text:
    Carolyn STONE v. MAYFLOWER SCHOOL DISTRICT
    94-655
    894 S.W.2d 881
    Supreme Court of Arkansas
    Opinion delivered March 13, 1995

      Mitchell, Blackstock & Barnes, by: Clayton R. Blackstock, for appellant.

      Brazil, Clawson, Adlong, Murphy & Osment, by: William Clay Brazil, for appellee.
   Donald L. Corbin, Justice.

Appellant, Carolyn Stone, appeals an order of the Faulkner County Circuit Court, entered by the court sitting without a jury, dismissing her complaint against appellee, Mayflower School District. This appeal, arises from a contract dispute over salary between appellant, a teacher and counselor, and appellee, and was certified to this court because it requires interpretation of The Teachers’ Minimum Salary Law, Ark. Code Ann. § 6-17-1001 to -1003 (Repl. 1993), and The School Finance Act of 1984, Ark. Code Ann. §§ 6-20-301 to - 321 (Repl. 1993). Jurisdiction is therefore properly in this court pursuant to Ark. Sup. Ct. R. l-2(a)(3) and (d). Although appellant died before her appeal was submitted, both parties, in oral argument before this court, stipulated that the record should reflect that an order of revivor has been entered. We find no error and affirm.

The thrust of appellant’s argument in this case is that, in violation of The Teachers’ Minimum Salary Law and The School Finance Act of 1984, she was not paid in accordance with appellee’s salary schedule. Appellant contends she was not given full credit for her previous experience as a teacher. She filed suit against appellee seeking judgment for the difference between her salary and the salary appellant argued she should have been paid had she been classified correctly in the salary schedule.

The evidence revealed that appellant signed annual employment contracts with appellee from the 1987-88 school year through the 1992-93 school year. Appellee does not dispute that appellant’s 1987-88 contract reflected an experience level of five years. After the 1987-88 contract, appellant’s ensuing contracts each reflected an additional year’s experience so that with the final contract between the parties in 1992-93 reflected she had ten years experience.

Appellant testified that at the time she signed the 1987-88 contract she was certified in art, physical education, industrial arts, and counseling grades kindergarten through twelve; she had seventeen years teaching experience. The 1987-88 contract stated her primary responsibility was elementary school counselor. Appellant testified that she had worked as a counselor for only two of the seventeen years she had taught. She stated further that it was not until she served on the committee to review the policy handbook, after she signed the 1987-88 contract, that she discovered she was not being paid in accordance with appellee’s salary schedule. However, appellant admitted on cross-examination, that she accepted the 1987-88 contract “willingly and happily” and that she signed every contract thereafter knowing what the policy handbook stated regarding the salary schedule.

Appellant frames the issue of this case as whether a school district can pay a teacher a salary different from the one specified for that teacher on the district’s salary schedule. Appellant contends the answer is no, and cites Marvel v. Coal Hill Public Sch. Dist., 276 Ark. 369, 635 S.W.2d 245 (1982), in support. In Marvel, this court held that a school district could not avoid abiding by its own salary schedules simply because a federal grants program provided for a lower salary. Because the facts of Marvel and the present case are so dissimilar, Marvel is not controlling of the present case. Appellee responds that, according to statute and its own personnel policies filed with the State Board of Education, it could pay a teacher less than required by its salary schedule so long as the Board had “good reason” for doing so and stated such reason in the official minutes of the Board’s meetings.

The trial court found that the parties entered into a contract whereby appellant’s starting salary was based on five years experience as applied to the salary schedule then in existence and that appellant had been paid the required increments based on the original agreement between the parties. The trial court therefore dismissed her complaint. We cannot say the trial court’s findings were clearly erroneous and therefore affirm the judgment. Murray v. Altheimer-Sherrill Public Sch., 294 Ark. 403, 743 S.W.2d 789 (1988).

Section 6-17-201(a) of the Arkansas Code of 1987 Annotated, 1993 replacement volume, provides that “[e]ach school district in the state shall have a set of written personnel policies, including the teacher salary schedule.” The Code further provides that the personnel policies in effect at the time a teacher’s contract is entered into or renewed shall be considered to be incorporated as terms of the contract and shall be binding upon both parties unless changed by mutual consent. Ark. Code Ann. § 6-17-204(a) (Repl. 1993). At the time appellant signed her 1987-88 contract, the personnel policies then in effect provided in pertinent part:

Section 3.2
A. Employees’ salaries shall correspond to an adopted salary schedule which takes into account the level of preparation and the years of teaching experience, unless the Board, for good reason, decide to exclude a teacher or administrator from schedule and include such statement in its official minutes. [Emphasis added].

The official minutes of the August 3, 1987 Board meeting reflect that appellant’s “placement on the salary schedule at experience step #5 [was] due to lack of experience in Specialty Field and mutual agreement.”

Our law is clear that school districts must adopt a minimum salary schedule with annual increments for education and experience and that they must abide by that schedule. Marvel, 276 Ark. 369, 635 S.W.2d 245; section 6-17-1001. As an assurance that districts would actually pay teachers according to the schedule, our legislature has required that the salary schedule must reflect the actual pay practices of the district in order for the district to receive state aid. Section 6-20-319(4)(B). However, our law is equally clear that the personnel polices of a school district are incorporated into a teacher’s contract unless changed by mutual consent. Section 6-17-204; Helena-West Helena Sch. Dist. #2 v. Randall, 32 Ark. App. 50, 796 S.W.2d 586 (1990). Appellee’s personnel policies provided that a teacher could be excluded from the salary schedule for good reason. Appellee’s “good reason” for giving appellant only five years experience for the counselor’s position was because only two of her seventeen years of experience were in the counseling field. The trial court found appellant and appellee reached an agreement. Based on this record, we cannot say the trial court erred.

The judgment is affirmed.

Glaze and Roaf, JJ., dissent.

Andree L. Roaf, Justice,

dissenting. Today’s decision compromises the requirement that a school district abide by its published salary schedule. The majority correctly states that “[o]ur law is clear that school districts must adopt a minimum salary schedule with annual increments for education and experience and that they must abide by that schedule.” Marvel v. Coal Hill Public Sch. Dist., 276 Ark. 369, 635 S.W.2d 245 (1982); Ark. Code Ann. § 6-17-1001 (Repl. 1993). The majority, however, concludes a school district is not required to abide by that salary schedule if the district’s personnel policies provide that a teacher may be excluded from the schedule.

It is true that the personnel policies of a school district are incorporated into a teacher’s contract unless changed by mutual consent. Ark. Code Ann. § 6-17-204 (Repl. 1993); Helena-West Helena Sch. Dist. #2 v. Randall, 32 Ark. App. 50, 796 S.W.2d 586 (1990). The phrase relevant to the discussion of the instant case is “unless changed by mutual consent” but Marvel and West Helena are not at all helpful in determining the meaning of this language, since neither case addressed the validity of changes in personnel policies. Did the General Assembly intend to authorize school districts to evade adopted salary schedules and personnel policies by negotiating with individual teachers? Such authority would seem to defeat the purpose of requiring school districts to abide by salary schedules and policies which have been promulgated in compliance with other related statutes.

In reaching its decision, the majority notes that “[e]ach school district in the state shall have a set of written personnel policies, including the teacher salary schedule.” Ark. Code Ann. 6-17-201(a) (Repl. 1993). The legislation which added the “including the teacher salary schedule” provision did not take effect until after the date of Mrs. Stone’s initial 1987-88 contract. However, the fact that teacher salary schedules were not mandated by law to be a part of the written personnel policies is not the only or the most serious problem with the decision of the majority. To conduct a proper analysis of the issue presented in this case, § 6-17-204 must be examined as part of the total scheme of interrelated statutes which pertain to school personnel policies in general and which have undergone numerous amendments.

Sections 6-17-201 through 205 are found in the subchapter entitled “Personnel Policies.” On the date of appellant’s initial contract, section 201(a) provided: “Each school district in the state shall have a set of written personnel policies legally adopted by its board of directors.” Section 202 stated:

(a) Each school district shall have a committee on per sonnel policies consisting of classroom teachers, administrators, and the superintendent.
(b) The classroom teacher members of each district’s committee shall be elected by the classroom teachers employed in the district.

(Emphasis supplied.) Finally, section 203 stated:

(a) Each school district’s committee on personnel policies shall review the district’s personnel policies annually to determine if additional policies or amendments to existing policies are needed.
(b) Either the committee or the board of directors may propose new personnel policies or amendments to existing policies.
(c) The board of directors shall have authority to adopt, reject, amend or refer back to the committee on personnel policies for further study and revision any proposed policies or amendments to existing policies that are submitted to the board for consideration.

(Emphasis supplied.)

