Southwestern Water Co. v. Merritt, 5-590

• Court: Arkansas Supreme Court
• Writing for the Court: WARD; MILLWEE; GEORGE ROSE SMITH
• Citation: Southwestern Water Co. v. Merritt, 275 S.W.2d 18, 224 Ark. 499 (Ark. 1955)
• Decision Date: 24 January 1955
• Docket Number: No. 5-590,5-590
• Parties: SOUTHWESTERN WATER COMPANY, Inc., Appellant, v. Russell L. MERRITT et al., Appellees.

Page 18

275 S.W.2d 18

224 Ark. 499

SOUTHWESTERN WATER COMPANY, Inc., Appellant, v. Russell L. MERRITT et al., Appellees.

No. 5-590.

Supreme Court of Arkansas.

Jan. 24, 1955.

John Dale Thweatt, DeValls Bluff, Albert G. Sexton, Lonoke, John R. Thompson, Little Rock, for appellant.

Barber, Henry & Thurman, House, Moses & Holmes and Thomas C. Trimble, Jr., Little Rock, for appellees.

WARD, Justice.

The principal question considered on this appeal is: Should the trial court deny the petition of a corporation to condemn lands for public irrigation purposes on the sole ground that its present assets appear insufficient to pay the damages to be later assessed?

The Southwestern Water Company is a corporation of this state with powers to construct and operate irrigation reservoirs and to acquire land by the right of eminent domain. On September 29, 1950 it filed a petition in the Lonoke Chancery Court to condemn 95 tracts of land (separately described) which would be flooded by a proposed dam on Two Prairie Bayou. It was alleged; that it was unable to purchase the property; that it had applied to the Arkansaw Public Service Commission and received a Certificate of Convenience and Necessity; that it was necessary to start work immediately; and, that it was necessary for it to exercise its power of eminent domain. The prayer was that the lands be condemned and a jury empaneled to ascertain the amount of compensation. All those having an interest in the several tracts of land were made defendants and were duly served.

On November 2, 1951 appellees propounded written interrogatories to appellant, and a response was filed on February 15, 1954. On February 23, 1954 appellees asked to have the response made more definite and certain, and this was done on March 4, 1954.

Subsequent to the last mentioned date appellees filed a motion (filing date not shown) stating they were informed appellant 'does not have sufficient funds or assets to pay the damages which will be incurred in the event the properties * * * are condemned', and these defendants have had a cloud on their titles for several years and have been embarrassed by this litigation. It was then asked that this cause be dismissed unless appellant, in a reasonable time, showed its financial ability to pay compensation for all reasonable damages accruing from the condemnation proceedings. Thereafter, on May 17, 1954 a hearing was held at which time the testimony of R. M. Traylor, a stockholder in appellant company, was taken relative to the financial condition of appellant. In view of the conclusion hereafter reached it suffices to say, regarding Mr. Traylor's testimony, that appellant's assets amount to around $47,000 at the present time, and that some of the stockholders appear financially able to put up considerable money if they should decide to do so.

At the close of the testimony the court dismissed appellant's petition apparently for reasons that (a) This same cause was filed in 1944, dismissed in 1949, and refiled September 29, 1950; and this action has been delayed from time to time and caused a cloud on the title of appellees' land, and (b) 'That the plaintiff has failed to show its ability to pay any reasonable judgment.' We now examine these reasons for dismissal of appellant's complaint.

(a) We are not impressed that the court relied heavily on this ground, and certainly appellees did not because they did not emphasize it in their motion to dismiss, introduced no evidence relative thereto, and do not urge it on appeal. At any rate we do not consider the ground sufficient reason for a dismissal. True, there appears to have been considerable delay in appellant's prosecution of its cause, but the courts have control of such matters and, if called on to do so, appellant might have provided a satisfactory explanation for the delay.

(b) Principal consideration is given to the court's action in dismissing appellant's complaint because of its lack of financial ability to pay the judgments which might be assessed. Although the record does not disclose the value of the land sought to be condemned, yet we will assume for the purpose of this opinion that it was in excess of the present physical assets of appellant. Consequently we will further assume, for the purpose of this opinion, that the Chancellor was correct in finding, as a matter of fact, that appellant failed to show itself financially able to pay the judgments that might be assessed against it in event appellees' lands were condemned and finally acquired by appellant. We do conclude from the evidence however that there is a probability that appellant could increase its assets in the future to take care of any judgments rendered against it for the value of appellees' lands. Since the above concessions are most favorable to appellees' contentions herein, it is unnecessary to discuss the testimony tending to support them.

Under the above state of facts we reach the conclusion it was reversible error to dismiss appellant's petition.

The foundation of appellees' contention in support of the Chancellor's action is the constitutional prohibition, Ark.Const. Art. 2, § 22, against taking private property without just compensation. In the situation confronting us we see no possibility of appellees having lost their land without full compensation if the court had granted the order of condemnation as prayed for in appellant's petition.

This condemnation proceeding was begun pursuant to the provisions of Act 87 of 1909 entitled 'An Act granting the Right of Eminent Domain to Irrigation Corporations'. This Act now appears in ...