Daniels v. City of Fort Smith

594 S.W.2d 238, 268 Ark. 157, 25 Wage & Hour Cas. (BNA) 175, 1980 Ark. LEXIS 1407
CourtSupreme Court of Arkansas
DecidedMarch 3, 1980
Docket79-285
StatusPublished
Cited by53 cases

This text of 594 S.W.2d 238 (Daniels v. City of Fort Smith) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Daniels v. City of Fort Smith, 594 S.W.2d 238, 268 Ark. 157, 25 Wage & Hour Cas. (BNA) 175, 1980 Ark. LEXIS 1407 (Ark. 1980).

Opinions

Frank Holt, Justice.

In 1973 the voters of Fort Smith approved an industrial development bond issue for the financing of an industrial facility to be constructed and operated by the Unitog Corporation as authorized by Act 9 of 1960, as amended. (Ark. Stat. Ann. § 13-1601 et seq. [Repl. 1979]). After the construction was completed, appellant ordered appellees Unitog, B&B, Inc., the general contractor, and various subcontractors to insure that all workmen were paid minimum wages pursuant to the Arkansas Prevailing Wage Law, Act 74 of 1969, as amended. (Ark. Stat. Ann. § 14-630 et seq. [Repl. 1979]). Appellees immediately advised appellant that they would not comply with the order. Six months later, appellant filed suit in chancery court seeking a declaratory judgment that Act 74 of 1969, as amended, applied to the Unitog project. The chancellor held that the Unitog project was not constructed for “public use” as required and defined under Act 74 of 1969; and, further, that Act 74 did not apply to the Unitog project financed under Act 9 of 1960, because Act 74 is in irreconcilable conflict with Act 9 as amended by Act 208 of 1971. (Ark. Stat. Ann. § 13-1615 [Repl. 1979]). The primary issue here is whether the Arkansas Prevailing Wage Law applies to work on a commercial construction project which is financed pursuant to an Act 9 industrial development bond issue.

Appellant first contends that the chancellor erred in not considering the Unitog project a “public work,” and in not requiring the appellees to comply with Act 74 of 1969, as amended. The Act reads in pertinent part:

§ 14-631. It is hereby declared to be the policy of the State of Arkansas that a wage of not less than the prevailing hourly rate of wages for work of a similar character in the county in which the work is performed shall be paid to all workmen employed by or on behalf of any public body engaged in public works exclusive of maintenance work. . . . (Italics supplied.)
§14-632 (1) Not less than the minimum prevailing hourly rate of wages for work of a similar character in the county in which the work is performed and not less than the prevailing hourly rate of wages for holiday and overtime work, shall be paid to all workmen employed by or on behalf of any public body engaged in the construction of public works, exclusive of maintenance work. (Italics supplied).
§ 14-630 (7) ‘Public Works’ means all works constructed for public use whether or not done under public supervision or direction or paid for wholly or in part out of public funds; it does not include any work done for or by any drainage, improvement, or levee district; (Italics supplied.)

The thrust of appellant’s argument in that the project was constructed for a public purpose; i.e., to create jobs and to improve the general economic conditions of the area. Therefore, it falls within the purview of § 14-630(7) defining “public works” inasmuch as the terms “public purpose” and “public use” are synonomous. In support of its contention, appellant relies primarily on Wayland v. Snapp, 232 Ark. 57, 334 S.W. 2d 633 (1960), where we held that Act 9 projects were considered public property used exclusively for public purposes within the meaning of Art. 16, §§ 5 and 6 of the Arkansas Constitution. Consequently, the property was not subject to ad valorem taxation. We also stated that the only purpose behind the legislature’s passage of Act 9, and the voters’ approval of the bond issue, was the “public welfare. . . . obviously and undoubtedly a ‘public purpose.’ ” In view of this language, we agree that the Unitog project was constructed for a “public purpose.” Even so, we find no language in Wayland which indicates that the terms “public purpose” and “public use” are synonomous, or that Act 9 projects were constructed for the public use. Similarly, although in Hackler v. Baker, County Judge, 233 Ark. 690, 346 S.W. 2d 677 (1961), we stated that the purpose of the people in providing for Act 9 projects “was to create jobs and thus prevent unemployment and loss of population rather than to assure the erection of a building;” we did not hold that Act 9 projects were constructed for the public use.

Appellees respond that even though the project was constructed for a public purpose, the statute requires that the project be constructed for the “public use.” They argue that the terms are not synonomous, and that the project was clearly not constructed for the public’s use. In support of their position, appellees rely on the case of City of Little Rock v. Raines, 241 Ark. 1071, 411 S.W. 2d 486 (1967), an eminent domain case, where we stated that the fact “a project is one for which public funds may be expended is not a sufficient basis for finding that use of the property is a public use justifying the taking of private property.” We held that the taking of privately owned land (in connection with an Act 9 industrial park) for the purpose of selling the land to private industry was not a public use under the scope of eminent domain. Our holding provides, in effect, there is a distinction between the terms “public purpose” and “public use.” Even so, appellant argues that the distinction is necessary in eminent domain cases because a serious deprivation of one’s private property by the sovereign is at stake. We are convinced that the distinction set forth in City of Little Rock v. Raines, supra, also governs in other cases involving Act 9 projects. We must therefore determine whether the project was constructed for a “public use” as required under § 14-630 (7).

In determining whether a public use exists, certain factors must be considered. The voters of Fort Smith approved the industrial development bond issue for the financing of the construction of the Unitog facility. The city then issued tax free municipal bonds and entered into a trust indenture agreement with a local bank whereby the city pledged the title to the real and personal property leased to the appellee Unitog as security for the payment of the principal and interest on the bonds. Although Unitog representatives negotiated and actually purchased the land, the property was immediately deeded to the city which in turn leased the property to appellee Unitog. When the bonds are retired, the city will reconvey the property to Unitog for $100 consideration.

Under the lease agreement, Unitog retains control over all buildings, equipment and other personal property at the facility. As such the general public does not have open access to and use of the facility such as they would have to a public library, courthouse or other public facility. Also, as provided in the Act, the bonds do not constitute a general indebtedness of the city. Ark. Stat. Ann. § 13-1706 (Repl. 1979). Here they are retired solely from revenues derived from the Unitog facility and not by any public funds or any manner of taxation. A project need not be constructed under direct public supervision to be considered a public work. § 14-630(7). The controlling issue, by this statute, is whether the project is a public work which is defined as “works constructed for public use." (Italics supplied.)

Admittedly, the Unitog facility provides jobs for a substantial number of workers thereby reducing unemployment and indirectly improving the general economic conditions in the area. Any new factory or industrial facility, however, would provide these same incidental benefits to the general public.

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Bluebook (online)
594 S.W.2d 238, 268 Ark. 157, 25 Wage & Hour Cas. (BNA) 175, 1980 Ark. LEXIS 1407, Counsel Stack Legal Research, https://law.counselstack.com/opinion/daniels-v-city-of-fort-smith-ark-1980.