33 S.W.2d 379 | Ark. | 1930
Suit was brought in the Arkansas Chancery Court, Northern District, by the receivers of Farelly *839 Lake Levee District of Jefferson and Arkansas counties for the purpose of enforcing the collection of taxes delinquent on the lands in said district for the years 1928 and 1929, in which suit the Felger Timber Company, Inc., intervened alleging that it was the owner of the standing timber on certain lands described amounting to 4,300 acres, but was not the owner of the fee; that the timber had been separately assessed for taxation, is being taxed as personal property, was not liable for levee taxes sought to be collected, and prayed that the plaintiffs be restrained from collecting taxes upon the timber.
The case was heard upon the pleadings, record evidence and the testimony of witnesses. The trial court rendered judgment sustaining the prayer of the intervener and enjoining plaintiffs from further proceeding against the timber on the lands described in the intervention. From that judgment is this appeal.
1. Previous to the creation of the levee district and the erection by it of its levees, these lands were subject to recurrent inundation from the waters of the Bayou Meto and the Arkansas River, so that the lands had little value. It was difficult to remove timber therefrom because of the frequency of the overflows, the lands remaining soft and boggy for a considerable period of time after the subsidence of the waters. Since the completion of the levees, the lands when put in cultivation, have become very valuable for agricultural purposes — as valuable as any within the levee district. The lands are covered with a good growth of merchantable timber, principally oak and hickory with some cypress and ash. At the time the evidence was taken in this case this timber was estimated to be worth $20 per acre. The evidence was to the effect that the levee district had been formed for the primary purpose of eliminating the overflows so as to render the lands fit for agricultural purposes, the ultimate purpose being to convert them into farms. The estimated benefits were placed at $28 per acre, the assessments amounting annually to about $1.25 per acre. *840
2. With reference to the relation of the intervener, the facts are that the levee district was extended to include the Felger lands in 1917, which lands at that time had been owned by the Felger family for a number of years. The title was in Bertha S. Felger in May, 1928, when, for a nominal consideration, she conveyed the timber thereon of every character and description including its growth for a period of fifty years, in which time it might be removed, to Earl H. Felger, as trustee, giving to the grantee the right to erect thereon houses, railroads, and all other improvements deemed necessary, stipulating that such improvements should be personalty with the right of removal within a reasonable time after the expiration of the time given for the cutting of the timber. Earl H. Felger was the son of Bertha S. Felger. On or before the execution of the timber deed a corporation was organized under the laws of the State of Delaware, the capital stock of which was owned by the Felger family except ten shares owned by four other persons, the said Earl H. Felger being the president and Bertha S. Felger the secretary of such corporation. Contemporaneous with the execution of the timber deed aforesaid to Earl H. Felger, as trustee, he conveyed the timber on the same lands for a nominal consideration to the corporation, intervener in this action, the terms of the conveyances being identical.
Mrs. Felger had been the owner of the lands from before the formation of the levee district, and, as this suit was brought only for the delinquent assessments for the years 1928 and 1929, we infer she had regularly paid all the yearly assessments on the benefits assessed against her lands and until the improvement was completed and her lands freed from overflow. Then, for a nominal consideration, she conveyed, not, as is customary, certain species of trees or such as was merchantable, or for a time limit reasonably necessary within which the timber might be removed, as in the case of Dover Lumber Co. v. Board, etc.,
So long as the timber remains uncut, the soil can have no value except that of the growth of the standing timber. As this is the case, and if, as contended by the appellee, the timber could not be subjected to any part of the payment of the annual assessments of benefits, then, as stated by the appellant, "no human being would be foolish enough to pay State, county and school taxes and also the levee assessment and get nothing in return for a period of fifty years." Since it is not likely that any one would pay the taxes, the necessary result to the other landowners in the district would be an additional burden placed upon their lands and an increase in the amount of their assessments.
3. The appellee relies in this case on the force of act No. 146 of the Acts of 1905 which provided that "hereafter all timber in this State which has been sold separately and apart from the land on which it stands shall be classed as personal property and shall be subject to taxation as such," and insists that, since it has paid the general taxes assessed against the timber as personal property, it is not subject to taxation for local benefits, as only such benefits can be assessed against lands in the territory affected, and that, when the act creating the levee district used the word "land," it meant the taxable real estate in the district as defined by the revenue law and as the same appears on the tax books.
