Gould v. Toland

• Decision Date: 04 July 1921
• Docket Number: 87
• Citation: 232 S.W. 434,149 Ark. 476
• Parties: GOULD v. TOLAND
• Court: Arkansas Supreme Court

232 S.W. 434

149 Ark. 476

GOULD v. TOLAND

No. 87

Supreme Court of Arkansas

July 4, 1921

Appeal from Howard Chancery Court; Jas. D. Shaver, Chancellor reversed and affirmed.

Decree reversed and remanded.

Coleman Robinson & House, for appellants.

The commissioners were justified in charging their expenses for railroad fare, auto hire and hotel bills to the district. Acts 1919, No. 243, §§ 5-7. The expenses were incurred in good faith. The allowance to James Gould, under § 2 of the act, was final and binding. No right of appeal was given. 1 L. R. A. (N. S.) 438; 50 do. 233; 127 N.W. 226. The act of 1920 providing for the payment of damages, in addition to preliminary expenses, on dissolution of the district, was valid. The engineer's fee should be estimated by the proportion of the work done as compared with the contract. 115 Ark. 445; 127 Ark. 14. Under the testimony the engineer was entitled to judgment for 2 1-2 per cent of the total fee, which was the amount allowed by the board of commissioners.

W P. Feazel and W. C. Rodgers, for appellees.

The statute (§5) fixed a per diem for the commissioners. No provision is made for their "expenses." The expenses of the district are rigidly circumscribed and strictly limited to matters and things specifically and expressly mentioned in the act.

Any contract which Judge Gould made with reference to a sale of bonds for the district was made before there was an assessment of benefits, and was void. The allowance to Judge Gould for $ 35,000, to the extent of the excess of the preliminary expenses of the district, was ultra vires.

The contract of the engineer with the board provided that he should receive one per cent. of the estimated cost when the plans, specifications and estimates are complete. The engineer is bound by the contract.

Allowance to Mr. House of $ 1000 as attorney's fee was improper. $ 250 for the nominal services shown would be an outside figure.

HUMPHREYS J. Justices WOOD and HART dissent in part.

OPINION

HUMPHREYS, J.

This suit was instituted in the Howard Chancery Court by appellees against appellants, to set aside settlements made by the Board of Commissioners of Howard County Road Improvement District No. 2 with certain of the appellants, for services rendered by them to the district, expense allowance to said commissioners, and to prevent the collection of taxes from the landowners in said district to pay same. The district was created by Special Act No. 243, General Assembly of 1919. The act permitted an abandonment of the district at any time. On account of local opposition, the commissioners suspended work before it was ascertained that the benefits to the property in the district were equal to, or exceeded, the cost of the improvements, whereupon the Legislature passed act No. 114 at its special session in 1920, directing the commissioners to ascertain the preliminary expenses of said district, including damages for the failure of the district to carry out its contracts and to levy a tax against the real estate in the district, in accordance with section 12 of the act creating the district, to pay same.

Subsequent to the organization of the district, and before any assessment of benefits was laid on the land in the district, the commissioners entered into a contract for the sale of bonds with James Gould, and employed an engineer and attorney. The contract with James Gould for the sale of the bonds contained the following clauses:

"First party hereby sells and agrees to deliver to the party of the second part serial bonds of said improvement district in an amount as is authorized under the special act creating said district, minimum of four hundred thousand dollars and a maximum of seven hundred thousand dollars, at a price of $ 1.02, said bonds to mature within a period of twenty-five years and to be dated the first day of May, 1919, and shall bear interest at the rate of six per cent. per annum semi-annually, New York City payment.

That as soon as the board of commissioners has delivered to said James Gould, party of the second part, a written opinion of__or Geo. B. Rose, attorneys, with the board of commissioners, for a right to borrow funds to be expended upon the preliminary work of said road district and upon the execution of a note signed by members of the board of commissioners as commissioners of said district and delivered to the said James Gould, party of the second part, he contracts and agrees to advance to the said board of commissioners the sum of $ 20,000 in cash, and said commissioners shall execute a note payable to James Gould, party of the second part, to bear interest at the rate of six per cent."

The contract with the engineer contained the following clause:

"The compensation of the party of the second part shall be an amount equal to 5 per cent. of the actual construction cost of all improvements made by the party of the first part, not exceeding in cost $ 1,000,000, to be paid as follows: One per cent. of the estimated cost when plans, specifications and estimates of costs are completed, 1 1/2 per cent. of the construction costs when the contract is let, and the balance to be paid in installments."

The contract with the attorney was, in substance, for him to render all necessary legal services to the district during the construction of the work for a stipulated amount of $ 1,000.

Before the work was suspended, James Gould had advanced $ 20,000 in cash to the board, under his contract, on a note executed to him, bearing interest at the rate of six per cent. All this money, except $ 7,000, was used in the payment of preliminary expenses. The work progressed to the point where contractors made bids for constructing the improvement. The lowest bid, however, was for $ 1,260,859.60, considerably in excess of the estimate according to the preliminary survey and estimate, which was for $ 922,154.14. The contract for the construction of the improvement was not let.

Pursuant to the provisions of the act authorizing the commissioners to settle all preliminary expenses and damages growing out of its contracts, the commissioners settled with James Gould, including damages growing out of his contract, upon the basis of $ 4,000 for his profits on a tentative sale of the minimum amount of bonds, $ 18,000 as interest thereof from the date of his contract until the date of settlement, and $ 13,000 at that time unpaid upon the advance of $ 20,000 in cash, making a total balance allowance to him of $ 35,000, for which they issued the district's notes in denominations of $ 500 each, bearing interest at the rate of six per cent. per annum from date until paid; also settled with the engineer, H. R. Carter, upon the basis of two and one-half per cent. of the estimate of the cost of the improvement, and, on that basis, allowed him a balance of $ 14,000, for which amount they executed notes of the district of the denomination of $ 500 each, bearing interest at the rate of six per cent. per annum from date until paid; also settled with the attorney by allowing him $ 1,000, the total amount of his contract, for which they issued the notes of the district, bearing the same rate of interest.

In addition to the settlements and allowances aforesaid, the commissioners allowed themselves expenses covering the items of railroad fare, auto hire and hotel bills incurred while attending meetings of the board and performing other services for the district.

Upon a hearing of the cause in the chancery court, the allowance to James Gould was reduced to the actual amount of money advanced by him, with interest...