Lewis v. Delinquent Lands

• Decision Date: 01 December 1930
• Docket Number: 28
• Citation: 33 S.W.2d 379,182 Ark. 838
• Parties: LEWIS v. DELINQUENT LANDS
• Court: Arkansas Supreme Court

33 S.W.2d 379

182 Ark. 838

LEWIS v. DELINQUENT LANDS

No. 28

Supreme Court of Arkansas

December 1, 1930

Appeal from Arkansas Chancery Court, Northern District; Harvey R Lucas, Chancellor; reversed.

Decree reversed, and cause remanded.

Chas A. Walls and Rose, Hemingway, Cantrell & Loughbrough, for appellant.

Ingram & Moher, for appellee.

OPINION

BUTLER, J.

Suit was brought in the Arkansas Chancery Court, Northern District, by the receivers of Farelly Lake Levee District of Jefferson and Arkansas counties for the purpose of enforcing the collection of taxes delinquent on the lands in said district for the years 1928 and 1929, in which suit the Felger Timber Company, Inc., intervened alleging that it was the owner of the standing timber on certain lands described amounting to 4,300 acres, but was not the owner of the fee; that the timber had been separately assessed for taxation is being taxed as personal property, was not liable for levee taxes sought to be collected, and prayed that the plaintiffs be restrained from collecting taxes upon the timber.

The case was heard upon the pleadings, record evidence and the testimony of witnesses. The trial court rendered judgment sustaining the prayer of the intervener and enjoining plaintiffs from further proceeding against the timber on the lands described in the intervention. From that judgment is this appeal.

1. Previous to the creation of the levee district and the erection by it of its levees, these lands were subject to recurrent inundation from the waters of the Bayou Meto and the Arkansas River, so that the lands had little value. It was difficult to remove timber therefrom because of the frequency of the overflows, the lands remaining soft and boggy for a considerable period of time after the subsidence of the waters. Since the completion of the levees, the lands when put in cultivation, have become very valuable for agricultural purposes--as valuable as any within the levee district. The lands are covered with a good growth of merchantable timber, principally oak and hickory with some cypress and ash. At the time the evidence was taken in this case this timber was estimated to be worth $ 20 per acre. The evidence was to the effect that the levee district had been formed for the primary purpose of eliminating the overflows so as to render the lands fit for agricultural purposes, the ultimate purpose being to convert them into farms. The estimated benefits were placed at $ 28 per acre, the assessments amounting annually to about $ 1.25 per acre.

2. With reference to the relation of the intervener, the facts are that the levee district was extended to include the Felger lands in 1917, which lands at that time had been owned by the Felger family for a number of years. The title was in Bertha S. Felger in May, 1928, when, for a nominal consideration, she conveyed the timber thereon of every character and description including its growth for a period of fifty years, in which time it might be removed, to Earl H. Felger, as trustee, giving to the grantee the right to erect thereon houses, railroads, and all other improvements deemed necessary, stipulating that such improvements should be personalty with the right of removal within a reasonable time after the expiration of the time given for the cutting of the timber. Earl H. Felger was the son of Bertha S. Felger. On or before the execution of the timber deed a corporation was organized under the laws of the State of Delaware, the capital stock of which was owned by the Felger family except ten shares owned by four other persons, the said Earl H. Felger being the president and Bertha S. Felger the secretary of such corporation. Contemporaneous with the execution of the timber deed aforesaid to Earl H. Felger, as trustee, he conveyed the timber on the same lands for a nominal consideration to the corporation, intervener in this action, the terms of the conveyances being identical.

