Dodds v. Sixteenth Section Development Corp.

99 So. 2d 897, 232 Miss. 524, 1958 Miss. LEXIS 302

• Court: Mississippi Supreme Court
• Decided: January 20, 1958
• Docket: Nos. 40740, 40741
• Status: Published

Opinions

Arrington, J.

These two cases were consolidated as both involve'a lease of Section 16, Township 6, Range 1 East, Hinds County, Mississippi. In Cause No. 40,740, Sixteenth Section Development Corporation, hereinafter referred to as Development Corporation, filed its hill in the Chancery Court of the First Judicial District of Hinds County to confirm a lease executed by the Board of Supervisors to it on June 21, 1957, for a term of twenty-five years. The chancellor confirmed the lease and the defendants appeal.

The Development Corporation is a non-profit corporation organized under the laws of the State of Mississippi. The incorporators include the Board of Supervisors of Hinds County, the Superintendent of Education of Hinds County, the Presidents of the three Jackson Banks, and Bishop Duncan M. Gray. The purpose for which it is created is:

“To operate and function as a civic improvement corporation, and more particularly to provide, own, hold, maintain, control, operate and manage a recreational park or parks with a lake or lakes for fishing, swimming, boating, water skiing and related activities in the County of Hinds Mississippi, for the benefit of the people of Hinds County and the general public; to render more productive in revenue to the sixteenth section school land fund of Hinds County, Mississippi, the land upon which said lake or lakes are located; and to promote in Hinds County the conservation and fullest beneficial use of the water resources of the State of Mississippi by providing for the further and additional beneficial use and disposition of the water in and from such lake or lakes as is permitted by law and not inconsistent with the other objects of the Corporation.”

The charter of the Development Corporation provides, in part, as follows:

“No dividends or profits shall ever be paid or divided among said members. All revenues for any fiscal year in excess of operation and maintenance expenses, principal, and interest payments on bonds, notes and other indebtedness and appropriate reserve and contingent fund requirments shall be contributed and paid to the proper township sixteenth section school land fund or funds of Hinds County, Mississippi, as provided by law. No member shall have or ever acquire any individaul or personal rights or interest in the assets of the corporation. ’ ’

The record discloses that proper order was entered authorizing the President of the Board to execute to the Development Corporation a twenty-five year lease covering approximately 400 acres of Section 16, Township 6, Range 1 Bast, Hinds County, for an annual ground rental of $8,000. On July 9, 1957, the Development Corporation entered into a lease contract with the Mississippi Power & Light Company, hereinafter referred to as Power Company, which lease contract was made an exhibit to the bill of complaint. Under this contract, the Development Corporation agreed to construct a reservoir in accordance with plans and specifications prepared by Michael Baker, Jr., Inc., It authorized the Power Company to use the water in its Rex Brown Steam Electric Generating Plant for cooling purposes. In order to build the reservoir, the Development Corporation planned to issue bonds in the amount of $1,500,000, which amount would be used to construct the reservoir and a water line to Pearl River and in equipping its pumping station. The Power Company agreed to pay the Development Corporation $143,845.20 annually at the rate of $11,989.60 per month for the use of said water. The Power Company guaranteed sufficient payments to meet the annual payments of principal and interest due on bonds, the annual ground rental of the Development Corporation to Hinds County in the amount of $8,000, and all ad valorem taxes upon the leasehold interest and improvements placed on the land. The Power Company was to have paramount rights to use of the water.

The Devolopment Corporation submitted the project to the Mississippi Board of Water Commissioners and on June 11, 1957, the Board entered an order approving and authorizing the Development Corporation to withdraw one and one-half billion gallons of water per year from Pearl River at a rate not to exceed 6.48 million gallons per day for use in the said reservoir. The Chairman of the Board of Water Commissioners testified that he personally approved the reservoir as a water conservation measure; that it will preserve water which would otherwise be lost and help relieve the water situation in the vicinity of Jackson; that the reservoir would have a value many times its present value at the end of the present lease.

The record further discloses that the Power Company is now increasing the size of its Rex Brown Generating Plant and will expend over $25,000,000 for such improvements, and that it had planned to use under ground water and cooling towers, the same as is now being used at the present plant.

