Road Improvement District No. 1 v. Bank of Commerce & Trust Co.

Hart, J., (after stating the facts). The fact that the note provides that it may be payable on or before a certain day does not destroy its negotiability. McCormick v. Daggett, 162 Ark. 16. It is contended, however, that by the language of the ■ note itself it is payable out of a particular fund’ which may prove inadequate to meet the note in full and that this destroys its negotiability within the rule laid down in Rector v. Strauss, 134 Ark. 374. We do not think that the facts in the case at bar are similar to those in the case just cited. In that case the note- recited that it was made with the express understanding that it was to be paid out of the first money received by a real estate company from the sale of certain lots. In the case before us the particular fund is referred to in the note, not for the purpose of charging payment exclusively thereupon; but merely to indicate the source from which the money is to be received. The note sued on was issued by the commissioners of a road improvement district organized under the general laws of the State. The commissioners are given the power under the statute to cause the improved road to be constructed and express power is also given the commissioners to borrow money and issue bonds to pay the cost of construction. The note recites that it is given for money advanced for necessary engineering work and is payable out of the first funds that shall come into the hands of the district not required to meet payments on its outstanding bond issue, whether said funds shall be derived from taxation or from the sale of further bonds of the district. It is evident from the language used that the commissioners had exercised the power to borrow money given them by § 5411 of Crawford & Moses’ Digest, anil the language used in the note is but a recognition that the commissioners had already exercised this power and that, pursuant to its exercise, bonds of the district were outstanding which were a prior lien on the lands in the district. In other words, the language used indicates that there has been a prior issue of bonds by the commissioners under the statute which created a prior lien upon the revenues of the district. The language of the note sued on was a recital of the law as it existed and was not intended to give the holders of bonds a lien which the law did not give them; but merely recognized a prior lien in favor of the bondholders which they had obtained under the statute. Therefore, this reference to the source of payment in no way affects the negotiable character of the note sued on. The note sued on was an evidence of an indebtedness of the district which it had the authority to make under the section of the statute above referred to. The note sued on was executed in payment of engineering services, and as-such was binding upon the district. Arkansas Foundry Co. v. Stanley, 150 Ark. 127. The case last cited shows that the bonds of the district are but evidences of indebtedness of the district; but the recitation in the note above referred to also shows that a bond issue was outstanding at the time the note sued on was executed. Hence it was a distinct issue of bonds made by the commissioners under the authority of the statute before the execution of the note sued on was contemplated. Therefore, the language of the note was merely a recognition of this fact and was not for the purpose of directing the payment of the note out of a particular fund where the maker of the note had several funds out of which the note might have been paid. Hence its negotiability was not destroyed. Again it is insisted that no recovery can be had because the note was altered. In this respect it is contended that the resolution authorizing the execution of the note, provided for 8 per cent, interest,- and that the note was first executed bearing that rate of interest and was subsequently changed to bear 6 per cent, interest because § 5411 does not allow the commissioners to borrow money at a rate of interest exceeding six per cent. There was testimony in the record tending to show that the note had not been altered in this respect. The case was tried before the circuit court sitting as a jury, and it is well settled in this State that the finding of facts made by a circuit court is as conclusive upon appeal as the verdict of a jury. Tucker Lake Reclamation Dist. v. Winfrey, 160 Ark. 205. It follows that the judgment must be affirmed.