Mrs. Felger had been the owner of the lands from before the formation of the levee district, and, as this suit was brought only for the delinquent assessments for the years 1928 and 1929, we infer she had regularly paid all the yearly assessments on the benefits assessed against her lands and until the improvement was completed and her lands freed from overflow. Then, for a nominal consideration, she conveyed, not, as is customary, certain species of trees or such as was merchantable, or for a time limit reasonably necessary within which the timber might be removed, as in the case of Dover Lumber Co. v. Board, etc., 173 N.C. 117, 91 S.E. 714, cited by appellee, but the conveyance was for all the standing timber of every kind and character regardless of its size "with the growth of said timber" for and during a period of fifty years in which time the grantee might remove the timber. That grantee is a corporation whose entire property consists of the timber here involved and whose corporate stock, except a nominal number of no par value shares, is owned by the Felger family. The president of this corporation is Mrs. Felger's son and its secretary herself.

So long as the timber remains uncut, the soil can have no value except that of the growth of the standing timber. As this is the case, and if, as contended by the appellee, the timber could not be subjected to any part of the payment of the annual assessments of benefits, then, as stated by the appellant, "no human being would be foolish enough to pay State, county and school taxes and also the levee assessment and get nothing in return for a period of fifty years." Since it is not likely that any one would pay the taxes, the necessary result to the other landowners in the district would be an additional burden placed upon their lands and an increase in the amount of their assessments.

3. The appellee relies in this case on the force of act No. 146 of the Acts of 1905 which provides that "hereafter all timber in this State which has been sold separately and apart from the land on which it stands shall be classed as personal property and shall be subject to taxation as such," and insists that, since it has paid the general taxes assessed against the timber as personal property, it is not subject to taxation for local benefits, as only such benefits can be assessed against lands in the territory affected, and that, when the act creating the levee district used the word "land," it meant the taxable real estate in the district as defined by the revenue law and as the same appears on the tax books.

A number of decisions of this court are cited by the appellee in support of this contention which we have examined and considered. Typical of these cases is that of St. L. S.W. Ry. Co. v. Levee District, 81 Ark. 562, 99 S.W. 843, a review of which will be sufficient to illustrate the character of the cases relied upon. That was a case where the roadbed and right-of-way of the railway was included in the assessment of benefits for the construction of a levee. Among other things, it is there contended that the assessment of the railroad tracks was invalid because it included the ties, angle bars and rails which were claimed to be personal property and as such exempt from taxation for local improvements. The court held these were a part of the roadbed and, for purposes of taxation, by virtue of our statute, was real estate. In Ft. Smith L. & T. R. Co. v. McDonough, 119 Ark. 254, 177 S.W. 926 at 926-7, the court said: "It must readily be conceded, and it is conceded by appellee, that taxation for local improvement must be confined to real estate to be benefited by the proposed improvement. Personal property is not subject to taxation for the purpose, nor was it attempted in the enactment of the statute under consideration to tax personalty. The statute expressly provides that real estate only shall be assessed, but in effect declares that railroads, tramroads, etc., shall be deemed to be real estate within the meaning of the statute. It is doubtless within the power of the Legislature to classify property of doubtful character as real estate for the purpose of making it subject to assessment for local improvements. The statutes of this State provide that the tracks and right-of-way of railroads shall be real estate for the purpose of taxation and we have held that that classification makes property of that kind subject to special taxation for local improvement." In that case the court held that a street railway was not real estate.

Appellee also relies on the case of Anderson Tully Co. v Gillett Lumber Co., 143 Ark. 97 at 101, 222 S.W. 362, where, referring to the act of 1905, supra, the court said: "The act is intended to make timber sold separately and apart from the land on which it stands personalty for the purposes of taxation, so that the land and the timber may be separately assessed and the owner of the land be not required to pay the taxes on the timber, which would otherwise be charged to him as a part of the land." This doctrine was recognized in the case of Southern Lumber Co. v. Arkansas Lumber Co., 176 Ark. 906, 4 S.W.2d 928, but in that case the declaration is made that: "It is well settled in this State that growing trees may be severed from the land itself, and that the severance is accomplished by a conveyance of the timber, or by a conveyance of the land with a reservation or exception as to the timber. The ownership...