Chicago Mill & Lumber Co. v. Drainage Dist. No. 17

• Decision Date: 14 February 1927
• Docket Number: (No. 184.)
• Citation: Chicago Mill & Lumber Co. v. Drainage Dist. No. 17, 291 S.W. 810 (Ark. 1927)
• Parties: CHICAGO MILL & LUMBER CO. v. DRAINAGE DIST. NO. 17 OF MISSISSIPPI COUNTY.
• Court: Arkansas Supreme Court

291 S.W. 810

CHICAGO MILL & LUMBER CO. v. DRAINAGE DIST. NO. 17 OF MISSISSIPPI COUNTY.

(No. 184.)

Supreme Court of Arkansas.

February 14, 1927.

Rehearing Denied March 21, 1927.

Appeal from Circuit Court, Mississippi County; G. E. Keck, Judge.

Proceeding by Drainage District No. 17 of Mississippi County for an increase in tax rate, wherein the Chicago Mill & Lumber Company intervened as party defendant. From a judgment affirming an order of the county court increasing the tax rate, the intervener appeals. Affirmed.

W. R. Satterfield, of Memphis, Tenn., and Little, Buck & Lasley, of Blytheville, for appellant.

Chas. D. Frierson, of Jonesboro, amicus curiæ, for bondholders.

SMITH, J.

Drainage district No. 17 of Mississippi county was organized by special statute (Acts 1917, vol. 1, p. 485), and embraced a large part of both the Chickasawba and Osceola districts of that county. Pursuant to the authority conferred by this act, serial bonds running from the year 1919 to 1942, inclusive, were issued by the district, aggregating $1,682,500. The betterments to the real property in the district were assessed at $4,190,868.41, and taxes thereon were levied in 24 installments for the years 1919 to 1942, inclusive. The first four installments were fixed at 2.3 per cent. of the assessed betterments, and for the remaining 19 years the annual installments were fixed at 3.6 per cent. of the benefits. These annual installments aggregated 81.2 per cent. of the benefits. The levy of the taxes against the benefits was sufficient to take care of the principal and interest of the bond issue; the interest amounting to $1,394,649.20.

This special act was amended at the extra session of the General Assembly of 1920 by an act (No. 305) approved February 23, 1920. The amendatory act enlarged the district and cured all defects in the proceedings leading up to the organization of the district, confirmed all judgments, assessments and contracts, and removed the limitation on the cost of the improvement and made all betterments bear interest at the rate of 6 per cent., and provided that interest on the bonds should not be considered as a part of the cost of the improvement and should be collected in addition to the benefits.

Pursuant to the authority conferred by the amendatory act, plans were prepared to afford drainage to what is known as the Big Lake area, and certain other changes in the plans were made and benefits were reassessed. Bonds dated August 2, 1920, aggregating $2,300,000, were issued in addition to those previously issued. Taxes were levied on the changed and corrected benefits to take care of the principal and interest on both issues of bonds maturing after that date.

The taxes were then levied in 22 annual installments, for the years 1921 to 1942, both inclusive. The installments for the years 1921 and 1922 were fixed at 5 per cent.; for the years 1923 and 1924 at 6 per cent.; for the year 1925 at 6.6 per cent.; and for the years 1926 to 1942, both inclusive, at 7½ per cent. The tax rate for 1921 was reduced from 5 to 4 per cent., and for the years 1923 and 1924 it was increased from 6 to 7 per cent.

The district filed a petition in the county court, praying an increase in the rate for the year 1925 to 7.7 per cent., and alleged that it was necessary to increase the tax rate, because of a large delinquency of the lands in the district. At the time this petition was filed no default had occurred in the payment of principal or interest on either bond issue.

The appellant, Chicago Mill & Lumber Company, which owns a large body of land in the district, intervened and was made a party defendant, and filed an answer denying the authority of the court to make an order increasing the tax rate previously fixed. At the hearing in the county court the order prayed was granted, and the intervener duly prosecuted an appeal to the circuit court. Upon the hearing of this appeal the order of the county court was affirmed, and this appeal is from that judgment.

Proof was offered, showing that the annual increase in delinquencies had in 1924 reached $71,738.69, the principal part of which was in the Big Lake area. It is shown that a total of 14,000 acres of land had been returned as delinquent, of which 8,000 acres had been sold to the district in proceedings to enforce payment of the drainage tax. The showing was made that the taxes for the year 1924 were on a 7 per cent. basis, and produced revenues of $339,724.04, and it was further shown that, if the rate were increased to 7.7 per cent., as prayed, a total revenue of $363,990 would be produced if all taxes were paid, but it was estimated by the commissioners of the district that a delinquency total of 20 per cent. would likely occur.

It was also shown that during the year 1925 bonds and interest thereon totaling $310,875.00 would mature, and if the anticipated delinquencies occurred there would be an excess of revenues over requirements of only $3,115. The court made no finding of fact, for the reason stated, that the facts were undisputed, but did make the following declaration of law:

"Under the facts in this case, the drainage district is entitled to increase the tax rate as petitioned for herein. The county court had authority to order said increase under the acts of the General Assembly under which said district was created, and the order of the county court is affirmed."

The appellant lumber company requested the following declarations of law, all of which were refused, to which ruling of the court exceptions were duly saved:

"No. 1. The drainage district has not shown that the original levy of taxes is insufficient to meet the costs of the improvement, and, until it does do so, the county court has no authority to increase the tax rate.

"No. 2. Under the law creating the district, each tract of land must bear its just proportion of the costs of making the...