favorablyof freedom of speech in theabstract is one thing, it is quite an­other to defend this right when aperson wi th views obnoxious toour own speechifies in public.

We should keep in mind at alltimes that the Bill of Rights is notself-executing. Learned Hand putit beautifully:

... Liberty lies in the hearts ofmen and women; when it diesthere, no constitution, no law.no court can save it; no constitu­tion, no law, no court can evendo much to help it ...It does not particularly disturb

me that many politicians lead (orjoin) the hue and cry of the hour.Those who drafted our Constitu­tion expected this. On the otherhand, it does disturb me when Ihear the leaders of our professiondisparage those few lawyers whostep front and center to representthe poor, the disfranchised, thedespised.

When a citizen, without poweror position. wishes to espouse hisunpopular cause and the forces ofgovernment are brought to bearagainst him, who will step for­ward to represent him in securinghis rights by due process of law?Not I. for I must hie myself over toTraffic Court to earn my dailybread. Not my brother or sisterover at XYZ firm for he/she mustattend a corporate board meeting,or jet off to Washington to lobbyfor Acme Company. Then who?

We know the answer. Time aftertime idealistic ACLU lawyershave jumped into the fray. What istheir reward? It obviously isn'tmoney (even with various at­torney fee statutes, it is still "porecity" for those who regularly dothis type of work). Is it for public,popular acclaim? How many cock­tail parties have you attended inhonor of some young storefrontlawyer who just won a major civilrights case?

It must be the self-satisfactionthat the true advocate feels whenhe or she has stood virtually aloneby the side of some wrongedcitizen who has no other cham­pion; and by perseverance anddogged advocacy has vindicateda right secured to this citizen byour Constitution.

Over the years, there have beenshining examples of this type ofadvocacy by lawyers with no con­nection with the ACLU - and [ donot discount their vital contribu-

tion. But. on a day by day, year inand year out basis, it has been theACLU (and kindred spirits) whichhas taken the lead in establishingand maintaining our freedoms forall citizens.

For my part, I salute these stal­warts who have faced the heat inthe face of every type of adversity.We who work within the or­ganized bar must not let bread­and-butter issues claim all of ourenergy. We must not look theother way with the demurrer, "Weain't got no dog in that fight." Se­curing to all citizens their rightsand privileges under law is the es­sence of our profession.

Good news from the Nation'sCapitol. A representative of theAmerican Bar Association hasadvised that all of the professionsare now in agreement regardingthe approach we should take tothe F.T.C. fight. As you may know,the American Bar Association ob­jected to certain language whichthe American Medical Associa­tion had submitted to amend theFederal Trade Commission Reau­thorization Legislation. The ABAfeared that the AMA's languagewould encourage F.T.C. attemptsat regulating the discipline pro­cedures of the professions, ratherthan discourage it.

As it now stands, the profes­sions are all in agreement that theproposed reauthorization legisla­tion should simply remain silenton licensure and disciplining,and the F.T.C.'s authority in thisarea, or lack thereof. should beleft up to interpretation by thecourts. While some of us mightprefer specific language whichwould stop in trusion in this areaby the F.T.C., there is no reason­able possibility that satisfactorylanguage could be adopted as anamendment to the basic legisla­tion. So, silence seems to be thebest course.

This session of Congress isyoung and, as things develop, themembership of the Associationwill be kept abreast of significantdevelopments. [j

July 1985/Arkansas Lawyer/107

POINT OF VIEWILETTERS

Lawyers Get a'Bum Rap'

By Lawrence H. Averill, Jr.

"The first thing we do, let us killall the lawyers." - Shakespeare.Henry VI. Part II, Act 4, Scene 2.

How many times have youheard that phrase. particularly bynon-lawyers. I bet a lot. Why arelawyers so castigated and criti­cized. Why do people wish thatlawyers do not exist?

I must say that personally thisbothers me a great deal. My con­cern is not because I am a dean ofa Law School and because I amprotecting my own domain. I feelconcerned because [ believe thatlawyers are getting a "bum rap." Ithink the legal profession is asmisunderstood as is the previous­ly famous quote from Shake­speare. Most think that Shake­speare was castigating lawyers.In truth. Shakespeare was em­phasizing the importance of law­yers to a free society. The partywho made the above quote was amember of a group which was con­sidering an attempt to overthrowthe government and the establish­ment of a totalitarian regime. Thespeaker felt it was necessary toeliminate all the lawyers in orderto be successful. If the lawyers re­mained. freedom would remainand their scheme would fail. Inmany ways this is the same mis­or non-understanding about thelegal profession that exists today.

Editor's Note:Lawrence H. Averill. Jr.. is dean

of the University of Arkansas atLittle Rock School of Law. He is aformer professor of law at the Uni­versity of Wyoming College of Lawand received a LL.M. /rom GeorgeWashington University and a J.D.from the American University.Dean Averill is an Academic Fel­low of the American College ofProbate Counsel and a member ofthe Bars of the District of Colum­bia. Maryland. Wyoming andArkansas.108/Arkansas Lawyer/Ju1y 1985

Several years ago a friend whoreturned from Russia teased methat Russia might not be such abad place because it did not havemany lawyers. I was quick topoint out that the people in Russiado not have freedom of the press,freedom to work at what or wherethey want to work, freedom totravel, freedom to read what theywant to read, freedom to leave thecountry at will. freedom to be se­cure from unwarranted searchesand seizures. freedom to ownproperty. freedom of opportunity.etc. If you are in a society that de­nies these freedoms. you do notneed many lawyers.

In addition, a portion of the crit­icism of the legal profession is in­escapable in that it is inherent inthe nature of legal work. In everycase where people are makingcontentions against other people.there is always a loser and inmany cases. particularly thosewhere settlements aIe involved,both sides may feel dissatisfiedwith the results. One's naturalreaction is to blame his or herlawyer if the result is unsatis­factory.

Furthermore as a whole. law­yers should never seek mere popu­larity. Just as there are winnersand losers in each dispute. anyaggressive representation of an­other. particularly of a contro­versial person or issue, will causesome or maybe most to dislike thelawyer or even lawyers in gen­eral. If a good public imagemeans we have to be liked byeveryone. we should reject it. If agood public image means the pro­fession is honest. trustworthy andeffective. we should embrace it. Itis toward these latter attributesthat we should put our emphasisand set our goals.

The end result is that there aresome attributes of the legal profes­sion that will never permit us tohave a good public image. This isnot to say there is nothing we cando about it. I believe that there are

at least three steps that should betaken and, if properly taken,would significantly improve theimage of the legal profession inthe eyes of the public.

Public Service

First. we must try to provide bet­ter services to the public. Withsome obvious exceptions and aneed always to improve our abili­ties. the legal profession as awhole does a reasonably ade­quate job in providing adequateskills in our litigation and techni­cal functions. We. of course. needalways be diligent in improvingthose skills. Mandatory continu­ing legal education would be ameritorious step in this direction.

In addition to this type of train­ing. we need to get actively in­volved in non-litigative methodsof settling disputes. Commonly re­ferred to as alternative methods ofdispute resolution. the concept in­cludes arbitration. negotiationand mediation. [ would urge thatthe legal profession take an activepart in honing skills related tothese matters. Clearly. legal train­ing and the ability to separate thewheat from the chaff with regardto disputes are outstanding foun­dations for properly administer­ing arbitration, negotiation andmediation. The law schools arebecoming much mOTe involved inthese techniques and the teach­ing of a foundation for their use isbecoming an important part oftheir curricula.

Another area of concern with re­gard to service to the public is of abroader nature. The legal profes­sion is a high profile profession.This is one of its main attractionsand why many people wish to be­come a lawyer. I think it is very im­portant for the legal profession tocontinue this status. In returnlawyers need to be actively in­volved in all segments o[ oursociety. We need to be leaders inall our activities. We need to do­nate our time and service to pub-

lie service and to attempt to solveproblems outside of our own eco­nomic desires. Frankly, we needto generously provide our time forpublic service endeavors. There isa motto in some service clubs thateach person should give back atleast as much as he or she takes.This clearly applies to all mem­bers of the legal profession. Mostlawyers [ believe satisfy this re­sponsibility very well.

One specific area of service thathas recently had a decline inlawyer participation is service inthe state legislatures and stategovernments. I realize that thereare a large number of economicand political reasons for thisphenomenon. I personally feel.however, that it is damaging tothose institutions and to the pub­lic in general for lawyers not to besignificantly represented in thesegovernmental bodies and agen­cies. Lawyers are often criticizedfor how poor the law is and yetquite frequently we have verylittle to say as to its form or sub­stance or both. We end up enforc­ing or opposing inadequatelydrafted legislation and then get­ting the blame for its inad­equacies. The solution to this isfor more lawyers to take an activepart in state government and leg­islatures, both from the outsideand from the inside.

In particular, [ hope we can de­velop in the future more interest inmembers of the legal profession toactively pursue positions in ourlegislatures. The same point isapplicable to positions on admin­istrative boards, as well. Certain­ly, the salaries for these positionsare going to have to be significant­ly improved before very manymembers of the legal professionwill be seeking out these posi­tions. Consequently, I would urgethe legal profession to take an ac­tive part in attempting to improvethe salary condition of many ofthese very important public ser­vice positions in state govern­ment.

Media CommunicationThe second area that I want to

discuss concerns our need to im­prove the image of the legal pro­fession in the press and othermedia. I have never understoodwhy the media appears to find

some kind of sadistic joy in criticiz­ing the legal profession. Lawyersand the Press should be naturalallies, not enemies. You need bothto have our free society. Withoutthe free press there would be nolawyers; without lawyers therewould not be a free press.

The two professions are some­times antagonists. however. Con­sider the lawyer who wishes todeny the press ready and unlim­ited access to a case in order toprotect a client. Consider, on theother hand, the press' call to pro­vide the public with knowledgeabout important people andevents. Unfortunately, our re­lationship with the media is oftendillicult and strained.

I believe greater communica­tion between these two insti­tutions would greatly help to re­duce the friction we often see.One suggestion that might help inthis regard would be the creation(or activation, if they alreadyexist) of joint media relations com­mittees to specifically deal withcommunication problems. Thesecommittees will not cure the prob­lem entirely but they should helpto reduce friction, misunderstand­ings and inaccuracies.

Another factor with the mediaissue is that lawyers must realizethat the media is in the businessof selling "news." Consequently,controversy and conflict are ex­tremely newsworthy because theysell. This puts the legal professionin a particular!y visible posi tionbecause by definition controversyand conflict are a part of the pro­fession. Although we cannot andshould not run away from thisphenomenon, we should realizeits dangers to the profession. Likeall "institutions," opinions of theindividual are not necessarily theopinions of the institution. Alllawyers should be careful to makeand maintain that distinction.

We will also have to recognizethat no matter how hard we try,media reports will not always bepresented in the manner in whichthe lawyer desires the matter tobe presented. There will alwaysbe risk in dealing with the media.It should not stop us, however,from dealing with the mediaunder appropriate circumstances.We need to learn more about the

media and how it functions. Weneed to be tolerant of both lawyerand media transgressions fromideal median exposure. Both pro­fessions must be aggressive intheir nature and aggressive ac­tion will inevitably produce un­desirable results sometimes.

Lawyers' Self EsteemThird and surprisingly, we need

to gain a better opinion of our­selves. Recent studies indicatethat lawyers are as negativeabout themselves as the lay popu­lace is. This I think is unfortunate.I believe the legal professionshould be proud of itself. Thewhole foundation of our society isbased on law and the rule of law.Lawyers have been a predomi­nant force throughout our history.They have constantly shaped ournation's policies and actions.From the very beginning of ourcountry's existence, the lawyerand the judicial system helpedsignificantly to shape its destiny.It is no wonder that even todaymany people are seeking entryinto the legal profession becausethey feel it is the place where theaction is, and where they canmake a significant mark onsociety.

Consequently, we need to standup for ourselves. We sometimesas a group are too self-critical. Weneed to take to heart the philos­ophy embodied in the old saw, "[don't agree with what you say, butI will fight for your right to say it."This is the spirit of our judicialand legal system in this country.In particular, we need to be verycareful about our public utter­ances about other lawyers, judgesand the legal profession. Criticalcomments aTe given far greatercredence than they typically de­serve.

We often assume that the laypopulace knows more than it doesabout the legal profession and itsoperations. We need to get outthere and sell our profession atevery opportunity that we can. Weare the greatest society on earthbecause of our freedoms and ourprotection of freedoms and thesemay only be maintained by astrong and independent legal pro­fession.

Otherwise, "the first thing wedo, let us kill all the lawyers."

July 1985/Arkansas Lawyer/l09

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We realize that it is profession­ally dedicated persons such asyou that led the Arkansas BarAssociation to sponsor this state­wide competition. We applaudthe Arkansas Bar Association andits efforts in initiating this com­petition. We sincerely trust that

the Association will continue tosponsor this high school competi­tion in the future.

We admit we were disap­pointed in the "loss," but wegained experience through thepreporation and the participation.Moreover. we are eagerly antici­pating the opportunity to be in­volved next year.

Again, we say "Thank you."

Sincerely,

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James Ward, SponsorRobert Goeller, Sponsor

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A SeriesGenerations in the Law:

Pine Bluff Commercial

Editor's Note:Andree Roaf. of Little Rock. is

an attorney with the WoodsonWalker & Associates law firm.After nearly 12 years as a researchscientist. Roof enrolled at the Uni­versity of Arkansas at Little RockSchool of Law. commuting fromPine Bluff. She graduated in 1978.Since joining the Woodson Walkerfirm she devotes 50 percent of hertime to a commercial practice.

Harold Flowers credits hisfather with initially instilling inhim the desire to be an attorney.While he was still a young boy.his father would often take him tothe Lafayette County Courthouse

home in Stamps. Among thesevisitors was Scipio Jones of LittleRock. one of the first black law­yers in Arkansas. who served asan early role model for youngHarold.

Harold Flowers' mother. an edu­cated woman and communityleader in her own right. was re­ferred to as "the aristocrat of blackStamps" by Maya Angelou. a na­tive of Stamps. in her best-sellingautobiography. I Know Why TheCaged Bird Sings.' Mrs. Flowers.who was also portrayed in thefilm version of this autobiogra­phy. was further described by Ms.Angelou as "one of the few gen­tlewomen I have ever known". 2

W. Harold Flowers

By Andree Roof

On June 6. 1985. W. HaroldFlowers of Pine Bluff washonored as a fifty year

member of the Arkansas BarAssociation at the annual meet­ing of the Association in HotSprings. Harold Flowers. often re­ferred to as the Dean of the blackbar in Arkansas. has been ad­mitted to the practice of law inArkansas longer than any otherblack attorney in the state. Inaddition. he is the patriarch ot alamily of lawyers and mentor.advisor and inspiration to theyounger members of the blackbar. His careers as lawyer. cham­pion for human rights and re­ligious leader have spanned anera of dramatic social changes.especially with regard to the con­dition 01 black Arkansans. He hasplayed a leading role in helpingto bring about these changes.

On October 16. 1911. W. HaroldFlowers was born into a prom­inent family in the small town ofStamps. in Lafayette County.Arkansas. He was the oldest ofthree sons born to Alonzo WilliamFlowers. Jr.. a businessman. andBeulah Lee Flowers. a publicschool teacher. One brother.Cleon Flowers. became a physi­cian and practices medicine inPine Bluff. His youngest brother.Curtis V. Flowers. attended TexasSouthern School of Law. graduat­ing in 1950. He practiced law inHouston. Texas until his death in1976.

Harold Flowers' father was amanager for Universal Life Insur­ance Company and a state leaderof the Masons. and as a boy.Flowers was impressed by thesteady stream of prominent blackbusinessmen. leaders and profes­sionals who visited his parents'

W. Harold FlowersMentor, Advisor and Inspiration

1I2JArkansas Lawyernuly 1985

Harold Flowers and The Freedom Pledge, 1955

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in Fort Worth, Texas.When Harold Flowers returned

to Pine Bluff as a new lawyer in1938, there were only 12 blackattorneys in the entire state. twoin Pine Bluff and the remaindersituated in Little Rock.' As ayoung lawyer, Harold Flowersplayed the role that his family up­bringing. environment and edu­cational accomplishments haddestined him to play, that of cru­sader for the rights 01 his people,both in and out of the court room.

Harold Flowers' experiencesover the past 50 years range frombeing warned by The Ku KluxKlan to leave Arkansas in 1952 tobeing considered by PresidentEisenhower for appointment to

luly 1985/Arkansas Lawyerll13

point for the black community inJefferson County and surroundingareas. Flowers recalls that it wassaid at that time that you neededonly three books to practice law,"an appointment book, a statutebook and a receipt book." He re­mained at the Masonic Temple for25 years before moving his officeto his present location, at 104South Mulberry Street in PineBluff, where he has maintained aprivate practice to the presentdate.