The chief engineer for the Board of Water Commissioners testified that he approved the project as it would conserve the water supply. Arthur C. Miller, Vice-president of Michael Baker, Jr., Inc., an internationally known engineering firm, testified that the plans and specifications for the reservoir were prepared under his supervision; that they were approved by the engineers at the home office of the company; that the firm consulted with Dr. Fred Kellogg, Dean of Engineering at the University of Mississippi and an internationally known expert on soil mechanics, and that he approved the plan. Miller further testified that the reservoir would be safe and would contain approximately one and three-fourths billion gallons of water; that the use of the water by the Power Company will not interfere with the use for recreational purposes; that there will be 2-3/4 miles of shore line for recreational development on the north side of the lake. In addition, it will have two miles of shore line along the levee which will not be usable; that there is no danger of the dam breaking; that the circulation and addition of new water will prevent stagnation in the reservoir; that the reservoir will not create fog any more than any other body of water; and that in his opinion, fish would be able to live in the reservoir; that the plan was to completely fence all portions of the dam except the area on the north portion; that the lake will cover a part of the Livingston Eoad and the maximum increased distance that anyone would have to travel by reason of this would be one-half mile. As to other benefits, he testified that the construction of the reservoir would reduce the flood condition in Jackson from Eubanks Creek, also that in an emergency the reservoir could provide the City of Jackson with water; that the reconversion of the reservoir would present no engineering problem and could be reconverted at a cost of approximately $50,000.

J. E. Aldridge, Superintendent of Education of Hinds County, testified that after making a study of the proposed project, he recommended that the Board of Supervisors execute the lease; that the lands leased to the Development Corporation for an annual ground rental of $8,000 produced only $1294.23 for the Township School Fund for the preceding year. He further testified that about twenty years ago a lake was constructed on Sixteenth Section land near Edwards, Mississippi, and this section now' produces an annual revenue for the school fund of approximately $225 per year; that another lake was constructed in 1956 on sixteenth section land in Township 5, Range 1 west, and leased to the Employee’s Recreational Club of United Gas Corporation, which lease comprises approximately 168 acres for an annual rental of $700; that the construction of this project will result in increased revenue and that in his opinion the reservoir will have a vastly increased value at the end of the present lease.

Upon this evidence, the chancellor confirmed the lease, beginning on June 21, 1957 and terminating on June 20, 1982.

In Cause No. 40,741, Patrick J. Maloney and others filed bill in the Chancery Court of the First Judicial District of Hinds County seeking to enjoin the construction of the proposed reservoir, contending that if the Development Corporation is permitted to complete or commence the construction of this project it would destroy the identity of the land and will do lasting, permanent and irremediable injury to the land and the reversionary interest, and would if permitted constitute actual and com-missive w7aste as defined by law7.

The defendants answered and denied that the work contemplated would destroy the land and would show that in addition to the $8,000 a year minimum rent for the next twenty-five years, which was vastly more than said lands have ever produced as rental into the school fund, the defendants propose to place improvements on said lands which will cost over $1,000,000, at no risk or expense to Hinds County or the township school funds.

The appellant Patrick J. Maloney testified that he objected to the proposed construction on the grounds that they were making a change in the land and that he was not referring to the value of the land at the end of the twenty-five year lease. John S. Virden’s testimony was to the same effect.

Arthur C. Miller testified as to the details of the construction of the reservoir, that he was personally familiar with the land in this sixteenth section; that this land had formerly been used for agricultural purposes; that the average depth of the water in the reservoir would be fifteen feet, and a maximum of about thirty feet; that there is no timber on the land; that in constructing the reservoir the top soil will be removed and retained for the purpose of placing it back on the levee in order to grow grass. He also brought out the fact that a canal which would vary from 20 feet to approximately 300 feet in width and about three-fourths of a mile in length would run from a discharge outlet from the Power Company in a northeasterly direction to a point near the northeast corner of the lake, and he repeated that the reservoir could be reconverted in more or less its original state at an estimated cost of $50,000.

Boss Dodds, President of the Board of Supervisors of Hinds County, called as an adverse witness, testified that he was of the opinion that this reservoir was for the best interest of Hinds County and that it was a good lease.

With this testimony the appellants rested, and the appellee offered in evidence by agreement the transcript of testimony in Cause No. 40,740, subject to certain specific objections by the appellants.

