Standard Pipe Line Co. v. Index-Sulphur Drainage Dist.

• Decision Date: 28 March 1927
• Docket Number: (No. 307.)
• Parties: STANDARD PIPE LINE CO., Inc., v. INDEX-SULPHUR DRAINAGE DIST. et al.
• Court: Arkansas Supreme Court

293 S.W. 1031

STANDARD PIPE LINE CO., Inc., v. INDEX-SULPHUR DRAINAGE DIST. et al.

(No. 307.)

Supreme Court of Arkansas.

March 28, 1927.

Rehearing Denied May 23, 1927.

Appeal from Miller Chancery Court; C. E. Johnson, Chancellor.

Separate suits by the Index-Sulphur Drainage District and the South Miller County Highway District against the Standard Pipe Line Company, Inc., to recover the amount of special improvement taxes. The cases were consolidated for the purpose of trial, and from a decree for plaintiffs, defendant appeals. Affirmed.

Index-Sulphur drainage district and South Miller county highway district brought separate suits in the chancery court against Standard Pipe Line Company, Inc., to recover the amount of special improvement taxes against said company for the payment of preliminary expenses in winding up the affairs of said improvement districts. The suit in each case was defended on the ground that the assessment of benefits was arbitrary and discriminatory, and, in any event, that the defendant company was not in any sense benefited by said improvements. The cases were consolidated for the purposes of trial.

The record in the case is very voluminous, but a brief statement of facts will suffice to indicate what issues of law are involved in the appeal.

Index-Sulphur drainage district was created by a special act of the Legislature, approved February 4, 1920. It was ascertained by the commissioners that the cost of the improvement would exceed the benefits to the real property situated in the district, and they recommended that further proceedings be discontinued and the affairs of the district should be wound up. The Legislature of 1923 passed an act to repeal Index-Sulphur drainage district of Miller county, Ark., and provided that the affairs of the district be wound up by the commissioners and its legal indebtedness paid. Special Acts of 1923, p. 282. Section 9 of the repealing act provided that the commissioners of the district should levy upon the real estate within the district a tax sufficient to pay the indebtedness of the district, and that said tax should be levied upon the real estate, using the assessment for state and county purposes as assessed and fixed for the year 1923. The section further provides that the commissioners should declare the per cent. to be levied annually on said assessment for state and county purposes for the year 1923 that would be required to pay off the outstanding indebtedness of the district. The section also provides that, if the commissioners deem it to the best interest of the property owners, the taxes may be spread over four annual installments. Pursuant to the authority given by this act, the commissioners levied a tax upon the real property in the district of 1.6 per cent. of the assessed value of the real property of the district, including said company's pipe line, as fixed by the Arkansas Railroad Commission under the provisions of our statute, authorizing it to assess the property of pipe line companies in the state of Arkansas. The amount of said tax or special assessment for the year levied was $457.23, and for the four annual installments the aggregate amount which would be paid by said pipe line company would be $1,828.92. The act creating the district provided that the property of railroad, telegraph, telephone, and pipe line companies, situated within the district, should be classed as real estate, and an assessment of benefits be levied against such property as was done upon other real estate. The Standard Pipe Line Company, Inc., had its pipe line in said improvement district, and it extended into the state of Louisiana. It was engaged in piping oil from the state of Arkansas into the state of Louisiana. Other facts with reference to this case will be stated in the opinion.

South Miller county highway district was created by special act, approved February 4, 1920, and was repealed by special act of the Legislature, approved February 9, 1923. Special Acts of 1923, p. 126. It was ascertained by the commissioners that the cost of the improvement would greatly exceed the benefits to the real property, and for that reason the construction of the improvement was abandoned. For a more particular statement of the acts of the commissioners in winding up the affairs of the district and determining its indebtedness, see Meek v. Christian, 168 Ark. 313, 270 S. W. 614. The original act creating the district provided that railroad, telegraph, telephone, and pipe line companies situated in the district should be classified as real estate, and that their property should be assessed as other real estate for the construction of the improvement. The act creating the district also provided that, if for any cause the improvement was not constructed, the preliminary expenses should be paid by the commissioners, and they were directed to determine the percentage to be levied annually on the assessment for county and state purposes for the year 1923, and that the amount of taxes should be spread over four annual installments. A rate of 1.6 per cent. was levied against the assessed value of the lands, railroads, pipe lines, etc., using the assessment for state and county purposes for the year 1923 as a basis for assessing said property. The amount assessed against the Standard Pipe Line Company, Inc., was $1,655, which was the amount due under the plan of assessment provided to be made for the payment of preliminary expenses as above set forth. Other facts will be stated in the opinion.

The court found the issues in favor of the plaintiffs, and a decree was entered of record declaring that the amount assessed in support of each improvement district against the Standard Pipe Line Company, Inc., was a lien on the right of way and pipe line within said district and provided for the collection of the same by sale of the property assessed. The consolidated case is here on appeal.

T. M. Milling of Shreveport, La., and Arnold & Arnold, of Texarkana, for appellant.

Henry Moore, Jr., and T. B. Vance, both of Texarkana, for appellees.

HART, C. J. (after stating the facts as above).

It is first contended by counsel for the defendant that its pipe line is not real estate and could not be classified as such by the Legislature in the acts creating said improvement districts. There is a conflict in the adjudicated cases as to whether or not the right of way of a railroad company or of a telegraph company is subject to local assessments, but this court has held that the right of way of a railroad corporation or of a telegraph company is subject to local assessment as real property. Missouri Pac. R. Co. v. Conway County Bridge Dist., 142 Ark, 1, 218 S. W. 189; and Western Union Tel. Co. v. Road Imp. Dist. No. 1, 144 Ark. 476, 222 S. W 717. Such holding is in accord with the weight of modern authority on the question. The reason is that the railroad or telegraph company has an easement in its right of way which is permanent in its nature, and which may be specially benefited by drainage or road improvements. It is not like the case of allowing street car companies, gas and water companies to use the streets of a city under legislative authority. In all such cases, the Legislature merely gives such public service corporations the use of the streets, and they acquire no permanent easement in them; while in the case of railroad or telegraph companies they have the exclusive right to use their right of way for the purposes for which such corporations are organized, and such uses carry with it an interest in the ground which is in the nature of real property and is the subject of a special assessment as such. Northern Pacific Ry. Co. v. Richland County, 28 N. D. 172, 148 N. W. 545, Ann. Cas. 1916E, p. 574, and case note, and L. R. A. 1915A, p. 129, and case note.

By analogy, the right of way and pipe line of the defendant was subject to assessment for the preliminary expenses of each improvement district the same as the other real property in the district.

It is next insisted that the pipe line of the...