Although he has been a solopractitioner for most of his prac­tice. he was associated with twoattorneys in the 1950s, Ed Trimble,now deceased, and L. CliffordDavis, now a District Court judge

W. Harold (left) and Curtis V. (right) Flowers in 1967 at National Bar Associa­tion meeting in Houston. Texas.

in Lewisville, where he wouldlisten to the court proceedingsbeing conducted there. In thosedays, the court sat only inFebruary and August. andFlowers has lond memories andyet mixed feelings about this ex­perience. He recalls sitting in thecourtroom in February. the roomheated by a big potbellied stovesurrounded by a sandbox-like con­traption to catch ashes andsparks, with blacks seated on oneside 01 the room and whites on theother. During the August term, herecalls that it was usually morecomfortable to sit outside thebuilding beneath the open courtroom windows and listen to theproceedings from a cooler van­tage point. There, young Haroldwould listen to the arguments andoratory 01 local attorneys such asTillman B. Parks, then prosecut­ing attorney and later U.S. Con­gressman, and Steve Carrington,among others. He would then re­turn home and conduct mock tri­als belore his young playmates,practicing the oratorical skillsand techniques he had learned.

Another early influence wasNoah Parden, a well known blackattorney whom Flowers met inEast SI. Louis, Il1inois at the age01 14.

Flowers, like many blacks 01 hisera, had to come to Little Rock tofurther his education. There heattended Philander Smith for bothhigh school and college. While atPhilander Smith, he witnessed ablack man being dragged downthe streets 01 Little Rock to belynched and recalls that this hor­rifying experience served tofurther strengthen his resolve tobecome an attorney. In order topursue this goaL he traveled toWashington, D.C. where he at­tended the Robert H. TerrellSchool 01 Law, an all black lawschooL graduating in June 1937.He returned to Arkansas InFebruary 1938, having alreadytaken and passed the ArkansasBar exam in June of 1935. He lor­mally opened his law office inPine Bluff in February 1938, in theMasonic Temple Building on thecorner 01 Fourth and State Streetsin Pine Bluff. This historic build­ing housed the offices of most ofthe black professionals in PineBluff at that time, and was a focal

name in headlines across the na­tion during the 1940s. He recallswith special pride taking SilasHunt. the first black to attend theUniversity of Arkansas LawSchool. to Fayetteville in 1948. Hisrole in building the NAACP inArkansas was especially notable.He served as president of the

A "fiery orator:' Flowers is pictured at the First Baptist Church of Pine Bluffin the 1940's.

the U.S. Supreme Court in 1954.He has fought racism and dis­crimination across the U.S. and asfar afield as Cuba.

His accomplishments are toonumerous to attempt to recount.Some of the high points which hetreasures are not the celebratedcriminal trials which kept his

1141Arkansas LawyerlJuly 1985

State NAACP in 1948 and was pres­ident of the Pine Bluff Chapterfrom 1946 to 1948. during whichtime it became the largest branchever in the history of NAACP inArkansas, enrolling over 5000members. He was a founder andleader of the National Bar Associa­tion, the largest association ofblack lawyers in the U.S., andserved as its vice president in 1947and president in 1953, and con­tinues to occupy a leadership posi­tion in this organization.' In 1938,Flowers helped to organize thefirst state bar association forblack attorneys m Arkansas,which was initially called theWonder State Bar Association.During the 1960s. with the adventof black awareness, the organiza­tion's name was changed to Ar­kansas Black Lawyers Associa­tion, In 1981, the association for­mally changed its name to the W.Harold Flowers Law Society. torecognize and honor HaroldFlowers for his service to the bar,and his pioneer work on behalf ofhuman rights. In 1977, he was thefirst black to serve as special Cir­cuit judge for lefferson County. In1980. he was appointed Associatelustice of the Arkansas Court ofAppeals by Governor Bill Clinton.serving out the remainder of theterm of ludge George Howard, Ir.

In 1969, the tragic death of hisdaughter, Frances, led HaroldFlowers to a new calling. Long ac­tive as a layman in his church, hebecame an ordained minister inthe United Methodist Church.Continuing his role as a trail­blazer, he served as the first blackpastor of an integrated UnitedMethodist Church, co-pastoringHunter Memorial United Meth­odist Church in Little Rock from1978 to 1981. He is now pastor ofDuncan United Methodist Churchin Little Rock. In his role as a min­ister, he has relentlessly cru­saded for racial harmony andunderstanding in the churches ofArkansas. and his impassionedmessage has reached and toucheda new cons~ituencyof Arkansans.

Harold Flowers has had a signif­icant impact upon all who havecome in contact with him. WileyA. Branton, formerly dean of How­ard University Law School inWashington. D.C.. and now part-

I Angelou. Maya. I Know Why The CagedBird Sings. p. 77 (I9701.

z Id. 01 p. 78.1 In 1970. there were only 10 block allor­

neys in the slale 01 Arkansas. Segal, Ger­aldine R.. Blacks In the Low. University01 Pennsylvania Press. p. 276 (983).There are now approximately 6S licensedblack allorneys in Arkansas according tothe records 01 the W. Harold flowers LawSociety.

• Blacks were denied membership in theAmerican Bar Association until after1943, when the Association passed a res­olution stating that "membership in theABA shall not be dependent upon lace,creed or color." Id. at p. lB.

Juty t985/Arkansas Lawyerll15

Harold Flowers has said that hewould like to be remembered ashaving been like a "middle busterplow - one who came throughand made the soil tillable for thefiner tooled implements which fol­lowed." He describes himself as acrusading social engineer whohas helped to pave the way forblack lawyers who have comeafter him. Of the many changesthat he has surely witnessed inthe past 50 years. he believes themost significant and gratifyingchange to be that black Arkan­sans no longer live in a state offear. Civil rights activist. lawyer.judge. minister and religious lead­er. Harold Flowers has providedinspiration for young black attor­neys. and has set an example ofdedicated and committed publicservice for all Arkansans. I J

FOOTNOTES

character to endear him to others.He observes that Flowers "neverspeaks unkindly about anyone"and that his strong religious faithhas enabled him to weather per­sonal storms while maintaining apositive outlook on life.

The first in his family to pursuea legal career. Flowers has beguna family tradition that should con­tinue for generations to come. Heand his late wife Margaret werethe parents of nine children. Theoldest son. W. Harold Flowers. Jr..attended the University of Col­orado undergraduate and lawschools. and has practiced law inBoulder. Colorado since 1973. Adaughter. Stephanie Ann Flow­ers. attended Texas Southern LawSchool and has practiced law inHouston. Texas since 1981.Gretchen Flowers Wiggins. a sec­ond year law student at TexasSouthern University and wife ofJohn Wiggins. the president of theHouston Lawyers Association,has become the third Flowerschild to enter the legal profession.In addition to his eight survivingchildren. Flowers has ten grand­children. Members of the Flowersfamily will surely continue to beinvolved in the legal profession inthe future. as a result of the legacyand tradition which has been es­tablished by Harold Flowers.

I

This photograph of W. Harold Flowers' children includes W. HaroldFfowers. Jr.. center. Stephanie. seated. at far left. and Gretchen. next toStephanie.

ner in a major Washington. D.C.law firm. began his legal careerin Pine Bluff. He credits his earlyassociation with Harold Flowersas having influenced him to studylaw. A high school student whenFlowers first returned to Pine Bluffto practice law. Branton recallsthat Flowers was"a gifted orator"who was frequently called upon todefend blacks accused of heinouscrimes and whose cases no otherlawyer would take. He states thatbefore Flowers' arrival. the othertwo black attorneys in Pine Bluffhad practices limited to uncon­tested matters. He recalls thatHarold Flowers was a fieryspeaker and civil rights advocatewho was considered extremelyradical because he "had theaudacity to advocate equal op­pertunity for blacks in the 1940s."He states that Flowers travelledall over the state of Arkansassuggesting that biacks should beemployed as firemen. policemenand in other public positions. andthat he also filed several earlyschool cases in which he sought.not integration. but equality ofteachers' salaries and school facil­ities. which was also consideredradical in those days.

Another Jefferson County attor­ney who was greatly impressedby Harold Flowers was LawrenceE. Dawson. now a JeffersonCounty Chancery judge. JudgeDawson recalls that he first metFlowers in June of 1948 when hecame to Pine Bluff as a newly li­censed attorney. He remembersthat Flowers had a heavy caseload and was frequently in courtlitigating cases. especiallycriminal matters. Judge Dawsonsays that. in making closingarguments to the jury. Flowers"had no equal" and that he was soimpressed with his oratoricalskills that he would often comeand sit in the rear of the courtroomwhen he knew that Flowers wasscheduled to make a closing argu­ment. Judge Dawson says that inhis 37 years as a practicingattorney and judge. he has notknown any attorney to matchFlowers' unique abili ty to movejuries.

fn addition to being impressedwith Flowers' legal skills. JudgeDawson has found Flowers' uplift­ing personality and strength of

••

Consider theevidence.

You be the judge: Whatbetter location for an attor­ney in Little Rock is there?The Rogers Buildingstands within a block ofthe Pulaski County Court­house, UALR Law School

• and Library, and the-' Arkansas Bar Association.

It offers a parking deck,private health club andskywalk access to theExcelsior Hotel and theStatehouse ConventionCenter Complex. And itfeatures the office spaceconsulting services offamed Andre Staffelbach-absolutely free. Werest our case.

I t

IR>DOYLE ROGERS

COMPANYCorporate Iivi1lg like llever before.

For leasillg illformatioll, COli tact till! Doyle Ragers Comp(wy, 221 West Second Strt't'f, Suitt' 800,Littl, Rock, Arkallsas 72201, (501) 375-1662.

116/Arkansas Lawyer/July 1985

Law, Literature & Laughter

My New Year's resolutions in­cluded a provision to log more bill­able hours. As though in re­sponse, I received a letterDecember 31 instructing me to re­port for jury duty on January 3.

Notwithstanding my resolution,I opted not to excuse myself underArk. Stat. Ann. §39-108(c).

Jury service is a civic duty. Be­sides, people, especially non­lawyers, highly resent otherpeople, especially lawyers, whotake advantage of legal tech­nicalities.

Two weeks after orienta1ion Iwas called to the rail. After voirdire and peremptory strikes byfour lawyers whom I know, I foundmyself sitting as juror number 10.Either I have a reputation forhonesty and fair dealing, or eachside presupposed the other wouldstrike me.

As often occurs, the case wassimpler than the lengthy presenta­tion warranted.

P took his recently-bought usedcar to D's repair shop to have hisclutch inspected. D diagnosed abrake problem covered by p's spe­cial one-year warranty. The workwas done. P drove away in hiscar. D filed a warranty claim,which was denied.

P returned to D's shop a monthlater for another problem. WhileD's employees were working onthe car D told P of the claim prob­lem and insisted P pay the $400.00brake job bill before driving awayagain. The car was on the rack atthe time, so P had a slight edge inthe discussion.

Space limitations dictate theomission of certain details. P paidthe bill, got his car, then sued,alleging fraud (in that the brake­work was not really needed) andconversion (for the refusal to re­lease the vehicle until the alleged­ly fraudulent bill was paid). Pwanted his $400.00 back plus$50,000.00 punitive damages.

By Vic FlemingAlter four hours of testimony,

the judge submitted the case tous, the jury, saying, 'Tm givingyou this case without any in­structions. You'll never see thishappen again. It's rare. But thelawyers have agreed to submit itto you that way." That's right! Noinstructions! Not even the pre­liminary AMls.

Each side's counsel then arguedthe case under the "do-right rule."Then we, the jury, retired to con­sider our verdict. My comradesknew I was a lawyer. One of themsaid to me, "What do we do?"

"I guess we elect a foreman.""You're elected." It was my first

political victory since eighthgrade.

Someone asked whether eachperson might state their views onthe case. Without objection Igranted that request.

For half an hour people talkedabout clutches, brakes, insur­ance, warranties. agency, hear­say, breach of contract, and pos­sible reasons why the warrantorhad not been sued. The clockcrept past 5:30. I announced, "Theforeman has clearly lost control ofthe delibera1ions."

I asked for a show of hands onpunitive damages. No takers. Fora show of hands on a $400.00 ver­dict for P? No takers. For a defen­dant's verdict? Six hands. For aplaintiff's judgment of half the dis­puted bill? Five takers.

I singled out the person, otherthan me, who had not raised herhand at all. "What do you think?" Iasked.

She said she thought P was en­titled to something, but $200.00was too much. For another fiveminutes the discussion draggedon. Jurors offered their opinionson the attorneys' preparation,mannerisms, dress. etc. It wasmost educational (unfortunately, Icannot write off the lost income).

Again I struggled to regain con­trol. I asked whether four of the sixD-verdicters and four of the five P­$200.00 verdicters would join themost recent speaker in a $100.00judgment. All five P-$200.00 folksimmediately shifted. Two of the D­verdicters conver1ed.

I then assumed the role of anauctioneer with the others. "Willyou go $100.00 for P? Will you ... ?"The second or third pointee raisedhis hand. I filled out the verdictform and passed it around for ninesignatures.

Ain't justice wonderful? 0luly 1985/Arkansas Lawyer/I 17

u Toward the Bicentennial uBy Robert D. Cabe

The proposition that schoolboards should be required to re­view educational materials andschool course content for the pur­pose of removing indecent, ob­scene. or inappropriate materials.thereby ensuring that teachersand materials used in the schoolswill instill social, moral. and polit­ical values of the "traditionalAmerican" variety. is. unless verycarefully limited, antithetical tothe very foundations of Americandemocratic ideals and notions.

Generally speaking, two typesof review might be undertaken bya school board. One would be anacross-the-board, top-to-boltomreview of all materials, both cur­ricular and library; the otherwould be a case-by-case review ofspecific materials (course or li­brary) that are called into ques­tion for whatever reason. fn thecase of the former, impracticalitybecomes a factor and suggeststhat. absent extremely unusualcircumstances, such a reviewshould not be undertaken. fn thecase of the latter, a school boardmay have to review the materialsto fulfill its general supervisory re­sponsibility for all courses andmaterials. but the manner andmethod of the review should re­flect a sensitivity to the rights,needs for opportunity for ex­panded learning, and capabili­ties of the students.

An excellent statement of therole of education in our demo-

"Toward the Bicentennial" willfeature a series of articles on FirstAmendment issues to launch the1987 bicentennial observance 01the U.S. Constitution. In this issue,Robert D. Cabe and G. Ross Smithdiscuss school board review ofeducational materials and schoolcourse content. Newspapers willbe the locus 01 Phillip Carroll andProlessor Albert M. Witte andcable television programmingwill be discussed by Robert M.Cearley, Jr .. and J. W. Dickey, Jr..in the next two issues of TheArkansas Lawyer.1I8/Arkonsas Lowyerl)uly 1985

SchoolBoardCensorshipUndemocratic andUnconstitutionalerotic form of government is foundin the concurring opinion of Jus­tice Blackmun in Board 01 Educa­tion. Island Trees Union FreeSchool District No. 26 v. Pica, 457U.S. 853, 102 S.Ct. 2799, 73 L.Ed. 2d435 (1982):

Indeed, the Constitution presup­poses the existence of an in­formed citizenry prepared toparticipate in governmentalaffairs, and these democraticprinciples obviously are con­stitutionally incorporated intothe structure of our government.It therefore seems entirely ap­propriate that the State use"public schools [tol ... In­

culcat[e] fundamental valuesnecessary to the maintenanceof a democratic political sys­tern." Ambach v. Norwick, 441US, at 77, 60 L. Ed. 2d 49, 99 S.SI. 1989.It is in the execution of the in­

culcative function that the schoolboard must be exquisitely sensi­tive to not only the First Amend­ment rights of students, but alsoto the example they set forstudents and the message theysend when deciding issues ofcourse materials, course content.and library holdings. If the schoolboard is insensitive to these con­cerns and disqualifies content ormaterials with a heavy hand, itruns the risk of contradicting anddenigrating the right of freespeech and free access to ideaswhich is, by any measure, funda­mental to and of prime impor­tance in our democratic system ofgovernment.

It is helpful to examine thebreadth and depth of the inculca­live function. The most extensive

discussion is found in Ambach v.Norwick, 441 U.S. 68, 99 S. Ct. 1589,60 L. Ed. 2d 49 (1979). The issue be­fore the court was the validity of aNew York statute which requiredU.S. citizenship (with some excep­tions not relevant to the case) ofany person who wished to be cer­tified to teach in the publicschools of the state; certificationwas required of any person em­ployed to teach in the schools.After noting that public education"go[es] to the heart of representa­tive government," "fulfills a mostfundamental obligation of govern­ment to its constituency," and "isthe very foundation of good citi­zenship," the Court turned to theinculcative function:

... Other authorities have per­ceived public schools as an"assimilative force" by whichdiverse and conflicting ele­ments in our society are broughttogether on a broad but commonground. See, e.g., J. Dewey,Democracy and Education 26(1929); N. Edwards & H. Richey,The School in the American So·cial Order 623-624 (2d ed. 1963).These perceptions of the publicschools as inculca1ing funda­mental values necessary to themaintenance of a democraticpolitical system have been con·firmed by the observations of so­cial scientists . ..

