Whitaker & Co. v. Sewer Improvement District No. 1

Decision Date30 March 1955
Docket NumberNo. 14900.,14900.
Citation221 F.2d 649
PartiesWHITAKER AND COMPANY, Appellant, v. SEWER IMPROVEMENT DISTRICT NO. 1 OF DARDANELLE, ARKANSAS, et al., Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

S. L. White, Little Rock, Ark., for appellant.

Robert J. White, Russellville, Ark. (Herbert C. Scott, Dardanelle, Ark., on the brief), for appellees.

Before GARDNER, Chief Judge, and STONE and THOMAS, Circuit Judges.

STONE, Circuit Judge.

In the municipality of Dardanelle, Arkansas, Sewer Improvement District No. 1 was organized in 1917. In that year, the District issued sixty-five bonds of $500 each, bearing six per centum interest, and maturing annually and serially. After several years, there was default on the bonds. In 1937, the then holder of $18,300 (principal) of the bonds secured a decree in the United States Court for $28,074.01, which included past due interest. In 1939, the same holder had a further decree covering four additional bonds (total $2,000) and interest ($762.20). In 1948, these decrees were assigned to Roy A. Dickie. In 1951, Dickie filed a "Petition and Motion" seeking equitable relief which would enable him to ascertain and recover the balances due upon these decrees.1

Summarized, the answer pleaded that the entire amount of the benefits determined to accrue to all of the lands in the District had been paid by the respective property owners except $16,146; that plaintiff is entitled to recover this total sum, together with legal penalties and costs, from those property owners who are delinquent; that property owners who have paid in full the betterments to their properties have the liens thereon released; that the District has no assets except the above delinquent assessments; and that there is no legal authority to levy or assess "additional betterments or taxes against the lands, current or delinquent."

A stipulation of facts was filed. The Court stated in his decree that "from and upon consideration of the stipulation of facts, the orders and decrees heretofore entered, and all matters and things before the court, and the record as herein presented over a period of fifteen years", he made certain findings.

A summation of the here pertinent findings is: that the total benefits accruing from the improvement constucted are $78,086; that these betterments have been fully levied and are liens upon the various lots and tracts in proportion to the betterments levied upon the particular tract or lot; that there remain due and unpaid betterments in the total sum of $16,146; that such sum, together with penalties and costs as fixed by law, is the entire remaining assets of the District covered by the pledge securing the bonds; that the amount due upon the judgments is $35,486.27; and that plaintiff is entitled to have such delinquent assessments, together with penalties and costs, collected by a receiver and to immediate foreclosure to enforce payment.

The body of the decree named a receiver and ordered him to proceed to collect the delinquencies and to disburse receipts as directed therein. The Court expressly reserved two questions of law for future briefing and presentation as follows:

"1. Under the law can this court direct the assessment of additional betterments against the various lots, blocks and parcels of land lying within said district;
"2. Do the delinquent assessments in this district draw interest and if so, the date and rate from which such interest may be calculated."

Thereafter, the Court considered and determined the thus reserved matters in a "Decretal Order", the here material portions are as follows:

