CASES DETERMINED IN THE SUPREME COURT OF ARKANSAS - SMITH V. REFUNDING . : 13(wip, OF ARKANSAS. Opiiiion dellYered May '27, 1935. • 4IGHWAYS—ISSUANUE, OF REFUNDING cEaTIFICATE . s.—Acts .,Ex. Sess. 1934, No. 11, §§ 11,.12, authorizing tho issuance of 'refund-, ing. certificates to municipalities . and street improvement dis-• • •-tricts regardless of the invalidity of Previous statutes On the sub-•ject, held to cure any infirmity in . ACts 1931, No: 248, and to ratify and confirm the; acts of the State . Highway CommisSion in issuing certificates of ind ,• ebtedness under the supposed authority of that act . HIdHWAY-L PURPOSE OF REFUNDING CERTIFIcAlt . s.—The purpoSe •of Acts 1931; No. 248, and Acts Ex-. SeSs..1934, No. 11, §§ 11, 12, . in authorizing' the issuance -of refunding certificates of indebtedness to municipalities and.. street improvement districts in an amount equal , to the actual cost of, improving streets which are continilations of State highways through such municiPalities,,was to relieve Urban pioperty owners 'of the burden or impioVing - such streets, b'ut the obligation assumed by the State was liinited to bonds outstanding at the date of passage of sach acts. • 3. STATUTES—SPECIAL SESSION.=rhe Legislature, when called in extraordinary session, cannot legislate outside the oovernoes call; but ma'Y act freely within the call, and may legiSlate upan all oi any of the subjects specified, or upon any part a a subject; and every presnmption will be made in favor of its action. 4.. STATUTF;---SPECIAL SESSION.—Where ' the Governor's preclamation called a special session to consider legislation for refunding of out-, standing road district bonds, the . Legislature was empowered to enact a statute curing the isSuanCe of refunding certificateS ' urider 'an invalid statute: Appeal I from Pulaski 'Chancery Court; . Frank H. Dodje,.Chancellor; affirmed.
9 SMITH V. REFUNDING BOARD OF ARKANSAS. [191 Suit by Harrow Smith against the Refunding Board of Arkansas.. From a deeye.e dismissing the complaint, plaintiff has- appealed. • = Verne McMillen, for appellant. Carl Bailey, Attorney s General, and Walter L. Pope, for appellee. Cockrill,:4r4i$tecyl #ed.tot,antici, MCHANEY, Justice. By this suit appellant seeks to enjoin the refunding board from issuing refunding obligations to those municipal improvement districts of this State entitled thereto under the provisions of act No. 248 of the Acts of 1.931 (page 770). As a basis for this action, it is contended that; first, Said . act NO. 248 iS Void for the reason that, as enrolled , and printed, , it contabis no enact-. ing clause, as is required by § 19 of article 5 of the Constitution, which proVides 'that :''''The 's6 ,16 Of the,laWS' of the State of Arkansas shall be : 'Be it . eriacted'by'the General Assembly of the State , oi Arkansas?". and,.second, that, since said act is.a nullity, the attempt of the General As-sembly- to • provide for •The refundinr•of certificates of indebtedness authorized by said Aft i\TO. 248, by' the enactment of §§ 1.1 and 12 of act No. , 11, , ef the Extraoidiriary Session ' of 1934 (Page .48).; approyed. Febrpary 12, 1934, is likewise void,. because. not within the . Governoes call for said . Extraordinary Session: - A. brief revieW. of the acts . Of theGenertil AsSembly, anthoriling the issuance by the HighWay , Commission of certificates,, of indebtedness to street • improvement districts in municipalities, whose streets form a portion or a continuation of State 'highwayS through Such municipali ties, is deemed appropriate. . At the 'Extraordinary . Session .of . the . General AssemblY. in 1928, act :NO. 8 . (page 31), was passed, approved October . 3, 1928, which amended act No. 184 of 1927 (page 645) . ; entitled, •"An Act to 'Provide for the Permanent ImproVement of Con-tinuatibns of State Highways Within the Corporate Limits of Cities of the First and Second Class." Said act No. 8, by § 1 (page 31), directed the State Highway Commission to designate for the pUrPose . .of said act ,`-`such streets and parts of streets within the corporate limits