441 US, at 77.The court went on to refer to the

inculcative function. but always

Editor's Note:Robert D. Cabe is a Little Rock

attorney with the Allen, Cabe &Lester law firm. Until 1981. he wasa member 01 the Wright. Lindsey &Jennings law firm in Little Rock,where he chaired the /irm's LaborLaw Section. He has served aschair 01 the state's Quality HigherEducation Study Committee andas chair 01 the Little Rock SchoolDistrict Superintendent SearchCommittee. He received a LL.B.from Duke University and a B.A.lrom Hendrix College. His twochildren, Meredith, 16, andMatthew, 13, attend Little RockPublic Schools.

limited it to those activities whichare directed to the students' under­standing of and preparation for ef­fective functioning as citizens in ademocratic society. In descrip­tions of or references to this func­tion, the Court used such terms asdevelopment of "students' atti­tude toward government and un­derstanding the role of citizens inour society," 441 US, at 78; in­fluencing "the attitudes ofstudents toward government, thepolitical process, and a citizen'ssocial responsibilities," 441 US, at79; and promotion of "particularvalues and attitudes toward gov­ernment," 441 US, at 79, n.lO.

Thus, the teaching and provi­sion of materials regarding so­ciaL moral and political values isa proper function and respon­sibility of the school board, to theextent of this specific and narrow­ly defined function: that which isnecessary to enable students toappreciate the benefits, duties,and responsibilities of citizenshipin a democratic society. Thewholesale review of all materialsto eliminate those which might,by some unspecified definition,be "obscene, indecent, or inap­propriate" is a horse of anothercolor, is wide of the mark, and istotally unjustified.

In the first place, the concept ofobscenity or indecency is nec­essarily in the eye of the beholder,and is one with which the UnitedStates Supreme Court has strug­gled on many occasions withouthaving arrived at any particularlyhelpful definitions.

There is also a practical prob­lem because of the nature ofschool boards, certainly inArkansas, and in other states, aswell. School board members areunpaid public servants who haveby and large, neither the time, thetraining, nor the inclination to un­dertake such a review. In virtuallyevery school district. the initial de­cisions regarding course mate­rials, course content. and libraryacquisitions are made by edu­cational professionals hired toperform those and other func­tions. To expect that a schoolboard member should take thetime to master the details and ac­tually review all such materials isan unwarranted assumption and

imposition on the time of such offi­cials.

If school boards did not rely onprofessionals to perform thesetasks, they would become so hope­lessly mired in detail that the taskwould not be done, or would bedone superficially and poorly. fnaddition, the likelihood of findingany objectionable materials is notgreat. certainly not in the case oftextbooks. By and large, text­books are written in such a way asto appeal to as many school sys­tems as possible and to be as un­objectionable as possible; thepublishers' profit motives assurethat this is so.

Some of the same considera­tions apply with respect to libraryacquisitions. Most acquisitionsare the result of a number of fac­tors: teacher requests for mate­rials to supplement course mate­rials; a desire for balance wi thinthe library collection among themajor topics or categories ofbooks according to guidelinespublished and generally followedby the library profession; the ac­ademic, social. and economiccharacteristics of the student pop­ulation being served; and re­quests by students and others.

In Island Trees, the Courtquoted with approval the obser­vations of a district court with re­spect to the nature and purposesof a school library:

"[A] student can literally ex­plore the unknown, and dis­cover areas of interest andthought not covered by the pre­scribed curriculum ... Th[e]student learns that a library is aplace to test or expand uponideas presented to him, in or outof the classroom." Right to ReadDefense Committee v, SchoolCommittee, 454 F. Supp. 703, 715(Mass. 1978).The court then noted that the

board's discretion in carrying outthe inculcative function, at leastas to the removal of books fromthe library, is not unfettered. Thedissent suggested that the plural­ity's holding required school li­braries to act as conduits for thedistribution of or access to pub­lished materials; the majority didnot choose to refute that charge.Practically speaking, there is agood reason to allow greater lati-

tude of materials in the library: be­cause of the often watered-downnature of many textbooks, it isonly in the library that studentswill have access to materials thatwill benefi t them in preparing forcollege admission tests, in writ­ing essays for college applica­tions, and in acquiring the enrich­ment of background that will beessential to their success in a col­lege environment and in increas­ingly sophisticated and diversework environments.

The situation with respect topatron complaints about specificmaterials is somewhat different.The school board has, of course,the ultimate responsibility for thecontent of courses taught. the ma­terials used, and the library mate­rials made available as a comple­ment to the required courses andmaterials. On occasion, a com­plaint might be received aboutsuch materials and the boardmust respond in appropriateways.

First and foremost, the boardshould establish clearly definedand regularly followed pro­cedures for such complaints. Theabsence of such procedures or theboard's departure from themweakens any decision that may ul­timately be made, because itsuggests that there may havebeen less than a full and fair ex­ploration of the educational valueof the challenged materials.

At a minimum, the board shouldrequire the complainant to specifi­cally identify the materials andthe parts alleged to be offensive;the harmful results which the com­plainant fears would follow use ofthe materials; the age group ofstudents for which the complain­ant thinks the materials appropri­ate; the extent of the complain­ant's familiarity with thematerials and with reviewers' andcritics' opinions of the materials;the action requested; and the iden­tification of materials whichmight be substituted for the al­legedly offensive materials.

There should then be a proce­dure for review of the materials bya committee which includes edu­cators (teachers, administrators.and librarians) and parents. Fin­ally, the board, if called on tomake the ultimate decision,

July 1985/Arkansas Lawyerll19

should determine whether theeducational value of the mate­rials outweighs the perceivedthreat to community values. In Is­land Trees. the Court specificallytreated the removal of librarybooks. and articulated a standardtied to the board's motivation forthe removal decision. 457 US. at871. To its decision-making pro­cess, the board should also add ameasure of sensitivity to the aca­demic freedom of the faculty.

The issues of alleged obscenityor indecency are most likely toarise in the context of literaturecourses and library holdings. InIsland Trees. the Court held thatthe board could not remove a bookfrom the school library if itthereby intended to deny studentaccess to ideas with which theboard disagreed, and if the intentwas a substantial factor (one inthe absence of which the decisionwould have been different). TheCourt carefully limited its opinionto the removal of library books.and did not treat ei ther curriculardecisions or library book acqui­sitions.

The board has ari obligation tothe students who depend on it fortheir education to not unduly nar­row the scope of that education.Our society and world are chang­ing so rapidly, and the diversity ofour nation is such that the boarddoes students a distinct dis­service when they elect to removematerials for which there is anysubstantial educational purpose.A particular danger is that aboard might tend to be too paro­chial in its viewpoint. on thetheory that it is bowing to com­munity notions of decency; thestudents are the losers, because agreat many of them will be re­quired to function in a societymuch larger than that of theirhometown, and to restrict theireducational opportunities andtheir acquaintance with newideas is to put them at a dis­advantage when competingeither in colleges and universitiesor in the employment market­place.

None of this is intended to inter­fere with the right and obligationof parents to educate theirchildren and to determine whattheir children will read, at least in

1201Arkansas Lawyernuly 1985

the realm of optional reading ma­terials. Parents can and should, ifthey feel the necessity to do so, in­struct their children not to read anunassigned book. More important­ly, these suggested rules and pro­cedures do not in any way inter­fere with the abilities of parents todiscuss and explain their viewswith respect to a particular workor idea, or to make available tothe child the benefits of other in­struction, either through a church,the reading of alternative works,or through the literature of anynumber of groups or organi­zations.

If the board is to truly enhanceand support traditional Americanvalues, it must not tread on theconcept under!ying the first andmost important of the Bill ofRights: maximum personal free­dom is attainable only in an en­vironment where there is a free ex­change of ideas, and where thebest ideas acquire that status be­cause they are constantly chal­lenged by new ideas and survivethat challenge. The schoolroomand school library, of all places.should be free marketplaces ofideas; otherwise, they become in­consistent with the fundamentalright of freedom of speech and. bytheir example. encourage intoler­ance and even limitation of thisbasic and precious right.

SchoolBoardReviewTo WhatExtent?

By G. Ross Smith

Since the adoption of the FirstAmendment to the Constitution ofthe United States and subsequentcourt decisions extending itsreach to state action. the case lawwhich has developed to establishthe scope and substantive content

of the rights enumerated in theAmendment has been overwhelm­ing, if not always clearly articu­lated. One reason for the volumeand frequency of litigation is thatthe rights protected are notabsolute and cannot be stated orapplied with mathematical preci­sion. Rights such as freedom ofspeech must often be applied incontexts which require a balanc­ing of free speech interests withother legitimate and competingconcerns.

In June, 1982, the United StatesSupreme Court was called upon tobalance the long-establishedprinciple favoring deference tolocal school officials on matters ofpublic educational policy andadministration with the allegedspeech rights of public schoolstudents. In Board of Education.Island Trees Union Free SchoolDistrict v. Pica.' the Court ad­dressed (in eight separate opin­ions) the constitutionality of ac­tions of local school boards andtheir individual members in ap­piying their personal moral. so­cial and political values to makecontent-based decisions regard­ing selection and removal ofschool library books and cur­riculum design. Five junior andsenior high school students liledsuit under 42 U.S.C. §1983 alleg­ing that such actions violatedtheir constitutional rights of free

Editor's Note:G. Ross Smith, with the G. Ross

Smith, P.A.. law firm of LittleRock, received a B.S.B.A. Degreefrom the University of Houston in1966. He was associate editor ofHouston Law Review from 1964 to1966. He was counsel for the Defen­dants in the United States Su­preme Court cases of Wood v.Strickland and the Board of Educa­tion v, McCluskey, In Wood v.Strickland. the Court was for thefirst time confronted with the issueof the liability of individual mem­bers of boards of education forcivil rights deprivations. Smith isa member of the National SchoolBoards' Association and the Na­tional Council of School Attor­neys. He authors a monthlycolumn in the Arkansas SchoolBoards' Association newsletter.

speech. While there was admit­tedly no abridgment of actualspeech. the students argued thattheir challenge should properlybe construed as within the protec­tion of speech rights. The DistrictCourt granted summary judgmentfor the school officials. noting that:

"the board acted not on re­ligious principles but on its con­servative educational philoso­phy. and on its belief that thenine books removed from theschool library and curriculumwere irrelevant, vulgar. im­moral. and in bad taste. mak­ing them educationally unsuit­able for the district's junior andsenior high school students."102 S.Ct. at 2804.

The Court of Appeals reversedand remanded for trial and theSupreme Court granted certiorari.

Prior to Island Trees. the Su­preme Court had not addressedthe exact issues involved. It hadhowever decided other cases re­quiring resolution of first Amend­ment controversies in the publicschool context. One of the mostnotable was Epperson v.Arkansas.' where the Court ex­pressly acknowledged that localschool boards have broad discre­tion in the management of schoolaffairs and that the federal judi­ciary should not "intervene in theresolution of conflicts which arisein the daily operation of schoolsystems" unless "basic con­stitutional values" (emphasisadded) are "directly and sharplyimplicated" in those conflicts. '

Although Epperson involved theEstablishment of Religion Clauseof the First Amendment, the citedlanguage is the acknowledgedtest to determine the propriety offederal intrusion in public schoolmatters where constitutional vio­lations are alleged.

Also prior to the SupremeCourt's decision in Island Trees. aconflict on the library book re­moval issue had developed in theCourts of Appeal for the Secondand Sixth Circuits. In President'sCounciL District 25 v. CommunitySchool Board No. 25.' the SecondCircuit sustained school board ac­tion on library book removalprimarily predicating its holdingon the Epperson rationale and aconcomitanl finding that the

issues asserted by the plaintiffswere not of constitutional magni­tude and did not involve the depri­vation of federally protectedrights which would warrant fed­eral intrusion. To the contrary. inMinarcini v_ Strongville CitySchool District.' the Court of Ap­peals for the Sixth Circuit con­cluded, by reasoning which somehave characterized as specious.that public school students pos­sessed a First Amendment "rightto know." The cases cited in sup­port of that assertion pertained tothe rights of adult citizens in non­school contexts and althougharguably involved the right to re­ceive information. did not addresssituations where the defendantshad a right or duty, as do schoolboards, to prescribe and regulatethe substantive content of an edu­cational program.

The Court's ultimate "resolu­tion" of the Island Trees contro­versy is perhaps one of the mostperplexing series of opinions in re­cent years. No clear majorityemerged. Justice Brennan wrotethe plurality opinion. joined byJustice Marshall. Justice Stevensand, in part. by Justice Blackmun.Justice White concurred solely inthe judgment. Separate dissentswere advanced by Chief JusticeBurger. Justice Powell. JusticeO'Connor and Justice Rehnquist.Justices Powell. Rehnquist andO'Connor joined the Chief Justiceand Justice Rehnquist was joinedby the Chief Justice and JusticePowell.

The legal issues on which theJustices diverged included notonly the basic issue whether theright of free speech afforded anyprotection to students protestinglibrary book removal but also avariety of tangential issues whicharose once the threshold issuewas decided by the plurality infavor of the students' position.Once the decision was made thatfreedom of speech was in fact im­plicated in library book removal.the Court was faced with issuessuch as: (I) the substantive con­tent of the legal test to be appliedin determining the propriety of re­moval; (2) the proper allocation ofthe burden of proof; (3) explicationof specific criteria which wouldunquestionably permit removal if

adequately substantiated; (4) con­sideration of distinctions in deci­sions to remove library books fromthe shelves vis a vis decisions notto acquire books for indusion inthe library inventory and deci­sions not to include materials incurriculum resource materials: (5)assuming vulgarity or obscenityto be an appropriate reason for re­moval of books. must such ob­scenity or vulgarity be pervasiveor would "random" vulgarity in abook suffice for removal; (6) the ex­tent to which the adequacy ofinternal school board review pro­cedures should affect the judicialreview process; and (7) the extentto which any legal test whichmight be articulated would ef­fectively erode the discretion ofschool board members and permitor require the substitution of a fed­eral judge's notion of appropriatelibrary materials by invalidatingdecisions based on the values oflocally elected school officials.

As noted, the plurality opinionauthored by Justice Brennan heldthat library book removal did in­deed implicate rights of freespeech and, in appropriate cases,warrant fecleral court interven­tion. Justice Brennan stated thatfederal review and possible inter­vention was necessary to protectthe students' "right to receive in­formation." a right which he foundto be implied in the right of freespeech. He referred to what he per­ceived to be the unique role of apublic school library and sug­gested that a student's right to re­ceive ideas was "0 necessarypredicate to the recipient's mean­ingful exercise of his own rights ofspeech, press. and political free­dom.'" In a holding which cameclosest to securing a consensus(eight justices), Justice Brennandid concede that local schoolboards have a legitimate role inestablishing an educational pro­gram so as to impart traditionalcommunity values and to promoterespect for authority and tradi­tional values "be they social.moral or political."7 However, if itcan be established that the deci­sive factor in library book removalwas "0 narrow partisan or politi­cal" motivation or an intent tosuppress ideas. it was impermis­sible. Justice Brennan did specify

luly 1985/Arkansas Lawyer/121

that criteria such as pervasive vul­garity. educational suitability.inappropriateness for an agegroup. space limitations and ob­solescence would be acceptable.hut that is presumably qualifiedby the language on impermissiblemotivation. Justice Brennan ex­pressly stated that his views re­lated only to library book removaland not to initial acquisition orcurriculum content decisions. Healso decided that the internal re­view procedures in the IslandTrees case were suspect and thata trial was necessary to exploreissues pertaining to the motiva­tion of the boord members. Thecase was thus remanded.

The dissenting Justices {and tosome extent Justice Blackmun}were aghast at what they per­ceived to be fatal flaws in theplurality's reasoning. Foremost intheir concern was JusticeBrennan's announcement of a pub­lic school student's "right to re­ceive information" which wastermed "previously unheard of"and "wholly unsupported by ourprevious decisions. "8 The dis·senters also professed theirinability to fathom how a schoolboard could eltectively inculcatetraditional community values(whether moral. social or politi­cal) in light of the largely subjec­tive and restrictive test prescribedby the plurality. Moreover. if. asadmitted by the plurality. a boardmay transmit its notions of appro­priate values without federal re­view in the curriculum and inbook acquisition decisions. whatpossible rational basis couldthere be for severely restrictingtheir discretion in library book re­movals. The dissenters alsocogently noted that. not only wasspeech per se not involved. butthat any alleged denial of accessto information did not rise to thestandards of Epperson as a mate­rial and substantial encroach­ment of a basic constitutionalright since (I) no such right hadbeen previously recognized; (2)the removed books were avail­able from other sources and (3) noeffort was made to suppress or in­hibit classroom discussions of theideas discussed in such books.

