author: Hart, J?,

text:
    Bank of Hoxie v. Meriwether.
    Opinion delivered October 20, 1924.
    1. Party walls — equitable lien. — Under an agreement oí an adjacent proprietor to pay part of the cost of a party wall when he commenced to use it, a charge is created in the nature of an equitable lien upon the lot upon which the wall is erected.
    2. Covenants — real and personal covenants distinguished.— Real covenants relate to realty, having for their main object some benefit to the realty iand inuring to the benefit of and becoming binding upon subsequent grantee, while personal covenants do not run with the land.
    3. Party walls — easement on adjacent lots. — Benefits and burdens attaching to party walls, erected on the boundary line between two lots as part of the freehold, under an agreement expressly made binding on heirs and assigns of owners of both lots, held to follow ownership of the respective lots.
    4. Party walls — notice to mortgagee. — Where a party wall agreement was not acknowledged or recorded, a subsequent mortgagee will not be held to have constructive notice of its execution or contents.
    5. Party walls — notice to mortgagee. — The fact that a mortgagee knew that the owner of an adjoining lot had built a party wall, which the mortgagor subsequently. used as a wall of his building, did not constitute actual notice of the adjoining owner’s claim for half of the cost of erecting the wall, under agreement with the mortgagor’s grantor, in the absence of a showing-that the mortgagee knew that the mortgagor did not contribute his share of the cost.
    6. Party walls — payment of cost — presumption.—In the absence of notice to the contrary, a mortgagee had a right to presume that his mortgagor had paid his share of the cost of a party wall, immediately on his completion of the building of which the wall became a part, as provided by a contract between the adjacent owner and the mortgagor’s grantor.
    7. Party wall — notice to mortgagee. — The fact that half of , a party wall was on a mortgagor’s land would put any one on notice of matters affecting his title that inquiry might disclose, and hence would preclude removal of the wall by the mortgagee as a trespass on the land, but is no notice of an obligation to contribute to its cost on making use of it; notice only of those facts that are naturally and reasonably connected with the known facts being imputed..

      8. Banks and banking — notice to cashier. — Notice to the cashier of a bank holding a mortgage on a lot that the owner of an adjoining lot claimed an equitable lien on the mortgaged lot for payment of. half of the cost of a party wall is notice to the bank.
    9. Principal and agent — notice to agent. — A principal is aifected with notice of all that his agent knows, in the line of his duty or within the scope of his powers.

      10. Corporations — agent’s knowledge. — As corporations must act through agents, the general rule is that knowledge of an agent •acquired in the ordinary discharge of his duties for the corporation is imputed to the corporation.
    11. Banks and banking — circumstantial evidence to prove notice. — That the cashier of a bank holding a mortgage on a lot, when it was executed knew the terms of a party wall agreement, and that neither the lot owner nor his grantor had paid for half of the party wall as agreed, may be shown by circumstantial .evidence.
    12. Party walls — lien—merger op estates. — That a mortgagee of a lot acquired the mortgagor’s interest therein did not extinguish, under the doctrine of merger of estates, the adjoining owner’s equitable lien on the lot for half of the cost of a party wall erected under agreement with the mortgagor’s grantor, neither mortgagor nor mortgagee being party to the party wall agreement or personally liable thereon, and the adjoining owner having nothing to do with the conveyance by the mortgagor to the mortgagee.
    Appeal from Lawrence Chancery Court, Eastern District; Lyman F. Reeder, Chancellor;
    affirmed.
    STATEMENT OK PACTS.
    On the 22d day of March, 1922, ' T. J. Sharnm brought this suit in equity against Gus Mitchell and the Bank of Hoxie to foreclose two mortgages given to him by Gus Mitchell on a certain lot in the town of Hoxie, Lawrence County, Arkansas.
    . The Bank of Hoxie was made a party on the ground that it claimed to have a mortgage against the same property. The Bank of Hoxie joined in the suit, and •asked for a foreclosure of its mortgage against the property.

