| Ark. | Mar 22, 1915
Lead Opinion
(after stating the facts). I. ' The first question is whether or not the chancery court under the act could allow iclaims arising under contracts made with the directors of the drainage district for work done of a permanent nature as contemplated by the improvement district in advance of an assessment of benefits.
In Kirst v. Street Improvement District No. 120, 86 Ark. 1" date_filed="1908-03-30" court="Ark." case_name="Kirst v. Street Improvement District No. 120">86 Ark. 1-8, we said: “Special assessments for local improvements find their only justification in the peculiar and special benefits which, such improvements bestow upon the particular property assessed. Any exaction in excess of the special benefits is, to the extent of such excess, a taking of property without compensation.” See also Coffman v. St. Francis Drainage District, 83 Ark. 54" date_filed="1907-05-13" court="Ark." case_name="Coffman v. St. Francis Drainage District">83 Ark. 54; St. Louis S. W. Ry. Co. v. Board of Directors, etc., 81 Ark. 562" date_filed="1907-02-04" court="Ark." case_name="St. Louis Southwestern Railway Co. v. Board of Directors">81 Ark. 562. See, also, Cribbs v. Benedict, 64 Ark. 555" date_filed="1897-12-11" court="Ark." case_name="Cribbs v. Benedict">64 Ark. 555-61; Alexander v. Bd. of Directors Crawford County Levee District, 97 Ark. 322" date_filed="1911-01-23" court="Ark." case_name="Alexander v. Board of Directors">97 Ark. 322; Board of Directors Crawford County Levee District v. Dunbar, 107 Ark. 285" date_filed="1913-03-10" court="Ark." case_name="Board of Directors v. Dunbar">107 Ark. 285-290.
In the recent case of Cherry v. Bowman, 106 Ark. 39" date_filed="1912-12-16" court="Ark." case_name="Cherry v. Bowman">106 Ark. 39, the board of directors of an improvement district in a city entered into a contract for the work to be done contemplated by the improvement district 'before there was an assessment of the benefits. It was sought in that case to restrain the board from proceeding to carry out the terms of the contract. In that case we held that there was no inhibition against letting the contract for the improvement before the assessments had been made. The basis of the refusal to grant the injunction prayed was expressed as follows:
‘ ‘ There is no- showing or contention that the contractor is about to proceed or threatens to proceed with the execution of his ¡contract Ibefore those matters herein mentioned are determined, and which must be determined before his contract becomes binding on the district. ’ ’ One of the matters mentioned as being necessary to determine before the contract became binding on the district was “that the cost shall not exceed the benefits.”
The statute creating the Fourche Drainage District provides that the -assessment books prepared by the assessors shall show the value of the lands without the improvements contemplated by the act, and the estimated increased value by reason of such improvements.” The law, therefore, ¡creating the -drainage district put into any contract which its directors might make for the improvements contemplated by the act, the provision that there should be an assessment -of benefits before any contract can be entered into that would be binding on the district or the land- -of the property owners included therein. Cherry v. Bowman, supra, is authority for holding that whi-le a tentative contract might be entered into for the improvement contemplated in advance of the assessment of benefits, yet such contract could not be performed- -or consummated by doing the work contemplated and would not be operative and 'binding on the district or the lands included therein, until there had been an assessment of benefits.
In Fellows v. McHaney, 113 Ark. 363" date_filed="1914-06-08" court="Ark." case_name="Fellows v. McHaney">113 Ark. 363, 168 S. W. 1099, speaking of act of 1913 repealing the act creating the drainage district, we said: “By this act of 1913, the-Legislature ascertained and declared that the assessment previously made was a proper one, and validated it, and its action in- so doing is beyond judicial review, in the absence of a-Showing that the assessment so validated was arbitrarily made, regardless of benefit, or a -showing that no benefit could possibly accrue -from the improvement sought to be made to the property sought 'to be taxed. In that ease there were no allegations that the “lands would not have been benefited at -all by the improvements ” the contention .simply .being that “the assessment as validated by the Legislature was unequal and unjust. ' But in the ease at bar, it was alleged and proved that the cast of the improvement contemplated by the district would exceed the value of the benefits returned by the board of assessors as finally equalized under the act by such board sitting as a board of equalization.
