Elkins v. Huntington-Midland Highway Dist.
| Decision Date | 24 December 1923 |
| Docket Number | (No. 68.) |
| Citation | 256 S.W. 835 |
| Parties | ELKINS et al. v. HUNTINGTON-MIDLAND HIGHWAY DIST. et al. |
| Court | Arkansas Supreme Court |
Appeal from Sebastian Chancery Court; J. V. Bourland, Chancellor.
Action by M. W. Elkins against the Huntington-Midland Highway District and others. From judgment dismissing the complaint, plaintiff and others appeal. Reversed in part and remanded, with directions. Reversed in part and entered.
John F. Clifford, of Little Rock, G. L. Grant, of Ft. Smith, and Geo. W. Johnson, of Greenwood, for appellants.
Pryor & Miles, of Ft. Smith, for appellees.
The Huntington-Midland highway district (hereafter called district) was created by Act No. 298 at the special session of the Legislature of 1920. The third section of that act provides for the appointment of three commissioners by the county court of Sebastian county. The following commissioners were duly appointed: Frank McCormack, John W. Jasper, and W. P. Fitzgerald — who duly qualified as such, and organized themselves into a board of the district as provided in section 5 of the act. Section 4 of the act provides that the commissioners and their successors in office shall compose a body corporate under the name of the district, and under such name the district might contract and sue and be sued. The domicile of the corporation was fixed at Huntington, in the Greenwood district of Sebastian county. Carter & Knoch were employed by the board as engineers of the district. They made a preliminary survey, and filed plans and specifications, with an estimate of the cost, etc. The board also employed the firm of Covington & Grant as attorneys for the district. The plans were approved by the county court as required by the act, and the board proceeded to assess the benefits under the terms of the act.
Section 16 of the act among other things provides:
"In order to hasten the work, the board may borrow money and issue its negotiable evidence of indebtedness for its repayment, in such form as the board may adopt, and may issue bonds with interest coupons attached, or in such other form as the board may adopt, and dispose of them in such manner and for such amount as the board may deem best, subject to the approval of the county court."
Section 29 of the act provides:
"If for any reason the improvements herein contemplated are not constructed, all obligations incurred by the commissioners for preliminary work of any kind shall be a lien and a charge on the lands of the district, and an assessment shall be made and a tax levied, as hereinabove provided, to that end, that the same may be paid."
On the 29th of December, 1920, the board of commissioners made a report to the county court giving a full account of the proceedings of the board from its organization to that date, and showing, among other things, that the board had entered into a contract for the construction of the work contemplated by the act, and that it had entered into a contract for the sale of the bonds as contemplated by the act. The report stated that Chas. B. Thweatt had been employed to prepare the necessary transcript of proceedings incident to the issuance of bonds under a written contract which it set forth. A contract had also been entered into with Carter & Knoch and with the attorneys, Covington & Grant, as heretofore mentioned. The report contained the following recital:
"The board of commissioners has incurred various items of expense, an itemized list of which is hereto attached and made a part hereof, for the making of the plans and for the preliminary expenses."
The items of expense enumerated in this report are as follows:
Salary of assistant secretary............ $1,050 00
C. B. Thweatt, attorney fee.............. 500 00
Cash borrowed from M. W. Elkins ......... 3,000 00
The $3,000 cash received has been spent as follows:
Paid H. R. Carter, engineering fee ....... 1,500 00
Commissioner's fees ...................... 180 00
Telephone messages ....................... 10 00
Covington & Grant, attorney's fees ....... 665 00
Geo. B. Rose, attorney fee ............... 100 00
Salary to assistant secretary ............ 450 00
Incidentals .............................. 95 00
The order of the county court approving the report of the commissioners is as follows:
"On the 29th day of December, 1920, come the commissioners for Huntington and Midland highway district and file and present to the court their report as to proceedings and actions had and done by them; and after hearing evidence in the matter, and being familiar with said proceedings through the knowledge of the judge presiding, and after being fully advised and informed, the court hereby ratifies, approves, and confirms the organization of the commissioners on February 25th by electing Frank McCormack president, John W. Jasper secretary, and W. P. Fitzgerald treasurer, and the election of Henry Lane as assistant secretary at a salary of $150 a month; also approves the selection of engineers and the contract made with them; also the selection of attorneys and the purchase of the record book; also approves the selection of Jas. A. Chadwick on December 11th, as president, to fill the vacancy caused by the resignation of Frank McCormack; also approves assessment of benefits as made and filed by the commissioners and their action in sustaining said assessment on the date of the hearing had; also approves the construction contract entered into with Hogan Construction Company; also approves the contract for the sale of bonds entered into with Gordon N. Peay, Jr.; also approves the various items of expense incurred as shown by the report of the commissioners; also approves the contract of employment of Chas. B. Thweatt to prepare transcript of proceedings incident to the issuance of bonds; and fully ratifies and approves all actions and proceedings had, done, and taken by said commissioners as shown by the report this day filed with the court."
After the above proceedings were had this action was instituted in the Sebastian chancery court by M. W. Elkins on the 20th of November, 1920, against the district and its commissioners and against H. C. Lane and Covington & Grant. He alleged, among other things, in his complaint that the district was indebted to him in the sum of $3,000 with interest as evidenced by certain certificates which he attached and made exhibits to his complaint. These certificates amounted in the aggregate to the sum of $3,000. He alleged that he had acquired them before maturity and for a valuable consideration; that they were issued by the district to the various parties named therein for preliminary expenses of the district; that Lane had indorsed the certificates issued to him for the amount of such certificate; that Grant had indorsed the certificate issued to Covington & Grant, and that they had thereby become liable to plaintiff, Elkins, for these amounts; that the plaintiff had a contract with the district to purchase its bonds issued in the sum of $100,000; that the district breached this contract and failed to deliver the bonds, to plaintiff's damage in the sum of $2,000; that the sums due the plaintiff on the certificates were long past due, and that the district and its commissioners refused to pay the same; that the district was insolvent and that plaintiff had no adequate remedy at law. He prayed for judgment in the sum of $3,000 against the district and that he have judgment also in the sum of $450 against Lane, the amount of the certificate indorsed by him, and that he have judgment against Covington & Grant in the sum of $665, the amount of the certificate indorsed by Grant, and also against Grant individually for the sum of $500, the amount he guaranteed to pay on this certificate, and that a receiver be appointed to wind up the affairs of the district and to levy and collect the tax on the lands of the district to satisfy the judgment rendered against it.
The pleadings in that case were made a part of the record in this case.
In the answer to the suit by Elkins, the district and its commissioners admit the indebtedness claimed by Elkins, but denied that he was an innocent purchaser. They alleged that before these certificates were issued and before Elkins had purchased the same he had agreed to buy the bonds of the district, and as a part of the contract of purchase he had agreed to loan the district a sum sufficient to pay the preliminary expenses of the district, which was to be repaid at the time the bonds were delivered; that at the time the certificates were issued the commissioners of the district and Grant, the attorney of the district, met with the plaintiff at his office in the city of Little Rock, at which time the plaintiff caused the certificates to be prepared by his stenographer, and directed the commissioners to sign the certificates and have them indorsed by the persons to whom they were payable, and then to be sent to him through the bank with draft...
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