It is unfortunate that this newlysanctioned basis for further fed-

1221Arkansas Lawyer/luly 1985

eral encroachment into the altairsof local school districts emanatesfrom such a bizarre combinationof opinions as is found in IslandTrees. The divergence of viewsmanifested in the eight opinionsmay be the most persuasive evi­dence that the plurality opinion issimply wrong. from both legaland policy considerations. Almosteveryone would concede that pub­lic students generally benefitfrom exposure to a wide spectrumof varying ideas. However. tosuggest that exposure to librarymaterials is a matter of federalconstitutional dimensions is sim­ply to arrogate unto the federaljudiciary additional authority tofurther erode local control of pub­lic school operation when otherdirect and indirect means of ob­taining access to a divergence ofeducational materials are readilyavailable. Chief Justice Burger ob­served in Island Trees:

"We can all agree that as a mat­ter of educational policystudents should have wide ac­cess to information and ideas.But the people elect schoolboards. who in turn selectadministrators. who select theteachers. and these are the indi­viduals best able to determinethe substance of that policy.The plurality fails to recognizethe fact that local control of edu­cation involves democracy in amicrocosm. In most publicschools in the United States theparents have a large voice inrunning the school. Throughparticipation in the election ofschool board members. the par­ents influence. if not control.the direction of their children'seducation. A school board isnot a giant bureaucracy far re­moved from accountability forits actions; it is truly 'of thepeople and by the people.' Aschool board reflects its con­stituency in a very real senseand thus could not long ex­ercise unchecked discretion inits choice to acquire or removebooks. If the parents disagreewith the educational decisionsof the school board. they cantake steps to remove the boardmembers from oltice. Finally.even if parents and studentscannot convince the school

board that book removal is in­appropriate. they have alterna­tive sources to the same end.Books may be acquired frombook stores. public libraries. orother alternative sources un­connected with the unique en­vironment of the local publicschools."In civil rights cases from other

contexts. the federal judiciary hasstressed that defendants. to theextent possible. must make deci­sions (particularly in the employ­ment discrimination area) utiliz­ing objective. as opposed tosubjective. criteria. Yet. the Is­land Trees Court has articulatedalmost totally subjective criteriato be employed by a federal judgereviewing library book removaldecisions. The ominous prospectseems to be that the inventory ofpublic school libraries will be de­termined more by litigious teen­age students and federal judgesthan publicly elected school offi­cials.

Although the question posedhere for debate is whether localschool boards should be requiredto review educational materials toensure the installation of tradi­tional social. moral and politicalvalues. Island Trees suggests thatthe real inquiry. at least in thecase of library book removal. isthe extent to which they can do so.The plurality seems to insulatecurriculum and book acquisitiondecisions from federal judicial re­view. at least for now. The dis­senters' position that none of thethree categories of decisions meetthe parameters of Epperson ispreferable. 0FOOTNOTES

• 102 S.Ct. 2799 (1982)., 303 U.S. 97 (1968)., Id at 104.• 457 F.2d 289 (2d Cir. 1972). cert.

denied. 409 U.S. 998 (1972)., 541 F.2d 577 (6th Cir. 1976). See

also Right to Read Defense Com­mittee of Chelsea v. School Com­mittee of the City of Chelsea. 454F.Supp. 703 (D. Mass. 1978) andSalvail v. Nashua Board of Edu­cation. 469 F.Supp. 1269 (D.N.H.1979).

• 102 S.C!. at 2808., 102 S.C!. at 2806.• 102 S.C!. at 2830.

The Grand GulfCases

A summary of decisions, issues and arguments on

state v. federal jurisdiction in utility regulation

Middle South Utilities, Inc.(Middle South), is the parent tolour wholly-owned utility com­panies: Arkansas Power & Light(AP&L), Louisiana Power & Light(LP&L), Mississippi Power & Light(MP&L), and New Orleans PublicService, Inc. (NapS!) (collectivelyreferred to as the operating com­panies). In the early 1970's, MiddleSouth planned the Grand Gull nu­clear project as a two-unit gener­ating plant to be located near PortGibson, Mississippi. to produce1250 megawatts of power per unitand to serve and be individuallyfinanced by Mississippi Power &Light. Middle South determinedsubsequently that MP&L did notalone possess financial strengthsufficient to finance constructionof the project and in February 1974organized Middle South Energy,Inc. (MSE), as a wholly-ownedgeneration subsidiary to take overthe interest of MP&L and facilitatefinancing and construction.

The existing financing frame­work for Grand Gull (to date in­volving a sum exceeding some

$3.4 billion) has been developedthrough a complicated series offinancing agreements amongMiddle South, the operating com­panies, Middle South Energy, Inc.and third party lenders - a con­sortium of domestic and foreignbanks. The first such agreement,known as the Availability Agree­ment, was executed by MiddleSouth Energy, Inc.. and theoperat­ing companies in June 1974. Underits terms, the four operating com­panies agreed to take and pay forpower from the Grand Gull unitaccording to their respectiveneeds based upon a formula setout in another document known asthe 1973 System Agreement.' In ef­fect, under the Availability Agree­ment. the operating companiesagreed to jointly reimburseMiddle South Energy, Inc. forthe cost of construction of GrandGull by paying depreciation over27.4 years, plus amounts equal toMSE's operating expenses and in­terest on debt, whether or not it re­ceived necessary government au­thorizations to perform its dutiesunder the agreement or actually

performed its duties and obli­gations under the agreement.

Beginning in 1974, MSE exe­cuted a number of bank loanagreements and indentures to ob­tain construction financing, in theCOllrse agreeing to enforce itsrights as to the operating com­panies arising from the Avail­ability Agreement and to neitherterminate nor modify the agree­ment without the consent of thelenders, MSE also agreed to as­sign to its lenders its rights underthe Availability Agreement to re­ceive payments from the operat­ing companies as security for the

Editor's Note:

Dana Daniels Nixon of LittleRock, was senior and chief Admin­istrative Law judge from 1980-84 atthe Arkansas Public Service Com­mission. She attended Randolph­Macon Women's College and theUniversity of Arkansas at Fayette­ville School of Law, where shewas a member of the ArkansasLaw Review staff. Nixon plans toreturn to law practice in the fall.

By Dana Daniels Nixon

July 1985/Arkansas Lawyerll23

loan agreements. Between June1977 and October 1984, AP&L andthe other operating companiesjoined in 12 agreements related tothe assignments in which theyagreed to make payments pur­suant to the Availability Agree­ment directly to the banks in theevent MSE defaulted in its pay­ments to the lenders, and to makethe payments due even if regula­tory approval for the plant wasnever secured and even if theplant never produced any power.The operating companies alsoagreed to make the payments dueMSE under the AvaHability Agree­ment even though a regulatoryagency might prohibit the operat­ing companies from making them,in the form of unsecured "ad­vances," or loans from the com­panies to MSE, which would be­come "subordinated indebted­nesses" of MSE to them. In effect,then. the operating companiesagreed to make "loans" to MSE ifthe making of "payments" were tobe prohibited. The rights of the op­erating companies to collect thedebts owned them by MSE would,under the terms of the assign­ments of the Availability Agree­ment. be inferior to ("sub­ordinated") MSE's' pre-existingdebts to the banks - which wouldbe paid to the banks with the pro­ceeds of the "advances" made toMSE by the operating companies.

AP&L built its plants in Ar­kansas and, by 1980, had a great­er portion of coal and nuclearbaseload generating capacity inrelation to its customers' needsthan the other operating com­panies. In recognition of this, theoperating companies agreed in aJuly 1980 Memorandum of Under­standing to reallocate their obli­gations to take power from and topay for Grand Gulf. In this agree­ment, formalized a year laterin a Reallocation Agreementapproved by the federal Securi­ties and Exchange Commission("SEC")', AP&L relinquished allof its interest in Grand Gulf.The other operating companiesagreed that AP&L should be allo­cated none of the energy capabil­ity of the project and agreed theywould indemnify or "hold harm­less" AP&L for any obligationsthat might ever be imposed on itdue to the 1974 Availability Agree­ment and assignments of MSE's1241Arkansas Lawyer/Ju1y 1985

rights thereunder. The other threecompanies further agreed to exe­cute an agreement to be filed withthe Federal Energy RegulatoryCommission ("FERC") establish­ing the terms, rates, and con­ditions for the sale of Grand Gullpower in conformity with the Real­location Agreement.

As noted, however, the Avail­ability Agreement could not bemodified by MSE to comply withthe Reallocation Agreement's zeroallocation of capability to AP&Lwithout the permission of thoselenders financing construction ofthe project. The lenders refused torelease AP&L from its obligationsaltogether but did agree to a fixedallocation of 17.1% of the total fi­nancing cost of the project asAP&L's obligation. In November1981, with the consent of the lend­ers, an amendment to the Avail­ability Agreement was executedwherein AP&L expressly assumedthe obligation to pay for thatshare of the costs.

Each of these documents was,in accordance with the PublicUtility Holding Company Act of1935, IS U.S.C. §79 et seq.. filedwith the SEC for approval. The1973 and 1982 System Agreementswere filed for approval only withthe FERC.

On June 10, 1982, the operatingcompanies and MSE entered intoa formal agreement known as theUnit Power Sales Agreementwhich was filed as a wholesalerate in Middle South Energy, Inc.'(hereinafter cited as the GrandGulf case). This agreement de­tailed terms for the sale and pur­chase of Grand Gulf power pur­suant to the fixed allocations inthe Reallocation Agreement and,therefore, granted no entitlementto capacity and imposed no costobligations on AP&L. The agree­ment was filed with FERC for ap­proval on June 18, 1982. MSE justi­fied its allocation plan on thegrounds that each operating sub­sidiary should have adequatebaseload generation and a diver­sified fuel mix, and that AP&L'sgeneration currently met suchneeds. On February 3, 1984, FERCAdministrative Law Judge ErnstLiebman rejected the provision ofthe Unit Power Sales Agreementthat AP&L had no obligation topurchase power and held thatAP&L should receive 36% of the

power from Unit 1 of Grand Gulfand bear 36% of its cost. (The fateof Unit 2 was not decided.)

On April 30, 1982, Middle SouthServices, Inc.. the service sub­sidiary of Middle South, filed the1982 System Agreement for ap­proval in Middle South Services,Inc,' (hereinafter cited as the Sys­tem Agreement case). Thisdocument was meant to replacethe 1973 System Agreement as thegoverning agreement for whole­sale buying and selling trans­actions among all the publicutility subsidiaries of MiddleSou th except those from GrandGulf, which was covered by theUnit Power Sales Agreement.'

In early 1983, testimony and ex­hibits were filed in the SystemAgreement case by the FERCStaff, the Louisiana PSC, and theCity of New Orleans. Each pro­posed major changes in the as­signment of production costsamong the Middle South operat­ing companies to effectivelyequalize such costs among thecompanies and shift substantialportions of the costs from the otheroperating companies to AP&L.One major consequence of equal­izing production costs on theMiddle South system would be totransfer the benefits associatedwith two-thirds of AP&L's low-costcoal and nuclear plants to the op­erating companies in Louisianaand Mississippi, while shiftingonto AP&L one-third of the cost im­pacts of the more expensiveGrand Gulf and Waterford nu­clear plants. Quite obviously, thenet result of such equalizationwould be a dramatic escalation inAP&L's costs of electricity.

On February 2, 1984, the day be­fore the initial decision in theGrand Gulf case, Middle SouthServices, Inc. filed a "Notice ofSeparate Positions" of the operat­ing companies and advised theFERC that they would take dif­ferent positions on the MiddleSouth System's production costallocation issue.' Subsequently,Louisiana Power & Light, Mis­sissippi Power & Light and NewOrleans Public Service, Inc.,called for use of allocation meth­ods designed to bring aboutequalization of production costsamong the operating companieswhile AP&L adhered to the posi­tion advanced by MSS at

previous evidentiary hearings in1983; which reflected a zero alloca­tion of Grand Gulf to AP&L pur­suant to the Reallocation Agree­ment.

In March 1984, following the de­cision by Judge Liebman to im­pose 36% of the Grand Gulf costson AP&L, the Arkansas PSC be­gan actions on its own. First. itinstituted two investigatory pro­ceedings into the facts and cir­cumstances underlying the con­tractual relationships involvingGrand Gulf among AP&L, its affili­ates, and Middle South.' It thenissued an Order to Appear andShow Cause in August 1984 inwhich it directed AP&L to showcause why certain agreementswhich purported to obligate it inconnection with the Grand Gulfproject should not be held void abinitio as a matter of law.' TheOrder referenced a number of doc­uments involved in the GrandGulf financing scheme but indi­cated that the only documentssubject to being declared voidwere the agreements actually ex­ecuted by AP&L. It did not addresseither the System Agreement orthe Unit Power Sales Agreement.

A hearing date was set and doc­uments and testimony filed withthe Arkansas PSC. Before thehearing took place, MSE filed suiton August 31, 1984, for declaratoryjudgment and injunctive relief inMiddle South Energy, Inc. andArkansas Power & Light Co. v.Arkansas Public Service Comm'net aJ.' Seven days after a briefcourt hearing on the matter, Dis­trict Judge Henry Woods perma­nently enjoined the PSC from con­ducting further proceedingspursuant to the Show CauseOrder on the ground of federalpreemption. The PSC's Motion toAmend the District Court's Orderwas denied, and the matter wasappealed." Oral arguments wereheld on April 8, 1985, and a deci­sion is pending in that case.

DECISIONS, STATUS Of CASE,ISSUES, AND RATIONALES

(BRIEfLY)The underlying issue in these

cases is the proper division ofjurisdiction and power between astate and the federal governmentin the regulation of public utili­ties. There are, of course, numer·ous other issues involved in eachcase, factual and legal. and pro-

cedural and substantive, not sum·marized due to space constraints.

In the Grand Gulf case, JudgeLiebman issued his initial deci­sion on february 3, 1984. He foundthat generation capacity ownedby operating companies in theMiddle South system, includingGrand Gulf. is planned and can·structed to meet the needs of theentire system rather than the indiovidual needs of the separate oper­ating companies; that the currentlevel of baseload capacity foreach operating company is due tosystem planning; and that MSE'sjustifications for the proposedGrand Gulf sales were inad­equate. He concluded that MSE'sproposed allocation of Grand Gulfpower and costs unduly dis­criminates against Louisiana andMississippi retail ratepayers andmust be modified; that the Louisi­ana PSC proposal to allocateGrand Gulf power and energy tothe operating companies basedupon equalization of costs fromthe nuclear units on the MiddleSouth system is just and reason­able; and that the fERC has thepower to force AP&L to purchasepower from MSE despite the factthat AP&L has no contractual rightor duty under the Unit PowerSales Agreement to purchasesuch power.

In the System Agreement case,Administrative Law Judge Headissued his Initial Decision onfebruary 4, 1985. His decision con­tains several findings of fact andconclusions of law which are dia­metrically opposed to those madeby Judge Liebman in the GrandGulf case: he rejected the pro·posals for equalizing productioncosts among the operating com­panies on the Middle South sys·tem and concluded that suchproposals were unjust. unreason­able, and unduly discriminatory.He found that any cost equaliza­tion scheme would be foreign tothe traditional operation of theMiddle South pool and that theevidence clearly showed that theindividual operating companiesof the system have operated anddo operate independen tly of theirparent so that generation addi­tions, with the exception of GrandGulf. have been made to satisfyindividual company needs andhave not been planned or built assystem plants.

Since he found Grand Gulf hadbeen built as a system plant,Judge Head ordered that AP&Lshould purchase a portion of itspower and bear a part of its cost.He based its share upon the ratioof its annual demand for energy(kilowatt hours) to the annualdemand of the system as awhole" and ordered that this for­mula be integrated into the 1982System Agreement.

Both the System Agreementcase and the Grand Gulf case arenow on appeal to the full fERC.Both cases involve as majorissues the general power of thefERC to order involuntary equal·ization of production costs againstone member of an affiliated powerpool and, more specifically, thepower of the fERC under the fed­eral Power Act, 16 U.S.C. §824 etseq.. to require that a separateelectric utility purchase powerfrom another utility, albeit anaffiliated one, where the purchas.ing utility has no contractual rightor obligation to purchase powerfrom the selling utility and wherethe selling utility is contractuallyrequired to sell all of its power out­put to other affiliated utilities. Un­derlying the arguments of the Ar­kansas parties l2 in both cases isthe question of the extent to whichthe federal agency may properlyintrude on the regulatory auth­ority of the state.

The Arkansas parties arguethat there are few situations be­yond the one involved in thesecases in which Congressional in­tent not to preempt state authoritycould be more pronounced. Theynote that the federal Power Actwas designed to Ii 11 the gap in reg­ulation of the electric industry leftby Public Utilities Comm'n. V.

Attleboro Steam & Electric Co. "which denied the states the rightto regulate the price of electric en­ergy across state lines. The pri­mary purpose of the Act was togive a federal agency power to soregulate. 14 The Act was "con­ceived entirely as a supplementto, and not a substitute for stateregulation. "I:' In referring to whatis now the Act. the House notedthat probably "no bill in recentyears has so recognized the re­sponsibilities of state regulatory

•. "16commlsslOns ...While the Arkansas parties rec­

ognize the interstate nature of

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Sierra doctrine. developed inUnited Gas Pipeline Co. v. MobileGas Service Corp.~ and FPC v.Sierra-Pacific Power Co.." thepawer o( the FERC under the Fed­eral Power Act to abrogate juris­dictional contracts is severelycircumscribed: the FERC maychange the contractual terms im­pacting rates only if the FERClinds. under §206(a) o( the Act"that the rate adversely affects thepublic interest to the point that thefinancial ability o( the utility tocontinue service is impaired. orwhen the rate is unduly discrimi­natory to or places an excessiveburden on other jurisdictional(wholesale) consumers. The FPA.according to the Arkansas par­ties. is premised on voluntarily de­vised contractual relations amongits jurisdictional utilities and con­tern plates abrogation of these con­tracts by the FERC only in circum­stances of unequivocal publicnecessity. Further. they arguethat the FERC may not force AP&Lto purchase capacity that it hasnot agreed to purchase and notethat the Eighth Circuit has heldthat title need not pass in order toconstitute a prohibited sale pur­suant to §202 o( the Federal PowerAct. 16 USC §824(a). in Otter TailPower Co. v. F.P.C.". Nor. theyassert. does the Commission prec­edent support a "forced purchase"in a similar situation.:zI

The cost equalization parties inboth the Grand Gulf and System

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ambit of [its] statutory auth­ority."" In their opinion. to law­fully equalize production costsamong operating companieswould require equalizing theircosts of service. an accomplish­ment only achieved by allocationo( ownership of generation plant.directly or indirectly. Such alloca­tion is beyond the pawer o( FERCto make. since it has no jurisdic­tion over generation facilities.either indirectly or directly.'"