The amount for which the act creating the district authorized a bond issue was $150,000. The directors soon after the creation of the district issued a statement in the form of a letter to the land owners in which they set forth that the engineers estimated that the work could be done for $150,000, and it was estimated that the total cost to the property owners would be about one per cent of the assessed value. The above letter was circulated before the board had final plans drawn for the work. The work under these final plans was. estimated to cost over $1,500,000. The board entered into contracts •amounting to $1,000,000, and work had been .done and debts created under these contracts to the amount of over $100,000 before the assessment of benefits contemplated by the act was completed, which occurred January 22, 1913. This final assessment of the total benefits, according to the testimony of the assessors which is not challenged or controverted, showed that the benefits would be 'less than the estimated cost of the work to be done. The estimated cost of the work to be done did not include interest on the bonds which the statute provides shall run from ten to twenty years, nor did it include the cost of maintenance.
II. 'To sustain the act of the Legislature, we must presume that the word “claims” as used was intended to mean only such claims' as were valid under the law creating the drainage district. No others will be binding on the owners of real property in the district. .
What claims were valid?
No .authority can be found in the act abolishing the drainage district for the levy of an extra assessment of 20 per cent upon 'the lands included in that portion of the drainage 'district known as the Four ¿he Levee District. The levy of the special tax must be in the same proportion according to the value of the assessed benefits upon all the lands included in the drainage district, without regard to the fact of their being also included within the levee district. 'The levy of this extra assessment is in conflict with the provisions of our Constitution and statutes requiring uniformity 'and equality in taxation. To validate this extra assessment on that portion of the 'lands in the drainage district included within the levee district would be tantamount to exempting the lands in the drainage district outside of the territory embraced in the levee district of their just and equal proportion of the tas, land requiring the particular lands in the levee district to bear an unequal burden. This can not be done. See Davis, as Collector, v. Gaines, 48 Ark. 370" date_filed="1886-11-15" court="Ark." case_name="Davis v. Gaines">48 Ark. 370; Town of Monticello v. Banks, 48 Ark. 251" date_filed="1886-11-15" court="Ark." case_name="Town of Monticello v. Banks">48 Ark. 251.
The preliminary expenses that were incurred were for the common benefit of all the property included in the drainage district, .and all of this property must share alike in the payment of the expenses. See Board v. Dunbar, 107 Ark., supra.
IV. The decree of the court was based upon a misconception of the power conferred upon' it by the statute under review abolishing the drainage district, and was erroneous insofar as it allowed indiscriminately, claims .arising out of contracts for permanent work, and claims for preliminary expenses, and in ordering the levy of an extra tax of 20 per cent upon, the lands in the levee district in addition do the tax of 10 per cent upon all the lands in the drainage district.
The decree is, therefore, reversed and the cause is remanded with directions to ascertain from this record, and other testimony if necessary, the claims for preliminary expenses, .and to' .allow these claims; .and also to allow the claims of the trust companies or others whose money was furnished to pay the claims for preliminary expenses to the extent and for the amounts only of such preliminary expenses; .and to disallow and dismiss all claims for permanent work, .and for such other .and further proceedings looking to the adjustment and payment of the claims allowed as may (be necessary and not inconsistent with, this opinion.
Rehearing
OPINION ON REHEARING.