Act 224 of 1983, which is codified as § 6-17-204, was entitled “An Act to Make School District’s Personnel Policies a Part of A Teacher’s Contract; and for Other Purposes.” It is important to look at this act in its entirety, including the emergency clause:

Section 1. The personnel policies of each school district in effect at the time a teacher’s contract is entered into or renewed shall be considered to be incorporated as terms of said contract and shall be binding upon both parties unless changed by mutual consent.
Section 2. Any amendments to personnel policies adopted during the term of such contract shall become effective the following July 1. Provided, such amendments may take place immediately with mutual consent.
Section 3. All other laws and parts of laws in conflict with this act are hereby repealed.
Section 4. It is hereby found and determined by the General Assembly that some school districts change their personnel policies pertaining to teachers after contracting with the teachers; that such practice is unconscionable, and that this Act is necessary to cure such inequity. Therefore, an emergency is hereby declared to exist. . .

(Emphasis supplied.)

It is more logical to read section 204 as applicable only to changes in policies which are adopted after contracting with a teacher. It is also helpful to examine Act 687 of 1987, which added the teacher salary schedule to the required written personnel policy. Although this act was not in effect on the date appellant initially contracted with appellee, the provisions of the statute suggest that the purpose for placing the salary schedule in the personnel policy was to also bring these schedules under the purview of the personnel policies committees which contain elected classroom teacher representatives. The act reads:

Section 1. Each school district in the State shall have a set of written personnel policies, including the teacher salary schedule.
Section 2. Each school district shall have a committee on Personnel Policies which shall consist of no fewer than five (5) classroom teachers, and no more than three (3) administrators.
Section 3. . . . Either the committee or the board of directors may propose new personnel polices or amendments to existing policies, provided that such proposals by the Board have been submitted to the committee at least five working days prior to presentation to the Board. . . .

(Emphasis supplied.) Act 687 not only brought the teacher salary schedules into the personnel policy, but also significantly increased the role of classroom teachers on the policy committees.

Ultimately, in construing section 204, we must look to all of the related statutes in determining the meaning of the words “unless changed by mutual consent.” If the related statutes mandate a personnel policy committee and mandate such committee’s involvement and participation in the promulgation of and change to the personnel policies, then it makes little sense that school districts would be given the authority to circumvent the role of the personnel policy committees by negotiating deviations from such policies with individual classroom teachers. Since the emergency clause of Act 224 stated that the act was necessitated by school districts which were changing their personnel policies pertaining to teachers after contracting with the teachers, it is more logical to construe this act as pertaining to teachers as a group and not as individuals.

Thus, under section 204(a), the personnel policies shall be binding upon both “parties” (the school district and the teachers) unless “changed by mutual consent” (changed by the procedure outlined in section 203) after the commencement of the contract year. Similarly, section 204(b) provides that amendments to the policies may take place immediately with mutual consent. (Consent of the duly constituted committee and the district, rather than of individual teachers on a case by case basis).

Finally, our legislature has declared that the salary schedule must reflect the actual pay practices of the district in order for the district to receive state aid. Ark. Code Ann. § 6-20-319(4)(B) (Repl. 1993). Appellee could easily have complied with this requirement by promulgating a salary schedule or personnel policy which clearly set out the procedure for determining the salary of teachers new to the district with prior teaching experience. Instead, they relied on a provision in their personnel policy which gave the appellee the authority to exclude a teacher from the published salary schedule for “good reason” and allowed the superintendent to in effect determine the salary of appellant and numerous others similarly situated on a case by case basis. Almost inevitably, this resulted in disparate treatment. Appellant should have been able to verify the correctness of the salary offered to her by review of the appellee’s published policies and salary schedule, and should not have had to rely solely on verbal representations made to her in a closed door interview with the superintendent. It seems that this is exactly the situation and exactly the sort of conduct by school districts that the statutory scheme seeks to prevent. The majority would deny this statutory protection to an entire category of classroom teachers and open the door to similar practices by other school districts. The appellee’s authorized salary schedule did not accurately reflect its actual pay practices.

For the foregoing reasons, I respectfully dissent.

Glaze, J., joins.


source: Caselaw Access Project

author: Robert L. Brown, Justice.

license: Public Domain

text:
    Robert COOK v. STATE of Arkansas
    CR 94-658
    894 S.W.2d 589
    Supreme Court of Arkansas
    Opinion delivered March 13, 1995

      McCullough Law Firm, by: R.S. McCullough, and Rita F. Bailey, for appellant.

      Winston Bryant, Att’y Gen., by: Clint Miller, Acting Deputy Att’y Gen., and Brenda Stewart, Rule XV(E)(l)(b) Law Student, for appellee.
   Robert L. Brown, Justice.

The appellant, Robert Cook, was charged with three separate deliveries of crack cocaine on October 8, 1992; on October 13, 1992; and on October 22, 1992. He was convicted of all three deliveries and sentenced to ten years in prison and fined $2,500 on the first count, sentenced to eleven years in prison and fined $5,000 on the second count, and sentenced to twelve years in prison and fined $7,500 on the third count, for a total of thirty-three years to be served and $15,000 in fines. This appeal raises the question of the chain of custody for the crack cocaine allegedly purchased from the appellant Robert Cook. We find that Cook’s arguments have no merit, and we affirm.

Cook specifically asserts that gaps in the chain of custody occurred with respect to the crack cocaine purchased on October 8, 1992. On that date, Paula Russell was working for the Conway Regional Drug Task Force. Russell met with Cook and was accompanied by a confidential informant, Helsey Credit. Prior to the meeting, Credit was patted down by a Conway police officer, Joe Martinez, to make certain he had no drugs in his possession. Russell pulled her car up beside Cook’s car with the driver’s side of her car next to the passenger side of Cook’s car. She gave Credit $40 in cash for the drug buy. Credit exited her vehicle and approached the passenger side of Cook’s vehicle. Cook’s car door was open. Russell watched as Credit handed the money to Cook who then reached down below his car seat, retrieved an object, and gave it to Credit who, in turn, passed it through the car window to Russell. Russell subsequently delivered the object to the Arkansas State Crime Laboratory for analysis where it proved to be two rocks of crack cocaine.

At the trial of the three charges, confidential informant Helsey Credit was not present to testify for the State. During Paula Russell’s testimony, counsel for Cook objected to any testimony about the purchase on October 8, 1992, on the basis that the absence of Credit caused a break in the chain of custody. Defense counsel contended that without Credit the State no longer had evidence of a hand-to-hand buy because the alleged crack cocaine, according to the prosecutor, passed from Cook to Credit to Russell. The trial court overruled the objection, and Russell proceeded to describe the drug purchase that transpired on October 8, 1992.

Later on in Russell’s testimony, defense counsel objected once again to the cocaine buy allegedly made on October 8, 1992, due to the absence of testimony as to how the substance was returned to the Drug Task Force following State Crime Lab analysis. The trial court suggested introduction of the crack cocaine subject to the prosecutor later completing the chain of custody, and defense counsel agreed.

There was no specific proof establishing how the crack cocaine was transferred from the State Crime Lab to Paula Russell after testing. Roy V. Adams, Jr., a chemist with the State Crime Lab, testified, however, about standard procedures followed by Crime Lab drug chemists for evidence received for analysis. He stated that when the lab receives a substance, it logs it in by giving the matter a crime lab number and by entering the date of receipt. When the drug chemists do their tests, they check out the substance and mark down the lab number and place the date and their initials on the package containing the substance. They also put the date on the package when it is resealed. After testing, the evidence is returned to the Drug Task Force either by personal pick-up or by United Parcel Service. Earlier, Susan Wilson, an investigator with the Conway Police Department, had testified that evidence is usually returned from the State Crime Lab to the Police Department by UPS. After Roy Adams testified to these procedures, this colloquy took place regarding the crack cocaine allegedly purchased by Cook on the three occasions:

PROSECUTOR: Your honor, at this time, I’d ask the Court to rule that the chain of evidence is complete on State’s Exhibits 1, 2, and 3, and will seek their final admission at this time.
DEFENSE COUNSEL: No objection.
THE COURT: All right. They will be received at this time.

Cook later testified on his own behalf and denied participation in any of the three episodes.

Cook’s lone point on appeal relates to two asserted breaks in the chain of custody concerning Exhibit 1 which was the substance purchased on October 8, 1992: (1) the absence of Helsey Credit at trial, who received the substance on that date; and (2) the failure to establish a custodial link between the State Crime Laboratory and the Conway Drug Task Force for any of the three purchases.

We decline to address this issue because it is clear from the colloquy quoted above that Cook abandoned his objections with respect to chain of custody and permitted the exhibits to be introduced into evidence without objection. We have made it clear that an objection to chain of cusfody must be made at the time the substance is moved into evidence. Pryor v. State, 314 Ark. 212, 861 S.W.2d 544 (1993); Dixon v. State, 310 Ark. 460, 839 S.W.2d 173 (1992). We can only speculate then as to why Cook decided not to pursue his arguments made during the testimony of Paula Russell. The fact is that the defense counsel advised the trial court during the drug chemist’s testimony when the three exhibits of crack cocaine were offered for “final admission” into evidence that he had “no objection” to their admissibility. Thus, no effort was made by defense counsel to preserve his previous objections, and the trial court admitted the exhibits without objection. This being the case, the matter stands as if no objection had ever been made. See Bates v. State, 271 Ark. 699, 610 S.W.2d 257 (1981).

