Waldon v. Holland

• Court: Arkansas Supreme Court
• Writing for the Court: McFaddin, J.
• Citation: Waldon v. Holland, 175 S.W.2d 570, 206 Ark. 401 (Ark. 1943)
• Decision Date: 29 November 1943
• Docket Number: 4-7160
• Parties: Waldon v. Holland

175 S.W.2d 570

206 Ark. 401

Waldon v. Holland

No. 4-7160

Supreme Court of Arkansas

November 29, 1943

Appeal from Miller Chancery Court; A. P. Steel, Chancellor.

Reversed.

M A. Matlock and Will Steel, for appellant.

Head & Shaver and Bert B. Larey, for appellee.

McFaddin J. Smith and McHaney, JJ., dissent.

OPINION

McFaddin, J.

This appeal presents for answer the inescapable question whether Act No. 2 of the Special Session of the legislature in April, 1934, impairs the obligation of the contractual rights of the appellant. The chancery court held the act to be valid, and appellant challenges the decree.

The Facts

D. A Holland, appellee herein, purchased sixty acres of land in Miller county from D. J. Holland in 1923. There was a mistake in the section number in the deed, but we consider the mistake of no consequence since a correction deed was later obtained. The lands became vacant in 1926 and forfeited to the State for the taxes of 1928. The State confirmed its title by then existing statutory proceedings in the Miller chancery court in March, 1932; and on March 7, 1933, appellant, Waldon, paid the State $ 18 and received a donation certificate to the sixty acres. He immediately moved on the lands and has improved same, and is now, and has been ever since March, 1933, in full possession thereof.

The General Assembly of Arkansas, at the Special Session in April, 1934, passed Act No. 2, approved April 12, 1934 (see printed Acts of 1935, p. 1011); and under that act, D. A. Holland, as owner, redeemed the lands from the State on May 31, 1934, notwithstanding the intervening donation certificate to Waldon, as aforesaid. Holland demanded possession from Waldon, but never made any tender for improvements, and the State never returned the $ 18 to Waldon. In 1936, Waldon tendered final proof to the Land Commissioner and requested donation deed, but was informed of the redemption by Holland and was referred to the courts for redress.

In September, 1937, Waldon filed suit in the Miller chancery court against the State Land Commissioner and Holland, seeking to have the State Land Commissioner issue the donation deed and to cancel Holland's redemption as a cloud on Waldon's title. Holland answered and cross-complained, claiming Waldon's donation certificate void, and praying that Holland's title be quieted. Waldon then dismissed his complaint in the Miller chancery court, and through a proceeding in the Pulaski chancery court, forced the State Land Commissioner to accept Waldon's proof and issue him a donation deed. Then, on Holland's cross-complaint in the Miller chancery court, Waldon pleaded the donation deed and the Pulaski chancery decree and the invalidity of Act No. 2 of the April, 1934, Special Session, and also other defenses.

After the filing of a number of pleadings by both sides and a transfer to the circuit court and a re-transfer to the chancery court, the case was finally heard in Miller chancery court and a decree rendered on January 8, 1943, holding that Holland duly redeemed under the said 1934 act, and that the donation certificate and the donation deed held by Waldon should be canceled as a cloud on Holland's title.

A number of interesting and involved questions are argued in the briefs, but the decision of the one question stated in the first sentence of this opinion renders it unnecessary to state or discuss any other questions. Waldon claims that Act No. 2 of the April, 1934, Special Session of the Arkansas Assembly, impairs his contractual rights, and to that extent, is therefore violative of the state and federal constitutions. Art. 2, § 17, of our state constitution provides: ". . . no . . . law impairing the obligation of contracts shall ever be passed." The corresponding section of the federal constitution is art. 1, § 10, which provides: "No State shall . . . pass any . . . law impairing the obligation of contracts." To determine whether the Act of 1934 impaired the obligation of the contract necessarily involves a discussion of: (1) Was the donation certificate a contract? (2) What was the law at the time the certificate was issued? (3) What was the said Act of 1934? (4) What effect did the Act of 1934 have on the previously existing law?

