author: Hart, J., Humphreys, J.,

text:
    Stanley v. Gates.
    Opinion delivered July 1, 1929.

      Horace Chamberlin, for appellant.

      Hal L. Norwood, Attorney General, David A. Gates, John L. Carter, and Williamson ■& Williamson, for ap-pellee.
    Attorneys filing briefs as amici curiae: Frank 8. Quinn; Jones & Jones; Gaughan, Sifford, Godwin & Gaughan; Rose, Hemingway, Cantrell & Loughborough; Wm. H. Martin; Marsh, McKay & Marlin; Mahony, Yocum & Saye; George A. Hall; Alfred J. Hall; George Vaughan; F. 0. Butt; Sam Rorex; Danaher & Danaher; Rowell & Alexander; Coleman ■& Ganvtt; Cecil Shane.

   Hart, J.,

(after stating the facts). It is first earnestly insisted that the income tax law under consideration is a property tax, and is therefore violative of the equality and uniformity clause of article 16, § 5, of the Constitution; hut the court held adversely to thát contention in Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720, where it was held that an income tax is neither a property tax nor an occupation tax within the meaning of the provision of the Constitution just referred to.

It is next insisted that this holding was obiter dic-twn, and should not be considered binding upon the court in the case at bar. We do not agree with counsel in this contention. In the first place, this court is committed to the rule that, where grave public interests are involved in a question, the court may waive every point except that of determining the constitutionality of the act. Trammell v. Bradley, 37 Ark. 374, and McClure v. Topf & Wright, 112 Ark. 342, 166 S. W. 174. In both those cases the 'constitutionality of local liquor laws was involved. An income tax law works a great and important change in our tax laws, and is a matter of grave public interest. Besides, we think the language used by the various judges in their opinions in that case indicate their judicial interpretation of the subject after careful study of it. The views expressed were pertinent to the subject at hand, and appropriate as indicating their reasons for the conclusions announced.

In the early case of County of Pulaski v. Irvin, 4 Ark. 473, the court said:

“The power of taxation, as has been justly said, is the greatest power that can be intrusted to a sovereign. In its exercise all the great interests of society are involved, and the government is put into operation and supported by its resources or influence. As a general principle, the right of taxation is given and belongs exclusively to the legislative department. And there is great propriety and necessity in thus lodging it; for, as it is to be exercised for the benefit and security of the State, so the whole people of the State, through the means of the elective franchise, should have the power of regulating and controlling its action. ’ ’

The framers of the present Constitution, in recognition of this great principle, in § 23 of the Declaration of Rights, provided that the State’s ancient right of eminent domain and of taxation is herein fully and expressly conceded. The principle was announced in Sanders v. Texarkana, 103 Ark. 529, 146 S. W. 105, as follows: “Unless inhibited by some constitutional provision, the State Legislature has full power over all matters of taxation and the collection and disbursement of taxes, and may exercise absolute control over all revenues collected by subordinate brandies of the State Government. Cooley on Taxation, p. 46.”

Again, in the original opinion in the case of Sims v. Ahrens, 167 Ark. 557, 271 Su W. 720, it was said: ‘‘In approaching the consideration of this question, it may be said that we do not have to search the Constitution for express authority to levy the tax. The power to levy it exists as an inherent right, unless the Constitution has denied the right to the .State to levy taxes of this-character. ’ ’

The court there considered whether the income tax was in violation of article 16, § 5, of the Constitution. The opinion of the majority of the judges was that the income tax law was in violation of that provision of the Constitution, and concludes as follows: “The State is without power to impose an income tax or occupation tax for State purposes, and the court below was therefore correct in holding that act unconstitutional, and the decree is affirmed. ’ ’

Judge Humpheeys and myself concurred in the result announced, instead of dissenting from the opinion of the majority in affirming the decree, because we believed that a gross income tax operating upon all persons and occupations alike was unconstitutional. Because the majority opinion was placed upon the broad ground that, under art. 16, § 5, of the Constitution, the Legislature was prohibited from enacting any kind of income tax law, it became necessary for us to give our reasons for our disagreement to the conclusions of the majority; and, after a careful consideration .of the question, and stating our reasons therefor, we said:

‘ ‘ Our conclusion in the whole matter is that the effect of our previous decisions that the proviso in art. 16, § 5, of the Constitution, giving the Legislature the power to tax certain occupations, by necessary implication precludes it from taxing other occupations for State purposes, and that if the provision had been left out of the section the Legislature might have taxed all occupations. The section contains no such restriction as to income taxes. Hence, if we are correct in holding that an income tax is not a property tax, and if it is not the same thing as an occupation tax, it necessarily follows that it is within the discretion of the Legislature to pass a properly classified net income tax law. ’ ’

A motion for rehearing was filed and granted, on the votes of Justices Wood, Hart and Humphreys. Judge Wood gave his reasons for the change of views in a carefully prepared and seasoned opinion, which concludes as follows: “Therefore, for the reasons stated, I concur in the conclusion reached by Justices Hart and Humpheeys, that ‘it is within the discretion of the Legislature to pass a properly classified net income tax law, and such therefore is now the opinion and holding of the majority of the court’.”

Judge Smith wrote a dissenting opinion, concurred in by Chief Justice McCulloch, which concludes as follows: “I therefore respectfully dissent from what is now the majority opinion.”

Reference to the various opinions in that case will show that the court recognized that there was a division in the authorities upon the subject whether an income tax was a property tax or not, and we deliberately adopted the view that it was not a property tax. If it is not a property tax, it does not make any difference what name it is called. Whether it is called an excise tax, or a tax in the nature of an excise tax, or a personal tax, is a mere matter of definition, and does not in any wise change its character.

But it is again urged upon us that to hold an income tax unconstitutional 'because art. 16, § 5, of the Constitution, after saying that all property subject to taxation shall be taxed according to its value, etc., contains a provision that: “The General Assembly «hall have power from time to time to tax hawkers, peddlers, ferries, exhibitions and privileges in such manner as may be deemed proper,” which they claim, by necessary implication, prohibits all forms of taxation except property taxes and the occupation, taxes named in the proviso. This is in application of the maxim, “expressio unius est exclusio alterius.” In State v. Martin, 60 Ark. 343, 30 S. W. 421, 28 L. R. A. 153, Mr. Justice Wood, speaking for the whole court, said that the court is thoroughly committed to the doctrine that the maxim “is not to be applied with the same rig'or in construing a State Constitution as a statute, and that only those things expressed in such positive affirmative terms as plainly imply the negative of what is not mentioned will he considered as inhibiting the powers of the Legislature. ’ ’ The reason is that the Constitution of a State is not a grant of enumerated power, but its chief object is to impose limitations upon the several departments of government. If a contested enactment is not prohibited either by the letter or the spirit of the Constitution, it is authorized. Vance v. Austell, 45 Ark. 400.

The proviso in the section of the Constitution referred, to gives the Legislature power to tax certain named occupations without regard to the equality and uniformity clause applicable to property. This by necessary implication prohibits, the taxation of other occupations for State purposes; but at the same time it also impliedly recognizes that a tax on occupations is a different kind of tax to a property tax; and “it does not by inference too strong to be resisted,” as the rule is stated in Neal v. Shinn, 49 ,Ark. 227, 4 S. W. 771, cut off the Legislature from levying other recognized 'kinds of taxes than those dealt with in the clause of the Constitution under consideration. In the application of this rule of construction in State v. Handlin, 100 Ark. 175, 139 S. W. 112, the court sustained the validity of an inheritance tax law upon the ground that it was not a property tax within the constitutional rule as to equality and uniformity. My dissent in that case was based upon the construction given to the terms of the act, and not on the ground that it was unconstitutional. Again, in Floyd v. Miller Lumber Co., 160 Ark. 17, 254 S. W. 450, 32 A. L. R. 811, a severance tax act was sustained as to individuals as well as to corporations, and this could not have been done if such a tax was a property tax, or if there was a prohibition -by necessary implication in art. 16, § 5, against levying any kind of tax except a property tax or a tax on certain designated occupations and privileges, for only two of the judges in that case classified a severance tax as a tax on privileges. The view of the majority is that the Legislature has the power to pass a tax on net incomes, if the law is valid in other respects.

The whole matter may be summed up by a quotation from the concluding part of the opinion in Glasgow v. Rowse, 43 Mo. 479, as follows:

“The Constitution enjoins a uniform rule as to the imposition of taxes on all property, but does not abridge the power of the Legislature to -provide for a revenue from other sources. It was intended to make the burdens of government rest on all property alike — to forbid favoritism and to prevent inequality. Outside of the constitutional restriction, the Legislature must be the sole judge of the propriety of taxation and define the sources of revenue as the exigency of the occasion may require. The income tax was uniform and equal as to the classes upon whom it operated. It did not come within the meaning of the term ‘property' as used and designated in the Constitution, and I think was not in conflict with any provisions of that instrument.”