I. It is insisted on rehearing that when the Legislature created the Fourehe Drainage District and invested its hoard of commissioners with power and made it their duty to do 'the work designated in the act— that is, to effectually drain the Fourehe bottoms 'and other land within said district — that this gave the hoard the right to enter into contracts for doing the work contemplated, to (borrow money necessary' to meet the obligations incurred by reason of these contracts; that the language of the act' is in effect mandatory and leaves no power to determine whether the cost of 'the contemplated improvements would exceed the benefits to be derived therefrom; that the Legislature had determined for itself that the benefits would exceed the cost of the improvements;, and that therefore the court erred in holding that contracts for permanent work to be done in advance of the assessment of benefits were premature and not binding on the land of the district.
Section. 6 provides for a board of assessors who “shall make an assessment of all the land,” etc., entering on the books provided for the purpose, “the value thereof without the improvements contemplated Icy this act and the estimated increased value thereof by reason of such improvements.”
Section 7 provides that the assessors “shall'make their assessment at such time as they may !be directed to do so by the board of directors, and shall place in the hands of the president of the board of directors their report of assessment,” etc. This section also provides for a hearing before the board of assessors of the complaints of the property owners who may be “aggrieved by the action of the board of assessors.” And it constitutes the board of assessors a board of equalization to “adjust any erroneous or wrongful assessments,” and it makes “their assessment as adjusted” the assessment of the district.
Section 8 provides that the board of directors “shall have the power, and it is hereby made their duty to 'assess, levy and designate a tax upon the increased value of betterment estimated to accrue from improvements contemplated by this act upon all lands, * * * but such tax shall not exceed 6 per cent per annum of the betterment accruing to said property,” etc.
Section 9 provides for the collection of the taxes levied upon the basis of said assessment and prescribes the manner of procedure against the lands in event the taxes are not paid within the time prescribed for such payment.
Without going into any detailed analysis of these provisions, it is plain that when they are all considered together and in connection with the other provisions of the act, as they must be, that the Legislature did not determine in advance that the benefits to accrue would exceed the cost of the improvement contemplated in the creation of the drainage district. But, on the contrary, the language of the above sections of the act shows that the Legislature intended that 'before the permanent work of improvement should be undertaken and completed that an assessment of benefits should be made -which would exceed the cost of the improvement contemplated by the act. Necessarily this is true, for otherwise, as ¡shown in the original opinion, the act would have been in conflict with the Constitution. Art. 2, § 22, Const. 1874. The act clearly provides that the assessment should be made by “the board of assessors” employed by the board of commissioners of the district, .and it designates the property to ¡be assessed and prescribes the manner in which the assessors shall proceed to make the assessment. The language in which the above provisions are couched excludes the idea that the Legislature determined for itself in ¡advance that the benefits of the contemplated improvement would exceed the cost thereof. If the Legislature had determined in advance that the benefits to be derived from the ¡contemplated improvement would exceed the cost thereof, it would have doubtless directed the levy of a tax upon the basis of a certain per cent of the assessed value of the property or ¡declared in so many words that the lands in the district would ibe benefited by the improvement so much an acre on the rural property or so much a lot or square foot on the ¡city property, and would have directed the levee of a tax upon the basis of the benefits thus declared. The language used in the Act of 1907 is entirely inappropriate to express an assessment of benefits made by the Legislature in advance, and if the Legislature had intended to assess the benefits itself without the interposition of a board of .assessors, the phraseology to express such an assessment would have been entirely different. It is different in all the instances that have come under our observation where the Legislature has determined for itself in advance that the benefits to be derived from an improvement provided for would exceed the cost of such improvement. Therefore, we differ radically with counsel for .appellees in their construction of the act in this particular. The decision of the court was grounded primarily upon the .above construction of the act, which was purely a question of law; and after a careful consideration of the able and exhaustive briefs of counsel on rehearing, we are still of the opinion that this construction which we have given to the Act of 1907 is the proper one and the only one that can he reasonably given'it.
