Oliver v. Whittaker

• Decision Date: 14 February 1916
• Docket Number: 172
• Citation: Oliver v. Whittaker, 183 S.W. 201, 122 Ark. 291 (Ark. 1916)
• Parties: OLIVER v. WHITTAKER
• Court: Arkansas Supreme Court

183 S.W. 201

122 Ark. 291

OLIVER v. WHITTAKER

No. 172

Supreme Court of Arkansas

February 14, 1916

Appeal from Clay Chancery Court, Western District; Charles D Frierson, Chancellor; affirmed.

Decree affirmed.

F. G Taylor, for appellant.

The rule is that the expense of constructing a drain can not be assessed against particular lands to an amount in excess of the benefits received by such lands. 14 Cyc. 1061 and notes 41 and 42; Ib. 1062 and note 50; 10 A. & E. Enc. L. 232; 120 Ill. 482. The Act of 1913 says the interest on the bond shall be included and added to the tax, etc., but does not authorize the levy of a tax to pay such interest. The power to tax must be express; such grants are construed strictly and all doubts given to the taxpayer. 37 Cyc. 966-7 and notes. The judgment is excessive and void for the reason that it exceeds the amount of the benefits.

D Hopson, for appellees.

The court's action was fully authorized by law. Act 177 § 10. The act is valid. 1 Ark. 513; 11 Id. 481; 82 Id. 587; 85 Id. 175; 99 Id. 14. Interest is properly allowable on installments not due. 1 Page & Jones on Taxation by Assessment, § 475; 164 Ill. 412; 45 N.E. 723; 42 N.J.L. 508; 43 Id. 169; 6 Wash. 368; 33 P. 961; 117 Iowa 366; 90 N.W. 1006; 114 Cal. 137; 44 P. 1057; 41 La.Ann. 252; 5 So. 848; 82 S.W. 280; 26 Ohio St. 280; 20 Wash. 343, 55 P. 432; 52 Id. 1063; 47 Cal. 9; 41 Kans. 560, 21 P. 593; 119 N.Y.S. 585, 134 A.D. 533; 126 N.Y.S. 241; 141 A.D. 591.

MCCULLOCH C. J. HART and KIRBY, JJ., dissent.

OPINION

MCCULLOCH, C. J.

Appellant is the owner of real property within the boundaries of Big Gum Drainage District in Clay and Greene counties, and instituted this action in the chancery court of Clay County to enjoin the commissioners of the Drainage District from issuing bonds. An attack was made in the pleadings on the validity of the organization of the district, but those attacks appear to have been abandoned, and the sole question presented here for determination is whether or not the proposed bond issue is valid.

The contention is that the interest on the bonds must be taken into account in determining the cost of the improvement, and that when so treated the said costs will exceed the assessed value of benefits to accrue to the property from the improvement. The value of the benefits as assessed by the board of assessors aggregates the sum of $ 186,942, and the series of bonds sought to be issued amounts, with interest to maturity, to the aggregate sum of $ 319,704. Assessments were levied, divided into twenty-two annual installments, apportioned in amount so as to aggregate the total amount of the value of benefits with interest at 6 per cent per annum up to the respective dates of payment, which said aggregate amount is equal to the amount of the bonds and the interest thereon and the sum estimated to be sufficient to defray current expenses of maintenance and emergencies. In other words, the record shows, as we understand it, that the aggregate value of the benefits is divided into annual assessments, bearing interest to maturity, and that the bond issue, with interest thereon to be computed, together with other anticipated expenses, does not exceed that aggregate.

The contention of appellant is that the amount of the value of benefits as assessed, without interest, is the maximum liability of the property owners, and that there can be no assessments in excess of that amount for any purpose. Interest on bonds executed to obtain borrowed money for use in the construction of an improvement is necessarily a part of the cost of construction (Fitzgerald v. Walker, 55 Ark. 148, 17 S.W. 702), and that additional burden in excess of the value of benefits can not be cast upon the property owners unless it be held that interest can be imposed on postponed installments of the value of benefits. It is quite well settled by our decisions that special benefits to the property to be taxed form the basis of the right to impose the cost of local improvements upon such property, and that there can be no imposition of a tax in excess of the value of benefits. Kirst v. Street Improvement District, 86 Ark. 1, 109 S.W. 526; Alexander v. Board of Directors Crawford County Levee Dist., 97 Ark. 322, 134 S.W. 618. But we have not decided that the Legislature can not authorize the collection of interest on postponed installments of assessments. On the contrary, it is more reasonable to say that while the estimate of benefits should be fixed at the value at the time they accrue to the property from the construction of the improvement, interest on the deferred installments also becomes a part as it accrues, of the benefits and payment thereof may be exacted. All the authorities which are brought to our attention seem to agree that the Legislature may authorize the collection of interest on postponed payments of assessments. 1 Page & Jones on Taxation by Assessment, section 475; Watson v. City of Elizabeth, 42 N.J.L. 508; Johnson v. City of Trenton, 43 N.J.L. 166; Heath v. McCrea, 20 Wash. 342, 55 P. 432; The People v. Weber, 164 Ill. 412, 45 N.E. 723; E. & W. Construction Co. v. Jasper County, 117 Iowa 365, 90 N.W. 1006; Hellman v. Shoulters, 114 Cal. 136, 45 P. 1057; Newman v. City of Emporia, 41 Kan. 583, 21 P. 593.

The remaining question in the case is whether or not the Legislature has authorized the collection of interest in addition to the amount of the assessed value of benefits. The general statute (Act of May 27, 1909), ^[*] under which this district is organized, was amended by the General Assembly of 1913 (Act 177), which included the following section:

"Section 10. The amount of interest which will accrue on bonds issued by such districts and sub-districts shall be included and added to the tax, but the interest to accrue on account of the issuing of said bonds shall not be construed as a part of (the cost of) construction in determining whether or not the expenses and costs of making said improvements are or are not equal to or in excess of the benefits assessed.

"When assessments of benefits are made in drainage and other improvement districts, the land owners shall have the privilege of paying the same in full within thirty days after the assessment becomes final. But all such assessments shall be made payable in installments, so that...