The opinion was concurred in by the other judges.

There is no good reason for holding that inheritance tax laws and severance tax laws are not property taxes within the meaning of art. 16, § 5, of our Constitution, and that income taxes are property taxes and fall within the ban of its provisions. A majority of the court has yet to see the distinction between them. It has been well said that “a tax on incomes is not a tax on property, and a tax on property does not embrace incomes.” Hence a majority of the court holds that “property,” as the term is used in art. 16, § 5, of the Constitution, means the property itself as distinguished from the annual gain or revenue from it.

It is next contended that the act is in violati on of art. 5, § 31, of the Constitution, which reads as follows:

“No State tax shall he allowed, or appropriation of money made, except to raise means for the payment of the just debts of the State, for defraying the necessary expenses of government, to sustain common schools, to' repel invasion, and suppress insurrection, except by a majority of two-thirds of both houses of the General Assembly.”

The basis of the argument is § 41 of the act, which reads as follows:

“The commissioners shall pay to the State Treasurer, on or before the 25th day of each month, all taxes, interest and penalties collected under this act during the preceding calendar month, which amounts shall be credited by the treasurer as follows: The first $500,000 annually to the charities fund; the next $750,000 annually to common school equalization .fund; and all of the remainder to a special fund to be used solely for the purpose of reducing the State tax on property.”

The word “allowed” as used in that section of the Constitution means allowed by law or permitted by statute. Hence an act of the Legislature appropriating money for an exhibit of the resources of the State of Arkansas at the Panama Pacific Exposition was held not to be a necessary expense of government, and required a two-thirds majority vote of each house of the Legislature in its favor to render it valid. Belote v. Coffman, 117 Ark. 352, 135 S. W. 37, and Oliver v. Southern Trust Co., 138 Ark. 381, 212 S. W. 77.

It is conceded that the first two items, viz., charities fund and comimon school equalization fund, come respectively under the phrases “defraying the necessary expenses of government” and “to sustain the common schools,” but it is insisted that the concluding part of the section, providing that the remainder of the fund be used solely for the purpose of reducing the State tax on property, amounts to a violation of the constitutional provision, because such use is not for any of the enumerated purposes in the section and is therefore in violation of the constitutional provision, because the act was not passed by a two-thirds majority vote in each house of the Legislature. A majority of the court does not agree with this contention.

It could not be foretold with any degree of accuracy how much revenue would be annually derived from the tax collected under the act, and therefore it was provided that the unexpended portion not used in the charities fund and the common school fund should be used for the purpose of reducing the State tax on property. Under the existing system of taxation, the bulk of our revenue for supporting- the State Government and the common schools is raised from taxes on property. The fund so collected is placed in the general-revenue fund, and is expended under appropriations made by the Legislature. If an appropriation is made for a purpose not specified in the section of the Constitution, the act must be passed by a two-thirds majority vote, as explained above. Hence the unexpended portion of the fund collected under the present act would be placed in the general revenue fund, and thereby make it practical for the proper authorities to reduce the State tax on property. The fund, however, could not be used until the Legislature appropriated it as provided by the Constitution. The appropriations would be made in the same manner as a fund collected from a property tax. That is to say, if the Legislature u-sed it for any of the purposes not enumerated in art. 5, § 31, a two-thirds majority vote in each house would be required. In short, the unexpended portion of the fund will take the place of and be substituted for taxes collected on property, to the end that property taxes may be reduced, and the fund will be expended under appropriations of the Legislature just as property taxes are expended.' The framers of the Constitution did not intend that taxes collected from different sources should require different majorities in appropriation acts. The prohibition is directed at the purpose for which the tax is to he expended and not at the kind of taxes collected. Taxes from whatever source derived are expended under appropriations made by the Legislature in accordance with the Constitution. The concluding part of the section simply means that the unexpended portion of the tax should be substituted for a property tax of a like amount.

It is next insisted that the act should be declared invalid 'because the emergency clause as actually contained in the act when it passed the Legislature is not in compliance with the provisions of Amendment No. 13 of the Constitution, that there should be a statement of facts constituting the emergency in a separate clause, which should be separately adopted by a two-thirds vote. The complaint alleges that there is an emergency clause designated as § 44 of the act as approved by the Governor, which reads as follows:

‘ ‘'All laws and parts of laws in conflict herewith are hereby repealed, /it is hereby ascertained and declared that the Hospital for Nervous Diseases is inadequate to properly care for all who should be confined therein, to the end there are many persons of unsound mind at large, who are a menace to the public safety, and that said hospital as now equipped is inadequate to restrain those insane persons who are confined therein, so that there is danger of their escaping at any time and imperil the safety of the public; that there are hundreds and hundreds of persons desiring to enter the tuberculosis sanatorium who cannot now be accommodated there, because that institution has neither rooms, beds, nor facilities for additional people, as a result said consumptives at large are spreading the disease amongst their families and friends; that the funds to be raised by this aict will be used for the better care of the charitable wards of this State ■and to provide better for the rural schools of this State; and it is therefore ascertained and declared that it is necessary for the public peace, health and safety that this act go into immediate operation, and accordingly it is provided that this act shall take effect and be in force from and after its passage. ’ ’

The complaint alleges that the emergency clause now contained in the act was, after the passage of the act, substituted for the emergency clause which was in the act when it was passed by the Legislature, which reads as follows: “All laws and parts of laws in conflict herewith are hereby repealed, ancjthe urgency for immediate funds for the support of the charitable institutions of the State and the equalizing of educational opportunities, together with the urgent need of reducing the State tax on property, to the end that the expenses of government shall be home more equally and the ownership of property may be encouraged, is so great that an emergency is hereby declared to exist, and this act shall take effect and be in force from and after its passage.”

The emergency clause which counsel for plaintiff claim was on the act when it was passed expressly states that the urgency for immediate funds for the support of these charitable institutions of the State and the equalizing of educational opportunities are so great that an emergency is declared to exist. In direct, certain and positive terms the Legislature gave its reasons for putting the law into immediate effect. The Legislature itself was the judge wdiether it was immediately necessary to better conditions at the State charitable institutions and to equalize educational opportunities. This it could do by its own methods of investigation and by reading the newspapers. It could find by the latter method that the urgent need of building new structures to house the insane was being discussed; that provision should be made at once to equalize the opportunities for education for those in the remote sections of the various counties with those in towns and cities. The Legislature has declared in plain language that this was an emergency or necessity for immediate action in the respects stated, which could only be accomplished by legislative action. The Constitution defines the duties of each department of government. No one would gainsay that the General Assembly must act independently in passing- such:, legislation as the public needs require which is not forbidden,'by the Constitution. In this .respect it-is restricted ;only by its sense of responsibility .to the people.

Likewise its action is supreme in declaring when an eanergency exists; and if it states a fact or facts constitutings the emergency so that its action cannot be said to be arbitrary the courts cannot say to it that it has or has not performed its eqnstitutiopal duty. The three departments of government are of equal dignity and no one of them can encroach upon the other. The emergency clause in the act as signed by the Governor differs in no essential respect from the one alleged to iave been in the apt when passed by the Legislature. Whether the facts auestated in a concise qr more extended form is a matter that concerns the Legislature alone. The courts might disagree with the Legislature apout fhernecessity of action and bo of the opinion that the facts declared did not constitute a sufficient reason for immediate action but we are of the opinion that a -declaration by the Legislature of an emergency based upon certain facts stated is conclusive upon the courts and upon all parties in so far as it abridges the right involved in the referendum. Hanson v. Hodges, 109 Ark. 479, 160, S. W. 372; Jumper v. McCullom, ante, p. 837; and In re Senate Resolution No. 4, 54, Col. 262, 130 Pac. 33. Under either emergency clause the act took effect from and after its approval by the Governor. Lee Wilson & Co. v. Wm. R. Compton Bond Mtg. Co., 103 Ark. 452, 146 S. W. 110; Arkansas Tax Commission v. Moore, 103 Ark. 48, 145 S. W. 199 and Hanson v. Hodges, 109 Ark. 479, 160 S. W. 392.