A number of decisions of this court are cited by the appellee in support of this contention which we have examined and considered. Typical of these cases is that of St. L. S.W. Ry. Co. v. Levee District,
Appellee also relies on the case of Anderson Tully Co. v. Gillett Lumber Co., 143 Ark. at page 101, 222 S.W. 362, where, referring to the act of 1905, supra, the court said: "The act is intended to make timber sold separately and apart from the land on which it stands personalty for the purposes of taxation, so that the land and the timber may be separately assessed and the owner of the land be not required to pay the taxes on the timber, *843
which would otherwise be charged to him as a part of the land." This doctrine was recognized in the case of Southern Lumber Co. v. Arkansas Lumber Co., 176 Ark. 912,
From the act and the decisions cited relating to and construing it, appellee reasons that the character of the standing timber on the lands in question is fixed as personal property, and therefore is not subject to taxes for local improvements. The cases do not support the contention of the appellee. It is settled law and common knowledge that by the term "land" is meant everything that lies below the surface or is attached thereto by the processes of nature or of art and that standing timber is as much a part of the land as the soil constituting the surface, and it was in that sense the term was used in the act creating appellant district. Therefore, the benefit accruing to the landowner estimated at $28 per acre was the increased value of the land in its entirety and not to any particular interest therein, and the special assessment finds justification in the peculiar betterments to the property as a whole created by the building of the levee. Ahren v. Board of Imp. Dist.,
"The owner will not be relieved of taxation on account of the levee by reason of the fact that his lands will not be enhanced in value to him for the purposes he is using or intends to use them. The fact that the use to which the property is devoted will not be increased will not relieve it because the improvement is thereby rendered valueless to the owner. Only to the extent that such use affects the market value can it be taken into consideration by the assessor. As has been justly remarked by a court, `when the owner has the unrestrained power of alienation, and the property may be converted to any use at his pleasure, it is difficult to see how, upon any principle, an exception can be made to the rule regarding only the market value. After the owner has escaped what would otherwise be a great burden, on the ground that he does not intend to use the property in a way which will make the improvement beneficial, he may change his mind, throw the property into the market, and realize advantages for which others had been made to pay.'" Memphis L. T. Co. v. St. Francis Levee Dist.,
Although in this case the land is devoted to the growth of timber instead of cotton and corn and other agricultural products, the burden of the local benefit remains, and the act of the owner by her conveyance of the timber in dividing the entire estate in the land into two estates, one consisting of the soil and the other of the timber standing thereon, does not change the character of the estate or relieve it of its burden. For, as is said in Southern Lumber Co. v. Arkansas Lbr. Co., 176 Ark. 912,
It is immaterial under the act of 1905 whether the timber owned separately from the ownership of the soil was to be assessed as personal property or otherwise, since the act provided that it should be assessed in the county in which the lands were situated. But, as the standing timber was not "property of a doubtful character," the classification was arbitrary and unscientific, which the Legislature subsequently recognized by act 221 of the Acts of 1929, amending 9856 of the Digest, where provision is made that where the timber rights in any lands shall, by conveyance or otherwise, be held by one or more persons and the fee simple title in the lands held by one or more persons the timber rights in the land shall be assessed separately from "the general property therein"; that a sale of the one for delinquent taxes should not affect the title of the other; and that when *846 any timber rights should be forfeited for the non-payment of taxes it should be "certified to and redeemed in the same manner as is now provided for the certification and redemption of real estate upon which taxes duly assessed have not been paid." This act recognized the force of our decisions, and it would seem that now standing timber remains, when constructively severed, even for purposes of general taxation, a part of the realty. But, assuming the classification made by the act of 1905 still in being, under repeated decisions of this court this would not refer to taxes for local benefits. It seems to be the general rule that where the terms "taxes" or "taxation" are used in our Constitution or statutes, they are construed to have reference to taxation for general purposes, and not to local assessments where the fund raised is expended for the improvement of the property taxed.
In City of Bridgeport v. N.Y., etc. Ry. Co.,
"Assessment upon real estate for local improvements has no connection whatever with the general taxing powers mentioned, and this is so well settled as really to require no citation of authorities, much less argument." Carson v. St. Francis Levee Dist.,
In Cooley on Taxation, p. 416, ch. 20, 1, this question is thus discussed by the author: "Special assessments are a peculiar species of taxation, standing apart from the general burdens imposed for State and municipal purposes, and governed by principles that do not apply generally. The general levy of taxes is understood to exact contributions in return for the general benefits of government, and it promises nothing to the persons taxed beyond what may be anticipated from an administration of the laws for individual protection and *847
the general public good. Special assessments, on the other hand, are made upon the assumption that a portion of the community is to be specially and peculiarly benefitted, in the enhancement of the value of property peculiarly situated as regards a contemplated expenditure of public funds; and, in addition to the general levy, they demand that special contributions, in consideration of the special benefit, shall be made by the persons receiving it. The justice of demanding the special contribution is supposed to be evident in the fact that the persons who are to make it, while they are made to bear the cost of a public work, are at the same time to suffer no pecuniary loss thereby, their property being increased in value by the expenditure to an amount at least equal to the sum they are required to pay." And in Illinois Central Rd. v. Decatur,
The rule announced in these cases seems to settle the instant case contrary to the contention of the appellee. He relies, however, on the case of Dover Lumber Co. v. Rd. of Com'rs, etc.,
We think the better reason supports the statement of the Chief Justice, supra, and that it is in line with the rules announced by our own decisions. It will be noted, moreover, that the facts in the Dover Lumber case, supra, are quite different from those of the case at bar. In that case the timber was of a certain size and conveyed before the formation of the drainage district and for a period of only five years, while in this case when the district was formed Mrs. Felger owned the entire estate, and after the improvement had been completed she conveyed to a holding corporation for a period of fifty years all the timber and its growth during that period. It follows from what we have said that the chancellor erred in granting the relief prayed by the intervener. The *849 decree is therefore reversed, and the cause remanded with directions to dismiss the intervention of appellee, and for further proceedings in accordance with the rules of equity and not inconsistent with this opinion.