II. The next contention made in the briefs for rehearing is that the court erred in holding that the cost of the improvement contemplated would exceed the value of the benefits assessed. In the original opinion we said “in the case at bar it is alleged, and the uncontroverted proof ¡shows, that the estimated cost of the improvement contemplated exceeded the benefits.” Counsel for the appellants in their original brief stated as f ollows: ‘ ‘ The final assessment shows the total benefits to fee fifty to seventy-five thousand less than the estimated cost of work to be done.” Again, “The total assessed betterment was one million five hundred thousand dollars. The total cost of the work planned was more than one million five hundred thousand dollars. ’ ’ Again, ‘ ‘ In the present instance, the cost of the work exceeded beyond all reason the total benefits that would result from the work.” These statements were nowhere ¡challenged in the briefs of counsel for the appellees or for the receiver. On the contrary, in their original briefs counsel for appellees and for the receiver seem to have relied upon former decisions of this court, especially in the case of Fellows v. McHaney, 113 Ark. 363" date_filed="1914-06-08" court="Ark." case_name="Fellows v. McHaney">113 Ark. 363, 168 S. W. 1099, as having determined that Act No. 420, approved May 28, 1907, was a legislative assessment of benefits exceeding the cost of the improvement contemplated, and that therefore the assessment of benefits was not open to question. Counsel for appellees in their original brief say, “It was settled by this court in Fellows v. McHaney that the assessment now complained of had become a legislative assessment and not open to question. ” Again, speaking of the Act of 1913, they say, ‘ ‘ The act merely says that the court ¡shall collect upon the assessment of benefits heretofore made a sum sufficient to pay ¡all claims found to be due. The matter was sent to a court of equity in order that it might do equity. The assessment is confirmed and stands as the assessment of the district. And counsel for the receiver say, “All questions as to the validity of this district and validity of the 'assessments have ¡been .settled toy the decision mf this court, ’ ’ citing Fellows v. McHaney, supra, and other cases. And again, ‘ ‘ Practically all of the questions involved here were considered and decided in the case of Board of Directors of Crawford County Levee District v. Dunbar,” etc. Since learned counsel for the appellees, and for the receiver, did not challenge the truth of the statements of facts made and relied upon in the brief of appellants, as .above set out, the court was led to believe that counsel for appellees and the receiver, while conceding the truth of the facts as above .stated in the briefs of counsel for appellants, nevertheless .contended that the issue was settled in their favor by former decisions of this court, land especially Fellows v. McHaney, supra, to the effect that the Legislature had determined for itself in advance that the benefits to be derived from the improvement contemplated by the Act of 1907 would exceed the cost thereof, and that this issue of fact was therefore not open to question. We were thus led into the mistake of saying ‘ ‘ that the uncontroverted proof shows that the estimated cost of the improvement contemplated exceeded the benefits” and proceeded to treat the cause as if there were no controversy upon this issue of fact and disposed of the contentions of learned counsel for appellees that the .above issue of fact had been foreclosed in their favor by the opinion in Fellows v. McHaney.