-No sort of proof--that" the substitution'-of qn-omer-. gency: clause qfteir. the passage of the bill, was made by'some one:can of itself -affect.-the validity of:the-act. = , .If < this was.,tbe law, an-obnoxious-law could be, easily got: rid-of' by-an-interested party procuring;s.cHme one to alter or chauge-.it in-s-o-ine section-or-part of a; section after, the. bill i-s.passed^ To hold otherwise would make the validity, of any law depend -upon the- action .of the .parties '-affected-by the act however vaEd the statute as passed might h'áye béeüNSüch a'CóurSéHyóuld not only tend to unsettle "aid lawsy hut would be ruinous- to'the people. Booe v. Road Imp. 141 Ark. 140, 216 S. W. 500.

' ít ishext contended* that article 2 of-the act,- relating td the imposition Of the tax, renders the act invalid. The ^áfthpéóiálly: Complained of reads-as follows: '

‘‘‘Section' 3 (a) On individuals; — Á tax is hereby Mposéd’upOn: and] with "respect tcrthe entire income df every resideht,individual, trtíát' <jrestate, whi'ch-tax shall he levied collected and paid annually-upon-such entire net' ineome as herein computed,- -at ' the following' rates, after deducting the exemptions provided in this act: ' On the first $3,000 of'net income- or any part thereof, one per cent.; on the second $3,000 of net income or any part 'thereof, two per cent.;on the next $5,000 of net income or any part thereof,‘three per cent.'; on the next $14,000 of ii-et income Or ány part'thereof, four per cent.; on all net income in excess of '$25,000, five per cent.
i "On* corporations. — Every corporation organized under the'laws of this State shall pay annually an income tax with respect'to carrying on or doing business equivalent to two per cent, of'the entire net income of such ¡corporation as'defined herein, received by such Corporation during the income -year; and every foreign -cor-jporEition doing* business within the jurisdiction of this State shall pay annually‘an iUcoirie tax equivalent to two per cfint. of á proportion of itsentire net income to be determined as héreinafter provided in thie act.
“(c) ' On income ‘of' Arkansas property of non-resideiits. — A likePax is hereby'imposed' and shall be assessed'teviéd,' collected íind paid,- annually, at the rates specifidd'in'this''séctió'n, upon' and with respect to the entire net income as fibrein' defined, except its hereinafter provided,;from all property owned,‘and front every business, trade or occupation carried c>m in' this State by individuals,]* corporations, partnerships, trusts or estatés, not*residents of the'State of Arkansas.”

See also '§'T’6 relating to'exemptions."

Having beld that an income tax is not a property tax, it follows that the equality and uniformity clause of the Constitution applicable to taxes on property has no reference to income taxes, and income taxation of a progressive icharaeter does not offend § 18 of our Bill of Bights nor the Fourteenth Amendment to the Constitution of the United States, guaranteeing equal protection of the laws. While there must be no discrimina!’ m in favor of one as against another of the same class, the States may make exemptions, levy different rates upon different classes, and make such deductions as they choose, so long as they obey their own constitutions. State v. Frear, 148 Wis. 456, Ann. Cas. 1913A, 1147, 134 N. W. 673, 135 N. W. 164, L. R. A. 1915B, 569; and State ex rel v. Johnson, 170 Wis. 218, 175 N. W. 589, 7 A. L. R. 1617.

With reg'ard to the progressive feature of an income tax, the Supreme Court of Wisconsin, in the Frear case, quoted with approval from Knowlton v. Moore, 178 U. S. 41, 20 S. Ct. 747, page 109, the following:

“The review we have made exhibits the fact that taxes imposed with reference to the ability of the person upon whom the burden is placed to bear the same have been levied from the foundation of the government. . So also some authoritive thinkers and a number of economic writers contend that a progressive tax is more just and equal than a proportional one. In the absence of constitutional limitation, the question whether it is or is not is legislative, and not judicial. The grave consequences which, it is asserted,’must arise in the future if the right to levy a progressive tax be recognized, involved in its ultimate aspect the mere assertion that free and representative government is a failure, and that the grossest abuses of power are foreshadowed unless the courts usurp a purely legislative function.”

It is claimed that the act is discriminatory on its face between corporations and individuals. It is well settled that putting corporations in one class and individuals in another is a proper classification. The courts hold that there is a substantial difference between individuals and Corporations which justifies classification. A corporation is an artificial person, created by the State, endowed with franchises and privileges of many kinds which the individual has not. The tax is measured by a percentage on the net income from the business. Under § 16 different exemptions are allowed to individuals, heads of families and dependents. Foreign and domestic corporations have the same exemptions. Nonresidents are protected from discrimination, and the tax is only imposed on any business carried on within the borders of the State in the same manner as that of residents. The tax is levied and collected at the 'source, which is estimated from the amount of business in this State. The imposition of the tax upon business done by a nonresident in this State is no greater in any respect than that on a business conducted by a resident of the State. In Shaffer v. Carter, 252 U. S. 37, 40 S. Ct. 221, it is said:

“We deem it clear, upon principle as well as authority, that just as a State may impose general income taxes against its own citizens and residents whose persons are subject to its control, it may, as a necessary consequence, levy a duty of like character and not more onerous in its effect, upon incomes accruing to nonresidents from their property or business within the State, or their occupations carried on therein, enforcing payment, so far as it can, to the exercise of a just control over persons and property within its borders.”

In United States Glue Company v. Town of Oak Creek, 248 U. S. 321, 38 S. Ct. 499, it was held that a State, in laying a general income tax upon the gains and profits of a domestic corporation, may include in the computation the net income derived from transactions in interstate commerce, without contravening the commerce clause of the Constitution. See also People ex rel. v. Travis, 231 N. Y. 339, 132 N. E. 109, 15 A. L. R. 1319.

The differences between the situation of corporations and individuals justify a difference of treatment in the levying of the income tax. The Legislature alone has the right to make the classification, It has very broad powers in this respect, and its classification will not he reviewed by the courts unless they are plainly arbitrary or discriminatory as shown on their face, or confiscatory. In Brushaber v. Union Pacific Rd. Co., 240 U. S. 1, 36 S. Ct. 236, in discussing the question, the court said:

“In this situation it is of course superfluous to say that arguments as to the expediency of levying such taxes or of the economic mistake or wrong involved are 'beyond judicial cognizance. Besides this demonstration of the want of merit in the contention based upon the progressive feature of the tax, the error in the others is equally well established, either by prior decisions or by 'the adequate bases for classification which are apparent on the face of the assailed provisions, that is, the distinction between individuals and corporations, the difference between various kinds of corporations,” etc. ('Citing authorities).

As frequently said by the Supreme Court of the United States, “perfect uniformity and perfect equality of taxation, in all respects in which the human mind can view it, is a baseless dream. ’ ’ Patton v. Brady, 184 U. S. 608, 22 S. Ct. 493, and cases cited. As also stated by that court, it is not the province of the judiciary to inquire whether taxes of this sort are reasonable in amount, and the legislative determination is final, unless it appears arbitrary in its classification, or confiscatory.

In short, we have held that there are no constitutional restrictions in this State as to an income tax, which may be classified by the Legislature both as to the rate of taxation and the subjects as individuals, corporations, étc., if onfy it is uniform for each class, and of this Glassi-fication the Legislature is the judge, subject only to review by the courts if the classification is palpably arbitrary.

The statute provides for a general yearly income tax. Section 4, however, provides that such tax shall first be assessed, levied, collected and paid in the year 1929 and with respect to the net income received during the calendar year 1928; provided, when the taxpayer’s income year ends on any date other than December 31, 1928, only that portion of snch annual income shall be taxable under the act as is applicable to the calendar year. It is claimed that this renders the act invalid. In dis:ussing this question in Drexel Company v. Commonwealth, 46 Pa. St. 31, it was held that an income tax is imposed upon profits, not capital, and that it is both constitutional and expedient, in levying’ the tax, to take as the measure of taxation the profits on income- of the preceding year. In Brushaber v. Union Pacific Bd. Co., 240 U. S. 1, 36 S. Ct. 236, L. R. A. 1917D, 414, it was held that the income tax provisions of the Tariff Act of 1913 are not unconstitutional by reason of retroactive operation, the period covered not extending prior to the time when the amendment was operative. It was held further that the provision was not unconstitutional under the due process provision of the Fifth Amendment. The court quoted with approval from Stockdale v. Atlantic Insurance Co., 20 Wall. (U. S.) 323, 331, in sustaining a provision in a prior income tax law, which was claimed to be retroactive in character, the following: “The right of Congress to have imposed this tax by a new statute, although the measure of it was governed by the income of the past year, cannot be doubted; much less can it be doubted that it could impose such a tax on the income of the current year, though part of that year had elapsed when the statute was passed. The joint resolution of July 4,1864, imposed a tax of five per cent, upon all income of the previous year, although one tax on it had already been paid, and no one doubted the validity of .the tax or attempted to resist it.” See also People ex rel. v. Travis, 231 N. Y. 339, 132 N. E. 109, 15 A. L. R. 1319, where it was held that a retroactive income tax is not invalid when applied to the business conducted by a nonresident within the State, on the theory that it is a privilege or excise tax, since it is merely a distribution of the expense of government; and Flint v. Stone Tracy Co., 220 U. S. 107, 31 S. Ct. 342, Ann. Cas. 1912B, 1312.”