I. Was the donation certificate a contract? We have many times considered the rights of the holder of a donation certificate. A few of these cases are: McCauley v. Six, 40 Ark. 244; Hagerman v. Moon, 68 Ark. 279, 57 S.W. 935; Snider v. Smith, 75 Ark. 306, 87 S.W. 624; McCracken v. Sisk, 91 Ark. 452, 121 S.W. 725; Wilson v. Murray, 188 Ark. 312, 66 S.W.2d 622; Wilkins v. Maggard, 190 Ark. 532, 79 S.W.2d 1003; Young v. Pumphrey, 191 Ark. 98, 83 S.W.2d 84; and Ware v. Dazey, 201 Ark. 116, 144 S.W.2d 463. In McCracken v. Sisk, supra, Mr. Justice Frauenthal pointed out the similarity of our donation law to the United States homestead law (which may now be found in 43 U.S.C.A., Chap. 7), and used some of the homestead cases decided under the United States statute to aid in determining the status and right of the holder of a donation certificate. Among other cases which Mr. Justice Frauenthal cited and discussed was that of McCune v. Essig, 122 F. 588 (affirmed in 199 U.S. 382, 26 S.Ct. 78, 50 L.Ed. 237) to the effect: "The estate granted to a homestead settler is granted on conditions precedent." 91 Ark. 452, 121 S.W. 726. In Knapp v. Alexander-Edgar Lbr. Co., 237 U.S. 162, 35 S.Ct. 515, 59 L.Ed. 894, the United States Supreme Court, in considering the nature of an entryman's title under the homestead laws of the United States, said: "He has also an inchoate title, subject to be defeated only by failure on his part to comply with the requirements of the homestead law as to settlement and cultivation."

But there is no need to pursue the analogy between the homestead law of the United States and our donation statutes, because Mr. Justice Baker, speaking for this court in Young v. Pumphrey, 191 Ark. 98, 83 S.W.2d 84, said: "It perhaps may be safely said that the certificate of donation is a permit or right granted to the certificate holder to enter upon the land belonging to the State in order to make the improvements required by law." Thus, we have said the donation certificate was a "right granted . . . to enter . . . to make the improvements required by law."

At the time of the issuance of the donation certificate to appellant, the law pertaining to donation was found in §§ 6671 to 6695 of Crawford & Moses' Digest, and these same sections are now found in §§ 8636 to 8659 of Pope's Digest. The rights of the donee under his certificate are set forth in § 8640 of Pope's Digest, which provides that the State Land Commissioner shall issue to the donee a certificate, "which certificate shall further state that if within three years from the date of actual settlement, (the donee resided) in a house habitable at all seasons of the year upon said land, (and) the applicant shall present proof in the manner hereinafter provided to the commissioner, he shall execute, under his hand and seal, the deed of the State to the donee, conveying all the right, title and interest of the State in and to the lands described in said certificate." (In Ware v. Dazey, 201 Ark. 116, 144 S.W.2d 463, we held the residence period required of donees under § 8642 of Pope's Digest had been shortened to two years, but that point is immaterial to the question now considered.) The point we emphasize is that the State certified to appellant, Waldon, that it would issue its deed to Waldon if he performed certain conditions precedent. This certificate was certainly a contract to deliver a deed to the lands on condition precedent to be performed by Waldon. We may summarize by saying that while the donation certificate was not assignable or transferable, was not a present sale or conveyance of an estate, was not a present grant to be defeated on condition subsequent, still it was a certificate whereby, upon the donee promptly and faithfully fulfilling the conditions precedent, the State would thereafter convey to the donee the title which the State had in the lands at the date of the certificate. To that extent, it was a contract.

II. What was the law at the time the certificate was issued? The appellant received his certificate on March 7, 1933, and the law then existing became a part of his contract. Smith v. Spillman, 135 Ark. 279 205 S.W. 107, 1 A. L. R. 136; Wood v. Lovett, 313 U.S. 362, 61 S.Ct. 983, 85 L.Ed. 1404; 16 C. J. S. 693; 12 Am. Jur. 14. What was said by Mr. Justice Riddick in Snyder v. Smith supra, about a donation deed applies also to a donation certificate, to-wit: "The force and effect of a donation deed is governed by the law in force at the time it was issued." In the previous section of this opinion we have discussed the law concerning the donation certificate. The law concerning redemption also became a part of the contract; as that law measures the respective rights herein. Section 6696, Crawford & Moses' Digest (§ 8666, Pope) gave to persons under disability the unlimited right to redeem; but appellee was sui juris so far as this record discloses. Section 6741, Crawford & Moses' Digest (§ 8672, Pope) gave the landowner the right to redeem within two years after the forfeiture, and also the right for further redemption of lands "which had not been sold or otherwise disposed of by the State." But the execution of the donation certificate to appellant constituted a step by the State from which it could not recede. It was a disposition within the meaning of that statute, because the donation certificate was a contract, as shown in the previous section of this opinion. Appellee did not prove any defect in the tax proceeding under which the land forfeited to the...