ARK.] SMITH REFUNDIN'o BOARD Oi :ARKANSAS. 3 of 'cities'of the first . and •second class and incorporated towns as are Continuations of duly deSignated and estab-lished-highways passing through or into such cities ,or incorporated towns.."- -Said act fnrther (§ 4, p. 33)• provides thatione-half of •the, cost of the improvement of such streets within the- corporEite limits of cities and towns should' be 'refunded' to the district by • the State as , pro-videdin the act; in aimuat installments, notless than ten; proportiOned as, nearly as practiCable -to • the maturity 'of the bonds of the district:' -And it:further •(§ 5,, p. 33) provides that ,said Commission, 7shonld issue- its certificateS of indebtedness for . Said' installments;. Payable 'to the dis-trict-if it had no 'outstanding bondS; or payable' jointly,to the districtAnd the trustee. for thebondholder if 'The 'district had outstanding . , ; The act also provideS in, § 6 :(Pagei34') that , sai&Com-thissiou'in0; `'isSue•like . cettifieates 'Of 'indebtedness for tbe State 's'portion of- sindilar work don6 by , improvement districts ! since-June'9,' 1927,.., Or: by districts Where the plans' were adopted . by . : the ommissidners before this:Act went into . ieffeet : And • after ; June- . 9, .1927, the arimunt each instanee to be'. determined . by said '• The'6enerat As'sertibl :Y ot 1931: "al's . 'pas'sed 'Eiet No. 85, 'P. 247, AdtS 1931: T . hi . s -. ita • Wa:§ : •OirititMd, -"Ali' Act tO Outhtaiiding : BondS . 'of IMOoveinent Ms.= ti.ic.th in IncerPorated' TOWns : that Paved Contirinatidiis of State' HigliWaYs ThibUgh 'Said InCorpOrated-ToWfis:" ThiS. act provides that any street- iniprovement district having i outstanding bonds where slick district' paVed A•thorouglifare that 'continuation 'of a State highway iiito or through •the corporate- limits of.-an'inCorporated town or city Of the'first br . seemid ClasS; and made,fio Provement On ally :other . thoroughfareHexcept the one that is . , an extension . of 'a iState , higthway,'• should reeeiVe aid in paying . outstaudingibonds' , And , intereSt to the- ex:- tent of 50 per' Cent.,of tholrernaining 'bonds and interest as same become dfie:arutpayable: • In :other words; thi's act authorized the payment of 50 per :cent. of theremain-ing outstanding .bonds Of , municipal, improvement districts 'which had imProved streets .wbich were continua-
4 SMITH V. REFUNDING BOARD OF ARKANSAS'. [191 tions of , State highways and no other streets. SeCtion 3 of said act : (page 249) reads as follows : "In-considering the-outstanding bonds and interest on which-the State is to undertake to pay off half of same, said bonds shall only be the reniaining outstanding bonds repreSenting work done for excavation.or borrow, surfacing, concrete curb when constructed as an integral part of the -pavement ; or concrete base,. .drainage, subways, overhead crossings and reasonable overhead . expense ; it being the intentiOn of this act to pa4T for such cla.Sses of work•as the State is now contribUting towards constructing as -provided for in § 4. of act No.; 8 of the Acts of 1928,'whereby the State has been aiding in paving- continuations'of 'State highways. through 'incorporated towns where the work was done since June 9, 1927.Y " Section 4 . (page . 250) provideS that, as soon :as the Commission has determined the amount of ;the remaining outstanding bonds of, each, district- and the amount of aid each district , is entitled- to,- the Commission "shall "issue certificates . ' of indebtedness -for' .the respective:.amounts due-,each •city, town, . or district in , installments, 'as the •remaining .outstanding bonds are payable. --Such certifi, cates.of indebtedness should be . made, payable to the city pr town . that issued . said bonds if, done by the city Dr town, and if done by an improvement district.where bondsare outstanding, the certificates were -to be, payable ,jointly to the district and the trustee for. the bondholders. • Later in the same session -Of the : General AsseMbly (1931), act- No. 248 (page 770) was passed:which purportS_ to amend- act NO. 184 of 1927 (page 645),Thand.act No.; 8 of 1928, Extra Session (page 31). This act (§ 1, p. 771)• authorized and directed-the State Highway Commission to designate ;such streets and parts of streets within the corporate lithits of cities of the first and second class and incorporated towns. as• are continuations of State highways .passing through such cities and towns. It further provided in § 2 (page 771) that the amount of the bonds unmatured for payment at the time of the passage of this act or interest thereon, issned by any municipality or city and town paving district having a