Section 4'2 of the act provides that, if any paragraph or part of the act shall he adjudged to be valid, such judgment shall not affect or impair the remainder of the act. This court has recognized the doctrine that, when statutes are worded in a manner to justify it, the Legislature may express its will that the provisions of such statute declared by the court to be valid shall stand, notwithstanding other provisions in the same statute may he declared unconstitutional, and that the courts will respect and carry out such legislative declaration. Nixon v. Allen, 150 Ark. 244, 234 S. W. 45, and cases cited.

Even if the act had not contained the section just referred to, the act, as already construed in this opinion, is complete in itself, and is severable. The general rule is that, if any special provision of an act he unconstitutional and c an. be stricken out without affecting the validity of the residue of the act, it will he done, and the remainder of the act will be allowed to stand. Brooks v. Wilson, 165 Ark. 477, 265 S. W. 53; County Board of Education v. Austin, 169 Ark. 435, 276 S. W. 2; and Cone v. Garner, 175 Ark. 860, 3 S. W. (2d) 1.

In this connection it may be stated that the act contains forty-four sections, and is very broad and comprehensive. Other objections than those here considered may be offered in the future to various provisions of the act, but we will wait to consider the questions involved in them when they are presented in a «mcrete case.

It follows from what we have said that a tax upon the in' ome of a person or corporation, and not upon any particular property from which that income' is derived, is constitutional; and the statute under consideration is a valid exercise of legislative power over the subject of taxation. Therefore the decree will be affirmed.

Justices Smith, Humptiseys and Kirby dissent.

Humphreys, J.,

(dissenting). This suit was brought by appellants against appellee in the chancery court of Pulaski County to enjoin the enforcement of act 118 of the General Assembly of 1929 of the State of Arkansas, entitled, “An act providing for the levying, collecting and paying of a tax on incomes,” upon the ground that it is unconstitutional, and, even though constitutional, should be enjoined in order that it might remain in abeyance until a referendum vote of the people for and against the act may be registered. The necessary petitions to refer the act have been filed with the Secretary of State, and tw:o years’ taxes will be collected before the people can express themselves for or against it unless an injunction is issued.

According to the construction of the Constitution of 1874 in the case of 8ims v. Ahrens, 167 Ark. 557, 271 S. W. 720, the General Assembly of the State may enact a properly classified,'fair net income tax law. The writer was one of the majority who handed down that opinion, and, after reading the able briefs filed in the instant case by learned counsel for appellants and as amici curiae, T am not convinced that the majority opinion was incorrect. I am convinced, however, that the. act is void for other reasons. The first reason is that the act was not passed by a two-thirds vote of both houses of the General Assembly. The journals show that it only received a majority vote. Section 31, article 5, of the Constitution of 1874 provides that:

“No State tax shall be allowed or appropriation of money made, except to raise means for the payment of the .just debts of the State, for defraying the necessary expenses of government, to sustain common schools, to repel invasion and suppress insurrection, except by a majority of two-tliirds of both houses of the General Assembly. ’ ’

This section of the Constitution definitely specifies the only purposes for which a tax may be allowed or raised by a majority vote for both houses of the General Assembly. An act allowing a tax for any other purpose than those expressed in this act must receive a two-thirds majority vote in each house. Belote v. Coffman, 117 Ark. 352, 175 S. W. 37, One of the purposes expressed in act No. 118 of the Acts of 1929 for allowing- the tax is the reduction of property taxes. This purpose is clearly not within the exceptions specified in § 31, article 5, of the Constitution, and the act is void because it did not receive, a two-thirds majority vote of both houses of the General Assembly.

The next reason is that the act is palpably discriminatory, unfair, and unjust. It was not ruled in the case of Sims v. Ahrens, supra, that a discriminatory.net income tax law might be passed by the Legislature, but on the contrary it was ruled that the Legislature mig-ht pass a properly classified and fair net income tax law. It would extend this dissenting opinion to unusual length should the writer attempt to set'out all the palpably discriminatory features in the act. I shall only set out a few of the glaring discriminations contained in the act.

According to the terms of the act, a corporation enjoying a net income' of $50,000 a year would only have to pay $1,000, whereas an individual or partnership enjoying a net income of $50,000 derived from exactly the same kind of business would have to pay $2,050. In other words, an individual or partnership would be required to pay more than double the amount of taxes which a corporation would be required to pay on the basis of a $50,000 net income, where both conduct exactly the same kind of business in the same territory.

Again, the act in question is retroactive in that it imposes a net income tax upon all salaries earned in the year 1928 prior to the passage of the act. According to the terms of the act, a full year’s income for the year 1928 will be collected'from individuals, partnerships and corporations who operated under a calendar year, but if they operated under a fiscal year, terminating before December 31, 1928, only a portion of the 1929 income tax will be collected from them in the year 1929. This is an arbitrary and unjust discrimination which the writer cannot approve as a fair and proper classification.' Just because one person uses a calendar year in estimating his income and another a fiscal year, is no justification whatever for collecting a tax upon all of one person’s income for 1928 and only a part of another’s.

Ag'ain, the act malíes such a difference and inequality in taxation on the sales of property that the effect will he not only to tax the income from the property but to tax the capital or property itself. A reading of § 10 of the act, together with the subsections, reveals such a difference and inequality in the taxation on sales that same is unreasonable, unfair and unjust, and necessarily void.

The writer of this dissenting opinion will not attempt t set out further discriminations in the act which render it void, hut, in conclusion upon this feature of the act alone, will say that, after a very careful reading of the act, I cannot find a single tax imposed therein which is not palpably discriminatory, unjust and unfair.

Lastly, according to the view of the majority, the act is valid, but that should not prevent the issuance of a temporary injunction to restrain the enforcement thereof until a referendum vote of the people can he had thereon. This is so because, in my opinion, the emergency clause purported to be attached to the act which passed both houses of the General Assembly was an insufficient emergency clause to put the act into immediate force and effect. The Constitution, as amended, requires that facts be stated by the Legislature which constitute the emergency declared by it. This amendment was passed to prevent the evil which had grown up of attaching emergency clauses to all acts, even though an emergency did not exist. The purpose and intent of the amendment was to require the Legislature to state facts which really justified the declaration of an emergency. The emergency clause purported to be attached to the act which passed both houses of the Legislature was, in substance, like the emergency clause attached to the act which this court had before it for construction iu the case of Cumnock v. Little Rock, 168 Ark. 777, 271 S. W. 466. In his dissenting opinion in that case Mr. Justice Hart, now the Chief Justice of this court, said:

“Having reached the conclusion that the proviso is not self-executing, it becomes necessary for me to pass upon the validity of the act of the Legislature of 1925 attempting to put the proviso in question in operation. Section six provides that the act is immediately necessary for the preservation of the public peace, health and safety, and that the same shall take effect and be in force upon its passage. The reason given that it is declared an emergency is that, by reason of the heavy indebtedness hanging over many cities o'f the first class, they will be unable to procure proper facilities for the extinction of fires, proper police protection, and proper safeguards for the public health. This declaration on the part of the Legislature is a mere conclusion on its part. By an amendment to the Constitution of the State, adopted on the 11th day of November, 1920, the limitation upon the legislative power in declaring an emergency to exist is made. The section specifically provides that it shall be necessary to state the facts which constitute the emergency allowing the Legislature to put an act into immediate effect. The mere fact that cities and towns are largely in debt contains no statement of the facts of an emergency. I do not think that the legislative declaration of an emergency is final under the provision of the Constitution referred to, and am of the opinion that its action is subject .to judicial review. The authorities on both sides of the question are cited in a case-note to Payne v. Graham, 118 Me. 251, 7 A. L. R. 516.”