Further. the Arkansas partiesargue that Judge Liebman has ex­ceeded the jurisdiction o( theFERC by considering the retailratepayers o( the jurisdictionalconsumers. the opera1ing com­panies. While they agree that theFederal Power Act has as itsprimary purpose the protection o(consumers. they assert that thebeneficiaries of such protectionare these jurisdictional con­sumers (the operating companiesin this case) rather than the ulti­mate retail consumers. 21 Only inextreme cases, such as a pricesqueeze. may the Commissionconsider the impact of its deter­minations on retail rates. Z!

The Arkansas parties go on toargue that. even if it has jurisdic­tion generally to do so. the FERCcannot allocate any power from orcost responsibility (or Grand Gulfto AP&L because it has no contrac­tual vehicle through which it maydo so." The Arkansas partiescontend that under the Mobile-

sales in general among theMiddle South operating com­panies. and. specifically. sales ofthe energy from Grand Gulf. theycontend that the mere complexityof the transactions and the inter­state nature of the transactions donot. in and of themselves. renderevery aspect of their regulationsubject only to (ederal authority.The Arkansas PSC. however. ad­mitted that Congress could. if it sodesired. render the agreementscompletely subject to (ederal au­thority. As the Supreme Courtstated in Connecticut Light &Power Co. v. FPC:":

It has never been questionedthat technologically gener­ation. transmission, distribu­tion. and consumption [of elec­tric energy] are so (used andinterdependent that the wholeenterprise is within the reach ofthe commerce power of Con­gress. neither on the basis thatit is. or that it affects interstatecommerce if at any point itcrosses a state line. Such abroad and undivided base (orjurisdiction of the Power Com­mission [the predecessor of theFERCI would be quite un­objectionable and perhapshighly salutary if the UnitedStates were a unitary govern­ment and the only conflictinginterests to be considered werethose of the regulated componies.The Arkansas position is. sim­

ply. that Congress has not chosento give the FERC such a broodjurisdiction to date. The mostbasic arguments o( the Arkansasparties are that the FERC lacksauthority to equalize costs be­cause it would be an impermis­sible allocation o( generationplant andlor an impermissible set­ting o( retail rates by FERC. Theycontend that the FERC is clearlyprohibited from allocating gener­ation plant under Section 201(b) o(the Federal Power Act' :

The Commission shall ... nothave jurisdiction. except asspecifically provided ... over(acilities used (or the gener­ation of electric energy ...

While they note thot the FERCmay make "pragmatic adjust­ments" in agreements before it torelieve unduly discriminatory orunreasonable impact, they assertthat it may do so only "within the

126 Arkonsos Lawyer July 1985

Agreement cases contend thatFERC may (and should) modifyeither of the agreements to equal­ize production costs on the sys­tem. In doing so, they use threemain rationales for supportingsuch a decision.

First. they contend that theissue is not whether or not costsshould be equalized or redistrib­uted but how the massive newcosts, some $6 billion, associatedwith the Grand Gull units andWaterford 3 (a Louisiana nuclearplant scheduled to begin commer­cial operation in mid 1985), shouldbe distributed.

Second, they contend that thereis no issue as to the jurisdiction ofthe FERC to adopt cost equaliza­tion. because jurisdiction is clear­ly existent due to the pervasive in­terstate nature of the operations ofthe system, the subjection of theSystem Agreement to the FERC forapproval, and precedent both atthe FERC and in the courts."

Third, they assert that the issueis not whether the Middle Southsystem should be treated differ­ently than other power pools inthe country by forcing cost equal­ization upon some memberswhich have not voluntarilyagreed to acceptance of equalcosts. Rather, they argue, theMiddle South system operates asa monolith and the individual cor­porate identities of the separateoperating companies have, formany years, been ignored for pur­poses of system generation plan­ning, so the matter is one of dis­tinguishing the Middle Southsystem from voluntary and un­affiliated (in the holding companysense) companies for cost alloca­tion purposes.

These parties view cost equal­ization, if not supported by prece­dent. as a response to the "realworld" economic and structuralcharacteristics of the MiddleSouth system which operates overa four state area and has, in itsnew nuclear units. ventured intoconstruction of units with giganticphysical and generational size aswell as gigantic costs. Their ratio­nale is that active and effectiveregulation by the federal agencyis mandatory to protect the sys­tems' (retail) ratepayers sincestate commissions cannot be ex­pected to fairly deal with

consumers in other states. Theyalso suggest that FERC shouldmove into cost equalization tospread risks assumed by com­panies constructing such gigan ticplants.

In response to the arguments ofthe Arkansas parties that costequalization would either requirean impermissible forced sale ofthe generation plant or, failingthat. require a state commissionto set retail rates based on aver­age system costs rather than theactual operating costs of the indi­vidual utilities (which would vio­late all traditional concepts andlegal standards of traditional rate­making), the proponents of costequalization assert that their planwould do neither. It would merelyreallocate costs and is permis­sible under Municipalities ofGroton v, FERC" and CentralIowa Power Coop, v. FERC."They also rely on Georgia PowerCo. v. FERC." where the FPC re­fused to equalize costs among theSouthern Company subsidiariesbecause the system agreementdid not provide for it. and Con­necticut Light & Power Co. v.FERC." wherein the FERC didorder cost equalization becausethe Northeast Utilities systemagreement did so provide.

The cost equalization partiesalso use these cases in which vol­untary cost equalization has beenapproved by FERC as support fortheir argument that FERC has thepower to modify the System Agree­ment to force cost equalization,arguing that FERC has, at leastimplicitly, found cost equalizationto be just and non-discriminatorysince it could not have approvedan agreement that resulted in un­just or unlawfully discriminatoryrates.

Finally, in Middle South Energyv. Arkansas PSC. supra, the sub­stantive question is one of theproper regulatory roles of theFERC, the SEC, and the ArkansasPSC with respect to a number offinancial documents executed byAP&L in support of the Grand Gullproject since 1974. The PSC arguesthat the District Court erred infinding that the FERC has ex­clusive jurisdiction over theagreemen ts which were subject tothe Order to Appear and ShowCause.~ It also contends that theDistrict Court abused its discre-

tion by granting injunctive reliefthat was overbroad; that the Dis­trict Court lacked subject matterjurisdiction because the ap­pellees failed to exhaust theiradministrative remedies and thematter was not ripe for adjudica­tion; and that the District Courtshould have abstained from judg­ment pending the outcome of thePSC proceeding.

The PSC and supparting inter­venors argue that there is con­current jurisdiction between itand the SEC to regulate securitiesand other evidences of indebted­ness issued by public utilitieswhich are subsidiaries of publicutility holding companies, sincethis jurisdiction is recognized ex­plicitly in the Public Utility Hold­ing Company Act of 1935. 15U.S.C. §79g. The PSC also assertsthat whenever a state regulatesthe securities of electric utilities,the FERC is ousted in jurisdictionover such securities by expressprovision of the Federal Power Actat §§824c(f) and 825q.

MSE and AP&L argue that thelower court properly found thatstate jurisdiction over the subjectfinancial agreements was pre­empted by the Act under Nar­ragansett Electric Company v.Burke." that state regulation ofthe Grand Gulf agreements wouldbe an unreasonable interferencewith interstate commerce in viola­tion of the Commerce Clause,~and that the PSC's proceedings inthe Show Cause docket were ripefor injunctive relief by the DistrictCourt. 31

However, nowhere in his Mem­orandum Opinion did JudgeWoods address the securities and"evidence of indebtedness" argu­ments raised by the PSC in itsShow Cause Order and briefs tothe Eighth Circuit. It is anticipat­ed that the Eighth Circuit will, if itreaches the merits of the preemp­tion issue, address the relativeroles of the FERC, SEC, and Ar­kansas PSC in regulating securi­ties of subsidiaries of publicutility holding companies. TheCourt, of course, may decide to ab­stain from deciding the substan­tive issues presented and remandthe case to the PSC for further pro­ceedings and a final order in theShow Cause docket. A decisionfrom the Eighth Circuit in thiscase is expected this summer. 0

July 1985/Arkansos Lawyerl127

FOOTNOTES

I The System Agreement. signed in 1973and laler amended. covers the buyingand selling of power at wholesaleamong the four operating companies; itwas succeeded by the 1982 SystemAgreement which is the subject of one ofthe coses discussed in this article.

t Middle South Energy. Inc.. et 01..S.E.C .. Holding Company Act ReleaseNo. 22280 (November 18. 1981).

, FERC Dockel No. 82-616·000.• FERC Dockel No. 82·483-000.~ MSS acted as the representative agent

of the four operating companies for thisfiling. In October 1982. LP&L. MP&L. theStote of Mississippi. and the Mis­sissippi Legal Services Coalition jointlymoved for consolidation of this casewith the Grand Gulf case: the motionwas denied in November 1982.

6 Traditionally. each operating MiddleSouth company has buill its own gener­ating plants and assumed financial re­sponsibility for its own productioncosts. approved by the state com­missions.

• In Re An Investigation into the Oper­ations of Arkansas Power &: Light Co..APSC Dockel No. 84·04·011; In Re An In­vestigation into the Operations ofArkansas Power 8t Light Co.. APSCDockel No. 84-041-011.

I In Re an Order for Arkansas Power &:Light Co. to Appear and Show Causewhich Certain Agreements Should NotBe Held Void Ab Initio. APSC Docket No.84·l90-U. The order referenced Ark. Stat.Ann. §73-2SS, which provides that a pub­lic utility may not issue "stock, bonds.notes or other evidences of indebted­ness" without authorization from theArkansas PSC and stated that the obli­gations assumed by AP&L for GrandGulf costs "may constitute evidence ofindebtedness" under the Arkansasstatutes. All of the documents includedin the Order. including the AvailabilityAgreement and its amendments andassignments executed by AP&L. hadbeen filed with and approved by theSEC.

• Dockel No. LR·C-84·778 (E.D.PJk.). AP&Lintervened in support of MSE. and theAttorney General of Arkansas andRatepayers Fight Back. a consumers'group. intervened as defendent­intervenors.Arkansas Public Service Comm·n. et al.v. Middle South Energy. Inc. andArkansas Power &: light Co.. DocketNos. 84-2409. 2410. ond 2480.Judge Head admitted that an argumentcould be made that he lacks jurisdictionto require sales or purchases of GrandGulf power because the UPSA is the sub­ject of the Grand Gulf case in Footnote 1.

n For purposes of this article. referencewill be to the arguments of the partiesas those made by "the Arkansas por­ties" or "the cost equalization parties";the geographical division betweengroups is not exactly reflected in the di­vision of legal and philosophical argu­ments but is for the most part. and thereferences serve the purpose of brevityin this article due 10 the number of par·ties in the various cases: for example, inthe System Agreement case. the partiesare: MSS; the four MSU operating com­panies; Arkansas PSC; jointly. theCities of Benton. North Little Rock, Os­ceola. and Prescoll. Arkansas. andFarmers' Electric Cooperative Corpora­tion; jointly, the cities 01 Conway andWest Memphis. Arkansas; the Louisi­ana PSC; the City 01 New Orleans; the

128/Arkansas Lawyernuly 1985

City of Lafayette, Louisiana; the Mis­sissippi PSC; Mississippi Repre­sentatives Wayne Dowdy and WebbFranklin; the Missouri PSC; the MissouriOffice of Public Counsel; AMAX; Inter­national Paper Co.; Occidental Chemi­cal Corp.; Georgia-Pacific Coo; Mis­sissippi Industries; Mississippi LegalServices Coalition; the Municipal En­ergy Agency of Mississippi; ArkansasIndustries <Reynolds Metals Co.. Rice·land Foods. Associated Industries ofArkansas. and Weyerhaeuser Co.);Union Carbide Corp.; Louisiana Repre­sentative W. J. Tauzin; the AttorneysGeneral of the states of Arkansas. Mis­sissippi, and Louisiana; CongressionalDelegations of the states of Arkansas.Missouri. and Louisiana; and. the Stallof the FERC.

" 273 U.S. 83 (1927).16 See H. Rep. No. 621. 74th Congo 1st Sess.

17 (1935).I~ Hearings on H.R. 5423 before House

Comm. on Interstate and foreign Com..74th Congo 1st sesS. 1638 (935).

" H.R. Rep. No. 1318, 74th Congo 1st Sess. 7(1935).

" 324 U.S. 515 (1954)." 16 U.S.C. 884(bl." Ohio Power CO. V. fERC. 668 f.2d 880

(6th Cir. 1982). quoting FPC NationalGo. Pipeline Co. 315 U.S. 575 (1942).

'Xl In Re Pacific Gas and Electric Co.. 45F.P.C. 1153. aUd sub nom.. Northern Cal­ifornia Power Agency v. FPC. Sl4 F.2d184 (D.C. Cir. 1971). cerl denied. 423 U.S.863 (1975); See. Richmond Power &: LightCo. v. FERC. 574 F.2d 610 (D.C. Cir. 19781.

21 See. Pennsylvania Weier Power &: CO. V.

FPC. 343 U.S. 414. 418 (19521; Flo. Power &Lighl Co. v. FERC. 617 F.2d 809. 816 (D.C.Cir. 1980); Towns of Alexandria. Min­ne.olo v. FPC. 555 F.2d 1020. 1028 (19771.

Z1 FPC. V. Conway Corp.. 426 U.S. 271(1976).

ZJ In the Grand Gulf case, AP&L is a signa­tory only for the purpose of consentingto the terms of the contract; it has norights or obligations under the UnitPower Sales Agreement to take powerfrom or pay for Grand Gulf. In the Sys­tem Agreement case, the allocation 01power and cost of Grand Gulf is not pro­vided for since it is covered by theUPSA. and the owner of the plant.Middle South Energy. Inc .. is a party toneither the SA itself nor the case.

24 350 U.S. 332 (956); See. Permian BasinArea Rate Cases, 390 U.S. 747 (968).

~ 350 U.S. 348 (1956).'lIl 16 U.S.C.§824e. which provides: When·

ever the Commission shall, after a hear­ing.... find that any rate ... demanded... for any ._. sale subject to the jurisdic­tion of the Commission ... is unjust.unreasonable. unduly discriminatory orpreferential. the Commission shall de­termine the just and reasonable rateand shall fix the same by order ... _"

n 473 F.2d 1253 (81h Cir. 19731.:II Southern Co. Services. Inc.. 20 FERC

61(19821.2! See. e.g.. Nantahala Power 8t Light Co.

v. FERC. 727 F.2d 1342 (41h Cir. 19841;Ohio Power Co. v. fERC, 668 f.2d 880(61h Cir. 1982).

~ 587 F.2d 1296 (D.C. Cir. 1978)." 606 F.2d 1156 (D.C. Cir. 1979); ludge Heed

also voiced this opinion in his decisionat page 97.

:l2 S2 F.P.C. 1343 (974). This case is alsoheavily relied upon by the Arkansas par·ties.

~ 324 U.S. 515 (19451.

J6 In his order enjoining the Arkansas PSCfrom further review or regulation of thefinancial agreements entered into byAP&L beginning in 1974. federal District

Judge Henry Woods found that the Avai1~

able Agreement and related financialagreements are so "inextricably bound"to the wholesale sale of power in inter­state commerce that they are subject tothe exclusive jurisdiction of the FERC.Judgment and Memorandum Opinion inDockel No. LR-C-84-778. (Sept. 14. 1984)at 7-8.

:r. 119 R.I. 559. 381 A.2d 1358. cert. denied.435 U.S. 972 (1978).

:l6 United States Constitution. Art. 1. §8. cl.3.

71 Public Utilities Comm·n. of California v.United States. 355 U.S. 534 (958).

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New 1985-86 Officers

Newly elected President Don M.Schnipper, of Hot Springs, (seefront cover) assumed his positionon Saturday, june 8, at the close ofthe Arkansas Bar Association'sAnnual Meeting at the ArlingtonHotel. Hot Springs.

Richard F. Hatfield, of Searcy,was elected president-elect. andAnnabelle Davis Clinton, of LittleRock, was named to a fourth termas secretary-treasurer. Richard L.Ramsay was elected 1985-86 chairof the Young Lawyers' Section andMartin G. Gilbert was electedpresident of the Arkansas BarFoundation. Both are from PineBluff.