The chairman of the Board of Water Commissioners testified to the same effect as in the former case. Dr. Frederick H. Kellogg, Dean of Engineering at the University of Mississippi, testified that he served as consultant in the preparation of the plans and specifications and that they were both feasible and adequate from an engineering point of view. An expert on real estate appraisal testified that he had made a study of the plans and specifications for the proposed reservoir, the lease, and the contract between the Development Corporation and the Power Company; that the capitalized value of Hinds County’s interest in the land leased upon the completion of the proposed improvements would amount to approximately $1290 per acre, whereas the present capitalized value of said land without the improvements is only $77.72 per acre; and that without a doubt the proposed development of the sixteenth section land constituted the highest and best use to which the land could be put by Hinds County for the benefit of the school fund. He also testified that he was familiar with the improvements that are being constructed by the Power Company adjacent to this property, and that the expenditure will he in excess of $25,000,000; that the Power Company depreciates their plants over a period of 40 years, and the water will have an industrial value for a period of 15 years beyond the expiration of the lease; that the proposed project will keep a substantial amount of land intact for such use as the county deems appropriate 25 years from now, and this is one of the most valuable assets of the proposed project.

Mr. William E. Mallett, a civil engineer, testified in rebuttal that he had experience in land usage in connection with city planning and that he had studied the plans and specifications of this project; that in his opinion, it would cost $450,000 to replace the earth in substantially its original condition after the reservoir is built; that in his opinion residential and industrial usage would constitute the highest and best use.

The court declined to issue the injunctions and dismissed the bill of complaint, from which decree the defendants appeal.

The main assignment argued is that the proposed use of the lands involved constitutes waste. One of the leading cases in this State on this question is Moss Point Lumber Company v. Harrison County, 89 Miss. , 42 So. 290. In this case, the predecessors in title of the Moss Point Lumber Company obtained a 99-year lease from Harrison County for a total consideration of $835.00. It was conceded that the only value of this land was its timber, as it was unsuitable for cultivation. The Board of Supervisors of Harrison County brought suit to enjoin the lumber company from cutting the timber off the land. The Court held that to remove the timber from the land would constitute a destruction of the entire value of the land and upheld the county’s right to enjoin such action as constituting waste. On the question of what constituted waste, the Court said:

‘ ‘ The next question which we will consider is the question of what constitutes waste. Waste is defined to be any substantial injury done to the inheritance, by one having a limited estate, during the continuance of his estate. By universality of authority the cutting of timber for commercial purposes by a tenant for years is waste. We may safely say that there are hardly any authorities to be found in conflict with this statement. 1 Tiffany, sec. 249, p. 564; Warren County v. Gans, 80 Miss. 76 (s.c., 31 South. Rep., 539); Taylor on Landlord and Tenant, sec. 353, p. 271; Tiedeman on Real Property, sec. 69; Lester v. Young, 14 R. I., 579; Davis v. Clark, 40 Mo. App., 515; Smith v. Smith, 105 Ga., 106 (31 S. E., 135); Davis v. Gilliam, 40 N. C. 308; 1 Washburn on Real Property, secs. 275, 276; Proffitt v. Henderson, 29 Mo. 325.......

“What rights have tenants for years? The answer to this question can be placed in no better language, or more accurate expression, than the rule laid down in the Gans case, supra: ‘The rigid rule of the common law that a tenant of a particular state could not cut timber, except for estovers only, is in many jurisdictions modified, so as to allow him to cut off timber for clearing so much of the estate as the needs of his family may require for their support, though the timber be destroyed thereby. And he may clear for cultivation such portions of it as a prudent owner in fee would clear for that purpose, provided he leaves enough timber and wood as may be necessary for the permanent use and enjoyment of the inheritance. His right to open and clear for cultivation wild and uncultivated land is that of a prudent owner, having regard to its amelioration as an inheritance. When the particular tenant cuts timber in the process of clearing the land for immediate cultivation, he can appropriate it or its proceeds to his own benefit; hut he cannot cut the timber for sale without making himself amenable for waste. When the timber is cut by the tenant or others unnecessarily or unlawfully, the right of the reversioner or remainderman at once attaches, and he may bring an action on the case in the nature of waste for his damages, or he may bring trover or replevin for the timber severed from the inheritance.’ The rule announced in the Grans case is hut an affirmation of settled authority. What constitutes waste is determined by the consideration as to whether or not the act done results in injury to the inheritance. 1 Tiffany, sec. 247. In the original opinion it is held that ‘twenty years’ growth is held to constitute timber. Who can say, therefore, in this case, that the interests of those who will come after will he harmed by removing the timber?’ Courts do not undertake to deal with speculations of this kind, or reckon with possibilities. They are confined to legal rights, which exist at the time they are called to act on them. Whether or not an act on the part of the tenant is waste is determined by the facts and conditions which exist at the time the act is committed. ’ ’

The appellants contend that the construction of the lake on the land formerly used for agricultural purposes, thereby changing it from its former use, under the law constitutes waste. Under the English law, clearly this would he waste, as there an act would constitute waste if any change be made even though the results increased or enhanced tlie value of the inheritance. However, the Court in the case of Canon v. Barry, 59 Miss. 289, refused to follow the English rule as to waste, and said:

“When the defendant took possession, the arable portion was in such condition that it was wholly unproductive for the first year thereafter. By rebuilding the fences, clearing thirty or forty acres additional, removing some of the tenants’ cabins to other locations, and building several new ones, he has brought up the rental value of the place to something less than three hundred dollars per annum, exclusive of the amounts expended each year in making these improvements. In accomplishing these results, he has freely cut and used the growing timber on the place, of which there is a superabundance for this and all other purposes. In so doing, as well as in removing the cabins, and perhaps in other respects, he has unquestionably been guilty of that which would be deemed waste under the English authorities, but which we cannot pronounce to be such under the state of things existing with us, and under the circumstances of this case. The condition of this country and that of England are wholly dissimilar, and that which would be a safe test there is altogether inapplicable here. With us, speaking generally, it may be said that nothing will ordinarily be held to constitute waste which is dictated by good husbandry, and promotes rather than diminishes the permanent value of the property as an estate of inheritance. That such has been the nature and effect, in the main, of the acts of the defendant, is incontestably established by the testimony in the case. ’ ’

The Court, in Moss Point Lumber Co. v. Harrison County, supra, quoted with approval from the case of Davis v. Gilliam, 40 N. C. 310, which held that it was not waste to cut timber and construct embankments and ditches which increased the value of the inheritance. There the Court said:

“It is certainly proper, in cases of this kind, to have a view to the spirit and reason of the common law; and therefore many things that constitute waste in England, and may hereafter do so here, because prejudicial to the inheritance, ought not to be so held here at present, because they do not prejudice, but rather improve, the inheritance. Hence, turning woodland into arable, though the timber felled be sold, is not absolutely waste in our law; for cutting timber on land fit for cultivation, or that may be made so, and reducing it to that state, may, in the condition of our country, be a benefit, rather than an injury, to the reversioner. If this swamp be of the fertile quality, it might add greatly to the value of the inheritance to take off the whole of the timber, if the tenant would go on by embankments and ditches to prepare the land for crops. The rules, therefore, of the common law, determining what is or is not waste, are not entirely applicable to the condition of things here. But the principle on which these rules were formed applies here, as, indeed, it does everywhere; for it is founded in the nature of justice itself. It is that a tenant for a limited period, or a particular estate, cannot rightfully so treat the estate as to destroy the value of the reversion-er, or materially reduce it below what it should be; regard being had merely to the postponement of the enjoyment. The tenant may use the estate, but not so as to take from it its intrinsic worth.”

Judge Whitfield, in his concurring opinion, emphasized the small amount — $835—which was paid for the lease and that the cutting of the timber on the land would destroy its only value — “the whole value of the inheritance.” He also emphasized that a lessee should be allowed the widest possible range in the use of the leased premises as long as the value of the inheritance is protected, and said: ‘ ‘ The widest possible range of dealing may be allowed the lessee, the widest usage and freest treatment of the subject matter of the lease, provided, always, that the value of the inheritance in the thing leased shall not receive lasting damage.”

On the question of waste with reference to commercial use rather than agricultural, he pointed out that where sixteenth sections are in or near cities, the value of the inheritance is increased hy the use of said lands for commercial rather than agricultural purposes, and said:

“In one word, whatever inflicts lasting damage upon the inheritance is waste in all jurisdictions, here and in England. Of course, where all the timber is cut off and a town built on a sixteenth section, as in the case of the City of Columbus, the inheritance is benefited, and not damaged, and there is no waste in such case. That which benefits the inheritance can never be waste. Such instances present cases of ‘meliorating waste.’ In the very nature of things this must be the only correct rule, and it will be kept in mind, in this connection, that the demurrer admits in this case, that the whole value of the inheritance was being destroyed by the lessee for years.”

We are of the opinion that in the light of the above authorities and under the facts heretofore stated, the construction of the lake is not waste. There is no taking or removing of the soil from the premises, but only the removing thereof to make a levee, which, under the facts of this case, is a benefit to the inheritance.

