Guardian Trust Co. v. Keith

• Decision Date: 24 March 1934
• Docket Number: No. 9636.,9636.
• Citation: 69 F.2d 477
• Parties: GUARDIAN TRUST CO. et al. v. KEITH et al.
• Court: U.S. Court of Appeals — Eighth Circuit

69 F.2d 477 (1934)

GUARDIAN TRUST CO. et al. v. KEITH et al.

No. 9636.

Circuit Court of Appeals, Eighth Circuit.

February 16, 1934.

Rehearing Denied March 24, 1934.

John F. Rhodes, of Kansas City, Mo., and Archer Wheatley, of Jonesboro, Ark. (J. H. Hawthorne, of Jonesboro, Ark., and Justin D. Bowersock and Robert B. Fizzell, both of Kansas City, Mo., on the brief), for appellants.

C. T. Carpenter, of Marked Tree, Ark., for appellees.

Before STONE, SANBORN, and VAN VALKENBURGH, Circuit Judges.

STONE, Circuit Judge.

The trustees for various bond issues put out by drainage district No. 7 of Poinsett county, Ark., brought this action against the directors of the district, the sheriff of the county, Harry A. Keith, and Mamie Keith. The Keiths had procured a judgment by the state Supreme Court 183 Ark. 384, 36 S.W. (2d) 59 allowing them damages of $3,200, and interest, for the damage arising from overflow of 320 acres of land caused by the improvements made by the district. To procure satisfaction of that judgment, they had secured two writs of mandamus from the state Supreme Court. One of these writs required the sheriff to levy on certain personal and real property belonging to the district and sell the same in satisfaction for judgment. 183 Ark. 786, 38 S.W.(2d) 755. The second and later writ required the commissioners of the district to pay the judgment out of the revenues of the district. 185 Ark. 553, 48 S.W.(2d) 236. Alleging that they had a prior lien upon all of the properties and revenues of the district for the payment of the bonds, the trustees brought this action to restrain the collections required by the two mandamus writs. The case was heard upon its merits and the complaint dismissed. From that decree this appeal is brought.

Appellants seek to present here four matters, as follows: I. That the Keiths failed to follow the statutory remedy for ascertaining damages prescribed by the act incorporating the district (Laws Ark. 1917, p. 1053), and therefore cannot recover from the district until all of the bonds have been paid in full. II. That the Keiths have been guilty of laches in permitting millions to be spent in the construction of the improvements of the district without in any wise asserting a claim on account of damages. III. That the lien of the bondholders is prior and superior to that of the judgment. IV. That the judgment of the Poinsett county court in connection with the various issues of the bonds is res adjudicata of the rights of the parties concerning priority as to the proceeds of collection of assessments of benefits.

In the beginning we are faced with a challenge by appellees of the sufficiency of the assignments of error to present any except the third above point. The assignments of error are exceedingly general. It seems to us that only one of them presents a reviewable point with sufficient distinctness and clearness to require determination here. That assignment is the fourth, which raises the matter of priority of the bonds over the judgment. If this view of the assignments is correct, it eliminates from our consideration two of the points presented by appellants. Those are points I and IV above. This leaves for our consideration the two points of whether the bonds are prior to the judgment and whether the Keiths are guilty of laches in asserting their rights.

I. Priority.

As to priority, we think the judgment should be regarded as prior to the bonds. The situation presented here is of a drainage district which has permanently damaged property by its improvements, and for which no payment has been made, and where it has issued bonds supported by a pledge of all the property and revenues of the district. The Constitution of Arkansas (article 2, § 22) provides: "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." The Supreme Court of that state construes the requirement of the above provision to be that no incumbrance or transfer of the property by the condemnor will free it from the first right to this compensation. Keith v. Drainage District No. 7, Poinsett County, 185 Ark. 553, 48 S.W. (2d) 236; Organ v. M. & L. R. Ry. Co., 51 Ark. 235, 11 S. W. 96. The Keith Case, just cited, is the second mandamus proceeding involved here. While it is not binding, as an adjudication, against these complainants because they were not parties thereto, yet it is of full force as a determination by the Supreme Court of the state of the effect of the constitutional provision. To the same effect, see Fordyce v. K. C. & N. C. R. R. Co. (C. C.) 145 F. 566; Zimmerman v. K. C. N. W. R. R. Co., 144 F. 622, this court; Central Trust Co. v. L., St. L. & T. Ry. Co., 81 F. 772 (C. C. Ky.); Mercantile Trust Co. v. P. & W. R. R. Co., 29 F. 732 (C. C. Pa.); Wheeling B. & T. Ry. Co. v. Reymann Brewing Co., 90 F. 189 (C. C. A. 4); Epling v. Dickson, 170 Ill. 329, 48 N. E. 1001; Kentucky & I. B. & R. Co. v. Clemmons (Ky.) 86 S. W. 1125; Lewis on Eminent Domain (3d Ed.) vol. 2, §§ 886-887. Appellants do not choose to meet this issue squarely. Instead they contend that the provisions of the bonds granting a first lien upon all the property and revenues of the district is sufficient. They cite a number of cases from this and other courts sustaining the inclusiveness and the sanctity of such a pledge, but in none of those cases was the issue here involved presented in any form, and general language used in all of those cases must be construed in the light of the parties and the issues there involved. All of these decisions might be, and we think are, accurate, but none of them meet or answer the question involved here.

A matter which we wish to emphasize is that, if any other exclusive remedy were open to appellees whereby their rights could be protected without encroaching on the security of the pledge back of these bonds or if there were property of the district not pledged which could respond to their claim, we would regard that as being a situation not here presented. So far as appears in this case, there is no other remedy open to appellees, there is no such surplus property, and their land has been taken to form part of what is virtually a flood reservoir.

Without more appearing in the case, this judgment is superior to any incumbrance which the district could possibly place upon its properties or its revenues. This leaves for answer the question of whether the Keiths have, by their conduct in connection with the establishment of their judgment, so acted as to deprive themselves of this priority and, if so, to what extent.

II. Laches.

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