A partner in the Wood, Smith &Schnipper law firm, Schnipper isan alumnus of the University ofArkansas at Fayetteville School ofLaw and is a former national pres­ident of the U of A Alumni Associa­tion.

He is a member and formerchair of the State Board of Law Ex­aminers. former chair of theArkansas Institute for ContinuingLegal Education and was twiceappoin ted in 1976 as specialassociate justice of the ArkansasSupreme Court.

Schnipper is a 1980 recipient ofthe Association's Golden GavelAward for exceptional service tothe Association. He is a formerchair of its Young Lawyers' Sec­tion and Executive Council. a for­mer member of the House of Dele­gates and a former member andchair of the Association's LegalEducation Committee. Schnipperis a Little Rock native.

Hatfield, a partner in the Hat­field, Hodges, Marshall and Jor­dan law firm, is chairman of theArkansas Supreme Court Com­mittee on Legal Specialization.

He was appointed a special jus­tice to the Arkansas SupremeCourt in 1983 and was named anOutstanding Alumnus of the U ofA at Fayetteville School of Law.

A Texarkana native, Hatfield re­ceived the Association's GoldenGavel Award in 1976.

Richard F. Hatfield

Richard L. RamsayClinton is a graduate of Smith

College in Massachusetts and theUALR School of Law where shewas comments editor for theArkansas Law Review. She alsoattended the Institute for Para­legal Training in Philadelphiaand the University of Houston,Bates College of Law, where shewas a candidate for the HoustonLaw Review.

A former circuit judge for theFifth Division Circuit Court, Pu­laski and Perry Counties, Clintonis with the Wright. Lindsey &jennings law firm and is a HeberSprings native.

Ramsay was elected YLS chairon Thursday, june 6, in HotSprings. He is a partner in the

Annabelle D. Clinton

Martin G. GilbertRamsay, Cox, Lile, Bridgforth, Gil­bert. Harrelson and Starling lawfirm and an alumnus of the U of Aat Fayetteville School of Law. Heis a member of The American TrialLawyers of America and the Boardof Directors of United CerebralPalsy of Central Arkansas.

Gilbert, also a partner in theRamsay Cox Law Firm, waselected Foundation president onWednesday. june 5. He is analumnus of the U of A at Fayette­ville School of Law, a former pres­ident of the jefferson County BarAssocialion and a former chair ofthe Association's Banking LawCommittee, and serves on theAlCLE Board of Directors. 0

July 19851Arkansas Lawyerll29

IN

MEMORIAM

James D. Storey

James D. Storey, aged 61. ofLittle Rock, died Saturday,February 23, 1985.

Storey was a member of theWright, Lindsey and Jenningsfirm in Little Rock for 32 years. In1984 he was inducted as a Fellowin the American College of TrialLawyers. Storey was a formerpresident of the Pulaski CountyBar Association (1978-79).

Born in Flint. Mich., Storey wasan Army veteran of World War IIand the Korean War. He servedas the Army's youngest officer atage 18.

In 1949, Storey graduated fromthe University of Arkansas Schoolof Law at Fayetteville. He was re­cently honored by the school as anoutstanding alumnus.

A member of the Arkansas BarAssociation for 28 years, Storeywas a former chair of its member­ship, public information, civil pro­cedures, and professional utiliza­tion committees. He had served onthe Association's Executive Coun­cil and had chaired annual Asso­ciation meetings.

130IArkansas Lawyer/July 1985

Storey was a member of the Pu­laski County Bar Association, theArkansas Defense Attorneys'Association, the American Judica­ture Society and the InternationalAssociation of Insurance Counsel.

For eight years Storey was amember of the Arkansas Chapterof the Multiple Sclerosis Societyand was its chairman in 1971-72.He was a member and formerchairman of the Little Rock TrafficSafety Commission and was amember of the Governor's Advi­sory Board for Trailic Safety from1970-75.

He was also a member of thePleasant Valley Country Club andthe Club's Legal Advisory Board.He was a member of the HeightsOptimist Club and served the clubthree times as president.

Storey was an elder in the West­over Hills Presbyterian Church for25 year~.

Survivors are his wife. NormaIvy Storey of Little Rock; a son, J.Michael Storey of Little Rock; twodaughters, Kathryn Mainard ofCarrollton, Tex., and PennyStorey of Minneapolis, Minn.; hismother, Cora Crockett Storey ofParagould; a brother, RobertStorey of Paragould; a sister,Joanne Alexander of Madison­ville, Ky.; and three grand­children.

John Herman Spears

John Herman Spears, aged 84,01 West Memphis, died Monday,April 8, 1985.

Spears was a portner in the lawfirm of Spears, Sloan and Johnsonand was a former West Memphiscity attorney.

The West Memphis EveningTimes described Spears as a "self­made man." A practicing Critten­den County attorney for 50 years,Spears never "set foot" in a law

school but. instead, learned hisprofession via correspondenceschool. He was one of threeamong 32 men to poss the barexam in 1934.

Spears, the son of an Imboden,Ark., farmer, quit elementaryschool in the sixth grade to helpsupport a large family. He enteredhigh school at age 22 after work­ing for little more than a year with­out pay at the Imboden railroaddepot to become a telegraph oper­ator. He passed the telegrapher'stest in 1923 and enrolled in highschool while assigned to the nightshift at Marion.

He later passed the Universityof Arkansas' entrance exam but,due to money problems, returnedto his Marion railroad job. He thenaccepted a telegrapher's job in theMemphis Frisco yards and at­tended Memphis State Universityfor three years. He took a job inGrandin, Mo., as the Depressionhit in the early 1930's and com­pleted a law course by mail whilethere. It took him IS months.

Spears took a railroad job inTurrell in 1934 and practiced lawon the side until 1940.

From '1940 to 1944 he was deputyprosecuting attorney and in 1945he moved to West Memphis to fillthe city attorney's position. Heserved as city attorney until 1951.

A 3D-year member of the Ar­kansas Bar Association, Spearswas honored at the 1984 AnnualMeeting of the Arkansas Bar Asso­ciation for his outstanding contri­bution to the legal profession andthe community and lor serving theprofession with dignity and honor.

He was a trustee of the Critten­den Memorial Hospital. the at­torney for the Bank of West Mem­phis, and a member of the WestMemphis Chamber of Commerce.He was a former trustee of theBaptist Memorial Hospital inMemphis and of the Southern Bap­tist College in Walnut Ridge.

•

Spears was a former West Mem­phis alderman.

He was a member and trustee ofthe First Baptist Church and a for­mer Sunday School teacher.

Survivors are his wife, WillieSue Robertson "Bill" Spears andthree brothers, Ernest Spears ofRichland, Wash., and Richardand ada Spears, both of Imboden.

Joseph Leo Tresp

Joseph Leo Tresp, aged 62, ofNorth Little Rock, died Wednes­day, February 14, 1985.

Tresp was retired as a former re­gional counsel from the SmallBusiness Administration, wherehe had worked for 30 years.

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Tresp was also a member of theNational Association of RetiredFederal Employees and the Ger­man-American Club.

He was a member of the Arkan­sas Bar Association and St. Pat­rick's Catholic Church.

Survivors are his wife, EmmaFrancis Harbrecht Tresp of NorthLittle Rock; a son, Leo JosephTresp of Okinawa; eight daugh­ters, Sister Rose Marie Tresp ofSpringfield, Mo., Nancy MarilynTresp of Bangui. Central AfricanRepublic, Mary Margaret Mari­neau of St. Louis, Mo., VirginiaSusan McAnally of CopperasCove, Tex., Teresa Ann Tresp ofSacramento, Cal., Patricia KarenTresp of Houston, Tex., and GeriLynn King and Lisa Yvonne Trespof North Little Rock; a brother,Bruce Tresp of Dallas, Tex.; foursisters, Margaret Burns of Dallas,Elizabeth Davis of Woodinville,Wash., Leontine Benton of Albu­querque, N.M., and Nancy Ladow­ski of Syracuse, N.Y.; and sixgrandchildren. D

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July 1985/Arkansas Lowyerll31

The Tax Reform Act of 1984By William T. Marshall

Changes inDivorce Taxation

The Tax Reform Act of 1984 (TRA)passed by Congress on June 22,1984, and signed into law by Pres­ident Reagan on July 18, 1984 haschanged the rules relating to di­vorce taxation. The TRA is the firstmajor reform in federal divorcetax law in over forty years. Thisarticle briefly discusses how theTRA modifies the alimony rules,the dependency exemption rules,the allocation of the medical ex­pense deduction rules, and theproperty transfer rules, includingthe repeal of Davis. The authorpresented a more in-depth outlineand presen tation of the new taxlaw as it relates to Divorce Tax­ation at the Arkansas Bar Associa­tion's annual meeting in June atHot Springs. A copy of this outlineis available to Association mem­bers upon request.

NEW ALIMONY RULES

In 1942, Congress attempted tocreate a uniform federal conceptof alimony. The actual applica­tion of the alimony rules, how­ever, soon became dependentupon state law (i.e. state courts de­termined whether the payments

Editor's Note:

William T. Marshall is a cer­tified public accountant andattorney. He obtained his Bach­elor of Science, Master of BusinessAdministration and juris Doctordegrees all with honors from theUniversity of Arkansas. Prior topracticing with the Hatfield,Hodges, Marshall & jordan lawfirm in Little Rock, he was a taxpartner at House, Wallace, Nelson& jewell, P.A.

1321AJ-kansas Lawyer/July 1985

were for "a legal obligation forsupport" - alimony; or whetherthe payments were for "interestsin mari tal property" - propertysettlement).

Now, for the second time, Con­gress has attempted to develop afederal concept of alimony. The1984 attempt should prove muchmore successful because the taxconsequences will be largely de­termined by how the parties char­acterize the payments, ratherthan how state law would classifythe payments.

To qualify as alimony or sepa­rate maintenance payments, thepayments must satisfy five re­quirements;' (I) they must be incash; (2) be received under a di­vorce or separation instrument; (3)if the payments are made pur­suant to a decree of divorce or sep­arate maintenance. the spousescannot be members of the samehousehold when the payment ismade; (4) the divorce or separationinstrument must state that thepayor has no liability to makepayments past the payee's death;and (5) if payments in any cal­endar year are to exceed $10,000,then payments must be called forat least six consecutive calendaryears, beginning with the firstyear in which a payment whichotherwise satisfies the re­quirements of alimony is paid. inorder for any of the payments to betreated as alimony.2

In addition, alimony or sepa­rate maintenance payments madein any of the first five calendaryears of payments may not bemore than $10,000 larger than thealimony or separate maintenancepayments made in any succeed­ing year of the first six years of

payments. To the extent the eaT­lier payment does exceed a lateryear's payment plus $10,000, thedifference is recouped as incometo the payor and is allowed as adeduction for the payee on their re­spective returns for the later year.This recapture front loading ruleis cumulative in effect in that anydecreased payment in a later yearis measured against the amountpaid in each of the preceedingyears as reduced by the amount ofexcess recouped in any interven­ing year.:!

There are three circumstancesin which these recomputationrules do not take effect, eventhough a prior year's payment ex­ceeds a later year's payment bymore than $10,000; (I) if eitherspouse dies or the payee spouseremarries and the alimony or sep­arate maintenance paymentscease for that reason, there isno recomputation for that year orany later year; (2) payments madeunder a suppart order or similartemporary court decree are notconsidered alimony or separatemaintenance payments for thispurpose (i.e.. the recomputationrules do not start until paymentsare made under a decree of di­vorce or separation or a writtenseparation agreement); and (3)payments are not counted to theextent the payor's liability is topay a fixed portion of the incomefrom a business or property orfrom compensation.

As under prior law, paymentswhich are fixed as child supportare not alimony or separate main­tenance payments. However, theTRA makes a significant changefrom the way prior law was inter­preted. Under the TRA, to the ex­tent any payments are reduceddue to a contingency relating to achild, such as attaining a certainage, marrying, dying or leavingschool, the amount of the reduc­tion in the payment would bedeemed child suppart. Paymentswhich terminate at a time that canbe clearly associated with a child­related contingency would havethe same effect. such as paymentswhich terminate in the samemonth as a child's 18th birthday.'

The TRA will continue the exist­ing rule that payments are firstallocated to child support. Thus,there can be no alimony until all

Smu 1886

WILSON ARKANSAS

MEDICAL EXPENSES AND READ­OF-HOUSEHOLD STATUS

The TRA allows either parent todeduct the medical expenses paidby that parent for the child, re­gardless of which parent is en­titled to the dependency exemp­tion for the child.'

The TRA redefines head-of­household status to include anyhousehold which otherwise meetsthe definition for more than one­hall instead of an entire taxableyear. Therefore, a custodial par­ent will now be able to qualify ashead of household in more situ­ations. For example, the custodialparent can file as head of house­hold in the following situations: (I)when spouses are still married atyear-end but lived apart for thelast six months of the year and (2)although the noncustodial parentis entitled to claim the depen­dency agreement under an agree­menL 10

PROPERTY TRANSFERSProbably the driving force be­

hind the persistent and ultimatelysuccessful ellorts by the tax bar tochange the property division ruleswas the almost universal dis­satisfaction with the results ofapplying Davis". In Davis, thetransferor was required to recog­nize as ain the dillerence be-

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Rather than handling the mat­ter on a year-by-year basis, how­ever, the temporary regulationsindicate that the parties can, andin most cases they probablyshould, decide the dependency ex­emption issue for all future yearsin the divorce or separation agree­ment. If the exemption is releasedfor more than one year, the orig­inal release must be attached tothe noncustodial spouse's returnand a copy of such release mustbe attached to his or her return forall succeeding taxable years forwhich he/she claims the depen­dency exemption.'

These TRA amendments applyto taxable years beginning afterDecember 31. 1984. Since depen­dency exemptions are determinedon a calendar year basis, the newlaw will apply to support pay­ments beginning January I, 1985,and to tax returns filed for yearsbeginning in 1985. If a decree oragreement was executed prior to1985 and provides that the non­custodial parent may claim the de­pendency exemption then suchprovision will continue to controlprovided the noncustodial parentprovides at least $600 support tothe child in such year claimed.

child support payments in arrearshave been satisfied.'

If all of the foregoing re­quirements are met, thenpayments will be treated as ali­mony or separate maintenancewhich are deductible by the payorspouse and includable by thepayee spouse as taxable income.Tbe parties can, however, des­ignate that the payments are notto be taxable to the payee and arenot deductible by the payor. Acourt may also make this designa­tion in a decree or order.

The option to make the pay­ments not alimony could be ex­ercised by including in an agree­ment the words, "Such paymentsare not includable in gross in­come under I.R.C. Section 71 andnot deductible under I.R.C. Sec­tion 215." Without these words, allpayments otherwise qualifiedwill be treated as alimony.

The TRA alimony rules apply toall divorce or separation in­struments executed after 1984. In­struments executed before 1985and thereafter modified will besubject to the new alimony rules ifsuch modification expressly pro­vides that the instrument is to besubject to the 1984 Act. If a decreeof divorce or separate mainte­nance executed after December31, 1984, incorporates or adoptswithout change the terms of thealimony or separate maintenancepoyments under a divorce or sep­aration instrument executed be­fore 1985, such decree will betreated as executed before 1985.

DEPENDENCY EXEMPTIONSAs in the case of property set­

tlements and alimony, thespouses can determine by agree­ment who will be allowed the de­pendency exemption for theirchildren.

Under the general rule, the par­ent with custody of the child formore than one-hall of the cal­endar year will be allowed the de­pendency exemption. This is trueeven though the noncustodialspouse provides most or all of thechild's support.'

The TRA provides that on a year­by-year basis the custodial parentcan surrender the dependency ex­emption to the other parent by ex­ecuting a written declaration tothat ellect.' The form of thewritten declaration will be pre-

July 1985IArkansas Lawyer/l33

We do more than print the law­we put it into perspective...

od 01 such potential liability . Suchrecords must be preserved andkept accessible by the trans­feree. 17

CONCLUSIONThe domestic relations provi­

sions in the Tax Relorm Act of 1984more clearly described the para­meters by which parties can deter­mine, by agreement, the tax con­sequences of transactions pur­suant to divorce. Therefore, a taxadvisor should be consulted toassist in the settlement process aswell as the preparation 01 the set­tlement documentation. 0

FOOTNOTES

I Internal Revenue Code (I.R.C,) §7l(b)(1)., l.R.C. §7I(fXl).'l.R.C. §7I(fX2).• l.R.C. §7I(cX2)., l.R.C. §7I(cX3).'l.R.C. §152(eXI)., l.R.C. §IS2(eX2).• Temp. R"\!. §1.l52·4T., l.R.C. §213<b).w l.R.C. §44A(lXIS)." U.S. v. Davis. 370 U.S. 651 (1962).12 Supplemental Report of the Committee

on Ways and Means, U.S. House of Rep·resentatives on H.R. 4170 at 1491.