I thoroughly agree with what the Chief Justice said in that case relative to the sufficiency of the emergency clause being a question for review by the courts and that the facts stated by the Legislature must declare real and existing facts which justify the emergency declared. The writer of this dissent is also of opinion, from an inspection of the engrossed and enrolled act before the court for construction, that it is impossible to tell whether the emergency clause, or what emergency clause, was attached to the act by a two-thirds vote of both houses of the General Assembly. It is alleged in the complaint and conceded in the demurrer that the emergency clause to the engrossed and enrolled act was not the one attached to the original act as amended and engrossed which passed both houses of the General Assembly, but that, after' the passage of the original act as amended and engrossed, the emergency clause now attached to the engrossed and enrolled act was substituted, without a vote of either house, for the one that both houses adopted and passed. Such a substitution, if made, was necessarily a fraudulent one under the allegation of the facts in the complaint. If it be conceded that the facts, alleged in the complaint and admitted in the demurrer must be viewed in the light of the record, an inspection of the engrossed act reflects that the last page thereof, upon which the emergency clause appears, is written on older paper than the body of the act, and in slightly different type; and that the last page of the enrolled act upon which' a part of the emergency clause appears fails to bear the red ink page number which the other pages bear in their order, and that the page next to the last one upon which the first part of the emergency clause appears is written over words which have been erased. It is true that the records in the passage-of a law are the only evidences admissible to test its validity, but this rule of evidence is necessarily based upon the presumption that the records themselves are genuine, and not forgeries. If the records supporting the passage of a law are forged, the law must fall, as fraud vitiates everything, even to the highest and greatest legislative enactment. A law cannot escape the penalty of invalidity if it or a material part thereof is a fraudulent substitution for the law which actually passed both houses of the general .Assembly. An inspection of the engrossed and enrolled act in question shows that the emergency clause attached thereto has been tampered with, and, in my opinion, this is enough to destroy the integrity of the emergency clause and justify a court in declaring that the act passed without an emergency clause being attached, unless it can be shown that the emergency clause attached was the one adopted by a two-thirds vote of both, houses. In the present condition of the record the court should temporarily enjoin the enforcement of the laws, just as it would if no emergency clause had been adopted or attached to the act. According to the allegation of the complaint an insufficient emergency clause was adopted and attached to the act which passed both houses of the General Assembly and sincerth is allegation as sustained the to a great extent by an inspection of the engrossed and enrolled act the bars should he thrown down and the truth ascertained as to the particular emergency clause which was adopted and attached to the act which passed both houses of the General Assembly.

jr On aeeouiiGof the invalidity of the ct as well as the insufficiency of dhe emergency clause under, the alfer-ga tions\ of; the. complaint and ’inspection of the record the writer is of the opinion that the court should ¡enj oin: the;enforcement of themct.-


source: Caselaw Access Project

author: Hart, C. J.,

license: Public Domain

text:
    Young v. People's Loan & Investment Company.
    Opinion delivered July 1, 1929.

      J. M. Shinn, for appellant.

      Pryor, Miles & Pryor, for appellee.
   Hart, C. J.,

(after stating the facts). It is first contended that the judgment should be reversed because there is not sufficient evidence that the plaintiff is a corporation. According to the testimony of Lee Sims, he had been secretary-treasurer of the company ever since its incorporation, about five years ago. It is well settled in this State that parol evidence is admissible to show corporate existence. Kelley v. Stern Publishing & Novelty Co., 147 Ark. 383, 227 S. W. 609, and Edwards v. State, 171 Ark. 778, 84 S. W. 1041, and cases cited. Besides this, no effort was made to contradict the testimony of Lee Sims in this respect, and the plaintiff was treated throughout the trial as a corporation. Having ignored the matter in the court below, it is too late to raise the question now. Allen West Commission Co. v. People’s Bank, 74 Ark. 41, 84 S. W. 1041.

According to the evidence for the plaintiff, it purchased the note two or three days after the execution of the conditional sales agreement and the note given for the balance of the purchase price of the automobile. Plaintiff purchased the note two or three days after its execution, and paid a valuable consideration therefor. The defendant paid the first installment of the note, and there is nothing whatever in the record to show that the plaintiff had any sort of knowledge of facts that would lead te>‘ knowledge of any defect in the paper sued on. Before the fraudulent character óf a transaction may defeat negotiable paper in the hands of a third person, a purchaser for value, evidence must first be introduced to show that the person was not an innocent purchaser. McClain v. Patterson, 177 Ark. 544, 7 S. W. (2d) 8. It is plain, from the testimony of Lee Sims, that when he said “good consideration,” he meant ‘‘valuable consideration.” There was no' effort whatever made to show that the plaintiff was no>t an innocent purchaser, and the evidence for the plaintiff showed that it was an innocent purchaser for value before maturity of the note. Therefore we are of the opinion that the court did not err in direct-rug a verdict for the plaintiff. It follows that the judgment must he affirmed.


author: Smith, J. Humphreys, J., Butler, J.

text:
    Fuller v. State.
    Opinion delivered July 1, 1929.

      E. D. Chastain and O. D. Thompson, for appellant.

      Hal L. Norwood, Attorney General, and Robert F. Smith, Assistant, for appellee.
   Smith, J.

Appellant seeks by this appeal to reverse the judgment of the circuit court sentencing him to a term in the penitentiary for selling intoxicating liquors, and assigns as error only the alleged insufficiency of the testimony to support the verdict of guilty returned by the jury.

The State relied solely upon the testimony of ace ored hoy named Fred Reed, whose testimony was to the following effect. Witness was -sixteen years old; had worked the winter before at a cafe in Babylon for Percy Johnson, who ran the cafe as manager. One-day a white boy came into the cafe and wanted some liquor, and in regard to the sale the witness testified as follows: “Q. Who sold it? (Counsel for defendant): We object. The court: Let him answer. (Counsel for defendant) : We save our exceptions. A. Him (indicating). Q. That is, the defendant over there by his attorney? A. Yes sir. ’ ’

Witness further testified that appellant sent Percy Johnson for the liquor. Witness did not know where Johnson went to get the liquor, but he returned with a pint, which appellant sold to the white hoy for $1.50 in money.

It is first insisted that the witness did not properly distinguish between appellant and Percy Johnson as to who actually made the sale, if one was made; but this was a question for the jury. Johnson may also be guilty, in that he procured the liquor which had been sold, but this does not lessen appellant’s guilt, if he made the sale, as the witness stated that he did.

It is also insisted that there was no testimony that the liquor sold was intoxicating, and we think the only question in the case is whether the jury was warranted in finding that it was. The boy to whom the sale was made did not testify, and no one stated what the liquor was. But the court told the jury that appellant was charged with having sold an alcoholic liquor, and to acquit him unless it were found beyond a reasonable doubt that he had done so.

Although the word “liquor” was used several times in the examination and cross-examination of the witness, the adjective “alcoholic” was never employed; but we think the jury was warranted in finding that this was meant. The cross-examination of the witness evidenced the fact that it was regarded by all persons connected with the trial that appellant had done, according: to the testimony of the witness, an unlawful act in making the sale, and while the witness did not say that an alcoholic or intoxicating liquor had been sold, this was clearly and necessarily implied from what he did say.

The cross-examination of the witness was very searching, and an attempt was made by it to have the witness admit that he was prompted by a feeling of ill-will and prejudice towards .appellant .in slating that he had seen appellant sell the pint of .liquor for $1-.5Q. t.

In .the. case of Kinnane v. State, 106 Ark. 337, witnesses testified that they bought liquor from. Kinnane oju'r a boat, without. staling that it wasiintoxicatiijg^but'we, there said: “The. jury had a right to úse.fits.common-sense, rand, in -view „of the; surrounding circumstances, were warrantedin finding that the liquor sold was intoxi-, eating.” The case of Griffin v. State, 169 Ark. 342, is to the same effect.

We conclude therefQre that the judgment is sustained, by legally sufficient evidence, aiid.it must -be affirmed, and,, it is so ordered.

Humphreys, J.,

I. concur in the affirmance . of , the, judgment,'not only.for the reasons given; but.also for;the further reason that,-underJhe statute, it.was.unnecessary;, to.allege .and proye that the liqu.or ,wasdntpxicatip.

Butler, J.

I concur.for the reasons sta.te;d by.Mr... Justice,Humphreys,


author: Smith, J.

text:
    Arkansas Portland Cement Company v. Taylor.
    Opinion delivered July 1, 1929.

      Feazel & Steel, for appellant.

      James M. Jackson, F. E.' West.and W.. R-. Ponfiam,. for appellee.-.
   Smith, J.