Affirmed.


text:
    Mary THOMAS as Guardian of the Person and the City National Bank as Guardian of the Estate of Guy Thomas and Mary Thomas in Her Own Right v. ARKANSAS DEPARTMENT OF HUMAN SERVICES
    94-1108
    894 S.W.2d 584
    Supreme Court of Arkansas
    Opinion delivered March 13, 1995

      Harper, Young. Smith & Maurras, P.L.C., by: S. Walton Maurras, for appellants.

      Richard B. Dahlgren, Office of Chief Counsel, for appellee.
   Robert L. Brown, Justice.

This case involves the issue of whether a trust created to administer certain settlement proceeds for Guy Thomas is a Medicaid Qualifying Trust. The appellee, Arkansas Department of Human Services, concluded that it was, and the circuit court affirmed the DHS order following a petition for judicial review. We find no basis to reverse the DHS decision, and we affirm.

- On May 12, 1987, Gpy Thomas was injured on his job. On April 18, 1989, appellant City National Bank was appointed guardian of the estate of Guy Thomas and appellant Mary Thomas, who was Guy Thomas’s wife, was appointed guardian of the person. Though it is not entirely clear from the record in this case, Guy Thomas apparently worked for Tyson Foods, Inc. and filed a Workers’ Compensation claim against that firm. He also instituted litigation against other defendants as a result of the accident. On November 17, 1992, the Johnson County Probate Court, which was administering the guardianship, authorized the Bank to settle Thomas’s claims. Mary Thomas received $50,000 as part of the settlement, and on December 21, 1992, Tyson Foods entered into a Trust Agreement with the Bank and created a trust (the “Guy Thomas Trust”) for the benefit of Guy Thomas. In the Trust Agreement, Tyson Foods was designated as the grantor of the trust, and the Bank was named the sole Trustee. Tyson Foods paid $270,000 into the trust as its res.

The Trust Agreement reads in pertinent part:

2. PURPOSE OF TRUST. This trust is established to meet the special or supplemental needs of Guy Leon Thomas, hereinafter called Primary Beneficiary. It is anticipated that the primary source of Primary Beneficiary’s medical, custodial and financial support shall come from governmental assistance, including Medicaid.
3, DISPOSITIVE PROVISIONS.
(a) During the lifetime of Primary. Beneficiary, the Trustee shall pay to or apply for the benefit of Primary Beneficiary, such of the income and principal of the Trust Estate as the Trustee determines in its sole discretion is necessary for the reasonable comfort and happiness of Primary Beneficiary, but not for his food, clothing or shelter. The Trustee shall take into account the availability of government benefits in making expenditures and shall not make expenditures that will disqualify Primary Beneficiary from such benefits.

Mary Thomas is the Secondary Beneficiary under the Trust Agreement and will fall heir to the trust income after the death of Guy Thomas, if they remain married until his death.

On December 23, 1992, Mary Thomas applied for Medicaid Long Term Care Assistance on behalf of Guy Thomas, who was residing at the time in Countryside Manor Nursing Home. The application was denied on February 10, 1993, due to a lack of sufficient background information establishing eligibility. On May 11, 1993, she filed a second application for Medicaid benefits, which was denied by DHS on July 6, 1993, due to “excess resources” occasioned by the Guy Thomas Trust. Mary Thomas appealed both decisions and requested an administrative hearing.

On September 22, 1993, as a result of a petition by Mary Thomas, individually and as guardian, and the Bank, as guardian, the Johnson County Probate Court entered an order finding that the Guy Thomas Trust could not be used to pay for the medical, custodial, and financial expenses of Guy Thomas. The probate court ordered the Trustee not to use trust income or corpus for such purposes or for any purpose that would render Medicaid benefits unavailable.

On November 23, 1993, DHS denied Guy Thomas Medicaid assistance, following an administrative hearing, on grounds of “excess resources” and issued its.Final Order. DHS stated that the reason for the denial was his beneficiary status in the Guy Thomas Trust which had an appointed Trustee that had full discretion to use the funds on Thomas’s behalf. Mary Thomas, individually and as guardian, and the Bank, as guardian, petitioned for judicial review of this decision in Johnson County Circuit Court. The circuit court affirmed the DHS decision.

Mary Thomas and the Bank now appeal on the basis that the DHS decision was in violation of constitutional and statutory authority and was arbitrary, capricious, and characterized by an abuse of discretion. See Ark. Code Ann. § 25-15-212(h)(l) and (6) (Repl. 1992). We do not agree. Review of administrative agency decisions both by the circuit court and by this court on appeal is limited in scope. Arkansas Bank & Trust Co. v. Douglass, 318 Ark. 457, 885 S.W.2d 863 (1994); Douglass v. Dynamic Enterprises, Inc., 315 Ark. 575, 869 S.W.2d 14 (1994). The review by this court is directed not to the decision of the circuit court but to the decision of the administrative agency. Arkansas Bank & Trust Co. v. Douglass, supra. The construction of a state statute by an administrative agency is not overturned unless it is clearly wrong. Id. Finally, the evidence is given its strongest probative force in favor of the agency’s ruling, and we do not reverse an agency decision when there is substantial evidence to support it. Id.

With these stringent standards in mind, we turn to the decision reached by DHS in its Final Order in this matter. In its conclusions, DHS alluded to Section 1(b) of Act 1228 of 1993, now codified at Ark. Code Ann. § 28-69-102(b) (Supp. 1993), which mandates that trusts which limit the availability of trust income and principal to the beneficiary in order to qualify that person for Medicaid benefits are void as against public policy. The DHS conclusions also refer to several state regulations regarding Medicaid eligibility:

5. Medical Services Policy 3332.2 #13a states a Medicaid Qualifying Trust is a trust or “similar legal device” established by an individual (or his spouse) who is the beneficiary of the trust and who gives a trustee any discretion for use of the trust funds.
6. Medical Services Policy 3332.2 #13a also states if an individual is not legally competent and a trust is established for the individual by a guardian or legal representative, using the individual’s assets, the trust will be treated as having been established by the individual, since he could not do it for himself.
7. Medical Services Policy 3332.2 #13a also states with a Medicaid Qualifying Trust, consider as a resource to the beneficiary (for eligibility purposes) the maximum amount that a trustee could disburse if he exercised his full discretion allowed under the terms of the trust; this amount is deemed available to the individual, whether or not the distribution is actually made.

The DHS then reached the following decision:

It is also the decision of the Appeals and Hearings Officer that thé County Office acted correctly and in accordance with current Medical Services Policy when it denied the second Medicaid LTC application of Mr. Thomas, due to excess resources. Mr. Thomas is the beneficiary of a trust with an appointed trustee who has full discretion for use of the trust funds, according to the original trust document. Therefore, according to MS 3332.2 the trust assets would be countable as a resource to Mr. Thomas, and the available evidence establishes that the funds in the trust would exceed Mr. Thomas’ eligibility limit. An Order filed in the Probate Court of Johnson County in September, 1993 prohibited the use of funds in the trust account for Mr. Thomas’ medical care; however, Act 1228 voids this provision of the Order. Therefore, the decision to deny Mr. Thomas’ second Medicaid LTC application was determined to be appropriate.

The appellants urge two reasons why the DHS decision runs counter to state law and constitutes an abuse of discretion. They first contend that the Bank had no discretion to use trust resources for Guy Thomas’s medical, custodial, and financial support or for any purpose that would disqualify him from government benefits, including Medicaid, under the terms of the Trust Agreement. Discretion in the trustee is required by Ark. Code Ann. § 28-69-102(a)(l) (Supp. 1993). The appellants further point to the Johnson County Probate Court’s order that prevented dispensing of trust resources for such prohibited purposes. And, finally, they argue that Ark. Code Ann. § 28-69-102(b) was intended only to prohibit a diversion of trust income in order to qualify for Medicaid assistance once a beneficiary becomes sick and applies for such assistance and does not prohibit a limit on the trustee’s application of trust funds for medical or custodial assistance from the inception of the trust.

We begin by noting that the Bank as Trustee does have “sole discretion” over payment of trust funds for Guy Thomas’s benefit with the proviso that no expenditures should be made which disqualified Thomas from government assistance. That limitation, though, is in direct contravention of the public policy expressed in Ark. Code Ann. § 28-69-102. See Arkansas Dep’t of Human Servs. v. Walters, 315 Ark. 204, 866 S.W.2d 823 (1993). That statute states in pertinent part:

(b) A provision in a trust, other than a testamentary trust, which limits the availability of, or provides directly or indirectly for the suspension, termination, or diversion of the principal, income, or beneficial interest of either the grantor or the grantor’s spouse in the event that the grantor or grantor’s spouse should apply for medical assistance or require medical, hospital, or nursing care of long-term custodial, nursing, or medical care shall be void as against the public policy of the State of Arkansas without regard to the irrevocability of the trust or the purpose for which the trust was created and without regard to whether the trust was created pursuant to court order.
(c) This section is remedial in nature and is enacted to prevent individuals otherwise ineligible for medical assistance benefits from making themselves eligible by creating trusts in order to preserve their assets.

