Tapley v. Futrell

62 S.W.2d 32, 187 Ark. 844, 1933 Ark. LEXIS 143
CourtSupreme Court of Arkansas
DecidedJuly 10, 1933
Docket4-3176
StatusPublished
Cited by4 cases

This text of 62 S.W.2d 32 (Tapley v. Futrell) 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
Tapley v. Futrell, 62 S.W.2d 32, 187 Ark. 844, 1933 Ark. LEXIS 143 (Ark. 1933).

Opinion

Mehaffy, J.

The Legislature of 1933 ’ passed act 167. The title of the act is: “An Act to Refund All State Highway Obligations.” Section 1 of the act reads as follows:

“The issuance of Arkansas State Bonds, hereinafter called State Bonds, is hereby authorized in a total sum equal to the aggregate of the entire outstanding indebtedness of the State on account of the construction and maintenance of the State Highway System, including all State Highway Notes or Bonds, Toll-Bridge Bonds, Revenue Bonds, valid outstanding Road District Bonds on which the State has been paying interest under act No. 11 of the- Acts of 1927 and act No. 65 of the Acts of 1929, hereinafter called Road District Bonds, Certificates of Indebtedness issued or authorized under act No. 8, approved October 3, 1928, and act No. 85 of 1931, Short Term Notes issued under act No. 15, approved April 14, 1932, all valid claims against the State Highway • Commission, and all warrants and vouchers issued by the State Highway Commission prior to February 1, 1933, together with the-interest on the respective obligations and claims. Such bonds shall be the direct obligation of the State, for the payment of which, principal and interest, the full faith and credit of the State, and all its resources are hereby pledged. They shall be dated May 1, 1933, shall be payable in twenty-five years, and shall bear interest at the rate of three per cent, per annum, the interest to be payable semi-ánnually, and to be evidenced by attached interest coupons.”

The appellant, O. E. Tapley, tlie owner of a State Highway Bond issued under act No. 11 of 1927, brought this suit as a citizen and taxpayer, alleging that act 167 was in violation of § 1, article 16, of the Constitution of the State, which reads as follows:

“Neither the State nor any city, county, town or other municipality in this State shall ever loan its credit for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the payment of the present existing indebtedness, and the State shall never issue any interest-bearing treasury warrants or scrip.”

Appellant also alleged that the act violated § 12 of article 12, which reads as follows:

“Except as herein otherwise provided, the State shall never assume or pay the debt or liability of any county, town, citjr or other corporation whatever, unless such debt or liability shall have been created to repel invasion, suppress insurrection or to provide for the public welfare and defense. Nor shall the indebtedness of any corporation to the -State ever be released or in any manner discharged save by payment into the public treasury. ’ ’

He prayed for an order restraining J. M. Futrell, as Governor, Roy V. Leonard, as Treasurer, and Griffin Smith, as State Comptroller, composing the Refunding-Board, from exchanging Arkansas State Bonds issued under act No. 167 of 1933 for any Road District Bonds on which the State has been paying interest under act No. 11 of the Acts of 1927, and act No. 65 of 1929.

The appellees filed a demurrer to the complaint on the ground that it does not state facts sufficient to constitute a cause of action. The trial court sustained the demurrer with leave to amend. The appellant elected to stand on his complaint, refused to amend, and his complaint was dismissed for want of equity. The ease is here on appeal.

This suit challenges the constitutionality of act 167 of 1933 in so far as the act authorizes the Refunding Board to exchange'Arkansas State Bonds for Road District Bonds, the payment of which the State has assumed under act No. 11 of 1927 and act No. 65 of 1929.

Section 5 of act 167 provides that the holder of valid Road District Bonds and other bonds may deposit the same with the State Treasurer for exchange for a State Bond of equal face value.

Section 8 of the act provides that the Governor, State Treasurer and State Comptroller shall constitute a Refunding Board with powers necessary to carry out the provisions of the act.

The only question for our consideration in this case is whether act 167 violates the Constitution in authorizing the Refunding Board to exchange State Bonds for Road Improvement District Bonds.

It is first contended that the act violates § 1 of article 16 of the Constitution and § 12 of article 12 of the Constitution. The appellant calls attention to numerous authorities of other courts. We do not discuss them for the reason that the questions argued by appellant have been definitely settled by decisions of this court.

Section 1 of article 16 prohibits the State, city, county, town or municipality loaning its credit for any purpose, and also prohibits the county, town or municipality issuing interest-bearing evidences of indebtedness.

In the case of Hays v. McDaniel, 130 Ark. 52, 196 S. W. 934, we said: “It is said that the word ‘municipality’ here employed, includes the State. But we do not agree with counsel in this contention. If it be conceded that the word ‘municipality’ has sometimes been used by courts and textwriters as of sufficient breadth to include a sovereign State, it does not follow that it was so employed here. The framers of the Constitution were dealing with a subject of the highest importance, and evidently chose their- language with great discrimination, and we can not assume that they intended the word ‘municipality’ to embrace the State. To do so would render meaningless and wholly unnecessary the third clause of this section, which provides that the State shall never issue any interest-bearing treasury warrants or scrip. This second clause inhibits the issuance of any interest-bearing evidences of indebtedness. Treasury warrants and scrip are evidences of indebtedness, and it would have been an idle thing to do to prohibit the State, along with the counties, cities and towns therein, from issuing any interest-bearing evidences of indebtedness, and then, in the following clause of the same section, to repeat the. inhibition against the issuance of a form of indebtedness which was inhibited under the preceding clause. # *

“The State, acting through its Legislature, may borrow money for its own uses unless that right is denied to it by the Constitution, and the only inhibition against the State there contained, in this respect, is that it shall not issue any interest-bearing treasury warrants or scrip.”

The above case definitely settles the proposition against the contention of the appellant. This question was also discussed and decided in the case of Bush v. Martineau, 174 Ark. 214, 295 S. W. 9. We there said: “The General Assembly has plenary powers to contract for and create interest-bearing evidences of indebtedness on the part of the State, except to issue interest-bearing warrants or scrip.” We also held in the Bush-Martineau case, supra, that a road improvement district was not a corporation within the meaning of this section of the Constitution.

Many of these road improvement districts were created by the Legislature.

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Related

McArthur v. Smallwood
281 S.W.2d 428 (Supreme Court of Arkansas, 1955)
Brown v. Arkansas Centennial Commission
107 S.W.2d 537 (Supreme Court of Arkansas, 1937)
Sparling v. Refunding Board
71 S.W.2d 182 (Supreme Court of Arkansas, 1934)
Hubbell v. Leonard
6 F. Supp. 145 (E.D. Arkansas, 1934)

Cite This Page — Counsel Stack

Bluebook (online)
62 S.W.2d 32, 187 Ark. 844, 1933 Ark. LEXIS 143, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tapley-v-futrell-ark-1933.