Filbert v. ARKANSAS & MISSOURI HIGHWAY DIST.
| Decision Date | 23 October 1924 |
| Citation | 2 F.2d 114 |
| Parties | FILBERT et al. v. ARKANSAS & MISSOURI HIGHWAY DIST. |
| Court | U.S. District Court — Eastern District of Arkansas |
Rose, Hemingway, Cantrell & Loughborough and Moore, Smith, Moore & Trieber, all of Little Rock, Ark., for plaintiffs.
C. T. Coleman and Carmichael & Hendricks, all of Little Rock, Ark., for defendant.
There were eleven separate suits instituted by the plaintiffs, but as the issues involved are the same in each of the actions, they were, by consent of all the parties, consolidated and tried by the court sitting as a jury as one action; a jury having been waived by stipulation in writing.
The actions are on certificates of indebtedness issued by the defendant to the original payees, who are citizens of states other than the state of Arkansas, and by them assigned in due course to the plaintiffs, who are also citizens of states other than the state of Arkansas, of which state the defendant is a quasi corporation, created by the laws of that state.
The certificates were issued in 1920 and 1921, and are all of the same tenor, except as to the amounts, dates, maturity, numbers, and payees, and are in the form as set out in the following certificate:
The answer sets up as a defense that the contracts for the work for which the certificates in controversy were issued were let to the contractors on December 11, 1919; that the benefit assessments were less than the contracts called for, the benefit assessments amounting to $663,458.50, and the certificates issued and sued on in these actions to $281,897.88, in addition to $500,000 paid out for which bonds had been issued by the district, or a total of $781,897.88.
It is also alleged in the answer that, by an act of the General Assembly of the state approved January 27, 1920, the act of 1919 (Road Laws Ark. 1919, No. 82) creating the district was amended and a new assessment of benefits was made under this amended act, which amounted to $1,851,241.91, but that this amendatory act and the assessment of benefits under it was by the Supreme Court of the state held void in its entirety. That in 1923 the General Assembly of the state again enacted a statute, amending the act of 1919 creating the district, authorizing a new assessment of benefits, which assessment aggregated $1,919,962.20. The validity of this last assessment was by the Supreme Court sustained.
It is thereupon contended that, as the aggregate assessment of benefits under the original act of 1919 was less than the aggregate of the contracts for the construction of the highways, the certificates sued on, issued for the work performed under this assessment, are absolutely void, and plaintiffs are not entitled to recover.
By an amendment to the complaint, to which no answer was filed, and therefore must be considered as admitted, except as negatived by the agreed statement of facts, later referred to, it was alleged that at the time the contracts, for which the certificates were issued in part payment, the assessment of benefits aggregated $663,458.50 and the estimated cost of the work $578,711.10. That under the act of 1920 additional roads were to be constructed, and under this act a new assessment of benefits, aggregating $2,905,241.53, was made and approved on October 1, 1920; the contractor proceeding with the construction of the roads. The first road constructed was East Ninth street in the city of North Little Rock, but that this work was paid for in cash, and the certificates in controversy represent work done upon the main line of the district, which had been duly laid out from the beginning, and which is still a road of said district, though by the act of 1923 (Sp. Laws 1923, p. 380), passed long after the certificates in suit had been issued, it was provided that further work thereon should be limited to the building of the necessary bridges and the smoothing of the road as a dirt road. There is also a plea of estoppel by reason of the fact that the commissioners, as well as the landowners whose lands are assessed for benefits, knew of the work being done and made no complaint until after the work had been completed and the certificates sued on issued. That the certificates represent the actual cost of the construction as provided in the contracts, and the property owners have received the full benefit of the road.
The cause was submitted on an agreed statement of facts and no other testimony was introduced. Without setting out the agreed statement of facts in full, the material facts in the agreement are:
The defendant was created as a highway improvement district by Act No. 82 of the General Assembly of the state of Arkansas approved February 14, 1919.
Pursuant to the authority of said act, plans and specifications for the proposed improvement made the estimate of cost of the proposed highway to amount to $578,711.10, and an assessment of benefits aggregating $663,457.50, was made.
On December 11, 1919, the defendant entered into an agreement with the contractors, to whom the certificates in controversy were issued in part payment and bonds to secure the faithful performance of the work were executed by the contractors as required by the act.
By acts passed in 1920 additional roads were added to the district and a new assessment of benefits authorized. The plans for the entire work of the original as well as the additional roads involved a cost of $1,663,347.19, and an assessment of benefits was made, amounting to $2,905,241.23, which was confirmed on October 1, 1920.
The total amount of certificates of indebtedness issued by the defendant district is about $281,897.88, which is in addition to $500,000 of bonds previously issued and sold by the district, and the money used to pay the contractors. By an act of the General Assembly of 1923 the original act creating the district was amended by providing that the road should be constructed from Prothro's gin to Booker, and thence northeasterly along the Missouri Pacific Railroad to the county line, as originally planned, and that nothing more should be done on the main line over the hills and beyond the end of the concrete pavement that leads north of North Little Rock, except to complete the bridges and finish the road as a dirt road.
In pursuance of the act of 1923 the commissioners made their plans for the improvement showing an estimated cost for the work done and to be done in the sum of $1,317,957.10, and thereupon an assessment of benefits aggregating $1,909,962 was made and confirmed on August 3, 1923. The validity of this assessment was sustained by the Supreme Court in Massey & Miller v. Arkansas & Missouri Highway District in Pulaski County, 163 Ark. 63, 259 S. W. 387. The work of construction for which the certificates of indebtedness in suit were issued consisted of work upon the main road, and the fact that the work was going on was known to substantially all the landowners in the district, and none of them interposed any objection to the making of the improvement or to the issuance of the said certificates of indebtedness. The first complaint made by the landowners was in December, 1921, seeking to hold the commissioners to a personal account for the misappropriation of the funds of the district, which was some time after all the certificates in controversy were issued in payment of the work; but this suit has not been brought to a hearing. The commissioners have never repudiated the contract, but have always recognized its existence, and the certificates sued on represent the amounts due the contractors according to the terms of the contracts. While the original assessment of benefits aggregating $663,458.50 was in force, the district entered into separate contracts with various contractors to whom the certificates of indebtedness in...
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