The Emergency Clause of Act 1228 of 1993, which is codified in part at Ark. Code Ann. § 28-69-102, further states:

[T]he Medicaid eligibility laws of this state are in immediate need of amendment to . .. assure that otherwise ineligible individuals are prevented from artificially impoverishing themselves to receive benefits to which they are not otherwise entitled and to facilitate recovery of improperly obtained benefits and assure the fiscal integrity of the funds appropriated for Medicaid and this Act is necessary to accomplish that purpose.

The Guy Thomas Trust without question limits the availability of trust income and principal for purposes that Medicaid benefits would cover. Whether the limitation in the trust is in effect before the beneficiary applies for Medicaid assistance or occurs at the time of application for that assistance is of no significance under the statute. The provisions of the Guy Thomas Trust relating to the safeguarding of government benefits run afoul of the public policy of this state as expressed in § 28-69-102, and for that reason, they are void and unenforceable. In addition, the order of the Johnson County Probate Court is of little avail to the appellants. The probate court is clearly without jurisdiction to interpret a trust instrument. See In the Matter of Long Trust v. Holk, 315 Ark. 112, 864 S.W.2d 869 (1993). Because the limit on trustee discretion is unenforceable under Ark. Code Ann. § 28-69-102 and because the probate court order has no effect, the discretion in the Bank as trustee to apply trust resources for Guy Thomas’s benefit is comprehensive. There is no basis for reversing the DHS decision on this point.

Secondly, the appellants urge that because neither Guy Thomas nor Mary Thomas acted as grantor of the trust and because Tyson Foods did, § 28-69-102 does not apply. The appellants are correct that certain sections of the statute do contemplate the beneficiary and the grantor of the trust being one and the same person. See Ark. Code Ann. § 28-69-102(a)(l) and (b) (Supp. 1993). At the same time, the definition of “Grantor” under the statute is more expansive and does include an “individual, institution, or entity” as well as “fiduciaries” and “third parties.” Ark. Code Ann. § 28-69-102(a)(2) (Supp. 1993). But even if we accept the fact that the statute has specific reference to grantors who establish trusts in order to facilitate their own eligibility for Medicaid assistance, the public policy behind the Act is absolutely beyond dispute — trusts may not be created and used as devices to sequester resources for the purpose of qualifying individuals otherwise ineligible for Medicaid assistance. Ark. Code Ann. § 28-69-102(b) (Supp. 1993); see also Arkansas Dep’t of Human Servs. v. Walters, supra. In Walters, we highlighted the fact that the General Assembly had voided provisions in such trusts “to stop chicanery and to preserve the fiscal integrity of the Medicaid program.” 315 Ark. at 212, 866 S.W.2d at 826-827. We further held in Walters that § 28-69-102, which was enacted by Act 1228 of 1993, had retroactive application.

The appellants’ contention that Tyson Foods’s status as grantor takes this matter out from under § 28-69-102 does not withstand scrutiny. The settlement proceeds to meet Guy Thomas’s medical and custodial needs ultimately belonged to Guy Thomas or to the guardian of his estate. We view Tyson Foods’s role as the grantor of this trust as something of a guise, and we will not sanction such a device. Other jurisdictions have refused to enforce similar trust provisions directed at medical eligibility, when an entity other than the beneficiary has created the trust. See, e.g., Barham v. Rubin, 816 P.2d 965 (Hawaii 1991) (probate court created the trust as grantor); Hatcher v. Department of Health and Rehabilitative Services, 545 So.2d 400 (Fla. App. 1 Dist. 1989) (trust created by beneficiary’s guardian). Indeed, were we to accept the appellants’ arguments we would not only be thwarting the intent of the General Assembly as expressed in Act 1228, but we would also be reaching an indefensible result which we will not do. See S.T and C.B. v. State, 318 Ark. 499, 885 S.W.2d 885 (1994).

We conclude that Tyson Foods was clearly acting on behalf of and in the place of Guy Thomas when it created the trust and that the trust provisions are controlled by the dictates of Ark. Code Ann. § 28-69-102. There was no legal error or abuse of discretion on the part of the Department of Human Services.

Affirmed.


author: English, Ch. J.:

text:
    Cairo and Fulton Railroad Co. vs. Trout.
    1. Railroad: Right or Way: Proceedings to assess damages for.

    Under the provisions of the act of January 22d, 1855 (ch. 140, Gantt’s Dig.), either the land owner or the corporation could apply for an assessment of damages for right of way; written notice, as prescribed by the statute, should be given before the appointment of commissioners to assess the damages.
    2. --: Same.

    Where the defendant in a proceeding under the statute fails to appear, it is not necessary to enter a default before appointing commissioners to assess damages.
    3. Corporation : Service of process upon.

    Under a statute providing that, a summons against a corporation may be served on the president, chairman of the board of trustees, or other chief officer; or if its chief officer is not found in the county, upon its cashier, treasurer, secretary, clerk, or managing agent, etc.; when the service is nqt upon the chief officer, the return must show that he could not be found in the county, also upon whom the summons was served, naming the person and his office.

      4. Constitutional Law: Right of trial by jury, etc.

    A provision in the Constitution of 1836, that “ the right of trial by jury shall remain inviolate,” related to the trial of issues of fact in civil and criminal causes, and not to a statutory proceeding for the assessment of damages for the appropriation of a right of way.
    5. ---: Same.

    The provision of the Constitution of 1868, requiring that damages for the-appropriation of a light of way should be assessed by a jury of twelve men, did not, as to the Cairo and Fulton Railroad Company, a prior existing corporation, repeal the act of January 22d, 1855, providing for the-assessment of damages by five commissioners, in the absence of a statute authorizing the land owner to proceed in conformity to the new constitutional requirement.
    6. Appeal: Motion to correct error in court heloio, etc.

    When the defendant is actually served with process, and the writ or return is defective, he should appear and move to quash, or if judgment is taken by default, move to set it aside before appealing; but this rule does not apply when the defendant has not been served with notice.
    APPEAL from Saline Circuit Court.
    Hon. L. D. Beldin, Circuit Judge.

      J. M. Moore, for appellant.

      Z. P. H. Farr, contra.

   English, Ch. J.:

On the 12th February, 1874, John H. Trout filed a petition in the Circuit Court of Saline County, then in session, in which he stated, in substance, that he was the owner of the west half of the northwest quarter of section seventeen, township three south, range fifteen west, which he held by warranty deed. That during the latter part of the year 1872, and the early part of the year 1873, the Cairo and Fulton Railroad Company, without his consent, or any contract with him, entered upon his land above described, and appropriated and used his land, earth, timber, etc., in the construction of said railroad, to his very great damage; and that said company had totally failed to have said damages assessed. Prayer, that the judge of the court appoint five impartial and disinterested free-holders, citizens of said county, not related to him or stockholders in said company; and that they be required to assess his damages, etc. That a copy of the petition be served on the company, and for other relief, etc.

On the same day that the petition was filed, the court made an order, reciting the substance of the petition, and appointing five commissioners, naming them, disinterested free-holders, citizens of the county, not related to the petitioner, nor stock holders in the company, and directing them to proceed to examine and view said land, and assess the damages done petitioner by reason of the location and construction of said railroad on his land, taking into consideration the benefit of said road in the increase of the value of said land or otherwise; and that they report their assessment to the next term; and that the report should be signed and sworn to by at least three of the commissioners.

It was further directed by the court, that a copy of the order be furnished to the commissioners, and a copy of the order as well as a copy of the petition, be furnished said company, or its agent in said county, and that the company be summoned to appear at the next term of the court, and show cause, if any it had, why the report of said commissioners should not be confirmed, and entered as a judgment of the court.

It does not appear that a copy of the order was served on the company in any mode.

On the 20th February, 1871, the clerk of the court issued a summons commanding the sheriff to summon the Cairo and Fulton Railroad Company, or one of its agents in Saline County, to answer on the first day of the next June Term of the Saline Circuit Court, a complaint filed against it in said -court by John H. Trout, and warn it that upon its failure to answer, the complaint will be taken for confessed,” etc.

Upon which the sheriff endorsed the following return :

“ I have .this the 21st day of February, 1874, duly served the within, by delivering a copy of the same to one of the within agents as therein commanded. Horatio Riley, agent.”

It appears that the commissioners were furnished with a certified copy of the order of the court for an inquest of damages, upon which there is an endorsement signed by four of them, sworn to before a justice of the peace, 9th May, 1874, as follows :

“To Judge Belding, Judge of the Hon. Circuit Court of Saline County: We, the commissioners, beg leave to report that we have examined and viewed numbers "of land above named, and assess the damages at $800, and we do not consider that the said railroad has enhanced the value of said land any.”

The other commissioner estimated the damages at $1,000.

The report, with a plat of the land, was filed in the office of the clerk of the court, on the 12th of May, 1874.

