Missouri Pac. R. Co. v. Road Imp. Dist. No. 1 of Hot Spring County, Ark.

• Decision Date: 07 May 1923
• Docket Number: 6112.
• Citation: 288 F. 502
• Parties: MISSOURI PAC. R. CO. v. ROAD IMPROVEMENT DIST. NO. 1 OF HOT SPRING COUNTY, ARK., et al.
• Court: U.S. Court of Appeals — Eighth Circuit

288 F. 502

MISSOURI PAC. R. CO. v. ROAD IMPROVEMENT DIST. NO. 1 OF HOT SPRING COUNTY, ARK., et al.

No. 6112.

United States Court of Appeals, Eighth Circuit.

May 7, 1923

E. B Kinsworthy, of Little Rock, Ark. (Edward J. White, of St Louis, Mo., on the brief), for appellant.

L. E Sawyer, of Hot Springs, Ark., and William R. Duffie, of Malvern, Ark., for appellees.

Before LEWIS, Circuit Judge, and BOOTH and FARIS, District Judges.

LEWIS Circuit Judge.

This is a suit to enjoin the collection of taxes levied on complainant's main track, side tracks and buildings as a special assessment for construction of roads in Road Improvement District No. 1, Hot Spring County, Arkansas. A preliminary injunction was denied and the appeal is from that order. The relief sought is based upon many grounds. It is charged that the assessment and the procedure upon which it was based is violative of due process, equal protection of law, confiscatory in its effect, and that the tax is unreasonable, unjust and exorbitant, a plain abuse of power exercised without any regard to the benefits received and grossly disproportionate between it and the owners of other property within the district.

The district was created by legislative Act of January 27, 1921 (Sp. Laws 1921, p. 16, amended Feb. 18, 1921 (Sp. Laws 1921, p. 228)), and includes more than 90% of the territory of the county. It has a board of commissioners composed of four members, three of whom are named such in the Act, to continue in office for two years and until their successors are elected and qualified. The county judge of that county is made chairman and ex officio member. The board has a collector, treasurer and secretary. It is empowered to contract, sue and be sued, and is especially entrusted with the improvement of designated roads within the district. The Act divides the roads to be improved into seven sections, and describes the route and termini of each. Five of them radiate from Malvern, the county seat, which is a station on appellant's line. The other two are cross-roads. The aggregate length of them is 138.84 miles. Sections 1, 2 and 4 of the Act declare that all lands and real property, including city and town lots, railroad rights of way, tram roads and telegraph and telephone lines, lying in Hot Spring County and situate within five miles of any part of the respective roads described in the Act, are formed into an improvement district for the purpose of improving each of the roads, and that lands within the designated distance from each road is found to be benefited by the improvement of those particular sections of road. It requires a survey of the roads, that plans be gotten up for the improvement of them, and an estimated cost of improving each section be made and filed with the county clerk. The plans thus prepared must have the approval of the board, and also of the county court, before the improvements can be made. This was done, and the report disclosed that the total estimated cost of improving all seven sections of the road would be $727,640. Section 7 of the Act directs:

'As soon as the plans or report of the commissioners has been approved by the county court, the commissioners shall make an assessment of benefits to be derived by each tract, lot and parcel of lands within the several sections, assessing the benefits that will be derived from improvement of each section of said road separately against the lands in its respective sections, and shall enter in their assessment books opposite each tract and parcel of land the benefits that will be received from the improvement of each section of said road.' The basis fixed by the Act on which assessments were to be made is that of benefits. The commissioners were empowered to ascertain the amount of benefits which in their judgment would accrue to each tract on account of the improvement, and then lay the assessments accordingly. They derived their powers from the Act, and in making assessments were restrained to proceed as the Act directs. They were not at liberty to use some other basis or adopt some other method of ascertainment of benefits and assessments. Page & Jones on Taxation by Assessment, Sec. 234. The bill alleges, an exhibit shows, and one of the commissioners testified that they made the assessments by taking a per cent. of the assessed value for general taxation of property within the district. A segment of appellant's right of way 26.33 miles long lies within the district. Assessment benefits of $100,950.10 were made against appellant's main track, side tracks and five buildings, payable as the Act requires, in twenty consecutive equal installments. The assessed value of appellant's property for general taxation amounted to $1,091,030, and the benefits assessed were arrived at by taking 12% or less of that value. The method pursued is shown in exhibit found in the record and here copied, in so far as it relates to section 1 of the road:

"Re-Assessment of Railroads in Hot Spring County Road Improvement

District No. 1.

Missouri Pacific Railroad Company.

County and State

Road Section. Miles. Zone. Assessed Value. Total Benefits.

No. 1 Main track 8 1-2-3 $240,000.00 $14,400.00

Side track 5.26 1 15,780.00 1,893.60

Buildings 1 7,120.00 854.40"

It is similar in form as to other sections of road, and discloses a variation in per cent. of levy on main track, side tracks and buildings. Special assessments on the basis of benefits rest upon the assumption that the property on which the assessments are made will be enhanced in value, and that the enhancement will fairly equal the assessment it is made to bear. The Act was framed upon that assumption, and the commissioners were empowered to enforce its purpose; but they did not do so; they adopted the assessed valuation as a basis. It is our opinion that in pursuing that method all of their assessments were void. The error came about, we think, by misapplication of the provisions of section 8 of the Act, which we presently consider.

It is urged by appellees that there is no ground for complaint on account of the method of assessment adopted by the board because, it is claimed, farm lands within the district were assessed benefits of 24% of their assessed value for general taxation, while appellant's property was assessed not more than 6 to 12% of its assessed value. But additional facts show there is no merit in this contention, because from the uncontradicted testimony appellant's property was assessed at a higher per cent. of its value for general taxation than was other property in the district. The proof is that appellant's property was assessed at at least 60% of its value. One of the commissioners testified that farm lands in the district were in his judgment assessed as high as 50% of their value. Two other witnesses, both familiar with land values in Hot Spring County and residents there, testified that farm lands were assessed at not exceeding 25% of their value. One of them was in the real...