This suit was brought by the administrator of the estate of Ben L. Taylor Jr., to recpver damages on account of his death which occurred while he was employed by the appellant company at its cement plant in Howard County, on January 10, 1929. He had just assisted in unloading a car of cement, when his foreman directed him to assist in stacking- certain timbers, which were being unloaded from a railroad gravel car. These timbers were referred to throughout the trial by the witnesses as cross-ties, but the foreman said they were cribbing timbers for handling machinery. The ground had been frozen, and had begun to thaw, and was therefore muddy and spongy, and the foreman admonished the men to be careful on this account, but he gave no warning or instruction as to the manner in which the ties should be stacked after they had been unloaded from the car. The ties had -been sawed to uniform size of eight by eight inches, and were eight feet long, and two men were required to handle each tie.

When deceased began stacking the ties he used the same method that had been employed by others who had stacked ties before he was assigned to the -job, which was to place one upon another, without using foundation timbers or strips between the timbers to hold the tiers together. When deceased began stacking the ties there was probably a half-acre of ground covered bv them, which had been unloaded and stacked back from the track, but there was plenty of space for the ties which were being unloaded. The method previously employed had been to begin stacking the ties forty feet or more back from the track, and to build the piles toward the track. All the testimony shows that no foundation timbers had been furnished, nor had strips been supplied up on which to stack the ties so as to bind the tiers together; but the foreman testified that he had been employed on public works for twenty-five years and had never known this to be done, and there was no testimony to the effect that it was customary to furnish foundation timbers or small strips of lumber to be used as binders in tying the tiers of ties together.

The ground was not level, and sloped slightly from the track, but the incline is so slight that it would not be noticed in the pictures taken shortly after the deceased was killed, if the fact had not been mentioned by the witnesses. In stacking the ties, deceased worked with a Mr. Britt; and, while the testimony is undisputed that they stacked ties as the other piles of ties had been stacked, we think the testimony is also undisputed that they started from the ground up the pile which collapsed and killed the deceased.

The foreman testified that he cautioned deceased and his fellow-servant not to stack the piles too high or to crowd the passageway between the piles and the railroad track, and to move the car containing the ties to give room to unload them when this became necessary. But, in testing the legal sufficiency of the evidence to support the verdict returned in the administrator’s favor, we assume that this was not true, as deceased’s fellow-servant denied that any direction was given as to the manner of piling the ties, except to move the car when this became necessary to get more space for the piles. The car was moved by pinching it along the track with a bar for a sufficient distance.

The theory upon which the case was tried is reflected by instruction numbered one, given at the request of the plaintiff. It reads as follows:

“You are instructed that if you find from a preponderance of the evidence in this case that the deceased,at the time of the injuries resulting in his death, was working under the immediate direction, orders and supervision of his foreman, and was in the discharge of his duty to the defendant company, that he was in the exercise of ordinary care for his own protection, that the danger was not known to and appreciated by him, and was not open or apparent to one’s casual observation, and you further fiud from the evidence that the defendant company negligently failed to exercise ordinary care to furnish the plaintiff with a reasonably safe place in which to work, as alleged in the complaint, and while working under the direction, orders and supervision of his foreman, you find from the evidence that its negligence, if any, in this respect, was the direct and proximate cause of the injury to and the death of the deceased, it will be your duty and you are instructed to find for the plaintiff. ’ ’

This instruction, abstractly considered, appears to be a correct declaration of the law, but we are of the opinion that, when the testimony is regarded in the light most favorable to the plaintiff, as we have stated it, there was no case for the jury, and a verdict should have been directed in favor of the defendant.

"We think there is no question but that the pile which killed the deceased toppled over on him because it had been made too high. These ties had been sawed, and their sides were smooth and square. There could have been no danger in piling one tie on another and a third on top of these, but it is apparent that as the pile increased in height the danger of one or more tiers toppling over increased. Nothing could be simpler than piling ties, and it does not appear that an adult man, of ordinary intelligence, such as the- deceased was shown to be, would require instruction or warning as to this danger. There was no danger until the men themselves had created it by piling the ties too high, and in doing this they acted upon their own initiative. The instruction submits the question whether deceased and his fellow-servant were working under the immediate direction, orders and supervision of Clark, the foreman, but the undisputed testimony shows that Clark was not present when the pile toppled over, and had not been for some minutes, and when he last saw the pile it was only about five or six ties high, and then in a safe condition, and the foreman had left directions for the car to be moved when this was necessary to secure more space for piling the ties.

The undisputed testimony is that most of the piles were five, six, and seven, and possibly eight, ties high, but the one which fell and killed deceased was ten ties high. Several witnesses referred to all the piles as being about the same height, but the witnesses who had made a comparison in height agree that the pile which toppled over was higher than the others, and the pictures show this to be true.

The ties were eight inches square, and ten of them would mate a pile eighty inches high, which is higher than the average man’s head, and we think it was the height of the pile, conceding the ties were properly placed, which made deceased’s place unsafe, and he did that of his own volition.

It is argued that the jury was warranted in finding that deceased should have been warned of this danger; but we think it was so obvious that no warning was required, and that it was one which he had caused himself.

It is also insisted that the jury was warranted in finding that the defendant should have furnished foundation timbers for the piles and strips of timber to bind the tiers of ties together, and, if this had been done, the pile would not have toppled over, even though it had been piled higher than the other piles. In answer to this, it may be said that the ties themselves would make their own foundation, and a perfectly safe one, if the pile was not carried too high. There was no testimony that it was ever customary to furnish cross-pieces to tie the ties together. There was no reason why the ties themselves might not have been used for this purpose if the piles were made high enough to require binders.

Appellee insists that ties could not have been used as binders by placing one tier at right angles with the tier upon which it rested, for the reason that, if this had been done, the binder ties would have extended out over the pile towards the railroad track and have reduced the width of the passageway between the pile and the track to a distance less than it should have been. There appears, however, to have been no reason why the protruding ends should not have been allowed to extend away from the track,' instead of towards it, if, indeed, the pile was close enough to the track to make the ends protrude beyond the pile. In other words, the pile itself could have been made square,.or approximately so, and one tier could have bound the one upon which it rested, and this method could have been pursued until the pile was made as high as was desired. But, if the pile had not been made square and the binding ties would have protruded, this protrusion, as we have said, could have been from the track as well as towards it. It is true that no such directions as these were given to deceased and his fellow-servant, and they were not otherwise warned and instructed and directed as to how these ties should be piled. They were left to their own devices, but it is our opinion that the labor to be performed was so simple and the danger attending it was so obvious that liability cannot be predicated upon the failure to warn and instruct.

We are of the opinion therefore that a verdict should have been directed in favor of the defendant, and for this error the judgment must be reversed, and the cause will be dismissed.


author: Humphreys, J.

text:
    Ruddell v. Monday.
    Opinion delivered July 1, 1929.

      W. K. Ruddell, for appellant.

      L. F. Reeder, for appellee.
   Humphreys, J.

Appellant, a property owner in Paving Improvement District No. 6 of the City of Batesville, Arkansas, brought suit against appellees, who constituted the hoard of commissioners of said district, in the chancery court of Independence County, to enjoin them from proceeding with the work and spending any money or doing anything toward making the improvements contemplated therein, attacking the formation of said district on twelve different grounds.

Appellees filed an answer, denying the invalidity of the district.

The cause was submitted to the court upon the pleading's and testimony adduced by the respective parties, resulting in a dismissal of appellant’s complaint for the want of equity, from which is this appeal.

Appellant’s first attack on the validity of said district is that 'the minutes of the council did not recite that it found from evidence introduced at the time that the first petition for the district filed with the city council contained the names of ten residents within said district. The minutes of the 'council recited that it found more than ten persons living within Paving District No. 6 of the city of Batesville, Arkansas, did sign the first or initial petition. There is nothing in the statute authorizing the creation of the district, requiring the minutes to recite that these findings were based upon evidence introduced before the council at the time. According to the evidence introduced in the instant 'ease, fifteen persons living in the district signed the first or initial petition. Where nothing appears in the minutes of the council or the face of the record to the contrary, this court will presume that it heard the evidence in support of its finding and that the evidence warranted such finding.^

Appellant’s second attack on the validity of the district is that the boundaries of the district designated in the initial or first petition are so vague and indefinite that the property owners icould not ascertain what property was included or was intended to be included in said district. The boundary lines set out in the petition follow well-defined streets and Polk Bayou, which is a well-defined watercourse, so that the boundaries may be easily distinguished*. The description of the boundary line of the proposed district in the petition is clear and definite, and the finding of the trial court that the boundaries are easily distinguishable is supported by the evidence introduced in the case.

Appellant’s third attack on the validity of the district is that the object of the improvement district was not set out in the first or initial petition, because it failed to state the kind of paving to be done. The statute under which the district was formed does not require a specification in the initial petition of the kind of material to be used, so that it is a matter necessarily left to the discretion of the commissioners in forming the plans for the improvement and making estimates of the cost thereof. Boles v. Kelly, 90 Ark. 29, 117 S. W. 1073; McDonnell v. Imp. Dist. No. 145, Little Rock, 97 Ark. 334, 133 S. W. 1126.