On the 9th-of June, 1874, the court rendered the following judgment:

“ Comes the petitioner, by attorney, and the commissioners appointed at the last term of this court to view the land described in the petition in this cause, and assess the damages done thereto by the defendant, having filed their report in the office of the clerk of this court, on the 12th day of May, 1874, as appears from the endorsement of said clerk made thereon, and it appearing to the satisfaction of the court that no objections have been or are made to said report; and it further appearing to the satisfaction of the court that a majority of said commissioners under oath assessed the damages done said land by the defendant at the sum of $800 : It is therefore considered by the court, that the plaintiff do have and recover of and from said defendant the sum of $800, as damages, and all the costs in' this cause, for which let execution issue.

“And it is farthered considered, adjudged and decreed that all the right, title and interest of the plaintiff, of, in and to said land for a space of one hundred (100) feet on each side of said railroad, through said land, be and the same is hereby divested out of the said plaintiff and his heirs and assigns and vested in ■ the defendant and its successors forever.”

On the 3d of August, 1874, the defendant corporation obtained from the clerk of this court, the grant of an appeal from the judgment.

I. The first point made for (he appellant is, that the proceedings in the court below were ex. parte, and without notice to it.

The application for the inquest was no donbt añade under the provisions of the act of 22d January, 1855, Gould’s Digest, ch. 140, there being no other statute providing for such inquest of damages on the application of the owner of land.

Under that act, either party, the railroad corporation, or the owner of the land, could make the application, and cause the damages to be assessed as therein prescribed. The first and second sections prescribed the manner of making the application by the corporation, the notice to be given to the owner of the land, and the mode of ascertaining the damages, etc. The fourth section provides for an application, etc., by the land owner “ as hereinbefore directed.” Meaning, doubtless, that when the application is made by the owner of land, the same steps, substantially, must be taken as are directed to be taken when the application is made by the corporation.

The first section provides, substantially, that where a railroad has been surveyed and located over or upon land, and the owner has not, by agreement, relinquished the right of way, or is a femme covert, infant, person of unsound mind, or non-resident of the State, the case shall be specially stated in writing, by the railroad corporation, to the Judge of the Circuit Court of the county in.which such land, or the greater part thereof, is situated, accompanied by a plat descriptive of the land required for the road. The application may be made to the judge either in term time or in vacation. Written notice of such application must be given to the owner of the land, and delivered to him in person, or left at his residence, at least ten days before making the application, if such owner reside in the county; or if ho be a minor, to his guardian; or if of unsound mind, to his guardian or committee. If the owner reside out of the county, or is a non-resident of the State, lie may be served with actual notice, or by publication, etc. Upon such application, after such notice, the judge is required to appoint five impartial and disinterested free-holders, citizens of the county, who are not stockholders in the railroad company, nor related to the owner of the land, to view the land, etc., assess and report the damages, etc.

In this case appellee presented his petition to the Circuit Judge in term time, and his petition seems to be in good enough ■ form, but does not appear to have been accompanied by any plat descriptive of that part of his land taken or covered by the road. '

The material defect, however, in his proceedings, is that he failed to give appellant any notice whatever of his application, and the judge proceeded, at once, on the presentation of the petition, to select and apjioint the persons to view the land, and assess the damages, in the absence of the appellant, and without allowing it any opportunity to be represented and heard in the matter of the appointment; a step of importance to both parties. That the statute contemplates such notice, and that justice requires it to be given, there can be no doubt. Cool. Con. Lim., 563.

After the court had appointed the commissioners, as they are . termed in the order, it directed the appellant to be served with a copy of the petition, and of the order, and to be summoned to appear at the next term of the-court, and show cause, if any it had, why the report of the commissioners should not be confirmed, and entered as the judgment of the court.

The court should not have appointed the commissioners on such presentation of the petition, but should have required notice to be given to the ajipellant of the application, and delayed the appointment until after the notice had been served for the length of time required by the statute.

Moreover, the return of the sheriff upon the summons issued by the clerk, under the order of the court, does not show a legal service upon appellant, and the final judgment was rendered without appearance by it.

The general statute provides that“ Where the defendant is a corporation, created by the laws of this State, the service of the summons may be upon the president, chairman of the board of trustees, or other chief officer; or if its chief officer is not found in the county, upon its cashier, treasurer, secretary, clerk, or managing agent,” etc. Gantt’s Digest, sec. 4515.

And the officer executing the writ, must state in his return the time and manner of service. Ib., secs. 4513, 4837.

If the chief officer of the corporation was not to be found in the County of Saline, the sheriff should have stated that fact, in his return, and shown a service upon some person who was its cashier, treasurer, secretary, clerk, or managing agent, naming the person and his office. Cairo and Fulton Railroad Co. v. Hecht & Stevens, 29 Ark., 661; Odd Fellows’ Building Association v. Hogan, 28 Ib., 261; Aikin v. Gold Mining Co., 6 Cal., 186; Bruce, et al. v. Arrington, 22 Ark., 362, and cases cited.

If the appellant has been served with notice of the application, ten days before it was made, no further notice perhaps would have been necessary, none other being required by the statute under which the proceedings were had. Afforded by such notice the opportunity of being represented when the application was presented, heard, and the commissioners appointed, it may have been obliged to take notice of all subsequent legal steps taken in the matter. See Dickey v. Tennison, 27 Mo., 373.

II. It is next insisted for appellant, that a default should have been entered against it, before commissioners were appointed to assess the damages, etc.

Such is not the practice contemplated by the statute under which the proceedings were had.

When the corporation has notice of the application, it may appear and contest the appointment of commissioners, etc. If it appear and make no objections, or if objections are made and overruled, or if it fail to appear, and a proper case is made by the petition, the Judge, or court, if in session, may appoint the commissioners, and it is made their duty to view the land, assess the damages, and file their report in the office of the clerk of the court, and if no valid objection be made to the report, the court may enter judgment at the term succeeding the filing of the report, etc.

III. It is submitted for appellant that the damages should have been assessed by a jury, and not by a commissien of five men.

By sec. 6 of the Bill of Rights of the Constitution of 1836, which was in force when the act of 22d January, 1855, under which the proceedings in this case were had, was passed, it is declared that: “The right of trial by jury shall remain inviolate.”

The word “jury ” is here used in its common law sense, and means twelve men, and the Legislature cannot abridge the number. State v. Cox, 8 Ark., 446; State v. Morrill, 16 Ib., 384.

This provision of the bill of rights, however, relates to the trial of issues of fact, in civil and criminal causes, in courts of justice, and has no relation to cases of the kind now under consideration. Beckman v. Saratoga and Schenectddy Railroad Co., 3 Paige, 75; People v. Michigan Southern Railroad Co., 3 Mich., 496; Pierce Am. R. R. L., 166; Bonaparte v. Camden and Amboy Railroad Co., 1 Baldwin, C. C., 205. Hickox v. Cleveland, 8 Ohio, 543.

So much of the act of January 22d, 1855, as provides for the assessment of damages by a commission of five men, was not in conflict with any provision of the Constitution of 1836, and was valid when the act was passed. Is that part of the act yet in force, or was it in force when the commissioners in this case were appointed, and made the assessment ?

Sec. 48, art. v., Constitution 1868, provides: .“The General Assembly shall pass no special act conferring corporate powers, Corporations may be formed under general laws, etc. * * * No right of way shall be appropriated to the use of any corporation until full compensation therefor shall be first made in money, or first secured by a deposit of money, to the owner, irrespective of any benefit from any improvement proposed by such corporation; which compensation shall be ascertained by a jury of twelve men, in a court of record, as shall be prescribed by law.”

There is a similar clause in the Constitution of 1874, but the proceedings in the case before us were had while the Constitution of 1868, was in force. 'f-

We had occasion to comment on a portion of the. above section ofthe Constitution, of 1868, in Cairo and Fulton Railroad Co. v. Turner, 31 Ark., 506, and held that Turner had the right to proceed under the act of 22d January, 1855, for the ascertainment and recovery of damages, and should have resorted to that remedy, instead of ejectment for the land appropriated by the corporation, but it was not necessary to decide in that case, whether so much of the act as required the damages to be assessed by five men, had been repealed or modified by that clause of the above section of the Constitution of 1868, which provides that the compensation shall be ascertained by a “jury.”

“Which compensation shall be ascertained by a jury of twelve men, in a court of record, as shall be prescribed by law.”

In Lamb, et al. v. Lane, 4 Ohio State R., 167, a case which arose under a similar provision of the Constitution of Ohio (omitting the words “twelve men”) the court held that the word “jury” meant a tribunal of twelve men, presided over by a court, and having the allegations, evidence and arguments of • the parties ; and that they might be sent to inspect the premises. The court also held that the provisions of the Constitution did not execute itself, but that provision must be made by law for the selection, etc., of a jury; and this is plainly indicated in the clause of the Constitution of 1868, above copied.

Sec. 23, of the act of July 23d, 1868, providing for a general system of railroad incoiqooration, undertook to provide a mode for ascertaining damages, and compensating land owners for the right of way over their lands. The damages were to be ascertained by five commissioners, appointed on the application of the corporation. By its express language it applied to the corporations organized under the act, and could have no application to the Cairo and Fulton Railroad Co., which was chartered in 1853. Cairo and Fulton Railroad Co. v. Turner, 31 Ark., 506.