After carefully considering the briefs on rehearing, we believe our characterization of the issues was substantially correct. Appellees filed their petitions setting forth their several claims, some for preliminary expenses, others for permanent work done, and others for money furnished the board to pay for the work that was done. These claims were contested toy the appellants, 'and in the responses filed by the receiver to all the claims it was .alleged “that the same was not necessarily an expense incurred in advance of the enjoyment of the benefits, and was not a necessary and initial expense incurred by the district as originally organized; that the same was not properly based upon the benefits reasonably 'anticipated and was not for expenses incurred for the common benefit of property in the district and was not in proportion to the anticipated benefits;, that the said debt was incurred, if incurred at all, by the 'abuse of the authority of the board of directors of the district .and should- not be made a burden upon the taxpayers of said district. ’ ’ In an intervention filed by the Braddoek Land & G-ranite Company, .attacking the claims of the four trust companies, it was alleged as follows: “That the board of directors were authorized to make only expenditures necessary for the initial .and preliminary -steps for the construction of the contemplated improvements which included only the necessary surveys, maps and attorneys’ fees and such other things as .are comprehended in the terms ‘preliminary and initial steps’ prerequisite to determining what was necessary to be done prior to the commencement of the actual construction of the improvements, .contemplated 'by the Aiet of 1907 and whether or not such improvements could be made under the provisions of said act. That the board of directors of Pourche Drainage District, in disregard of the limitation of their authority under the Act of 1907, and in excess of their authority, before it was determined that said improvements could be constructed, made large expenditures that can not be embraced in the preliminary and initial steps for which .alone .said board of directors -were authorized to expend money or to incur debts on behalf of the district. That the total amount of such debts, in excess of and beyond the preliminary and initial -work, and in excess of the authority of the board, was .about one hundred thousand dollars. That the sums, .claimed by the trust companies are for money loaned to the board of directors to pay such unauthorized debts. * * * That the Pourche Drainage District, and especially the lands owned by the interveners, received no benefit from the expenditure of said money, but that the lands of the interveners were injured 'and damaged; that to .allow the claim of the trust companies and to charge them against the lands would violate constitutional rights, and that the said claims should he 'disallowed, except so far as they were for money expended for preliminary and initial work. ’ ’ The trust companies filed responses to the intervention of the Braddoek Land & Granite Company and Nettie F. Riffle, denying the lack of authority in the district to make expenditures other than those necessary for the preliminary or initial expenses, and in the responses to the intervention of two of these trust 'companies it was alleged “that the delivery of the ¡bonds was delayed because the assessment of benefits had not been made and filed and the said ¡bonds could not be approved by counsel until the assessment of benefits, had been made and confirmed.” Certain land owners filed protests against the levy of taxes, in which the}7 set forth: “That the assessment was unjust, confiscatory and discriminatory, and would result in the destruction of the rights of property without benefit and without-compensation, contrary to the- provisions of the Constitution of Arkansas and of the United States. ’ ’ Other exceptions set forth that the assessment ‘ ‘ exceeded the worth of the property and benefits derived from the improvement contemplated.” Thus while it was not alleged in haec verba, “that the cost of the improvement contemplated by the district would exceed the value of the benefits returned by the board of assessors,” the above allegations of the pleadings do- clearly show that such was their effect, and we were not in error, therefore, in so stating.
However, we do not regard it as material or important that this issue should have been raised by specific ¡allegations in 'the pleadings to that effect. It was an issue that was necessarily raised by the presentation of claims under the act ¡and by the contest of those claims on the grounds that no Claim should be allowed other than those for preliminary expenses.
The statement in the opinion, to wit, “The uncon-troverted proof shows that the estimated cost of the im¡provement contemplated exceeded ‘the benefits, ’ ’ we find is not 'accurate for the reason that Judge Kavanaugh testified that “the directors figured that the cost of the work would he $950,000; ’ ’ and the engineer of the district, Mr. Lund, testified that the estimated cost of the completed work of construction was $900,000. On the other hand, Mr. Polk, who was a member of the board of assessors, testified, “We knew just what the estimated cost of the district would be. * * * We were trying to adjust those assessments to isee if we could not meet the requirements of the cost of the ¡district. I think on our wind-up we were from fifty to .seventy-five thousand in our equalization below the actual cost they had estimated of doing the work. ’ ’ The testimony of Mr. Moore, another member of the board of assessors, was as follows: “The assessors were told by the directors of the drainage district the approximate amount that the work would cost. Their assessment as first made was more than the estimated cost of the work, but after being equalized was less than the cost of the improvement. There was never any assessment that was equal to the cost of the improvement. ’ ’ So it was not accurate to say that the uncontroverted proof ¡showed that the cost of the improvement exceeded the assessment of benefits.
