Tipton v. Smythe

• Decision Date: 16 April 1906
• Citation: 94 S.W. 678
• Parties: TIPTON, State Treasurer, v. SMYTHE.
• Court: Arkansas Supreme Court

Page 678

94 S.W. 678

TIPTON, State Treasurer, v. SMYTHE.

Supreme Court of Arkansas.

April 16, 1906.

Appeal from Pulaski Circuit Court; Edward W. Winfield, Judge.

Petition for writ of mandamus by R. M. Smythe against H. C. Tipton, State Treasurer, to require respondent to accept coupons on state bonds in payment for certain land. From a judgment awarding the writ, defendant appeals. Reversed and remanded.

Robert L. Rogers, Atty. Gen., for appellant. Bradshaw, Photow & Helen, for appellee.

McCULLOCH, J.

Appellee, R. M. Smythe, being the owner of a bond numbered 2,034, in the sum of $1,000 with 55 semiannual interest coupons of $30 each attached thereto, issued by the state of Arkansas on January 1, 1870, and due 30 years after date, applied to the Commissioner of State Lands to purchase a certain tract of real estate bank lands situated in Phillips county at the price of $240, and tendered to the Treasurer of State eight of said interest coupons in payment therefor. The Treasurer refused to accept said coupons on the ground that the bonds and coupons attached were barred, because not presented within the time required by an act of the General Assembly approved May 3, 1901 (Laws 1901, p. 262), and appellee thereupon presented to the circuit court of Pulaski county his petition for writ of mandamus to require the Treasurer to accept said coupons in payment for the land. The Treasurer appeared and demurred to the petition, the demurrer was overruled, and final judgment was rendered awarding the writ in accordance with the prayer of the petition, and the treasurer has appealed to this court.

Said bond was issued by the state pursuant to the provisions of an act of the General Assembly April 6, 1869 (Laws 1869, p. 115), providing for the funding of the public debt of the state; the particular bond in question being a reissue, under said act, of real estate bank bonds then outstanding. Section 10 (page 118) of said act of 1869 pledged the faith of the state for the payment of said bonds and interest, and to provide annually a sinking fund to pay off the principal as the same should become due. Section 11 of the act provides that "the proceeds of all of the mortgages, notes, bills, and other securities in possession of the state, obtained as security for the bonds issued to the real estate and state bank, are hereby set aside as a sinking fund for the payment of the interest and principal of the bonds to be issued in pursuance of this act." The act of May 3, 1901, the validity of which is challenged by appellee, is entitled "An act to provide for the cancellation of certain state bonds, and to fix the rate of sinking fund tax." It provides (section 1) that immediately after its passage "the State Treasurer shall make a call for all outstanding valid bonds of the state, except those of the issue of 1899"; and (section 2) that the publication should be made in a daily newspaper published in the city of Little Rock, and certified copies of the call should be filed with the secretaries of the stock exchange of New York, Boston, and St. Louis, six months before the day fixed in the notice for expiration of the time in which the owners of bonds were allowed to present bonds for redemption. Section 3 provides that the call or notice shall warn all holders of bonds to present same for redemption and payment within six months from the first day of said publication "or that said bonds shall thereafter be null and void and nonpayable out of the treasury." Section 5 provides that all valid bonds presented within the time prescribed shall be redeemed, and paid by the Treasurer out of the moneys in his hands to the credit of the sinking fund, and the succeeding section provides for a levy of taxes to raise a sinking fund, out of which the bonds shall be paid. Section 4 of the act is as follows: "All persons who shall hold any of said valid bonds, and shall neglect or refuse to present same to the Treasurer of State for redemption within the time prescribed by this act and set out in said notice, shall thereafter be debarred from deriving any benefit from same; and said bonds shall thereafter be invalid and nonpayable. The Treasurer of State shall, upon expiration of the period of presentation and redemption herein fixed, indorse on the record of each of said bonds herein called in but not presented, that same is barred of payment by the provisions of this act, and same shall no longer be carried on the books of the Treasurer or Auditor as part of the valid indebtedness of this state."

Appellee in his petition attacks the validity of the act of May 3, 1901, on the following grounds: "(A) Because said act seeks to deprive the owner of this bond of his property, without due process of law, by canceling said bond without payment, in violation of the Constitution of the state of Arkansas, and of the Constitution of the United States. (B) Because said act seeks to call in or to cancel, without payment, an obligation of the state of Arkansas, under terms and conditions which were not the law, and not therefore a part of the contract at the time of the issuance of said bond, and thereby impairs the obligation of the contract between the state of Arkansas and the holder of the bond, and said act is in conflict with the Constitution of the state of Arkansas and the Constitution of the United States. (C) Because the time within which to present said bond for payment is too short, and is in violation of public policy. (D) Because said act does not repeal section 4866 of Kirby's Digest, providing for the acceptance of said bonds in payment of the purchase price of real estate bank lands belonging to the state of Arkansas." A feature of both the first and second contentions of appellee, that the act in question seeks to call in and cancel the bonds of the state without payment thereof, can easily be disposed of by reference to the express terms of the act itself. The express object and purpose of the act is to call in the bonds for payment and redemption and not for adjudication as to their validity or cancellation without payment. No unreasonable provisions are found in the act requiring the bondholders to submit his bond to the Treasurer or any other person or board for final determination as to its validity. It is true that the act authorized the Treasurer to pay valid bonds only, and thereby imposed upon him the duty of ascertaining the validity of all bonds presented for payment; but his adverse decision as to the validity of a bond was in no wise binding upon the bondholder, to whom the courts are always open for an adjudication of such questions. In this respect the act in question is entirely different from the statute condemned by this court in McCracken v. Moody, 33 Ark. 81, whereby holders of school district warrants were required to present them within a fixed time for cancellation and reissue, and to submit them for final determination as to their validity to a board composed of the county judge and county clerk. It is urged against the validity of the statute that it is in violation of the Constitution of this state and of the Constitution of the United States, because the time within which the bonds must have been presented was too short, and the effect was to deprive the holder of his property "without due process of law," and that it impaired the obligation of the contract between the state and its bondholders inasmuch as at the date of the issuance of the bond, no authority existed in the law for peremptorily calling in such obligations. We do not think either contention is sound. The statute merely prescribes a period of limitation within which outstanding past due bonds of the state might be presented for payment and redemption. That the Legislature may prescribe a period of limitation within which rights may be asserted, even though no limitation existed when the right occurred, or may shorten a period of limitation which existed when the right accrued, is too well settled now for controversy. The only restriction upon that power is that the added limitation must be reasonable, and must afford an ample opportunity for the assertion of existing rights; otherwise the effect would be to impair the obligation of a contract or to deprive a person of property without due process of law.

Chief Justice Waite, in delivering the opinion of the court in Terry v. Anderson, 95 U. S. 628, 24 L. Ed. 365, said: "This court has often decided that statutes of limitation affecting existing rights are not unconstitutional, if a reasonable time is given for the commencement of an action before the bar takes effect (citing Hawkins v. Barney, 5 Pet. [U. S.] 457, 8 L. Ed. 190; Jackson v. Lamphire, 3 Pet. [U. S.] 280, 7 L. Ed. 679; Sohn v. Waterson, 17 Wall. [U. S.] 596, 21 L. Ed. 737; Christmas v. Russell, 5 Wall. [U. S.] 290, 18 L. Ed. 475; Sturges v. Crowinshield, 4 Wheat. [U. S.] 122, 4 L. Ed. 529). It is difficult to see why, if the Legislature may prescribe a limitation when none existed before, it may not change one which has already been established. The parties to a contract have no more a vested interest in a particular limitation...