This section of the act of July 23d, 1868, was held to be in-conflict with sec. 48, art. v. of the Constitution of 1868, in Whitehead and wife v. Arkansas Central Railroad Co., 28 Ark., 461, for the reason, among others, that it made provision for ascertaining the damages of the land owner, on the application of the corporation, by a commission of five men instead of a jury of twelve men as prescribed by the Constitution.

By the act of 28th April, 1873 (Gantt’s Digest, secs. 4944-8), provision was made for ascertaining the damages by a jury, on the applicatioft of any railroad company organized under the laws of this State.”

Remarking on this act in Cairo and Fulton Railroad Co. v. Turner, the court said : This act was passed after the appellant corporation had entered upon and constructed its road over the land of the appellee, and if it was intended to apply to railroad corporations other than such as were organized under the general law, which is by no means clear, we would not give it a retroactive effect so as to make the appellant corporation, acting under a long pre-existing special charter, a trespasser in entering upon the land of appellee.”

In the case now before us, appellant it appears, from allegations in the petition, entered upon and constructed its road over the land of appellee “ during the latter part of the year 1872, and the early part of the year 1873,” and no doubt before the passage of the act of 28th Api’il, 1873.

The act, had been passed, however, before appellee filed his petition for the appointment of commissioners to assess his damages (12th February, 1874) but the act made no provision for an application by the land owner, for the selection of a jury, etc., at his instance. Appellee had therefore to resort to the act of 22d January, 1855, which was the only act in force affording him a remedy.

The reason why the legislature deemed it unnecessary to provide in the act of 1873, for an application by the land owner, was, perhaps, that a railroad'corporation organized under a general law, as provided by the Constitution of 1868, could not enter upon land and appropriate the right of way, without first making compensation, etc., and if it undertook so to do, the land owner might treat it as a tresspasser. Whitehead and wife v. Arkansas Central Railroad Co., supra.

IV. It is insisted for appellee, that appellant should have applied to the court below, to set aside the judgment, before-appealing to this court.

In Files v. Robinson & Co., 30 Ark., 487 , this court said: Under the Code Practice, when the defendant is served with a defective summons he must move to quash, or, if judgment be rendered on default, ask the court to set it aside before he appeals or takes, a writ of error. This seems to be the general . rule.”

In this case the appellant was not served with any notice of the application made by appellee to the court below, for the appointment of commissioners to assess his damages. The notice of the application is required by the statute, as we have above seen, and without it the proceedings are irregular. People v. Tallman, 36 Barb., 222; Boonville v. Ormrod, 26 Mo., 193.

After the court had taken the important step of selecting the commissioners to assess the damages,- in the absence of appellant, it directed appellant to be summoned to appear at the next term, and show cause why the report of the commissioners should not be confirmed. A summons was issued, but not served on appellant in any mode known to the law.

In an ordinary suit, where the defendant is actually served With process, and the writ or return is defective, no doubt, under the Code Practice, he should appear, and move to quash, or if judgment is taken by default, move to set it aside, before appealing, etc. Gantt's Digest, sec. 1100. But this rule could hardly apply where the defendant has not been served with notice.

The judgment must be reversed, and the cause remanded with instructions to the court below to set aside, not only its judgment confirming the report of the commissioners, but the order appointing them, and for further proceedings; and to treat the appellant as being in court by reason of its prosecution of this appeal.


text:
    Cairo and Fulton Railroad Co. vs. Rea.
    1. Service and return of jtrocess against a corporation.

    See preceding case.
    2. Assessment of damages.

    Section 4712, Gantt’s Digest, does not authorize the appointment of a commissioner to assess damages, upon the failure of defendant to answer, in an action of trespass.
    APPEAL from Saline Circuit Court.
    Hon. L. D. Beldin, Circuit Judge.

      J. M. Moore, for appellant.

      Z. P. FT. Farr, contra.

   English, Ch. J.:

On the 25th May, 1873, Edwin G. Rea filed a complaint, in the Saline Circuit Court, against the Cairo and Fulton Railroad Company, alleging :

“That the said railroad company did, by, and through their agents, and employees, commit trespass on the plaintiff's land, in the County of Saline, State of Arkansas, in township two south, fourteen west, and section five, being the northeast of the northwest quarter, and the northwest of the northeast quarter of said section, by cutting down and using timber and earth from the same, and building a road bed through the same, to his damage five hundred dollars.”

On the next day a writ was issued, commanding the sheriff “ to summon the Cairo and Fulton Railroad Company to answer on the third (3d) day of the next June Term of the Saline Circuit Court, a complaint filed against them in said court by Edwin G. Rea, and warning them that upon their failure to answer the complaint will be taken for confessed,” etc.

Upon which writ, the sheriff endorsed the following* return :

“I have, this first day of June, A. D. 1873, duly served the within, by delivering a copy of the same to each of the within named defendants, as therein commanded.”

No order appears to have been made in the cause at the return.

There is an entry dated October 8th, 1873, showing that the plaintiff appeared, by attorney, and “ the court continued the cause without prejudice to any of the parties.”

It appears that on the 12th of February, 1874, Ransom Thompson was appointed by the court, and sworn “as a commissioner, to hear proof and report the amount of damages sustained by the plaintiff, by reason of the alleged misconduct of the defendants in taking the land of the plaintiff for the bed of said railroad, and use of his timber, etc., in the construction of said railroad,” etc.

On the same day the commissioner reported to the court, that he had examined witnesses, etc., and -was satisfied'that the plaintiff's damages amounted to $250; and final judgment was thereupon entered against the defendant for that sum, and for costs.

On the 3d of August, 1874, defendant obtained the allowance of an appeal from the judgment before the clerk of this court.

I. The return of the sheriff shows no legal service of the writ upon appellant.

There was but one defendant sued and named in the writ— the Cairo and Fulton Railroad Company — a corporation and not a natural person.

The manner of serving process on such a corporation, and making the return of service, was sufficiently indicated in Cairo and Fulton Railroad Co. v. Trout, ante.

II. The action is in trespass, and not founded upon contract, and in such action the statute does not authorize the court to appoint a commissioner to assess plaintiff’s damages on failure of defendant to answer. Gantt’s Digest, sec. 4712.

Judgment reversed, and cause remanded for further proceedings, appellant to be regarded as in court, by reason of the prosecution of this appeal, with leave to plead to the complaint, etc.


author: Walker, J.:

text:
    Peay vs. City of Little Rock.
    Taxation ; Constitutional pro vision, as to uniformity, applied to local assessments. The City Council of Little Rock passed an ordinance for the paving oí Markham Street, providing for an assessment on the adjacent lots and blocks, according to frontage, to pay for the same. The Constitution in force at the time contained the following provision: “ Laws shall be passed taxing by a uniform rule, * * * all real and personal property according to its true value in money.”
    Held: That the constitutional provision appied to local municipal assessments for the improvements of the streets of a City, and the assessment should have been according to the value of the property, and having been made according to frontage, it was void for want of uniformity.
    APPEAL from Pulaski Chancery Court.
    Hon. W. I. 'Warwick, Chancellor.
    77. M. Rose for aiipellant.

      T. D. W. Yonley, contra.

   Walker, J.:

The City of Little Rock filed, in the Chancery Court of Pulaski County, a bill of complaint to subject to sale certain lots, fronting on Markham Street, for the payment of a special tax levied and assessed upon said lots.

The defendant, Peay, demurred to the bill, the demurrer was overruled, and final decree rendered, subjecting the lots to the payment of the tax, from which an appeal has been taken to this court.

The City Council passed an ordinance: That Markham Street, a public highway in said city, between given point's, should be graded, and curbed on each side with stone, and paved in the Richardson Patent Wood Pavement. That the city engineer (if necessary) by actual measurement, ascertain the number of feet ’of each block or lot of land, cross street and alley, abutting oí touching upon said street, within the prescribed limits, and note the name of the owner of the same, if practicable, and file a map of the same, showing the owners of each block or lot; the number of feet the same abuts on said street, with the full length of said improvement in feet, the number of cubic yards of grading, &c., with the cost thereof, at the prices, &c., and the amount assessed against each block, lot or part thereof.

That the clerk, in making his .assessment roll, should levy and assess upon each foot of the several lots and blocks, or parts thereof, touching and abutting thereon, such parts of said street, in the proportion that the number of feet of said lot or block touching or abutting itpon said street, bears to the aggregate number of feet touching and abutting thereon, a sum of money sufficient to pay the proportionate part of said lot or block, of the whole cost or expense of said improvement.

Under a levy made upon the lots of Peay to pay for the pavement of the street opposite to such lot, demand for payment was made, which was refused, to enforce the payment of which this suit was instituted.

That the pavement was made, and a regular assessment of the property under, and according to the provisions of the ordinance is not questioned, but the real and only material question presented for our consideration is, as to the constitutional power of the corporation, to make such an assessment of the property owners, fronting Markham Street, as has in this instance been made.