Appellant’s fourth attack on the validity of the district is that ordinance No. 480, creating same, failed to set out the streets to be paved, to designate the kind of paving, and to designate the boundaries of the district so that they may be easily distinguished. The title or preamble to the ordinance and the emergency clause attached thereto named the streets to be paved, and, both being a part of the ordinance, the streets to be paved were sufficiently designated therein. The preamble to the ordinance, in describing the boundary lines of. the’proposed district, followed the description of the boundary lines in the initial petition. The ordainiing or enacting .clause of the ordinanc e in § 1 thereof reads as follows:

“That the whole of the territory a/bove described be and the same is hereby laid off into an improvement district for the purpose of constructing and maintaining a-paving system within the above-described territory and in accordance with said petition; that the boundaries above described be and they are hereby designated as the boundaries of said district, and that the territory embraced therein shall be known as Paving Improvement District No. 6 of the city of Batesville.”

The boundaries set out in the preamble and title of the ordinance referred to in § 1 thereof and adopted as the boundaries of the district are a sufficient designation of the lands to be included or embraced in the proposed district. As stated above, the boundaries so designated follow used streets and a well-defined stream, and are not void on account of vagueness and indefiniteness. There is nothing in the statute authorizing the creation of the district requiring that the kind of pavement to be used shall be set out therein, so that the kind and character of paving was necessarily left within the discretion of the board of commissioners.

Appellant’s fifth attack on the validity of the district is that the second or majority petition failed to contain a majority of the property owners within the -district. The minutes of the city council contained a finding that said petition did contain a majority in value of the property owners, and .the testimony introduced before the trial court in the instant case showed that a large majority in value of the property owners actually signed the second petition. The finding of the 'council in this regard was conclusive after thirty days, unless an appeal was taken, and, as no appeal was taken from the action of the council, this ground of attack is without sanction of law. Section 5652 of Crawford & Moses’ Digest requires that complaining parties must take an appeal from the action of the council in this particular within thirty days, else they are bound by the finding of the city council. Craig v. Russellville Imp. Dist., 84 Ark. 390, 105 S. W. 867; Waters v. Whitcomb, 110 Ark. 511, 162 S. W. 61.

Appellant’s sixth attack on the validity of the district is that the second or majority petition failed to state the nature of the improvement in that it did not state the kind of paving to he-used and the streets to be paved. The majority petition named the streets to be paved by reference to ordinance No. 480, and that was a sufficient compliance with the statute authorizing the creation of the district. As heretofore stated, it was unnecessary to state the kind of paving intended to be used, as that was a matter necessarily left to the discretion of the commissioners of the district.

Appellant’s seventh and eighth attack on the validity of the district is that the council did not make its finding that a majority in value of the property owners signed the petition by resolution or ordinance, and did not use any records in making such findings. There is nothing in the statute authorizing the creation of the district that requires the council to make such finding by resolution or ordinance. The minutes of the council recited that the majority in value of the owners of the property in the district signed the majority petition. Such a finding incorporated in the minutes of the council is a sufficient compliance with the statute, as the statute itself does not prescribe any form by which the findings of the council shall be made.

Appellant’s ninth attack on the validity of the district is that there is a variance in the first petition and the second petition, in that the first petition states that it was not to exceed 70 per cent, of the assessed value of the property in the district and the second petition states that it was not to exceed 50 per cent, of the assessed value of the property in the district. The statute authorizing the creation of a district does not require that either the first petition or the ordinance shall state what peneentum of the assessed value of the property it would cost to make the improvement, so therefore the percentum stated in the first petition and ordinance must be treated as sur-plusage. When so treated, there is no variance between the initial petition or ordinance and the second petition. If there were a variance, the second petition would control, and no prejudice could result to property owners, since the per centum was reduced and not increased.

Appellant’s tenth attack on the validity of the district is that there is'á variance between the figures in the cost of the improvement as estimated by the engineer and the estimate included in the proceedings of the city council creating the district. The variance is only $12.80 over a ,$28,000 estimate, and is de minimis. It is apparent that the discrepancy here is a clerical misprint.

Appellant’s, eleventh attack on the validity of the district is that ’the plans and specifications for the improvements do not show that they conformed-to the grades Of the‘streets set by the -city of Batesville.' The testimony introduced in the instant case shows that the city coufici! ápproved the plans and that the grades will conform to those' set by the city council.

Appellant’s twelfth and last attack on the validity of the district is that the initial petition and ordinance stated that -Central Avenue and Broad Street, in West Batesville, are to be paved, and that there is no addition to Batesville called West Batesville. The testimony' introduced in the instaht case reflects that all the property of Batesville north and west of Polk Bayou is not only commonly called West Batesville but that West Bates-ville is usually the designation of that part of Batesville north and' west of Polk Bayou, and that all of Paving District No. 6 lies in’ that part of Batesville usually called West Batesville. The name of Central Avenue and Broad Street, in West Batesville, as the streets to be improved, could not mean any other streets 'than the streets mentioned, hence no property owner was or could have been misled as to the streets to -be improved.

No error appearing, the decree of the court is in all things affirmed.


text:
    Jansen v. Perrin.
    Opinion delivered July 1, 1929.

      John L. Bledsoe, for appellant.

      George M. Booth and Walter L. Pope, for appellee.
   Humphreys, J.

Appellee herein brought suit against appellant herein and W. A. Jackson, in the court of J. A. Douglass, a justice of the peace in Randolph County, upon an account in the sum of $160 and interest at the rate of 6 per cent, per annum from March 3, 1928, being the amount paid by him on said date to the Pocahontas State Bank in satisfaction of a judgment it obtained against W. A. Jackson and the appellant herein on the first day of August, 1925, in the circuit court of Randolph County, which was a lien upon block No. 10, Dalton’s Addition to the town of Pocahontas, in said county and State, containing two acres, which he acquired by purchase from W. A. Jackson on August 15,1925.

On November 1, 1928, the cause was tried by the justice of the peace, sitting as a jury, resulting in the rendition of a judgment against both the appellant herein and W. A. Jackson. Appellant herein appealed from the judgment to the circuit court of said county, but W. A. Jackson did not appeal. After the transcript was lodged in the office of the circuit clerk, appellant herein filed an answer to appellee’s statement of account, interposing the defense thereto that W. A. Jackson was a prior in-dorser on the note npon which said judgment was obtained, and that, as between W. A. Jackson and himself, W. A. Jackson was primarily liable thereon, and that, under the doctrine of subrogation and as a matter, of equity, he had the right to require the Pocahontas State Bank to collect the judgment it obtained against them out of W. A. Jackson or the real estate of W. A. Jackson, upon which the judgment was a lien.

The cause was submitted, on appeal in the circuit court, upon the pleadings and testimony adduced by the respective parties, which resulted in a judgment upon the account against appellant herein, in favor of appel-lee herein, from which is this appeal.

The record reflects, according to the undisputed facts, that on August 1, 1925, the Pocahontas State Bank obtained a joint and several judgment against W. A. Jackson and appellant herein for $151.94, with interest and costs, which became a lien from the date of its rendition upon the following described real estate owned at the time by W. A. Jackson, to-wit, said block 10 in Dalton’s Addition to the city of Pocahontas; that the judgment did not show on its face or indicate in the findings of the court any difference in the liability of Jackson from the liability of appellant herein; that on August 15, 1925, W. A. Jackson sold said real estate to appellee herein upon the representation that there were no judgment liens against it; that the consideration paid and'to be paid for ilie property was $3,500, of which sum $500 was paid in cash, the sum of $780 by the assumption of two mortgages against the property, and the balance of the consideration was represented by vendor’s lien notes in the sum of $2,120; that Jackson traded $1,500' of the notes to his brother-in-law, Mr. Presley, and the other $500 note to the Pocahontas State Bank; that, when the vendor’s lien notes for $1,500 matured, it became necessary for appel-lee to borrow money on the property with which to pay him, and that, in negotiating a loan for that amount from-a building and loan association, it was discovered that the Bank of Pocahontas had obtained the judgment against W. A. Jackson and the appellant herein on the first day of August, 1925, which judgment was a charge and lien against said property; that appellee herein notified the appellant herein of the situation, and requested him to pay the judgment; that appellant herein declined to pay the judgment, stating that W. A. Jackson was primarily responsible therefor as between W. A. Jackson and himself; that the fact is that W. A. Jackson was a prior indorser to appellant herein on the note upon which the Pocahontas State Bank obtained judgment against them; that, in order to borrow money upon said property to pay Presley, appellee, on March 3,1928, paid the judgment, amounting then to $160, including interest, to said hank, and obtained a satisfaction thereof; that, in order to clear the property from the vendor’s lien notes against it owned and held by Presley so that he could get a loan from the building and loan association, he obtained a release deed from W. A. Jackson on the 5th day of April, 1928.

