American Exchange Trust Co. v. Truman Sp. School Dist.

• Decision Date: 04 May 1931
• Docket Number: No. 276.,276.
• Citation: 40 S.W.2d 770
• Parties: AMERICAN EXCHANGE TRUST CO. v. TRUMAN SPECIAL SCHOOL DIST. et al.
• Court: Arkansas Supreme Court

40 S.W.2d 770

AMERICAN EXCHANGE TRUST CO. v. TRUMAN SPECIAL SCHOOL DIST. et al.

No. 276.

Supreme Court of Arkansas.

May 4, 1931.

As Modified on Denial of Rehearing July 13, 1931.

Appeal from Poinsett Chancery Court; J. M. Futrell, Chancellor.

Action by the American Exchange Trust Company against Truman Special School District and others. From a decree granting partial relief, plaintiff appeals.

Affirmed.

This action was brought by appellant, trustee in 3 different bond issues of appellee district, to recover judgment for the amount of the bonds due and interest coupons thereof, and praying a mandamus requiring appellee special school district to set aside of the revenues of the district a certain amount yearly sufficient to pay the maturing bonds as they became due, as well as a foreclosure of the lien of the mortgages.

The deeds of trust are virtually the same, except as to the dates and descriptions of the bonds secured thereby. Three issues of bonds are involved in the suit, one of April 1, 1920, in the amount of $38,000, the issue of May 1, 1920, in the amount of $8,000, and the issue of August 1, 1922, in the amount of $40,000. There is no dispute as to the validity of the bonds or about the issuance of the deeds of trust to secure the indebtedness.

It appears from the resolution adopted by the board of directors of the school district that a building fund was created to provide a sinking fund for the payment of the bond issue of April 1, 1920, setting aside certain amounts of the revenues of the district to pay a designated amount of the principal and interest of the debts for the years specified therein; and also that if in any year the revenues are not sufficient to equal the amount appropriated to the building fund of that year, the amount of the deficit should be set aside and paid into the building fund in the first years following, until said deficit is made good or wiped out, and the building fund was pledged as security for the payment of the bonds and coupons set out in the deed of trust, and further provided that none of the building fund should be applied to any other purposes until the bonds and coupons were paid in full. In the deed of trust it was also agreed that, upon the failure of the district to perform its obligations and undertakings when performance was due, the trustee should be entitled to reasonable compensation for services rendered in connection with the trust in pursuance with the provisions of the trust, and that the district should pay compensation and all advances and expenses incurred by the trustee, which should have a lien therefor upon the premises and property conveyed and pledged or the proceeds thereof prior to the bonds and coupons secured by the deed. The trust deeds also contained a paragraph reciting the creation of a building fund from certain and all the sources of revenue for the payment of the matured bonds and interest. In the deeds of trust securing the bond issues of May 1, 1920, and August 1, 1922, a paragraph recites that the building fund provided for "is hereby appropriated for the payment of the debts secured by this deed of trust and no portion thereof shall be used for any other purpose until the debts secured by this deed of trust have been paid in full." These words were not included in the deed of trust securing the April 1, 1920, bond issue.

The original deeds of trust and resolution of the board referred to were exhibited to the chancellor, and a decree was rendered without any testimony taken upon the pleadings or exhibits thereto.

The chancellor denied the...