It is contended for the appellant that an assessment, such as is provided for by the ordinance under which this property was assessed, is unconstitutional, in this; that the valuation was not by a uniform rule according to its true value in money, but by a rule of length, or superficial surface, a valuation which had no reference to the value received, or benefit to the owner.

Sec. 2, art. x, of the Constitution of 1868, ordains that: “Laws shall be passed taxing, by a uniform rule, all moneys, credits, investments in bonds, joint stock companies or otherwise, and also all real and personal property, according to its true value in money.”

Art. v., sec. 49 : “ The General Assembly shall provide for the organization of cities and incorporated villages, by general laws, and restrict their powers of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent the abuse of such power.”

Sec. 47, art. v.: “ The General Assembly shall not have power to authorize any municipal corporation to pass any laws contrary to the general laws of the State, or to levy any tax on real or personal property, to a greater extent than two per centum of the assessed .value of the same.”

Under these provisions of the Constitution, the General Assembly enacted, sec. 3228, Gantt’s Digest, (referring to incorporated cities and towns) : “ They shall have power to lay off, widen, straighten, extend and establish, or improve and keep in order and repair, etc., * * * and to assess and collect a charge on the owner or owners of any lot, or land* or lots or lands through, or by which' a street, alley or public highway shall pass, for the purpose of defraying the expenses of constructing, improving, repairing, or lighting such street or alley, or public highway, to be in proportion, either, to the feet front of land or lot, abutting on such1 street, alley or highway, or, to the value of such lot or land assessed for taxation under the general law of the State, as such municipal corporation may in each case determine.”

Sec. 3229 : ' Each municipal corporation may, either by general, or special by-law, or ordinance, prescribe the mode in which the charge on the respective owners of lots of land, and on the lots or land, shall be assessed and determined, for the purposes authorized by the provisions of this act.”

Under the power thus conferred, the City of Little Rock, in its corporate capacity, did, by ordinance, direct that an assessment be made on the lots fronting Markham Street, to be apportioned to the number of feet of each, abutting on said street. In obedience to which, a survey was made, with an estimate of the number of square feet in front of each lot, and passed' the following ordinance:

Sec. 1. That the several sums set opposite the following described lots, or parts of lots, or blocks or parts of blocks, as the case may be,' respectively, to-wit: Pea, Gorden N., block one hundred, fifty feet, tax $414.06,

Following out the list it is found, that the valuation of each fifty feet front, the whole extent of Markham Street, is assessd in the same proportion, that is, according to the number of feet in front of the lot so assessed.

Under this state of case, the question to be determined is, does the assessment conflict with the Constitution,'which requires that “ laws shall be passed taxing by a uniform rule all property subject by law to taxation, according to its true value in money.”

Limited by these constitutional restrictions, the General Assembly cannot confer upon corporations, nor can they exercise greater powers than the Constitution confers.

The counsel for the city have attempted to draw a distinction between the “assessment” of property, anda “tax” on property, and insist that the term “tax” is applicable to a general, or stated tax, -whilst an assessment relates to a levy under a local ordinance. To sustain them in this position, reference has-been made to the decision of the Supreme Courts of several states, with others, two of the decisions of this court.

In that of Washington v. The State, 13 Ark., 752, the constitutionality of an act of the General Assembly, which imposed a penalty upon any one, who set up, or kept a billiard'hall or “ten pin alley,” without first paying,a license for the privilege of doing so. Ch. Justice Watkins, who delivered the opinion of the court: Held, “'that the corporation had power to impose a tax on ‘ billiard tables and ‘ ten pin alleys/ for municipal purposes, and as a police regulation for the preservation of good order.” Under the state of case before him, the judge might well have substituted the word “ privileges ” for “ taxes,” which was evidently in his mind, when he referred to municipal, and police regulations, which are altogether different from an assessment of taxes.

The other case, McGee v. Mathis, et al. 21 Ark., 40, was mainly decided upon the authority of Washington v. The State, it was appealed from to the Supreme Court of the United States, and reversed.

There are also decisions of some of the other states, which would seem to sustain the distinction between an “assessment” and “ taxation.”

The Tennessee, Illinois, Ohio and Wisconsin courts, in which certain decisions are found to some extent sustaining the distinction, have reversed them and now hold differently, whilst Missouri and some others still maintain the distinction.

Mr. Justice Breese, who reviewed all of the decisions of the Supreme Court of Illinois, indeed, of nearly all of the courts, when refering to the distinction between an “ assessment ” and a “ tax,” says: “ Call it a special assessment, then it is demanded on what grounds, apart from taxing power, can property be taken by way of a local or special assessment, * * * If a special assessment is not a tax, it must be placed under the exercise of the power of eminent domain, * * power of every description must be referred to some certain source, some local habitation must be assigned it, and if none can be, then it is safe to say, it is vagrant power/ or that it has no existence.” The City of Chicago v. Larned, et al., 34 Illinois, 276.

When taken in their popular meaning in reference to the taxing power, “ assessment of taxes ” and taxation have substantially the same meaning. “Assessment” is defined by Burrill to be, “To adjust or proportion :” “To rate or fix the proportion of a tax with each person of several, liable to it;” “To apportion a tax according to supposed relation between; ” “ To value in order to tax.” The term to “ assess ” and to “ tax,” were anciently used in close connection in point of meaning. Burrilhs Law Dictionary, vol. 1., 140. In vol. 2, 509, he says: “ To tax, to lay, to impose, or assess upon the citizen a certain sum of money, to be paid to tlie public.treasury.”

In practice, to “assess, fix or determine judicially, to adjust, adopt or proportion.”

It is in this popular sense that the terms, “ taxation ” and “ assessment ” are used in our Constitution, statutes and ordinances. Whether found in the several sections of the Constitution, or in the statute, laws or ordinances, they are limited by the Constitution to that uniform rule, and to the value of the property so assessed, according to its true value in cash.

At the foundation of the taxation system, rests the rule, that the citizen shall contribute to the support of the government, which protects his person and property, in proportion to the value of the property protected, and equality, so far as is practicable, is, says Dillon, p. 588, “ inherent in the very idea of a tax, as distinguished, from arbitrary taxation * * whatever limitations exist upon legislative authority, to wield, in its full scope, the taxing power of the State at its will, must be sought in the nature of the power itself, and in express or implied restrictions of the National and State Constitutions ; but for which, the power in the Legislature to tax is unlimited.”

The power of the corporation to levy the tax in this instance, is not questioned, its exercise is indispensably necessary to its corporate existence; but the real question to be determined, is, as to whether or not, the tax imposed in this instance bears equally upon the holders of property fronting the street paved. Mr. Cooley in his work on Constitutional Limitation, p. 515, well remarks, that, “The constitutional requirement of ‘equality’ and ‘ uniformity ’ only exist to such objects of taxation, as the Legislature shall determine to be properly objects of the burden, * * * but over all these the burden must be spread, or it will be unequal as to those who are selected to make the payment.”

In the case under consideration, the corporation did impose upon all the property holders, who owned property fronting on Markham Street, a tax, equal it is true, in frontage, but not in value, no ascertainment of the value of the property seems to have been made, none of the burdens imposed, as compared with the advantages to be derived to the owners of the property, on account of such improvement ascertained — $414,06 were imposed upon the fifty feet front owned by Peay, and. a like number upon every other fifty feet, which fronted the street.

From what appears from the records, the lot owned by Peay, may not exeed that sum in value, while another fifty feet may be worth ten times that much.

The benefits to those who own fronts upon which hotels, and other places of public resort are situated, may be equal, to the amount of tax imposed, and other fronts remote from the thronged thoroughfares, but little benefitted. Can it be said, that there is equality in burden and benefit in this? We think not. Suppose Peay’s lot is not worth more than the taxes assessed, and is sold to pay them, where, or upon what, is he to get benefit; when he has no property to be benefitted ? Certainly none.

We can scarcely expect absolute equality in all cases, or benefits commensurate with the burden of taxes imposed. But the principle upon which this approximation to equality is to be maintained, must be preserved inviolate, in this, that all property subject to taxation, shall be uniformly assessed according to value; a rule applicable to all taxation, whether for general, or local and special purposes.

We concede to the Corporation, power to judge of, and determine the extent and character of the improvement to be made, to ascertain, locate and fix the limits of the local.districts, and to declare that a tax shall be imposed upon the property, holders within the district so laid off, and to fix the amount to be levied upon the property of the district, but this levy must be made equal and uniform, according to the valué of each tract assessed, by an assessment according to the value of the property assessed.

Nothing short of this will meet the constitutional requirement; to depart from it, is a departure from the Constitution, and is void.

This valuation and assessment, cannot be arbitrarily determined, either by law, or by an ordinance.

The 15th sec., art. i., of the Constitution, ordains, “that private property shall not be taken for public use, without just compensation therefor.”

Suppose the Legislature should pass a law authorizing the taking of private property for public use, and should in the same act fix the compensation, which they supposed to be just, to be paid for it, no one would contend that the Legislature was competent to determine by law, what would be a just compensation for the property taken.