ARR.] SMITH V.T-REFUNDI*.' G BOARD OF ! ARKANSAS. 5 route and street :therein on. a' State highway, "shall be refunded to the district by'the State, as provided in '§4 hereinafter in . this act, the " .* refund to be I all of the uuniatured cost as stated above, in this paragraph if the work 'of construction contemplated.by this act shall haye been done , by improVement . districts Since . June 9, 1927, where the plans were adopted . for. State aid,by , the .High: way C ' ommission before the passagent this act and after June 9, 1927, the refund to be made in annual, 6r semiannual installments, over not less than ten years, proportioned as nearly as practicable to the maturing bonds and interest of • the •district." • The act further (.§.-• 3, p. 772) provides for the issuance of certificates of indebtedness for the respective installments payable jointly . to the district and trustee tor the bondholders: Section 4 (page 773). of • said act reads as foll6WS: . "The . State Highway Cominission. shall issue like certificates of indebtednesS for the 'entire said unniatured cost •of similar work done by improvement districts. ..or municipalities since •une 9, 1927, where• the 'plans were adopted' for State aid, by the HighwaY CominisSion be-. fore the passage. of this act and after June..9, 1927,. the amount in each instance to be 'determined'bY . said 'Commissioner as indicated in the last preceding -section;•provided, however, in the disbursement of .fUnds ;from the 'State Highway Fund,' in.the State Treasury, the follow-ingitems of. expense . shall have preference.. . • • , "Payment of 50 per cent of the•maturing bond - s-and - interest of 'any 'district as required.by law, 'Where, sueh district has paVed a • Continuatien of a State highway.into or through , an incorporated town or , City.• A .... , • • • . . • : • • • •, "It being the intentiouthat. the' annual revenueS'Ae-rived from gas tax, auto licenso fees, chauffeur's license fees or other taxes froth users of the roads, shall first be uSed to provide necessary funds , to care. for 50 per,••cent: aid toward paying extensions of State highways • into in-. corporated towns and cities, then out of remaining funds, same shall be used to pay 100 per cent, of the maturing
6 SMITH V. REFUNDING BOARD OF. ARKANSAS. [191 bonds and intereSt ot certain street improvement districts as . provided for. herein. " The . Extraordinary Session of 1934 of the General AssemblY passed act , No . 11 (page 28), Acts 1934, commonly known as the' Refunding Aet: Sections 11 and 12 of said act (page 48 . ) . ._ a . re Material to this inquiry. The repOrter will copy these sections • as a footnote to this opinion.' Sections 11 and 12, act No. 11, Acts. of 1934 (page 48): . Section .11. In . instances . where . municipalities or street improvement districts have impieved streets through cities and towns, which streets are continuations of -State highway's, and said municipalities or districts were given aid or are entitled to aid .by the issuance of certificates of indebtedness under act No. 248 of 1931, it shall be the duty of the State Highway Commission to ascertain and report to the Refunding Board by municipalities or districts the, amount of said certificates, together with the interest unpaid thereon 'to January 1, 1934, and the • amount. of aid to which any 'of said municipalities or districts may be entitled in instances where certificates haVe 'not been isaued to thern, which represents the actual cost of improving streets which are now the actual continuation of a State ,highway. Any municipality or street improvement district entitled to aid under said act 248 -for which no certificates have , been issued shall apply to the State Highway. Commission for aid within sixty days from the effective date of this act or thei-eafter be "fOrever• barfed from the behefits hereof. It . is the purbose of this and the next section's of this act. to authorize the issuance of refundirig certificates of indebtedness to municipalities and street improvement . districts, in an amount equal to the actual cost of improving streets which .are