Under the undisputed facts stated above, appellee herein had a right to pay off the judgment lien in favor of the Poiciahontas State Bank against W. A. Jackson and the appellant herein to clear his title to the property purchased under a warranty deed from W. A. Jackson. The rule of law applicable to the facts in this case is correctly announced in 37 Cyc. at page 448, as follows:

“A purchaser who takes land without knowledge of a judgment, which is a.lien on it, is, as respects the land, a surety of the payment of the judgment to the extent of the value of the land, and, upon payment, is entitled to be subrogated to the rights of the judgment creditor; and he may be subrogated to the judgment creditor’s lien against other property of the judgment debtor, and if, to save his land from sale, he has paid several judgment liens, he is entitled to be subrogated to the liens of such creditors against any other land of his vendor.”

The rule, stated in slightly different language in Harris on the Law of Subrogation, § 643, is as follows:

“It is a familiar doctrine that the purchaser of incumbered real property may pay off the lien to protect his own title, and be subrogated to the rights of the creditor. ’ ’

The alleged defense and proof in support thereof by appellant herein to the suit of appellee herein, to the effect that, because W. A. Jackson was a prior indorser to himself on the note upon which said judgment was obtained, he (appellant herein) had a right to require the Pocahontas State Bank to collect the judgment from W. A. Jackson, constituted no defense at all. The Pocahontas State Bank obtained a several and joint judgment against both appellant herein and W. A. Jackson, and had the right to collect said judgment out of either-or both of them without regard to the wishes or demand of either. If appellant herein had paid the judgment to the Pocahontas State Bank he would then have had recourse against W. A. Jackson, who was primarily responsible on the note. Unless he had, and until he has paid the judgment, he would not have any recourse against W. A. Jackson. Barton v. Matthews, 141 Ark. 262, 216 S. W. 693, 9 A. L. R. 1594. Appellee herein, having paid the judgment to clear his title to the land, was subrogated to the rights of the Pocahontas State Bank, and was entitled to collect the judgment from appellant herein. The judgment against him is therefore affirmed.

      No objection to the jurisdiction of the court seems to have been raised in this case. The objection that the cause should have been brought in equity was therefore waived, and the cause was properly tried according to the equity principles involved. Organ v. Memphis & L. R. Rd. Co., 51 Ark. 235.—(Reporter).


author: Kirby, J.

text:
    Old American Insurance Company v. Wiggins.
    Opinion delivered July 1, 1929.

      John L. CramJc, for appellant!

      II. B. Means, for appellee.
   Kirby, J.

Appellee, the 'beneficiary named in the policy or certificate of insurance upon the life of his wife, Mable Wiggins, brought this suit to recover $400, alleged to be the balance due under the policy for $500 and for penalty and attorney’s fees, and recovered judgment, from which the appeal is prosecuted.

The complaint alleged the issuance of the policy on the 1st day of July, 1927, jointly to Curtis Wiggins and others for the payment of $500 upon the proof of death of Curtis Wiggins and Mable Wiggins; that Curtis Wiggins was named as beneficiary of Mable Wiggins; the payment of all premiums, the death of the insured Mable Wiggins on the 10th day of May, 1928, the payment as provided in the policy upon the next day after information of the death of the insured of $100, denial of liability under the policy on account of false answers in the application for insurance, the application stating that •Mable Wiggins was not pregnant when in fact she was pregnant. That, prior to and at the time of making the application for insurance, Mable Wiggins and Curtis Wiggins, the plaintiff, advised, notified and informed the company and its agents of Mable Wiggins’ true condition, that she was pregnant, but the defendant’s agents who prepared the application for the'policy, knowing her true condition, carelessly or fraudulently stated in the application for insurance that said Mable Wiggins was not pregnant, which statement was unknown to her or the plaintiff at the time.

The answer denied the other allegations of the complaint, admitted denying liability under the policy on account of false answers in the application for insurance, and admitted that the application stated that Mable Wiggins was not pregnant, when in fact she was. Denied that she or Curtis Wiggins had advised, notified and informed the defendant or its agents of her condition, of pregnancy and that its agents who prepared the application for the policy knew the true condition of Mable Wiggins and carelessly or negligently stated on the application that she was not pregnant and that such answer was unknown to her or the plaintiff. Denied’plaintiff’s right to attorney’s fees, alleging the statute under which the claim was made to be unconstitutional, contravening the Federal Constitution. .

The application which was attached to and made part of the policy was exhibited with it, and shows Mable Wiggins was asked the question, “Are you pregnant a1 this time?” Answer, “No.” The application also contains the statement and warranty that the applicant knew that her insurability was to be determined without medical examination and by the answers made to the questions, and that before signing the application she had read or had had read to her each of the answers, and that eah of same was unqualifiedly true, warranting them to be so, etc.

The policy contained the following provision: “The company shall not be liable in any amount for death resulting within 10 months from the date of this policy as a direct or indirect result of pregnancy or childbirth. ’ ’ The policy was issued on June 4, 1927, and her death occurred on the 10th day of May, 1928.

Appellee, being asked the condition of his wife at the time of applying for the insurance, stated the agent asked if she was pregnant, and he told him she was, and the agent said, “Well, then, I don’t know whether I can write her or not until I see further, ’ ’ and he went away, and in a few days returned and told appellee, “It is all right. I am ready and will write up your policy.” He stated that his wife did not sign the application; that she eonld not write or read, and he did not know who signed it for her. That the agent had him to sign his name, and that he did not know of his wife’s signing by making her mark with a witness, and that she did not answer the question in the application, “Are yon pregnant at this time?” “No.” That he did not ask her, at the time of filling out the application, anything about being pregnant, but they had told him a number of days before that she was pregnant. The agent taking the application did not testify, and the application as signed did not purport to be signed by Mable Wiggins by mark.

The company paid the $100, according to the terms of the policy, on the day after being informed of the death of Mable Wiggins, and later, in checking up on the claim, denied liability because of the answer, “No,” by the insured, appearing in the application to the question, “Are yon pregnant at this time?”

There is no contention on the part of appellee that the insured was not pregnant at the time the application for the policy was made, or denial that she gave birth to a child on the 27th day of September, 1927, after the date of the policy on the 4th day of June, 1927, or that her death occurred on the 10th day of May, 1928. The beneficiary’s statement that he had told the agent, when applying for insurance, shortly before the application was written, that his wife was pregnant, and had been unformed by the agent that he did not know whether he could write a policy until he saw further about it, and in a few days was informed by him that “It is all right. I am ready and will write your policy up,” was undisputed. Neither was his statement that his wife could not read or write denied, and he also testified that no question was asked her by the agent at the time he wrote the application about her condition.

The jury found against the appellant, on conflicting testimony, that no false warranty had been made as to the condition of pregnancy of the insured, that no question about it was asked her, and the answer “No” to the printed question was not made or authorized by the insured, but written by the agent taking the application, notwithstanding he had before been fully informed of the pregnancy of the insured.

In Southern Insurance Co. v. Floyd, 174 Ark. 373, 295 S. W. 715, it was said, quoting syllabus:

“Knowledge relating to the physical condition of the insured which comes to the agent of the insurance company, while he is performing the duties of his agency in receiving applications for insurance and delivering policies, becomes the knowledge of the company, and the insurame company is bound thereby, in spite of a provision in the policy to the contrary, where the agent who solicited the business was charged with the duty of asking the applicant questions concerning his physical condition. ’ ’

The testimony of the beneficiary shows that the applicant correctly and truthfully answered all questions about her physical condition propounded to her, and is to the effect that there was no collusion between the ag-ent of the company and the insured; and it is also undisputed that the agent had knowledge of the insured’s pregnancy at the time he wrote the application for the insurance. It is also true that the death of the insured occurred more than ten months after the delivery of the policy, and its validity could not therefore be affected nor liability by the company escaped under the provision for non-liability for death resulting- within 10 months from the delivery of the policy, as a result, directly or indirectly, of pregnancy or childbirth, if such had been the case, and it was not shown to be.

The issue was submitted to the jury on proper instructions, and there was substantial testimony in support of the verdict, which will not be disturbed by this court. The judgment is accordingly affirmed.