"l.R.C. §1041."l.R.C. §104I(c)."Temp. Reg. §l.104-IT(bl." l.R.C. §104I(b).17 Temp. Reg. §1.l04-IT(e).

u.S. Supreme Court Reports. L EdusesFederal Procedural Forms. L EdFederal Procedure, L EdBankruptcy Service. L Ed

THE LAWYERS CO· OPERATIVE PUBLISHING co.Aqueducl Bu.ldongRochester New'tbrk 14694

the transler ("carryover basis")and the transferee is treated ashaving held the property as longas the transferor did ("tracking" 01holding period)." This non­recognition applies even if theparties are dealing with eachother at arms-length in a non­divorce or separation situation.Therelore, the subsequent tax con­sequences of the translereeshould be taken into considera­tion when negotiating the pur­chase price.

The temporary regulations im­pose notice and recordkeeping re­quirements with respect to trans­actions under I.R.C. §1041. Atransferor 01 property under Sec­tion 1041 must, at the time 01 thetransler, supply the transfereewith records sufficient to deter­mine the adjusted basis and hold­ing period of the property as of thedate of the transfer. In addition, inthe case 01 a transfer 01 propertywhich carries with it a potential li­ability lor investment tax credit re­capture, the transferor must. atthe time of the transfer, supply thetransferee with records sufficientto determine the amount and peri-

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tween the fair market value andthe basis of property he trans­ferred to his spouse at divorce insatisfaction of her inchoate mari­tal rights. The transferee, in turn,took the property with a basisstepped up to its value as 01 thedate of the transfer.

According to the supplementalreport of the new act by the Com­mittee on Ways and Means, thegovernment wanted the changefor two reasons: First. the currentrules governing translers 01 prop­erty between spouses or formerspouses incident to divorce havenot worked well and have led tomuch controversy and litigation.Second. in divorce cases, the gov­ernment often gets whipsawed. 12

The transleror will not report anygain on the transfer. while the re­cipient spouse, when he or shesells, is entitled under the Davisrule to compute his or her gain orloss by reference to a basis equalto the lair market value of theproperty at the time received.

The TRA added new I.R.C. §1041which provides that no gain orloss will be recognized on trans­fers 01 property to a spouse. Trans­fers to a former spouse are alsonontaxable, if the transfer is inci­dent to a divorce." New I.R.C.§104l(c} provides that the transferis incident to divorce if such trans­fer: (l) occurs within one year afterthe date on which the marriageceases, or (2) is related to the ces­sation of the marriage. This provi­sion could cover any transfer re­quired by the divorce instruments'even if made many years alter thedivorce. It To prevent divorcingspouses from choosing certaintransfers on which they want tax­able treatment. the IRS has takenan expansive view of which trans­lers are related to the cessation ofthe marriage. The Temporary Reg­ulations provided that a transferof property is treated as related tothe cessation 01 the marriage ifthe transfer is pursuant to a di­vorce or separation instrument.and the transfer occurs not morethan 6 years alter the date onwhich the marriage ceases. l~

For measuring the taxable gainor loss of the transleree on thesale of the property alter the trans­ler, the transferee's basis in theproperty is deemed to be the trans­leror's basis in the property before

134IArkansas Lawyerlluly 1985

EXECUTIVE DIRECTOR1S REPORT

Long Range Planning Conference to be Held

By William A. Martin

New Members

We added 67 new lawyer mem­bers to the Arkansas Bar Associa­tion in April. Last January yourHouse of Delegates amended theAssociation's By-Laws to providefree memberships to newly ad­mitted lawyers without the neces­sity of making an application forthe balance of the bar year inwhich admitted (until the follow­ing July).

We welcome these new mem­bers and hope they will be activein the work of the Association andwill pay dues when the first billcomes. We would like for those ofyou who have been members toencourage these new attorneys inyour community to volunteer forcommittee work - either YoungLawyers' Section committees orAssociation committees. Theyhave a lot to contribute and willgrow in the profession if they getinvolved.

- For everyone - please tell usahout your interests in committeework. The Association's presidentand Young Lawyers' chair cannotread your mind and they do notwant to leave out anyone whowants to be involved. If you didnot return a preference sheet, youcan still tell us of your interestsand there is still room for addedmembers on many committees.

For the Admission Ceremonythis spring, we tried somethingnew - a reception in the lobby ofthe justice Building, handouts ofinformation and absolutely nospeeches. We had many of ourleaders there with name tags sothe new lawyers could easily iden­tify and meet with them and thejudges on an informal basis. Thischange seemed well received anda welcome contrast to trying to get

the new lawyers to walk over tothe old Supreme Court Room inthe Capitol. listen to numerouspitches about almost every bargroup imaginable, then rejointheir families and come to theArkansas Law Center for a recep­tion. We plan to continue our newformat and hope more practicingattorneys will come to the recep­tion.

IOLTA

The Arkansas IOLTA Founda­tion, Inc., the non-profit corpora­tion authorized by the ArkansasSupreme Court to handle intereston lawyers' trust accounts, hashad its organizational meeting.Associate justice David Newbernwas elected the first president ofthe corporation. The work ofachieving recognition of tax ex­empt status and working out bank­ing arrangements is underway.When these jobs are completed,Norwood Phillips, chair of theIOLTA Education and RecruitmentSubcommittee, will start contact­ing lawyers to put their nominaland short term trust funds whichare too small to draw interest forindividual clients into IOLTA ac­counts where they will, as justiceP. A. Hollingsworth noted: "... bea very significant source of in·come for the benefit of public inter­est programs related to the legalprofession." (Re: Ark. Bar Assn.Pet. for IOLTA Program, 283 Ark.252, 675 S. W. 2d 355 (984) ).

Long Range Planning

David M. "Mac" Glover has ac­cepted President Don Schnipper'sinvitation to chair the Associa­tion's Long Range Planning Con­ference next spring. Associationleaders will gather Thursdaythrough Saturday, May 1-3, 1986,at the Sheraton Hotel on LakeHamilton, Hot Springs, to look at

where we are as an Associationand where ·we should be going inthe next few years. We skippedhaving a conference this year ­partly because of the emphasis onour legislative work and partly be­cause interest in long range plan­ning seemed to be lagging lastyear after a series of conferenceseach year.

Preparation is a key to a suc­cessful conference and we wouldlike to have volunteers who wouldlike to be involved and we wouldalso like your suggestions aboutissues which should be consid­ered. Please let Mac, Don or mehear from you.

Dues

Arkansas ranks 38th in theamount of annual dues out of 55state bors and bar associations,according to a survey conductedby the Florida Bar Association. Incoming up with this figure, theSupreme Court license fee andsimilar charges were added to thedues of voluntary associationssuch as ours to enable a compari­son to states with unified bars.Our $125 total for lawyers in prac­tice more than ten years is farbelow the top of $310 for Alaska,$300 for Delaware, $275 for Con­necticut and $273 for Hawaii. Tenothers have dues of $200 or more.At the low end of the scale areAlabama, Georgia, Louisianaand Oklahoma - all states inwhich every attorney is compelledto belong to be licensed - withyearly dues of $100.

The 55 figure - instead of 50 ­is accounted for by including theDistrict of Columbia and by Vir­ginia, North Carolina, West Vir­ginia and the District of Columbiahaving two associations - a man­datory one which handles disci­pline, admission and similar mat·ters and a voluntary one. 0

July 1985JArkansas Lawyerl135

YOUNG LAWYERS' UPDATE

Ramsey Elected YLS Chair

Association of Behavior Trial Consultants

Trial ConsultationMelissa A. McMath, M.S., L.A.C.

Worthen Bank Bldg.Little Rock, Ark. 72201

501-374-1169

By Martha M. Miller, Chair

On Monday April 8, 1985, 67 newlawyers were admitted to the Barof Arkansas. In their honor theYoung Lawyers' Section, in coop­eration with Arkansas SupremeCourt Clerk Dona Williams, enter­tained these new lawyers andtheir families at a reception inthe foyer of the Justice Buildingimmediately following their in­duction. Several special guestsalso attended: Arkansas SupremeCourt Chief Justice Jack Holt, andAssociate Justices George RoseSmith, Darrell Hickman, RobertDudley, John Purtle, David New­bern, and Steele Hays; ArkansasCourt of Appeals Judges DonaldCorbin and Melvin Mayfield;Attorney General Steve Clark;Fayetteville Law SchQol AssistantDean Jim Miller; Arkansas BarAssociation President William R.Wilson, Jr.; ABA President ElectDon Schnipper; and ABAlYLSChair Elect Richard L. Ramsay.Congressman Beryl Anthony alsowas present to watch his spouseSheila Foster Anthony receive herlicense. At the suggestion ofChairman Edward Boyce of New­port, the program format waschanged deleting all speechesfrom the YLS portion of the cer­emony and making the eventmuch more enjoyable.

Criminal Defense HandbookThe final draft of the Criminal

Defense Handbook will be goingto the printer sometime duringJune, and will be available at theABA Fall Legal Institute Sep­tember 19 and 20, 1985. The FallLegal program will be devoted topreviewing portions of the Hand­book and is shaping up to be oneof the finest seminars YLS hasbeen associated with. RacehorseHayes has agreed to be the key­note speaker for this event, andCo-Chairman Sam Perroni de­serves yet another pat on the back

t36/Arkansos Lawyernuly 1985

for his continuing fine efforts inboth editing the Handbook andserving as Program chairman ofthe Fall Legal Institute. Mark yourcalendars now; you won't want tomiss this one.

Chair-Elect Richard L. Ramsayattended the American Bar Associ­ation Young Lawyers DivisionAffiliate Outreach Project BarLeadership Institute in St, Peters­burg, Florida this post May. Rickacceded to the office of chair ofYoung Lawyers' Section duringthe Annual Meeting in HotSprings in June.

Other YLS officers and mem­bers of the Executive Councilwere elected on June 6 during theAnnual Meeting in Hot Springs.Thomas Ray of Little Rock was theonly candidate who filed a nomi­nating petition for the office ofchair elect,

Since this is my last edition ofthe YLS Update, I want to thankeveryone who helped make thisyear a successful one for theYoung Lawyers' Section. AlthoughI can't possibly name each ofthese individuals due to space

Jury SelectionWitness PreparationVerbal-Nonverbal Analysis

limitations, I do want to recognizethe officers and Executive Coun­ciL and each of the committeechairs for their time and efforts.Several "old" lawyers have alsocontributed to our efforts and de­serve special mention: ABA Pres­ident Bill Wilson; John Stroud,chairman of the Bar FoundationSpecial Projects Committee; andother members of the Bar Founda­tion who made many of our pro­grams possible due to their gener­ous funding.

And, finally, two non-lawyersmust be mentioned. Ruth Wil­liams of the ABA staff has devoteda great deal of time and attentionto two new major YLS projects, theMock Trial competition and theAETN video series "Ways of theLaw." The other non-lawyer isABA Assistant Executive DirectorJudith Gray. Those of you whohave ever worked with Judithknow that her contributions aretruly invaluable. She has been in­volved in every facet of the YLSprogram and we owe her a veryspecial "Thanks!".

o

Case PresentationVoir Dire Analysis

Post Trial Jury Review

ARKANSASBARFOUNDATIONBy Robert L. Jones, III

ASSETSREPAIR AND

CURRENT ASSETS OPERATING TRUST REPLACEMENT TOTALChecking Account 5 6.067.t3 5 1.463.80 5 5 7,530.93Savings Account lO.t68.26 64. t73. t3 10.470. to 84,811.49Certificate of Deposit ·0- 25,000.00 20,000.00 45,000.00Interest Receivable 2,371.50 14.084.90 1,432.62 17,889.02

TOTAL CURRENT ASSETS $ 18,606.89 5104,721.83 $31.902.72 $ 155,231.44INVESTMENTS $ 56.494.17 561.551.88 50,000.00 668,046.05INVESTMENT MANAGEMENT

ACCOUNT (RANSICK) 5 14,134.36 14,134.36PROPERTY 8< EQUIPMENTLond, Bldg. 8< Equip. $1.594,715.92 51,594,715.92Less: Accum. Depree. 1398,934.551 1398,934.55)NET PROPERTY 8<

EQUIPMENT 51,195,881.37 51.195,881.37OTHER ASSETSUtility Deposit $ 10.00 $ 10.00TOTAL ASSETS $1.285,126.79 5666,273.71 581.902.72 52,033,303.22

LIABILITIES AND MEMBERS' EQUITYCURRENT LIABILITIESNotes Payable 5 6,728.11 5 6,728.11ABA Escrow Account 579,785.11 79,785.11ABA Accrued Interest

Payable 1.432.62 1,432.62Siale Income Tax ·0- -0·TOTAL CURRENT

LIABILITIES 5 6,728.11 5 -0. 581,217.73 5 87,945.84LONG TERM LIABILITIESNoles Payable less

current Maturities $ 692,995.24 5 692,995.24Deferred Compensation 14,134.36 14,134.36TOTAL LONG TERMLIABILITIES 5 707,129.60 $ 707,129.60DEFERRED INCOMEDeferred. Lease Income $ 86.300.00 5 86,300.00TOTAL LIABILITIES 5 800,157.71 5 ·0· 581,217.73 5 881,375.44MEMBERS' EQUITYUnrestricted Surplus-

Appropriated S 379.78 S 53,989.44 S 5 54,369.22Unappropriated 481.536.97 401.647.67 684.99 883,869.63

Current Year ExcessRevenues over Expenses 3,052.33 46,405.63 49.457.96Restricted Surplus 164,230.97 164,230.97

TOTAL MEM8ERS' EQUITY $ 484,969.08 5666,273.71 $ 684.99 51,151,927.78TOTAL LIABILITIES8< MEMBERS' EQUITY $1,285,126.79 5666,273.71 581.902.72 52,033,303.22

The Foundation banquet held inconjunction with the Mid-WinterBar Association meeting in Jan­uary 1985 in Little Rock was againa success. Scholarship and re­search grant recipients were hon­ored. The dinner was open toFoundation members and theirguests. Chief Justice Jack Holtspoke on the need for higher andbetter quality of justice. Over 175persons attended.

Membership in the Foundationhas continued to grow. During thelast nine months 24 attorneys be-

came Fellows. The Foundationnow has 355 living Fellows.

In the July 1983 issue of theArkansas Lawyer, then Chair­man, Randy Ishmael, printed theFoundation's linancial status. Ibelieve it is good practice to peri­odically furnish the Associationmembership with this informa­tion. Printed below you will lindthe balance sheet of the ArkansasBar Foundation as of March 31,1985.

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Juty t98S1Arkonsas Lawyer/137

IN-HOUSE NEWSLaw Schools. AICLE and House of Delegates

UNIVERSITYOFARKANSASSCHOOL OFLAW ATFAYETIEVILLE

By J. W. Looney

Alumni Day ActivitiesAlumni Day, 1985,

was highlighted by aluncheon which fea­tured a tribute to thetrial judges of Arkansasincluding the FederalDistrict Court judgesand Circuit and Chan­cery judges. WilliamWilson, Jr. and Wins­low Drummond honoredthe judges. A secondfeature of the programwas a tribute to Dr.Robert A. Leflar uponthe forthcoming releaseof his latest book "OneLife and the Law: ASixty-Year Review."Judge J. Smith Henleyreviewed the careerand contributions of Dr.Leflar. Jack Gordon, a1969 graduate of thelaw school presented abronze bust of Dr. Leflarto the law school andDr. Leflar then spokein celebration of the60th Anniversary of theSchool of Law.

Also a featured partof the program was theannouncement by theWomens Law Caucusof the first Gayle PettusPontz award to be givenannually to an out-

1381Arkonsas Lawyer/July 1985

standing female law­yer. The award was pre­sented to Mrs. Pontz,as the first femalegraduate of the lawschool and in recog­nition of her distin­guished career.

The Student Bar Asso­ciation announced theselection of ProfessorRichard Atkinson forthe "Professor of theYear" award. ProfessorAtkinson teaches prop­erty, decedents estatesand real estate trans­actions.

Faculty ActivitiesCharles Carnes has

an article in the most re­cent issue of the Journalof Agricultural Taxationand Law, entitled"Worker Compensation­Texas Extends Cover­age to AgriculturalWorkers."

Linda Malone has afeatured article in Agri­cultural Law Update.the newsletter of theAmerican AgriculturalLaw Association en­titled "The Future ofTransferable Develop­ment Rights in the Su­preme Court."

Jake Looney's article"Modification of Ar­kansas Water Law: Is­sues and Alternatives"appeared in theArkansas Law Review.

John Watkins article"Open Meetings Underthe Arkansas Freedomof Information Act" alsoappeared in the Ar­kansas Law Review.

Rodney Smolla has anarticle in ConstitutionalCommentary entitled"The Supreme Court

and the Temple ofDoom: A Short Story."

Chris Kelley has anarticle in the ArkansasLaw Review, entitled"The Southern Pulp­cutter and the ShortStick: The MississippiUniform Pulpwood Scal­ing and Practices Act."

Dr. Robert Leflarspoke at an ArkansasUnion Program Sym­posium on "Our JudgeMade Law."

Wylie Davis deliv­ered an Oxford Lecture,"The Emergence of'Good Faith' and 'BadFaith' as Major LegalNorms."

Linda Malone mod­erated a panel on"International Per­spectives on Food, De­velopment and Peace"at the Third Annual Ful­bright Institute Sym­posium.