now continuations:of a State highway through citie g and towns, irrespective of the validity or invalidity of any previous atatutes • upOn' the ' subject.. • Section 12. Refunding certificates of indebtedness are hereby authorized to be issued in exchange' for andin an amount net exceeding the aggregate of the outstanding valid certificates of indebtedness issued under act No. 8 of the General Assembly, approved October 3, 1928, and act No. 85 of the General Assembly, approved March 3, 1931, together with the accrued interest thereon to January 1, 1934, and the amount reported to the Refunding Board Under Sec. 11 hereof. Said refunding certificates of indebtedness shall be negotiable, direct, general obligations of the State, for the payment of which, priricipal and interest, the full faith and credit of the State and all its resources are hereby . Pledged. They shall. be dated January..1, 1934, and shall be payable ten (10) years " from their A , at n e d shall bear interest at the rate of 3 per cent, per annum. Interest upon said refunding certificates of indebtedness shall be evidenced by interest coupons payable semi-annually upon the interest paying dates of the bonds issued by said municipalities or districts. -Said refunding certificates of indebtedness shall be delivered to the municipalities or districts entitled thereto, upon surrender of the original certificate to the Refunding Board for cancellation in instances where certificates have been issued, and to municipalities or districts entitled to aid to which no certificates have been issued. The trustee, paying agent or other perS n o holding original certificates shall surrender the same for cancellation upon the issuance of certificates as herein provided. No refunding certificates shall be issued and delivered to any municipality or district until all original certificates issued to or in aid of said municipality or district are surrendered for cancellation.
ARK.] SMITH V. REFUNDING BOARD OF ARKANSAS. • It will be noted that the concluding paragraph . of 11 of said act (page•48) provides : "It is the purPose of this and.the next-sections of this act tonuthorize the 'issuance of refunding certificatesof : indebtedness to municipalities and , street improvement ,districts, in an . amount , equal to the actunl. cost of iniproving streets which, are. now . continuations of . a State highway through .cities and towns, irrespective of the, validity . or invalidity of any . previous statntes upon the subject:'.', .thider these- statutes the chancery -cOurt suStained a demurrer to the complaint -of .appellant : seeking to enjoin the refunding board from issning refunding certifiCates of indebtedness, ,to, „such .districts. Appellant declined to plead further, ,ond:his vomplaintwas dismissed, for:want of equity„ We think the : chancery eourt : correctly . sustained the demurrer, and this irrespective of the validity or invalid- • ity of said act No.•248 of 1931. Assuming itto as , contended by. appellant, without : : so •deciding, :because tho• enrolled and •printed act• omitted the enacting clanSe which the original and : amended : bill as introduce&in the Senate contained, it does not follow , thatsubsequent abts upon . the part Of the-State through its lawmaking:power may not cure the-infirmity and-render valid that.which prior to the : curative act. was.invalid: We are of the'opinion that §.1I of the said aet Nó:.1:1 (page. 48) -Of the 'Acts of 1934 (Ex: Sess.) cured any invalidity in•act NoA48 Of the Acts of 1931 (page WO and that the unauthorized aCt of The State-Highway Commission •(•assuming it- to be so) in issuing oertificates of indebtedness nnder the.stipPosed authority . of acti:NO.. 248-Was-ratified, confirmed and. ap proved: That liart of •§ I1•hereinbeforequoted,specifically so stateS. We recently lad occasion•to ConStrue:this,snthe seetion of- said Act, No. 11 . of Acts 1934 : (Ex. Sess0 hi the case of RefundingToard v. Bailey, 190 Ark. 558, 80 S. W. (2d) 61, 64..-We there said : : "Ne think that from §'11.it appears plain that the Legislature intended• to Issue refunding certificates:in an nMountequal to:the actnat Cost of impreving the :streets; : and this irrespective of •The validity or invalidity'of -any Previons , statutes: upOn. the
