Arkansas State Highway Commission v. Stupenti, 5-75

• Decision Date: 20 April 1953
• Docket Number: No. 5-75,5-75
• Citation: 222 Ark. 9,257 S.W.2d 37
• Parties: ARKANSAS STATE HIGHWAY COMMISSION v. STUPENTI.
• Court: Arkansas Supreme Court

Page 37

257 S.W.2d 37

222 Ark. 9

ARKANSAS STATE HIGHWAY COMMISSION v. STUPENTI.

No. 5-75.

Supreme Court of Arkansas.

April 20, 1953.

Phillip H. Loh, III, Morrilton, Rieves & Smith, West Memphis, for appellant.

Hale & Fogleman, Marion, for appellee.

WARD, Justice.

The only question presented on this appeal is whether the trial court, where the jury had rendered judgment for the value of land under an eminent domain proceeding, was correct in adding interest from the date of entry by the State.

On February 24, 1950 the Arkansas Highway Commission filed suit in the Circuit Court against appellee and other landowners to acquire a right-of-way for the purpose of constructing a highway, and, having made the required deposit in the registry of the Court, took possession of appellee's land on May 5, 1950.

Trial was had on June 24, 1952, resulting in a verdict for $9,500 in favor of appellee, and the Court added interest at 6% per annum from May 5, 1950. The jury's verdict read.

'We, the jury, find for the defendant, Umberto Stupenti, and fix the damages to his lands in the sum of $9,500.'

Appellant does not question the principal judgment but contends the Court erred in adding interest.

The transcript contains no bill of exceptions and the motion for a new trial raises only the question regarding interest in addition to the usual assignments that the judgment is contrary to the evidence and the law. Before the trial it was stipulated that appellee's land was in cultivation.

The principal contention made by appellant is that the State of Arkansas can not be held to pay interest on its obligations unless bound by an act of the legislature or by a duly executed contract so authorized. Here it is conceded the State is not bound in either manner above stated.

Appellant insists, and it is not denied, that it stands in the same position as the State, itself, in regard to the question under consideration. See Arkansas State Highway Commission v. Nelson Brothers, 191 Ark. 629, 87 S.W.2d 394.

In support of its position appellant relies principally on two decisions of this Court which we note below.

State v. Thompson, 10 Ark. 61. Thompson brought suit against the State to recover $500 which the Sheriff of Phillips County collected from him under a misapprehension of law, and paid into the State Treasury. In considering the allowance of interest on the claim the Court made this statement:

'Upon examination of the whole question, both as regards the liability of the State in her sovereign capacity, and of the several statutes on the subject, we are of the opinion that the State is not liable for interest in any case unless by express agreement she makes herself liable.'

While the above quotation apparently supports appellant's position, the reasons assigned to support it are not applicable to the case under consideration. The Court reasoned that the State's method of paying its claims was 'out of a common fund raised by taxation for that purpose, pointed out the manner of presenting and allowing them * * * and placed all claimants on an equal footing,' and then stated it could 'see no reason for placing one class of claimants in a better situation than another' simply because 'the claimant had a right to resort to his suit against the State to establish the legality of the claim.'

Jobe v. Urquhart, 102 Ark. 470, 143 S.W. 121, 125. In this case the Board of Commissioners of the State Penitentiary, acting under the authority of an Act of the General Assembly of 1897, purchased land for a prison farm from Urquhart. The negotiated contract provided for a down payment and the balance at later dates, and, although the legislative act did not so provide, the contract provided for the payment of interest on the deferred payments. Jobe, the State Auditor, refused to issue a warrant for the payment of interest and Urquhart brought suit. The Court reaffirmed the rule announced in State v. Thompson, supra, in these words:

'It is well settled both upon principle and authority that a state cannot be held to the payment of interest on her debts unless bound by an act of the Legislature or by a lawful contract of [her] executive officers made within the scope of their duly constituted authority.'

Urquhart conceded the State was not bound by the unauthorized acts of its agents, and, also, that the legislative act in question did not expressly provide for the payment of interest, but contended that 'this authority may be expressed or implied' and that it was implied in that case. In rejecting this contention the Court said:

'The General Assembly has plenary powers to contract for and create interest-bearing indebtedness on the part of the state, except to issue interest-bearing treasury warrants or scrip. But the authority to bind the state to the payment of interest on her indebtedness must be plainly expressed and not implied.'

The rule announced above is sound within the scope of the cases announcing it, but we do not think it is applicable in the situation here presented. Although the exact question under consideration is before this Court for the first time, it has been considered by other jurisdictions.

Assuming, for the present, that appellee's property taken by the Highway Commission was, on June 24, 1952, worth the amount of the judgment rendered that day in his favor, he will be deprived of the use and rents for nearly two years unless the State is obligated to pay him the value thereof. To allow the State to escape this liability would be contrary to our State Constitution. Article 2, Section 22, reads:

' § 22. Property rights--Taking without just compensation prohibited.--The right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.'

Just compensation means full compensation. While the real loss to appellee might well be described as the denial of the use of his land for the time stated, yet the universally recognized rule for measuring this loss is by calculation of interest on the value of the land. This conclusion is supported by many authorities.

Kimball Laundry Co. v. United States, 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765. Where the Government took over a laundry for war purposes on a rental basis, it was held liable for interest on past-due installments under Amendment No. 5 of the U. S. Constitution which provides that 'private property [shall not] be taken for public use, without just compensation.'

Smyth v. United States, 302 U.S. 329, 58 S.Ct. 248, 252, 82 L.Ed. 294. After recognizing the general rule contended for here by appellant the Court stated the apparent exception in eminent domain cases. It said:

'The allowance of interest in eminent domain cases is only an apparent exception, which has its origin in the Constitution.'

Jacobs v. United States, 290 U.S. 13, 54 S.Ct. 26, 28, 78 L.Ed. 142. Construing the language in the 5th Amendment to the U.S. Constitution, which is the same as used in our own Constitution, the Court said:

'The owner is...