The action of the Legislature to this extent, would be held arbitrary and unconstitutional; nor could the Legislature, or .a corporation, either by a law or an ordinance, declare the value •of property, or what would be a just assessment upon it, so as to make the assessment uniform and equal in value; and for a like reason the relative estimate of benefit ■ and burden by law; such assessment and valuation is essentially a matter of fact to be ascertained by evidence, not by law.

A state, county, or more limited corporation can only take the private property of the citizen under right of eminent domain, or ■charge it with a tax assessed, for the support of government, upon a just compensation for the property taken, or upon an •equal and uniform charge upon the property according to its actual value in cash. So jealously did the framers of the Constitution guard this right, that they not only declared that valuation should be made, but directed that at le*ast once in every five years it should be made, not by law, but by an officer to be appointéd for that purpose.

An assessment according to the number of feet frontage of the property, irrespective of value, is irreconcilable with this constitutional provision, and cannot be restrained.

Tennessee, Louisiana, Arkansas, Texas, Missouri, California, Ohio, Massachusetts, Michigan, Wisconsin and Illinois have, by constitutional provisions, limited legislative power, or asserted the principle of taxation according to a uniform rule at the actual cash value of the property assessed; none more fully than Arkansas.

In the case of Weeks v. City of Milwaukee, et al., reported in 10 Wis., 242, a case in all its essential points like'the one under consideration, came before the Supreme Court of that State, under constitutional restrictions in many respects like our own, in which Mr. Justice Payne, in a well considered opinion, Held: That the uniform rule of taxation under the Constitution, is applicable to municipal corporations, that the rule of uniformity of taxation extends to all taxation, whether by cities or counties, and that an assessment by frontage, could not be sustained, as an exercise of the taxing power of the state and city, and to this extent fully sustains us in the conclusions at „ which we have arrived, but decided the case upon the qualifying effect of a provision in their Constitution, under which, special assessments under corporate authority, were so modified as to take the case out of the general rule. It is not clear to our mind how, considering the general principle, the final conclusion of the court can be sustained. At page 256, he says t I have no doubt if the assessments are to be sustained at all, that it must be done upon the ground that they are exercises of the taxing power * * a city or county is not a state; and if it contracts a debt, that is not a state debt. But when either exercises the taxing power, it is acting for the state, as taxation is an attribute of sovereignty; where, therefore, the Constitution requires the rule of taxation to be uniform/ I think it extends to all taxation by the state, whether acting directly or by delegating its authority to a political corporation. The object of this provision was, to protect the citizens against unequal, and consequently unjust taxation.”

In the case of McCormack, et al. v. Patchin, et al., 53 Mo., 33, it appears that a street in the City of St. Louis had been paved at the expense of the holders of property fronting it; after which a like tax was assessed for repairs; the correctness of the levy for repairs, upon a like frontage assessment, was the question before the court for consideration.

It was by the court held: Mr. Justice Wagner delivering the opinion, that “as the first tax was authorized by the provisions of the charter, the-assessment for repairs might also be levied under the same power.”

The question of power to make the levy in the first instance, Avas not discussed, but the decision seems to have been made upon the assumption, that the first assessment Avas correct, and, that under the same power and under the same rule of assessment, the property should be assessed for the payment of repairs.

It is also true that the judge did, in his opinion, assert the principle that the benefit to the property holders, by making the repairs, Avas compensation for the burden imposed by taxation. The same rule of benefit and burden is asserted in the earlier decisions of several of the states, among others, by the courts of Tennessee and Illinois, but in both of them, it has in their later decisions been in effect overruled.

The case of the City of Chicago v. Larned, et al., 34 Ill., 253, the facts of the case and the questions of laAV presented, were much like those in the case under consideration. Mr. Justice Breese, who delivered the opinion of the court, reviewed the ■decisions of the Supreme Court of Illinois, and many of the states.'. He said: “We propose to examine but one question, as the decision upon that, determines the whole controversy, and that is, are the provisions of the revised chapter of the City of Chicago, under which the assessment in question was made, in harmony with the provisions of secs. 2 and 5 of art. ix, and sec. 11, art. xiii, of the Constitution of the State. The framers of our Constitution have taken unexampled pains to affirm the principles of equality and uniformity as indispensable to all legal taxation, whether general or local.” With regard to assessment by frontage, he says: “ If this assessment is to be regarded as an exercise of the taxing power, it cannot be denied, that it flagrantly violates these principles of the Constitution * * The assessment of injuries and benefits, is in the nature of a judicial proceeding, and must be surrounded with some sort of judicial sanction; besides, the just compensation required by the Constitution is a matter of substance, and not of form, and which this proceeding utterly ignores.” .

In reaching his conclusions, Judge Breese has so fully sustained his decisions by authority, that we need only refer to them as well as the decision itself, as fully in accordance with the conclusions at which we have arrived, that the assessment of the property of Peay by its frontage on Markham Street, irrespective of its cash value, was unconstitutional and void.

The Chancery Court erred in overruling Peay A demurrer to the bill of complaint, and in rendering judgment thereon for plaintiff.

Let the judgment be reversed and set aside with costs, and the bill dismissed.


author: Walker, Ch. J.: .

text:
    Egan vs. Tewksbury.
    1. Pleading: Nultiel record.

    To p complaint upon a Foreign judgment, of which profert is made, the defendant pleaded, that there was no such record on file, or exhibited to the court as that mentioned in the complaint. This was not a plea of nul tiel record, and did not constitute a defense to the action, and judgment nil dicit, was properly rendered for the plaintiff.
    2. Practice: Filing exhibits.

    Under the provisions of the Code, a party relying on a deed or other writing, should file the same with the complaint, and may be required to do so upon motion of the opposite party.
    APPEAL from Conway Circuit Court.
    . Hon. J. M. Smith, Circuit Judge.

      Fletcher, for appellant.

      Ciarle & Williams and Coblentz, contra.

   Walker, Ch. J.: .

Tewksbury brought an action of debt in Conway Circuit ' Court, upon the transcript of a judgment rendered in the State of Ohio, against Egan.

The declaration is drawn in the common law form of debt upon a record, and sets forth fully the proceedings and judgment of the court with profert, as follows:

As by the records and proceedings in said court now remaining, more fully appear, a copy of which record duly authenticated, the plaintiff now here in court produces.”

The defendant appeared and filed what he claims to be a plea in bar, which is as follows:

Comes the defendant, W. P. Egan, by his attorney, and for plea to said plaintiff’s bill of complaint says, that there is no such record on file, or exhibited to the court as mentioned in said plaintiffs complaint; of this he prays judgment for costs.”

The record entry is, that the cause came on to be heard by the court'on the plea of nul tiel record, wherefore it is considered and adjudged by the court, that the plea is insufficient in law to bar the plaintiff’s action. The defendant interposed no other defense, and judgment was rendered for plaintiff.

Counsel for appellant objects, that as there was no demurrer to the plea, it was irregular for the court to pass upon its sufficiency ; that an issue of nul tiel record having been tendered, the court should have passed upon the issue of record, or no record. ' If, in fact, there had been a plea of nul tiel record filed, and the sufficiency thereof not raised by demurrer, no question as to the sufficiency of the plea being before the court, no judgment could be passed upon it. But we apprehend that the paper filed as a plea of nul tiel record can scarcely be considered such. It neither traverses, nor attempts to traverse, any allegation in the declaration, nor does it deny that there was such record of judgment and recovery as declared upon, but only denies that such record is on file or exhibited.

According to the common law rule of practice, in pleading, the plaintiff was not bound to file the instrument, and could only be made to produce it for the inspection of the defendant, and to furnish him a copy of it, upon his prayer of oyer for that purpose. When, says Gould in his work on pleading, ch. 2, sec. 21, “an action is founded upon a deed or other instrument pleaded with profert, before the defendant can be required to plead to the action, he is entitled to oyer of the instrument; according to the common law form of pleading, the offer to bring the instrument declared upon into court, is in effect holding it ready to be produced, when, upon oyer, required to do so.

By our Civil Code of Practice, sec. 148, the party relying upon a deed or other writing, should (if in his power) file the same Avith his complaint, and if he failed to do this, it might be reqnired of him by the court upon motion for that purpose. The proceeding by motion is by our Code of Practice substituted for a common law prayer of oyer, the object of both being to bring the instrument declared upon before the court, and before which time the defendant is not required to answer the complaint.

The objection filed by the defendant, that the record sued upon had not been filed, when, in fact, he had neither made prayer of oyer under the common law practice, nor moved the court to have the record filed under the Code Practice, was certainly no defense to the action, nor intended to put any allegation of the declaration in issue, and upon motion it should have been stricken out as a nullity, and judgment .rendered for want of plea. Crary v. Beebe, 4 Ark., 206; Badgett v. Martin, 7 Eng., 743.

In this instance the legal effect of the judgment of the court, that the plea was insufficient, was that it was no defense. The defendant declined to plead further, and judgment was properly rendered nil dicit in favor of the plaintiff for the sum demanded in his declaration. Finding no error in the judgment of the Circuit Court, the same is in all things affirmed.