ARK.] SIMPSON V. LITTLE ROCK NORTH HEIGHTS 451 WATER DISTRICT No. 18. • SIMPSON V. ' LITTLE ROCK NORTH HEIGHTS WATER DISTRICT No. 18. 4-4123 Opinion delivered October 14, 1935. 1. MORTGAGES—RENEWAL OF INDEBTEDNESS.—In the absence of an • agreement, or a plain manifestation of a contrary intention, the • security of the original mortgage follows the notes or bond or a •renewal thereof ; the presumption, upon the execution of a new. note or , . bond, being that the same security iS available for its payment.. 2. IMPROVEMENT DISTRICTS—REFUNDING BONDS.—Although Acts 1935, No. 192, authorizing the' i ; efunding of bonds of a water diArict did not expressly provide for continuance of the pledge of the •assessed benefits or of the mortgage of the water plant securing the original bonds, the power to provide such security will be implied, being essential .to effect the exercise of the power to. refund. Appeal from : Pulaski. Chancery Court; Frank H. Dodge ; Chancellor ; affirmect • Sam Rorex,. for appellant. . . Rose, Hemingway; Cantrell (C . Loughborough, for appellee. . BAKER, J. • The Little Rock North, Heights Water • District No. 18 desired to• refund its indebtedness under act No. 192 of the Acts of 19.35, and, among other things - preparatory thereto, it 'entered • intO*- a contract With
452-SIMPSON. V. LITTLE ROCK .NORTH HEIGHTS- [191 WATER • DISTRICT No. 18. C. W. Simpson, whereby he surrendered two certain bonds he held, Nos. 68 and 69, and agreed to receive other bonds of . a new issue in lieu thereof. The improvement district, on account of delinquencies in the payment. of assessments, • was in default, and was preparing to issue new bonds, .under said act 192, refunding the unpaid. portion of its indebtedness, the said new , bonds to draw interest at 1 per cent. for the first five years,. 11/2 per cent. for . the second five years, 2 per cent. for the third five years, and 2 1/ 2 per cent. for the fourth five years, and 3 per cent: thereafteruntil•paid. The contract made with Simpson was highly-advantageous to the district in the saving of interest. Before the new bonds had been exchanged for the old ones, Simpson came to the conclusion that the new bonds, so to be issued under act 192, would not be •secured by lien on the real property as were the old bonds. He believed that, upon issue of the new bonds, the holder thereof would have to look to act 192 to determine the intent or purpose of the district, and sirice the said act did . not expressly provide for a continuance of the lien, of . the pledge of assessed benefits, Or of the deed of t trust, covering the water plant, made when.the first bonds- were issued, that the new bonds would be taken in settlement of the firSt bonds, .and necessarily be without the security of . any kind, because the act did not provide . forjhe 'con-tinuande thered for the new obligations. He, ori account of that, decided that he preferred to have his bonds returned, rather than to accept the new 'bonds. These bonds had -been delivered to the Metropolitan Trust Company to be held until the neW bonds corild be piepared and delivered. SimpSon made demand upon- the Metropolitan Trust Company for the return of his bonds. Upon this de:. mand, made by Simpson, the said Trust CoMpany informed the Little Rock North Heights Water DiStrict No. 18 of the fact that this demand had been made, and asked for instructions from the district. The diStrict refused- to accede to these demands, because it §aid that Simpson might put the said' bonds upon the market and prevent .the refunding of the old isue, much to the detri-
A RK.j SIMPSON - v. LITTLE ROCK NORTH HEIGHTS 453
WATER DISTRICT . No. 18! ment of the district: The Metropolitan *Trust Company, to* save itself. from damage or Ioss, by reason of these adverse -contentions, betiveen the . parties filed in the chancery court of Pulaski County, an intervention, inter-pleading the °said Simpson and district, and praying the court to require the parties to present and submit their. respective oontention g . to •the jurisdiction . of the . said. court. . The interpled stated all- of . the-facts, and . the respective parties, by their: pleadings, admitted* the same as stated by the intervention. The chancery court, by its decree, held that Simpson was -boUnd'by the contract•whereby he had delivered the bond§ for reissue; that -the . original . 'security; the pledge of. assessments, and:deed of trust, : would,- by: operation' of law, be security for •the new bonds to be issued; pro-- vided also that if- a majority of the bondholders desired, a new deed. of: trust and a, new pledge-of: assessments might .be entered into by.the improvement district. 