Dean Jake Looneyconducted a workshopat Lake Louise, Alberta,Canada on "EstatePlanning for AlbertaFarmers and Ranch­ers:" spoke in Orlando,Florida on "The Effect ofMember Bankruptcy onCooperatives" to theFlorida Council of Co­operatives and on thesame topic at the Uni­versity of FloridaSchool of Law.

Dean Looney alsoserved as educationalleader for a legal studytour of the U.S.S.H. Agroup of lawyers andtheir spouses, fromArkansas, Oklahoma,Louisiana and Kansastoured four cities in theU.S.S.H. and met with

Soviet lawyers, judgesand government offi­cials to study Sovietlaw. Arkansas lawyersin the study group in­cluded Truman Yancyof Fayetteville; Bill andMarion Penix of Jones­boro; Greg Smith of FortSmith; John HarrisJones of Pine Bluff andMaurice Cathey of Para­gould.

Moot Court TeamWinners Selected

Chief Justice JackHolt, Jr., and AssociateJustices Steele Haysand David Newbernserved as judges of thefinal rounds of competi­tion for selection of theUniversity of ArkansasMoot Court Team. Thenational team membersselected were Mike Ro­senthal. Leanne John­son, Stephen Garnerand the alternate. KenTreece. Best brief scoreaward was to Mike Ro­senthal and Outstand­ing Team Award wasgiven to the team ofMike Rosenthal andLewis Steenken.

UNIVERSITYOFARKANSASAT LITTLEROCKSCHOOL OFLAW

By John M. Sheffey

ALTHEIMER LECTUREProfessor Victor J.

Stone of the Universityof Illinois College ofLaw delivered theSpring Altheimer Lec­ture on Friday. March 8.The title of his addresswas "Approaching TwoHundred: Is The Judi­cial Check In Bal­once?". ProfessorStone. who is a Con­stitutional Law andCivil Procedure Schol­ar. argued forcefullyand persuasively thatstrict construction of theConstitution by theUnited Stales SupremeCourt would be inappro­priate. His thesis wasthat the Constitutioncan remain a living doc­ument which adapts tomodern issues only ifthe Supreme Court is al­lowed some flexibilityin its interpretations.

While on the LawSchool campus. Pro­tessor Stone also spoketo the law studen tsabout his recent experi­ence in arguing a casebefore the SupremeCourt of the UnitedStates.

In addi tion to hislegal scholarship inter­ests. Professor Stonehas been very active inthe Association of Amer­ican University Profes­sors, serving tha1 orga­nization in numerouscapacities on the uni­versity. state andnational levels. Heserved as presiden t ofthe national organiza­tion from 1982-1984.

ALUMNI ASSOCIATIONMEETING

The UALR Law SchoolAssociation continuedto hold its monthly lun­cheon meetings in LittleRock. In February Car­olyn Long. anchor per­son for KARK TV NewsCenter 4. spoke on herinvolvement in the libelsuit of KARK vs. Simon.She also shared her re-

actions to and thoughtsabout libel suits againstbroadcast journalists.

The April meetingheard Sheffield Nelson.an alumnus of the LawSchool and formerchairman and chief ex­ecutive officer ofARKLA. discuss deregu­lation. Nelson is op­posed to deregulationin general. fearing thatit will result in both a re­duction in services andan increase in prices.

FACULTY NEWSProfessor Glenn E.

Pasvogel. Jr. led apanel discussion of"Bankruptcy and Banks- Current Trends." atthe Banking Law Semi­nar sponsored by theArkansas Institute forContinuing Legal Edu­cation and the Arkan­sas Bar Association.Professor Pasvogel pre­sented a series of ques­tions focusing on eUT­rent issues in Bank­ruptcy Law that affectbanks. and then mod­erated the discussionamong several expertsin the area.

Professor Fred Peelparticipated in a paneldiscussion on EconomicDevelopment in Arkan­sas. The panel. whichwas sponsored by PhiKappa Phi, includedrepresentatives of otherdepartments at UALH,as well as Tom MacRaeof the Winthrop Rocke­feller Foundation.

The UALR Interna­tional Trade Center pre­sented an exportingseminar on February22. Professor Arthur G.Murphey was one of thespeakers. and he ad­dressed the subjects ofagency. oral contractsfor the sale of goods. for­mation of contractsunder American and for­eign law and the ViennaTreaty of 1980. and con­flicting terms in con­tracts.

Professor Philip D.Oliver has been ap­pointed Visiting Profes­sor at the University ofFlorida College of Lawfor the Fall. 1985 semes­ter. He will teach inboth the J.D. and LL.M.Tax Programs.

Donaghey Distin-guished Professor ofLaw Robert R. Wrightchaired a joint ABA­AALS Inspection of theUniversity of AlabamaLaw School in March.

Professor Richard A.Burke. a native ofArkansas who recentlyjoined the faculty fromthe University of SouthDakota School of Law.which he served as bothdean and professor.spoke to the HelenaRotary Club on "In­creasing Litigation andthe Supreme Court ofthe United States." Healso addressed theJonesboro Rotary Clubwhere his topic was,"Business and Profes­sional Ethics." Profes­sor Burke. an outspokenadvocate of greater at­tention to legal ethics.also spoke on profes­sional ethics issues onKARN radio.

An article entitled."The Unconstitution­ality of State InsuranceTakeover Statutes: AnUnfortunate But NotNecessarily Final Re­suit." by AssociateDean and Professor ofLaw John M. Sheffey.was published in Vol­ume 69 of the MinnesotaLaw Review.

Professor James R.Cromwell will edit the1985 update to theArkansas Legal Ser­vices Support CenterPoverty Law PracticeManual. He will alsoauthor the 1985 updatefor the UnemploymentCompensation Chap­ter. Professor Cromwellcontinues to be activeon a subcommittee of

the Arkansas Bar Asso­ciation Civil Pro­cedures Committee con­cerned with the pro­posed aboli tion of localcourt rules.

Librarians Ruth Brun­son. Dana Davis, Pau­line Ghidotti and MikeHankins attended theSouthwestern Chapterof Law Libraries annualmeeting in Fayettevilleon March 28-30.

Professor Susan Web­ber Wright spoke at theTwenty Fourth AnnualArkansas Natural Re­sources Law Institute.Her topic was "Fiducia­ry Duties Arising FromOwnership of Oil andGas Interests."

ATLA PROGRAMAT UALR

UALR School of Lawwas host to a NationalCollege of AdvocacyBasic Course in TrialAdvocacy on March 24­29. The course wassponsored by the Asso­ciation of Trial Lawyersof America. Over 100practicing trial lawyersparticipated. This wasthe largest number ofstudents ever to attenda National Collegecourse. The large enroll­ment was due in nosmall part to the or­ganizational efforts ofWalter Niblock of Fay­etteville. The facultywas composed of out­standing trial lawyersfrom all parts of the na­tion, as well as severalof Arkansas most re­spected trial lawyers.UALR law professorsPaula Casey and DentGitchel also served onthe faculty. The courseconsisted of six days ofintensive lectures. dem­onstrations. workshopsand one-an-one videocritiques of student per­formance. There wasgeneral agreement thatthe program was a re­sounding success.

luly 1985 Arkansas Lawyer/139

Suite 400, Continental Building100 Main St., Little Rock, Ark.

1-501-375-1439

TOM M. FERSTl, MAl, SREA

C. Lessel. of Little Rock,focused on the follow­ing topics: real estatetransactions; divorce;time value of moneyconcepts; tax shelters;income shifting/split­ting, and complianceand record keeping.Ray Keenan, director ofthe Internal RevenueService Center for theSoutheast Region inMemphis, spoke on thetransition of IRS juris­diction over Arkansasfrom Southwest toSoutheast regions. Thisprogram was enthusias­tically received by 100registrants.Irving Younger Returns

AICLE and the Arkan­sas Trial LawyersAssociation are jointlysponsoring a one dayseminar featuring Pro­fessor Irving Young­er on Friday, Sep­tember 6 at the UALRConference Center.

Professor Younger'stopics will include hear­say in the morning andcredibility and cross­examination in theafternoon.

Don't miss this rareopportuni ty to attend a"live" one day sessionwith Professor Young­er. []

licers of local laborunions and state andfederal employees. Anumber of people at­tended from SouthernMissouri. Western Ten­nessee, Mississippi.Louisiana, Texas andOklahoma.

Topics included re­fusal of unsafe work;sex discrimination;duty of fair representa­tion; arbitration; wagedetermination and com­porable worth; plantclosures and the duty tobargain; public sectorbargaining; "hot is­sues under the Na­tional Labor RelationsAct; employment atwill; current trends incollective bargainingand the Fair LaborStandard Act.

Judge Richard Arnoldmade a presentation onthe update of relevantlabor in em ploymen t re­lations decisions in theEighth Circuit.Tax Awareness Institute

The 7th annual TaxAwareness Institute.jointly sponsored by theAssociation's TaxationSection was held at theUALR Conference Cen­ter in Little Rock onApril 26. This year's pro­gram, chaired by John

Member:Arkansas Bar AssociationArkansas Realtors Assn.

Society of Real Estate AppraisersAmer. Institute of Real Estate Appraisers

Court Testimony ...Real Estate Counseling ... Feaslbility StudiesCommercial and Residential Real Estate Appraisals

programs will continueto increase as more andmore Arkansas lawyersrealize this unique op­portunity to attend lirstclass CLE program­ming with a minimumexpense in time andtravel.

Other t.v. satelliteprograms were on buy­ing and using com­puters in law offices,May 8; evaluating apersonal injury case- the brain damagedchild, May 14; UCCstrategies under Ar­ticles Two and Nine,May 15; and Cable Com­munications Policy Actof 1984, June II.

Labor Law InstituteThe Labor Law Insti­

tute, jointly sponsoredwith the Association'sLabor Law Section, Re­gion 26 of the NationalLabor Relations Board,UALR Labor EducationProgram and the Amer­ican Arbitration Associ­ation, was held April 19­20 at DeGray Lodge,Arkadelphia. The ISOregistrants representedattorneys specializingin various areas oflabor law and employ­ment discrimination,personnel managers,business agents and of-

By Claibourne W. Patty, Jr.

1985 Banking LawSeminar

This year's biennialBanking Law Seminar,co-sponsored with theAssociation's BankingLaw Committee washeld March 22-23 at theSheraton Inn, HotSprings. The program,chaired by Mark Lester,tackled usury, one ofthe oldest problems forArkansas lawyers, andthe Organized CrimeControf Act (RICO), andbankruptcy, one of thefastest growing prob­lems.

A panel composed ofMartin Gilbert. BakerCurrus, Chris Barrierand Steve Watson dis­cussed usury problems;Professor Glenn Pas­vogel. Jill Jackoway,bankruptcy judges Rob­ert Fussell and JamesMixon, David Po;"'elland W. E. Ayers dis­cussed bankruptcyproblems, and JerryJones and John Lisle dis­cussed RfCO issues.

The program was at­tended by 73 persons,two thirds of whomwere lawyers, with theremaining one thirdbankers.TV Satellite Programs

Two t.v. satellite pro­grams on computer lawand real estate plan­ning for aged and in­capacitated clients,and another on govern­mental liability underanti-trust laws, werepresented simulta­neously at Little Rockand Fayetteville onFebruary 26, March 26and March 20. Approxi­mately 40 people totalhave attended theseprograms. It is antici­pated that attendanceat these t.v. satellite

~.I.C=;.~.~.

N~WS

140/Arkansas Lawyer/July 1985

ATTORNEY'S ECONOMICCONSULTANTS"A Division of Education and

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nent Disability or Wrongful DeathEconomic Valuation of Pecuniary Damages in Business Tort. Con­

Iract and Anti-Trust CasesValuation of Minority Stock Holdings in Estate SelliementsEconomic Analysis for Charters or Branch Applications for finan­

cial InstitutionsStructured Settlement Pricing and Design

We Buy

Real

EstateNotes

• Provide liquidiLvtor c,-;LLlLe"i.bankrupLcie...; anddivorce.;,;.

• ConverL fir'iL Lind.;,;econd morLg-Llg-e-,1..0 CLl"ih.

• Per'ional or hU'iine.,-;loan"i on rt.''iidcnl..ialor commercialproperLv.

QUAUFICD AS EXPERT WITNESS INARKANSAS AND

OTHER JURISDICTIONS

P.O. Box Drawer 34117Little Rock. Arkansas 72203

(SOl) 661-0161Telex: 78-3081

In Arkansas call: 1-800-221-2715Out-of-state call: 1-800-221·2717

Pioneer Financial ServicesFounded 1932

Call 1-800-FOR·LOAN

MISSING

AND UNKNOWN HEIRS LOCATED

NO EXPENSE TO THE ESTATE

WORLD-WIDE SERVICE FOR

COURTS - LAWYERS - TRUST OFFICERSADMINISTRATORS - EXECUTORS

AMERICAN ARCHIVES ASSOCIATIONINTERNATIONAL PROBATE RESEARCH

449 WASHINGTON BUILDINGWASHINGTON. D.C.

SERVICE DIRECTORYBEACH ABSTRACT & GUARANTY COMPANY

REPRESENTING:TICOR TITLE INS. CO.

ABSTRACTS-ESCROWS-TITLE INSURANCE100 Cenler 51- - Lillie Rock. AR 376-3301

•TYPING - WORD PROCESSING

PICK UP AND DELIVERY(5011851-3698 A. 8. "Abbie" May

15 Nicklaus DriveMaumelle. AR 72118

•LEGAL BRIEF PRINTING

PARAGON Printing & Stationery Companyhas been printing BRIEFS for over 35 years.

May we be of service to you?

311 East Capitol 375-1281Little Rock

•FOR AVIATION ACCIDENT CASES

BOB STEPHENSAIR TRAFFIC CONSULTANT

4005 ROYAL OAKNORTH LITTLE ROCK. AR 72116

(501) 771-217825 YEARS TERMINAL EXPERIENCETOWER. RADAR. AND NON-RADAR

ANOTHER REASON TO ORDER ABLACK BEAUTYECORPORAlE OUTFIT

Our expanded Texas branch provides fast, convenient service.

Excelsior-Legal Southwest, Inc.p.o. Box 5683, Arlington, TX 76011, (817) 461-5993

Toll free line-1-800-433-1700

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Black Beauty is America's most popular corpo-rate outfit. Here are some of the reasons­

• Everything (including seal) is in idethe "all-in-one" corporate outfit. • Im­proved corporate record book and slipcase in lustrous black vinyl with highquality gold stamped border. Thesturdy, dust-proof slip case reservesplace on shelf when corporate recordbook is removed.• Hidden rivets andgold label window on pine for attrac­tive appearance and quick identifica­tion.· Interior pocket neatly holds loosedocumen ts:....",,,,,,,,,,~~,,

,.

Ik~Ul'.. t Cuw]og u(1.;1\0', Product..-; and Scr\'Ju·"----------

• Improved 1'4" extra capacity boosterstandard three ring metals. BlackBeauty "all-in-one" outfits include:• Customized eal in zipper pouch.• 20lithographed share certificates in a sepa­rately bound section with full page stubs.Each is numbered and imprinted with cor­porate name. capitalization, state and of­ficers· titles.• 50 sheets, rag content paper.Or printed Minutes and By-laws with taxmaterials updated to conform with theEconomic Recovery Tax Act of 1981. Min­ute and By-laws include up-to-date IRC*1244 Resolution, Subchapter S Mate-

rials, Medical/Dental reimbursement plan,appendix of forms, instructions, work sheets

and 20 blank sheets. Special editions are availa­ble for CA, CT, DE, FL, GA, IL, MI, MO, NJ, NY,

PA, TX and Blank State (Model Business CorporationAct).• Our exclusive corporate record tickler.• Mylar

reinforced tab inde·xes with five posi­tions.• Transfer ledger, 8 pages bound inseparate section.

Complete Black Beauty· OutfitNo. 70 iGreen No. 71)50 ...heeL~ blankminute paper. ..... .. .. $42.50No. 80 'Creen -..so All withprinted minutes and by·law~ $46.00

Charge to American Express:\1asterCard or Vi<;;:\

You may also select Green Beautywith the same fine features.

Excelsior-Legalew York· Georgia· Illinois· Texas

TO: EXCEI.-'iIOH-LEGAI.SOlITHWEST. INC.P.O. &~ 5683A,.lin~ton. TX 76011

No, iONo. 80

No. it $42.50No. 81 $46.00

Ptto"~lO IIlcludto $100 for ..hlppm~ and h.mdhnJ!

State year _

Ship to_______________________ Zip Code AZ

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Capltaliwtion S

Num~r

NPVor PV. ,--_t=d('h

Cerlifictlte~si~...ned by President and ==::-::===c-=====;:- 0 Ship via Air-S6.00 e.JHra~",""l..lr)' 1rt';I~Urt"l". unle~ .. ot~nol ~pt'Clriedl

IRe ~1244 complete set-rl:sol.. dlr. min,. treatise, law elc., 4.95 extra.AM EXMVISA

ChargeSHIP VIA AIR:$6.00 ADDITIONALWITHIN THE .q CON·TlGUOUS STATES.($8.00 ELSEWHERE.)

Shlpmtont '" !thin 24 hou .....ilft.~r ~ipt uf urdlor

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