"1.
"That under the laws of the State of Arkansas, neither this Court nor the Commissioners of said Defendant District can direct the assessment of additional betterments against the various lots, blocks and parcels of land lying within said District.
"2.
"That the delinquent annual levy of the assessment of betterments in this District do not draw interest unless and until such times as the Commissioners of said defendant District shall have complied with Act 112 of the Acts of the General Assembly of the State of Arkansas of 1933, as amended by Act 241 of the Acts of the General Assembly of the State of Arkansas of 1937;
"That such acts are permissive legislation and not mandatory, and that the Commissioners of said defendant District have not heretofore complied therewith."
"4.
"That said Board, or the receiver herein appointed, determine and file with this Court a list of property upon which the full betterments have not been paid, and the amount of delinquent taxes upon each of the various lots, blocks and parcels of land so delinquent.
"5.
"That said Commissioners of said defendant District, after appointment, be directed to prepare and adopt a resolution fixing, finding and declaring the amount of unpaid betterments against each particular lot, block and parcel of land now delinquent and give notice of such resolution to refund, foreclose or re-assess delinquent annual levies in the manner required by law and Act 112 of 1933 as amended, during the publication of which notice of such resolution, said Commissioners and the receiver herein are directed to accept full payment of such delinquent taxes from the owner of said tract, lot or parcel of land, and upon failure so to do by such property owner, that said delinquent assessments draw interest from the final date of such notice at the rate of six per cent (6%) per annum from said date until paid, as required by the laws of the State of Arkansas, more particularly Act 112 of 1933 as amended.
"6.
"That the lien of the betterments against the various blocks, lots and parcels of land in said defendant District by reason of the original pledge of betterments upon all property which has heretofore been paid in full be by said Commissioners and said receiver cancelled as a cloud upon the title to that particular lot, block or parcel of land.
"7.
"That unless said betterments be paid in full within sixty (60) days from the termination of the notice so hereinabove ordered, that the Commissioners of said defendant District, and the receiver herein, be ordered and directed to proceed in a manner now provided by law to foreclose said delinquent assessments upon the various lots, blocks and parcels of land in said District, and to report their actions therein to this Court, and that all funds collected by said Commissioners and the receiver be reported to this Court for further disposition."

This appeal by plaintiff is from this last decree. Appellant presents here three issues as follows:

1. The Court erred in holding additional assessments could not be levied;

2. Statutes and decisions afford ample provisions for collecting interest;

3. The Court erred for failure to direct proper steps be taken to liquidate debt.

Because of the character of these three issues, our field of consideration can be somewhat narrowed by first examining the last of these three issues. This arises from the broad general scope of that issue. Issues 1 and 2 are concerned with specific matters, being respectively additional assessments and recovery of interest on delinquent payments. This third issue is not so confined.

The Third Issue.

This issue is that, this cause having been filed on the equity side of the Court prior to the adoption of the new Rules of Civil Procedure, the Court will grant "full and complete relief."2 The circumstance that this cause was filed before the above Rules were adopted has no bearing upon any issue in this case. Substantive rights are not determined by these Rules, which are purely adjective.

In the footnote 2, are quoted the equitable maxims which appellant urges as "applicable to the facts in this case." Obviously, the maxim which is, in its scope, inclusive of the two others is that "Equity will not suffer a wrong without a remedy." The required basis for application of this maxim is the presence of a "wrong". "Wrong", as used here, does not mean a "moral duty only, unconnected with legal obligations", Rees v. City of Watertown, 19 Wall 107, 121, 22 L.Ed. 72. "A court of equity cannot, by avowing that there is a right but no remedy known to law, create a remedy in violation of law, or even without the authority of law", Id., 19 Wall at page 122, 22 L.Ed. 72; quoted in Meyer v. City of Eufaula, Okl., 10 Cir., 132 F.2d 648, 652. What then, are the "legal obligations" due appellant, the violation of which constitutes a "wrong" giving him a right to avail himself of this maxim?

His rights must be sought in the contracts found in these bonds and the supporting pledge security. These contracts were made by an entity created by the State of Arkansas and possessing only such powers to contract and to act as are given it by that State.

Appellant's position is that the applicable Arkansas Statutes "do not provide for segregation on any property owners' share of the debt"; that these bonds are "general obligations, and under the `Last faithful acre doctrine,' each lot or parcel of land in the District remains bound until the debt is paid." Appellant cites and quotes from several cases supporting the "doctrine" of general liability of all property for the debts of a District but all of such citations, with one exception, concern statutes of States other than Arkansas.3 These citations are not controlling here because they have to do with statutes of States other than Arkansas; and as to matters dependent entirely upon State law. Whether the doctrine of the "last faithful acre" is applicable in Arkansas to a District of this character is, in all essence, the same issue as presented by appellant under his first contention that additional assessments may be made to pay this debt.

The only Arkansas decision cited in support of this third issue is Benton v. Nowlin, 187 Ark. 738, 62 S.W.2d 16. This cited case is useful only in connection with the second issue here which is concerned with the issue of...

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