'From this decree of the chancery court, C. W. : Simp-son has apPealed. Upon this , appeal he urges that said, act 192 of tbe ActS.of *1935:makes no:provision . for any *security of the refUnding bonds; but that it-only . provides that the district may fund; •or refund, the -old bonds and execute: and deliver the- new or . refunding .bonds in exchange for the old; and that Parties. to the transaction, in the transfer or exchange of the bonds, wOuld be bound by the pro-Visions .of the said . act, • and that -their rights wouldbe nOgreater than expre g sly or specificallY granted by the act. Appellant cites authorities that apparently .susTain the position that he ha.s taken; but, unfortunatelY for the contention : that he makes in that respect, the : authorities cited are from Other•jurisdictiOns, : and they appear to' be not in conformity 'With : the deciSions of our : own court, and, • we think,. perhaps :: against s the great weight...of authority... - In reply •to the ' contention Made by . appellant, we* suggest that the pledge of assessments made by the- improvement district, and deed of trust whereby the. physical properties of the district are mortgaged, are not essentially different from the ordinarymortgage. .Many'
454 SIMPSON V. LITTLE ROCK NORTH HEIGHTS [191 WATER DISTMCT No. 18. mortgages provide that the notes secured thereby may be' renewed from time to time, but that the mortgage will secure not Only the notes described in the face of it, bilt all renewals thereof. • Also we find that many notes so secured by mortgages make referenee to the particular mortgage securing the same. These references, however, of the note to the mortgage, or of the mortgage to the note, are not necessary to 'the validity of the lien, or to its continuity as to any renewals. Such references, however, make the proof that might otherwise be required unnecessary. • This court held in Oliphint . v. Eckerley, 36 Ark. 69,• that, in the absence of an agreement, or a plain manifestation of a contrary intention, the security of the original. mortgage follows the . note or renewal thereof. In other Words, instead of there being a presuMption of payment or- settlement of • the original indebtedness by the. execution of the renewal note, and . thereby •a release Of the security,, the presumption is that, upon the execution of the new note or bond, the same security is available -for its payment. 41 C. J. 468 ; 19 R..C. L. 450, 451. .. It might be suggested that•ordinarily in the issuance • of bonds by an ithprovement district, or any other legal entity, reference is made to the statute Or authority, authorizing . Q111.11 11 . 1P , owl.it is perhaps.not amiss to su g-gest that in the issuance of the refunding bonds, by this improvethent district, reference would probably be made, as authority, for the new issue, to act 192 of the Acts of 1935. If such reference be made, then it must be ap-• parent to any one that any issue of bonds authorized thereby is nothing more than a new obligation for the same debt, and under the authorities above mentioned, necessarily would carry the • same security. It has been suggested, and we think with sound pro-. priety, that the respective acts authorizing the refunding of the old indebtedness by implication must necessarily be said to provide for the security of the new obligations. These new obligations would be without practical value ordinarily, unless there is security for • their payment, and, since we do not impute to the Legislature a desire to dO a yain•thing, we have no hesitancy in saying that
ARK. 455 hi this provision for the refunding of the old bond issues the power is implied to do whatever is 'necessary to be done to make effective and valid the neW issue of bonds .to be substituted for the old ones.. The court did not err therefore in providing that, if a majority of the bondholders 'desired to have a new pledge' executed by . the ithprovement district, 'and a new mortgage or deed of trust upon its . physical properties, that same should be done.. ..We are in accord, however, with views of the trial court, that such new pledge, or mortgage, is not necessary, but that it may be executed as matter of 'expediency, or confirmation, if deemed advi sable . • Whatever powers or authorities are essential to effect the exercise of the grant -of power to reissue Or refund the bonds . must:be implied. 59 O. J. 9.72; Atkinson v. Pine Bluff, , 190 Ark. 65, 76 S. W. .(2d) : 982. . . • In the last cited na g e the -court 'said ".In granting authority to construct . sewerS, power is impliedly grarited to adopt the means appropriate and reasonably adapted ta carry into effect the , anthority. expressly given." • It perhaps may :not be -amisS to suggest that this court is committed to the theory that new obligations. maY be -issued' for the -old,• without an- eXpresS grant -of authority . Or power; and particularly vithen'there -is no crease in:the amoutit of indebtedness,'or . interest, where the obligation is . not otherwise Onerous -or illegal Talk ington v. Tumbow, • 190 Ark. 1138, 83 W. (2d) • 71 ; Alpkin v.-Tatum, 189 Ark. 862; 75 S. W. (2d) 377. • The decree of the chancery court therefore is 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.