The above testimony was elicited upon the hearing of some of the ex parte petitions of the claimants, and counsel for the trust companies contend that this testimony was not introduced on the hearing of their claims and that it would therefore be obviously unfair and contrary to the rules of practice to have the testimony considered in order to invalidate their claims. They say, “There is no testimony in the record bearing on this issue, and there is none introduced on the hearing of the claims of our clients that tends to sustain the issue.”
But even if the contention of counsel in this respect were correct, still the claims of the trust companies would necessarily fail, for the burden was upon the claimants to show that their claims were valid under- ‘the Act of 1913. That act abolishes the drainage district and makes provision for the allowance of claims. As we have shown in the opinion, the word “claims” as used in the act necessarily meant valid claims, ¡and no claims could be valid for permanent work done until it was first determined that the benefits to be derived from the improvement would exceed the cost thereof. Every presumption must be indulged in favor of the validity of the Act of 1913. It can not be presumed that the Legislature of 1913 validated the assessment made under the Act of 1907 as a legislative assessment of benefits to exceed the cost of the improvement contemplated by that act; for if the Legislature of 1913 had so determined, then its act in abolishing the district would be unconstitutional and void, because to abolish the district, .and burden the real property therein with assessments to discharge the obligation of valid ¡contracts made with the board of commissioners for the permanent improvement contemplated which were not made would deprive the land owners of their property without due process of law. Const. 1874, art. 2, § 21.
Therefore, in order to uphold the Act of 1913, it must be presumed that the Legislature ascertained that there had been no assessment of benefits to exceed the cost of improvement and that the assessment of benefits as made under the provisions of the act of 1907 was. in an amount dess than the’ estimated 'cost of the improvement therein provided for.
In 6 R. C. L., section 101, it is stated: “If it was required that the Legislature should have evidence of particular facts in order properly to pass a statute, it is presumed that such evidence was actually and properly before the legislative body and that it. acted on a full knowledge of the facts." See also sections 111 and 112.
In Sweet v. Rechel, 159 U.S. 380" date_filed="1895-10-28" court="SCOTUS" case_name="Sweet v. Rechel">159 U. S. 380-393, the Supreme Court of the United States said: “It is a well settled rule of constitutional exposition that if a statue may or may not ibe, according to circumstances, within the limits of legislative authority, the existence of the circumstances necessary to support it must be presumed.”
In the recent case of Morgan Engineering Company v. Cache River Drainage District, 115 Ark. 437, 172 S. W. 1020, we said: “It is well settled under our Constitution that the Legislature may not pass an act impairing the obligation of a contract. ’ ’ That was a case where a drainage .district had. been abolished, and the court was passing upon the question of the allowance of the ’claims of an engineering company for the preliminary expenses of surveying, the filing of plans, etc.
The appellees claim under the act, and the burden was upon them to show that their claims were valid. Since the Legislature abolished the drainage district for the reason, as we must presume, that the cost of the improvement exceeded the benefits, the only claims that would be valid, and that could be allowed, under former decisions of this court, as we endeavored to show in the original opinion, were 'claims for preliminary expenses. If any reason existed for abolishing t'he district other than that the cost of the improvement contemplated would exceed the benefits, it devolved upon the 'appellees to prove it, and they have not done so. In our opinion greater weight should be given to the testimony of the members of the board of assessors, whose duty it was to make the assessment of benefits. Their testimony shows that they 'knew what the estimated cost of the district would be, .and that they were trying to adjust the assessment of benefits so as to see if they could not meet “the requirements of the cost of the district.” It was their duty to finally adjust and equalize these assessments. Certainly it could not be correctly stated that the testimony of the two witnesses who testified as to the estimated cost .of the work should be given greater weight than the testimony of the members of the board of assessors, who, after knowing what this estimated cost would be, testified that after they had equalized the assessment of benefits there was never any assessment that was equal to the cost of the improvement. But even if the testimony were evenly balanced on this issue, which is the utmost in favor of the appellees that could be said of it, still the burden of proof being upon the appellees they must necessarily fail.
The motion for rehearing is therefore overruled.