8 SMITH V. REFUNDING BOARD OF ARKANSAS. [191 subject That provision, by its very terms, not only applies to § 11, but to the subseqbent sections. It is a plain declaration . of the Legislature itself as tO what it means." It was the manifest purpose of the Legislature to relieve the' owners- of real property from taxes on assessed' heilefits . levied 'for • the purpose of ' constructing streets in cities and towns -Which form continuations of State- highways. It' had already relieved rural property of such taxes, and its object was . to -assume the burden of outstanding obligations in such districts. The obligation assumed was 'limited to bonds that were outstanding at the, date of the passage of said acts. • It is next contended that the refunding board is not authorized to issue refunding certificates of indebtedness to street improvement districts in excess of the certificates. authorized to be issued under•said act No. 8 (page . 31) of the Acts of 1928 (Ex. Sess.) and said act No. 85 of:the Acts of 1931 (page 247). In other words, this contention is based,on the theory that since act No. 248, Acts 1931. (page-770), is void because it has no • enacting clause, the refunding of ;certificates of indebtedness-issued under act No..248 . .would be void because. not within the Governor's call. It is contended that the Legislature, having been called into special session fOr the purpose of refund-ink• obligations of the State, could not authorize the refunding of obligations which did not exist ;- that, since act No. 248 .is void, the obligations issued thereunder are likeWise void, and that the . Legislature had no power,. acting within the Governor's call, to assume or agree to pay any obligations which the State did not owe for,the.reason that the Governor did not call the Legislature into session for: the . purpose of assuming new obligations. Section 1 of the call. of the Governor convening the General Assembly in an extraordinary session in the latter part of 1934 (page iii) reads as follows : .".To consider and, if so advised, enact legislation providing for the:refunding of the outstanding State highway bonds . and notes, State toll -bridge bonds, outstanding road district bonds, on which the 'State has been paying interest, for the refund-irig or- payment of Certificates of indebtedness issued
- ARK.] SMITH V. REFUNDING BOARD OF ARKANSAS: under act No. 8 of -the General Assembly, approved Oc-tober 3, 1928, act No. 85 of the :General Assembly, approved March , 3, 1931, and act No. 2.48 of the General Assembly, approved Mara 3'1; 1931; and to 'fund other lawful claims against the . State for,highway•construction or maintenance, and. the accrued and nnpaid :interest upon the aforesaid obligations." • " We Cannot agree With appellant 11-1:,:this contention. It is, of course, true that the . General. Assembly, when called into extraordinary . _session, cannot legislate. outside the Governor's call. Jones v: State, 151, Ark. -288, 242 S. W.. 377 Sims v. Weldon,.165 Ark., 13;263 5: W: 42. But the same . eaSCs hold that the laWmakerS, When: . ConVened in 'extraordinary sessiOn, , "may Act, freely within the call -and : legislate ,upon ail or any..of the subjects specified, or upon any part of the subject; and every presumption will be made' in favor of the . regularity of its'aCtion." See also State NOte Board v: St4te ex rel. Atforne Oen-ci-al 186- Ark: 6O5 54 8. W (2d) 696... It iS perfectly manifest from the language .aboye quoted in . the ,Governor's call that,he intended that the ,Legislature.should do. something-with reference to certificates of indebtedness issued under: the aupposednuthority of said act, No. 248. Ile . specifically ., inentioned , said obligatiofth::The Legislature Was therefore, under the , doctrine of -the cases just cited, authorized to enact said §§11 and,12 of act No. 11 of the Acts of 1934 (Ex. Sess.,- p. 48). We sustained the act as a whole in Sparling v. Refunding Board, 189' Ark. 189; 71 S. W. (2d) 182, and stitained, CenStrued and applied §§ 11 and . 12 of said act, the VerY . .seeti „ o ns now under consideration, r in RefUnding Roard supra, and we no.w sustain them again as not,. .heing open to the attack made. - ' We find no errer, and' the decree is aCcOrdingly affirmed..
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.