The title to sixteenth section lands is in the State as trustee for the inhabitants of the township and for the support of the schools therein. Section 211 of the Constitution of 1890 prohibits these lands from being sold and provides that the legislature shall enact laws for the leasing of said lands. In the section involved here, 140 acres lies within the corporate limits of the City of Jackson. The lease in question was executed by the Board of Supervisors under the authority of Sections 6597-02 and 6597-04, Mississippi Code of 1942, as amended. These sections provide:-

“6597-02. Lease for ground rental — uncleared lands —sale of lieu lands situated outside of county. — The board of supervisors of the county in which sixteenth section lands are situated may, in its discretion, elect to lease any of such lands, whether within or without the municipality, for a term not exceeding twenty-five (25) years for a ground rental, payable annually, and in the case of uncleared lands, may lease them for such short terms as may be deemed proper in consideration of the improvement thereof, with the right thereafter to lease for a term or to hold on payment of a ground rental; provided, however, that land granted in lieu of sixteenth section lands in this state and situated outside of the county holding or owning the same, may be sold and the proceeds from such sale may be invested in the manner prescribed by law. ’ ’

“6597-04. Appraisal of lands situated in municipality to fix rental. — When any such lands are situated in a municipality and the same become subject to lease the board of supervisors shall appoint three (3) disinterested freeholders of the county to be appraisers, whose duty it shall be to appraise and report to the board their recommendations for a gross sum to be paid should the land be leased for ninety-nine (99) years, or the annual ground rental to be paid should the land be leased for a term of twenty-five (25) years. The board shall determine whether the same be a reasonable amount, subject to appeal to the circuit court by any person interested, provided that the holder of any leasehold of such lands at the date of the expiration of such lease hold shall have a prior right for a period of ninety (90) days from such expiration in which to renew his lease. ’ ’

Under the statute, no limitation is placed on the use to which the lessee may make of such lands. It is a matter of common knowledge that many towns and cities are built on sixteenth section lands, as well as factories, railroad lines, and other businesses. In Hinds County, the record discloses that three lakes have been constructed on sixteenth section lands, one of approximately 40 acres, one of approximately 78 acres, and one by the Filtrol Corporation immediately south of Jackson.

Appellants further argue that since the lands leased were formerly used almost exclusively for agricultural purposes, it would be unlawful to construct the proposed lake, and that said lands should be used for commercial and residential purposes. Although 140 acres of this section is within the City of Jackson subject to a 99-year lease, there has been no development; neither has there been on the remainder of the land subject to a 25-year lease. It may be that since Section 211 of the Constitution prohibits the sale of these lands, the public is reluctant to build homes or other commercial establishments without title to the land. Under the circumstances in this case, we do not think that this land should be forever condemned for agricultural purposes providing for an annual rate of only $1294.43, when under the proposed use it will bring an annual minimum rate of $8,000 for a period of twenty-five years, plus all profits realized on the development. To hold otherwise would thwart the purpose of Section 211 of the Constitution, which contemplates that the land be used to produce revenue for school purposes. It is a matter of common knowledge that for the past 140 years, with possibly a few exceptions since the discovery of oil and gas, sixteenth section lands have produced little revenue for the school funds. See Mississippi Constitutions, Ethridge, Sec. 211, Constitution of 1890, page 382.

The chancellor heard the evidence and made specific findings of fact which were incorporated in the decree as follows:

“(d) That the capitalized value of the lands covered by said lease to Sixteenth Section Development Corporation predicated upon the annual rental income from said lands for the past five years amounts to approximately $77.72 per acre.

“(e) That the capitalized value of said land covered by said lease after the construction of the proposed reservoir thereon will amount to approximately $1200.00 per acre.

“ (f) That the proposed use of said land for a reservoir as disclosed by the evidence constitutes the highest and best use to which the land could be put by Hinds County for the benefit of the school fund of Township 6 North, Range 1 Bast of said county.

“ (g) That the proposed use to which said land would be put by the construction of said reservoir does not constitute legal waste.

“(h) That the proposed use to which said land will be put by the construction of said reservoir will increase the value of the inheritance.

“ (i) That the proposed use of said land as a reservoir as disclosed by the evidence and as approved by the Board of Supervisors of Hinds County and by the Superintendent of Education of Hinds County, Mississippi, is for the best interest of Hinds County and the township school fund of Township 6 North, Range 3 East, of Hinds County, Mississippi.”

We are of the opinion that under the circumstances and facts of this case the chancellor’s decree was supported by substantial evidence, was manifestly correct, and should be affirmed.

In Cause No. 40,740, which was filed to confirm the lease under Sections 6616 and 6617 of the Code of 1942 as amended, we find that the order of the board of supervisors complied’ with all the requirements of the law and the decree confirming same should be affirmed.

It follows that the judgment of the court below in both cases is affirmed.

Affirmed.

McGehee, C. J., and Roberds, Hall, Lee, Holmes and Gillespie, JJ., concur.