Road Improvement District No. 1. v. Delinquent Lands

McCulloch, C. J. This is an action instituted in the chancery court of Independence County by appellant, the board of improvement of a local improvement district created by special act of the General Assembly, to enforce payment of unpaid assessments. It appears from the pleadings that the assessment of -benefits was duly made in accordance with the terms of the statute, that a tax thereon was levied to pay the cost of the improvement, that a contract was let for the construction of the improvement, that bonds were issued and sold in the sum of $100,000 to raise funds to pay the cost of the improvement as the work progressed, and that the improvement was completed. Owners of lands in the district filed answer, setting up as a defense that the bonds of the district were illegally sold for less than par, in violation of the statute requiring that the bonds should not be sold for less than par, and that for this reason there should be no collection of assessments to pay the bonds. The court overruled appellant’s demurrer to this part of the answer, and there was a trial, which resulted in a decree dismissing the complaint for want of equity. The court found from the evidence that the bonds had been sold for less than par, and decided that this rendered the bond issue void, and that there could be no recovery of assessments. It appears from the proof adduced that the bonds were first sold to a certain bond-buyer at a price above par, but that the buyer later réfused to accept the bonds, and the sale was not consummated. In the meantime there had been a depreciation in the price of bonds of this character, and they could not be sold in the market at par value. A contract had been let, and the 'contractor was proceeding with the work, and, in order to secure a sale of the bonds, the contractor undertook to sell the bonds for the district, and did so at a price less than par, but the district allowed the contractor a brokerage fee of five per centum on the face of the bonds, and also, made certain other allowances, which, after being deducted from the face of the bonds, made it possible for a sale at a price offered by a bond dealer. The contention is that the allowance of a brokerage fee and other items of credit to the contractor so as to effect a sale of the bonds constituted an evasion of the statute and rendered the bond sale void. This subject is fully discussed, and the law in reference thereto stated, in the recent case of Arkansas Foundry Co. v. Stanley, 150 Ark. 127. There was also testimony introduced tending to show that the bonds, which were negotiable in form, are now in the. hands of innocent, purchasers for value. We deem it unnecessary to determine ‘whether or not the circumstances under which the bonds were sold constituted an evasion of the statute so as to violate its terms and render the bonds void, and we also deem it unnecessarv to discuss the question whether the present holders of the bonds should be protected as innocent purchasers. The holders of the bonds are not parties to the present action, which is merely one to collect assessments on lands in the district, and a decision as to the validity of the bonds would not, for that reason, be binding on the holders of the bonds. The question decisive of the case is whether or not, irrespective of the validity or invalidity of the bonds, the district has a right to collect assessments. We are of the opinion that the allegation that the sale of the bonds was void does not constitute any defense to the action to collect assessments. It is undisputed that the district constructed the improvement as provided by statute, and that the district is liable for the cost of the improvement. It is unimportant to determine, in this case, in what way that liability shall be enforced. The district has received ithe benefit of the construction of the improvement and must pay for it, even though it should be held that the bonds were illegally sold. The case falls within the principles announced in the following cases: Fitzgerald v. Walker, 55 Ark. 148; Altheimer v. Board of Directors, 79 Ark. 229; Forrest City v. Bank of Forrest City, 116 Ark. 377; Hitchcock v. Galveston, 96 U. S. 341. The decree is therefore reversed, and the cause is remanded, with directions to enter a decree enforcing the assessment against delinquent lands, in accordance with the prayer of the complaint.