Thibault v. McHaney

• Decision Date: 22 March 1915
• Docket Number: 254
• Citation: 177 S.W. 877,119 Ark. 188
• Parties: THIBAULT v. MCHANEY, RECEIVER
• Court: Arkansas Supreme Court

177 S.W. 877

119 Ark. 188

THIBAULT v. MCHANEY, RECEIVER

No. 254

Supreme Court of Arkansas

March 22, 1915

[Copyrighted Material Omitted]

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor reversed.

STATEMENT BY THE COURT.

The Fourche Drainage District was created by special act of the Legislature approved May 28, 1907, Act No. 420, Acts of 1907 page 1112.

The above act was amended by an act approved April 6, 1909, Acts of 1909, page 304. Both the original act and the amendatory act were expressly repealed by Act No. 127, approved March 3 1913, Acts 1913, page 534. The second section of Act No. 127, Acts of 1913, contains the repealing clause, and is as follows:

"Jurisdiction is hereby conferred on the Pulaski Chancery Court to wind up the affairs of said district, and to that end all persons having claims against the district are required to present the same to said court for adjudication within three months after the passage of this act. Said court shall adjudicate said claims and shall appoint its receiver to collect upon the assessment of benefits heretofore made a sum sufficient to pay all claims found to be due, the tax necessary for the payment thereof to be divided into five installments as near equal as possible."

The board of directors of the Fourche Drainage District filed a petition in the chancery court setting up that "the district has made all the plans necessary for the public improvement contemplated by the act of its creation, has done a very considerable amount of work, has made numerous contracts and has incurred a large amount of indebtedness."

They prayed the chancery court to assume jurisdiction under the repealing act and to appoint a receiver and to proceed to wind up the affairs of the district in accordance with the provisions of that act. The court assumed jurisdiction, appointed E. L. McHaney as receiver, and made an order requiring the parties having claims against the district to file same with the clerk of the chancery court within three months after March 3, 1913.

Claims were presented by various parties amounting in the aggregate to over $ 100,000. Certain property owners in the district whose lands had been assessed, attacked the claims on the ground that they were not incurred as "preliminary and initial steps" for the purpose of determining the feasibility of the improvement contemplated by the improvement district, but were for permanent work done under contracts, which were made by the board of directors of the drainage district without authority. Among the claims presented were those of various trust companies, for money advanced the district to pay for the permanent work that was done under these contracts, which the property owners alleged the directors had no authority to borrow. The property owners alleged that these trust companies knew at the time that they loaned the money to the district, that the money was to be used for the purpose of paying debts that had been incurred by the district without authority. They alleged that the work done resulted in no benefit to their lands, and to compel the property owners in the district to pay the debts thus incurred by the directors, would be depriving them of their property without due process of law in violation of the State and Federal Constitutions. Responses were filed to the intervention of the property owners denying its allegations and alleging that the contractors had full authority to proceed to make the contracts as they did, and to borrow the money from the trust companies, and that the money was advanced by these companies "for the legitimate purposes of the district. That the money was loaned to enable the directors of the district to pay contractors and others to whom the district was justly indebted." The allegation of the complaint that the lands of the interveners received no benefit from the expenditures was denied.

The court, after hearing the testimony, allowed the claims of the appellees, amounting in the aggregate to over $ 100,000.

The Fourche Levee District, which we will hereafter designate "Levee District," was organized by Act No. 183, Special Acts 1911, page 479. The lands in the levee district had already been embraced in the drainage district. The court found that the contractors of the levee district arranged with the contractors of the drainage district to build the levees needed by the levee district. That these levees were built by the drainage district, and that the lands in the levee district were benefited by this work.

The court directed its master, who was also the receiver of the drainage district, to determine the exact cost of the levee, and "indicate upon the assessment rolls of the drainage district the land located in the levee district, and extend against said lands such sums out of the benefit already assessed, as would raise a sum sufficient to pay the cost of the levee; that after deducting the cost of the levee from the total indebtedness of the drainage district, the receiver should extend opposite each tract in the drainage district a pro rata of the assessments already made, sufficient to pay the balance of the indebtedness found due by the drainage district as indicated in its decree."

The levee district set up that the improvements made by the drainage district were without the consent of the property owners in the levee district, and were of no benefit unless other and different improvements were made, which would have to be made by the levee district at a great expense before any benefit could be realized.

The master reported that the drainage district built certain levees, which he described, that cost the drainage district $ 53,796.64, and which he reported should be borne by the drainage district as a whole; he reported $ 35,000 as the sum which, "in equity and justice should be borne by the property benefited by said levee, which is all the property within the limits of the Fourche Levee District."

The Fourche Levee District filed exceptions to the report of the master. These exceptions set forth that all the lands in the drainage district had been assessed on the basis that the improvements made would benefit all the lands in proportion to the amounts assessed against these lands; that the master erred in changing the assessments so as to place against the lands in the levee district a greater amount than was intended by the assessors, and was contrary to the act of March 3, 1913, dissolving the drainage district. The exceptions further specified that the master erred in certain designated amounts allowed against the levee district as its proportion of the expenses incurred, and in not allowing credits for money expended by the levee district which should be charged to the drainage district.

The court overruled the exceptions of the levee district. The court entered a supplementary decree reciting the filing of the assessment rolls, describing the property upon which the taxes were to be assessed, and showing the assessment against each piece of property and confirming these assessments and directing the receiver to collect these assessments as follows:

"Ten per cent of the benefits as assessed by the board of assessors of the Fourche Drainage District on all property situated in the Fourche Drainage District, except the property situated in the Fourche Levee District, and upon all property situated in Fourche Levee District an assessment of ten per cent on the benefits assessed by the board of assessors of the Fourche Drainage District for the common purpose of paying the debts and expenses, and 20 per cent additional on the same by reason of the special benefits arising from the building of the levee, paid for out of funds borrowed by the directors of the Fourche Drainage District."

The court decreed that the assessments should be paid in five installments, or greater sums, at the option of taxpayers, and fixed a time for the payment of the first installment of assessment and declared the same a lien on the real estate from the time of the decree, directed the receiver to give notice annually of the time of the payment of assessments, and appointed a collector to collect these assessments. The court retained control of the cause for such further orders and decrees as might be necessary.

The Fourche Levee District and W. C. Ratcliffe, for themselves and others owning land in the levee district, filed protests against the levy of taxes against the lands, setting up, among other things, "that the receiver had placed a levy of 10 per cent on all lands outside of the levee district, and had arbitrarily placed a levy of thirty per cent on all land in the levee district contrary to the act of March 3, 1913, which contemplates a uniform percentage upon the assessment of benefits heretofore made;" that the assessment was "unjust, confiscatory and discriminatory, and would result in the destruction of the rights of property without benefit and without compensation, contrary to the provisions of the Constitutions of Arkansas and of the United States."

Other exceptions were filed by one of the property owners, setting forth that the assessment exceeded the worth of the property and benefits derived from the improvement contemplated; that the assessors placed a nominal assessment of benefits on property in the city, and an excessive assessment upon property beyond the city limits and upon unplotted lands within the city, making same unjust and discriminatory.

These protests were overruled, and from the final decree entered, this appeal has been duly prosecuted. Such other facts as are necessary will be stated in the opinion.

Decree reversed and cause remanded. Motion for rehearing overruled.

Ratcliffe & Ratcliffe, for appellants.

1....