      Subsequently C. J. Saenger filed an intervention and asked for the foreclosure of an equitable lien claimed by him against said property, on tbe ground that he had erected a party wall, and that the amount agreed to be given him for erecting said wall had not been paid.
    It appears from the record that the intervener, O. J. Saenger, being- the owner of a certain lot in the business section of Hoxie, entered into a written agreement with E. P. Richardson, the owner of the adjoining lot, for the erection of a party wall. The agreement was signed in duplicate on the 14th day of May, 1913, by the parties to it, and A. G. Allbright and A. G. Richardson signed the agreement as witnesses. The agreement recited that C. J. Saenger proposed to erect a two-story store building on his lot, with a side wall thirteen inches thick. It ■ was agreed that one-half of the side wall should be erected on the lot of E. P. Richardson by C. J. Saenger, and that this wall should be known as a party wall, and should be owned in common by the owners of the respective lots on which it was situated.
    It was further agreed that, inasmuch as Saenger was to pay the entire cost of the erection of the party wall, because his building was first to be constructed, and because Richardson was undecided whether he would erect a one or a two-story building on his lot, he should pay to Saenger one-half of the value of whatever part of the party wall he used, immediately upon the completion of the building- on his lot.
    It was further provided that the entire agreement should be made binding on the heirs or assigns of both parties. The agreement was neither acknowledged nor recorded.
    After the party wall had been erected by Saenger, Richardson conveyed his lot to Gus Mitchell. In the summer of 1920 Gus Mitchell commenced and completed the erection of a two-story brick store building on his lot, and used the party wall as one side of the building. On August 20, 1920, Mitchell borrowed $6,000 from T. J. Sharum, and executed a mortgage on his lot to secure the payment thereof. On December 24, 1920, he borrowed $3,000 from the Bank of Hoxie, and executed a mortgage on said lot to secure the payment thereof. On February 21,1921, he borrowed ah additional sum of $2,623.37 from T. J. Sharum, and executed a mortgage on said lot to secure the payment of the same. All of these mortgages were duly filed for record when they were executed.
    According to the testimony of C. J. .Saenger, Gus Mitchell purchased his lot from E. P. Richardson in May, 1920. Mitchell began the erection of a two-story building .upon the lot immediately after his purchase, and completed it in the summer of 1920. While the building was being constructed, Saenger entered into negotiations with Mitchell for the payment of his half of the party wall. Negotiations were pending for some time, and in October, 1920, a compromise was reached whereby Mitchell promised to settle with .Saenger for the party wall in the sum of $1,068, which was estimated by these parties to be one-half of the value of the party wall.
    A. G. Allbright, one of the subscribing witnesses to the agreement to build the party wall, was cashier of the Bank of Hoxie; but the record does not show whether hé was cashier of the bank at the time he witnessed the agreement in 1913, or not.
    It appears from the record that he was cashier of the bank in the summer of 1920, when Mitchell erected the two-story building on his lot. During the period .of time while Mitchell was erecting the building on his lot, Saenger spoke to Allbright, at various times, about the amount which Mitchell should pay him for his half of the party wall, and Allbright' at this time was cashier of the Bank of Hoxie. He was also cashier of said bank in December, 1920, when the bank lent'Mitchell the $3,000' and took a mortgage on said lots to secure the payment of the same.
    Mitchell made default in the payment of all of said mortgages, and also failed to pay Saenger for his half of the party wall. Subsequently Mitchell was adjudged a bankrupt.

      T. J. Sharum had' no notice of the party wall agreement between Saenger and Richardson at the time the mortgages were executed to him by Mitchell, the grantee of Richardson. In April, 1922, T. J. Sharum became the owner by purchase of the lot of Gus Mitchell on which one-half' of the party wall in question is situated. At that time he had been fully advised as to the claim of Saenger with regard to the party wall.
    The chancellor found the facts to be substantially as above stated, and declared that the real point in issue on the law of the case is the question of priority of liens between Saenger and the Bank of Hoxie. The chancellor was of the opinion that the Bank of Hoxie took its mortgage from Mitchell with notice of the equitable lien of Saenger upon the lot for one-half of the cost of the party wall, under the agreement providing for its erection. A decree in accordance with the finding of the chancellor was rendered. The foreclosure of the respective mortgages of T. J. Sharum and of the Bank of Hoxie, according to their priorities, was provided for in the decree.
    It was further decreed that the written agreement between C. J. Saenger and E. P. Richardson constituted a covenant running with the land, and that Saenger had a lien upon the lot owned by Gus Mitchell as grantee of E. P. Richardson and the Bank of Hoxie, a purchaser from him with notice of the lien.
    To reverse that decree the Bank of Hoxie has duly prosecuted an appeal to this court. T. J. Sharum has since died, and the cause has been revived in the name of his administrator and heirs.

      Ponder & Gibson, for appellant.
    The agreement between Saenger and Richardson created only a personal obligation of Richardson for the payment of such part of the wall as he might use. (A). Because such is the legal construction of the contract. 78 Ark. 65; 54 N. Y. 444 ; 28 Ind. 37; 29 Miscel. 81; 37 N. Y. 106; 161 Mass. 489; 31 N. Y. Supp. 851; 11 Miscel. Rep. 9; 81 Tex. 201; 46 Ga. 19; 57 Ind. 88; 10 Pa. St. 155; 102 Iowa '206; 159 N. W. 441; 17 Pick. 538; 117 Mass. 387; 124 N. Y. 224; 115 111. 199. (B). Because the contract shows on its face that such was the intention of the parties. 102 Ind. 166; 120 Mich. 545; 81 Mo. 545; 26 111. App. 417. The party wall agreement between Saenger find Richardson did not create an incumbrance upon the land of Richardson. (A). Because such an agreement does not create an incumbrance which will constitute a breach of covenant against incumbrances. 37 N. Y. 106;.3 Daily 64; 43 N. Y. Sup. Ct. 328; 54 How. Pr. 340; 50 N. Y. 644; 31 Iowa 46; 7 Penn. Dist. R. 375. (B). That such an agreement does not give priority over other liens. 93 111. 359. No lien existed by reason of' the party wall' agreement. (A). Because the instrument creating such agreement was not recorded. See §§ 1516 and 8624, C. & M. Digest. (B). Because the agreement, not being recorded, the same did not constitute notice as against subsequent mortgagees or purchasers, even if they had actual notice thereof. 9 Ark. 112; 20 Ark. 190; 18 Ark. 105; 49 Ark. 457; 68 Ark. 168; 71 Ark-. 517. Even if the party wall agreement created a covenant running with the land, or any other lien or easement on the land which could be enforced in equity, when the wall was used by Mitchell the covenant ceased to be a running one and became a personal covenant of Mitchell,. and all parties dealing with the land thereafter were authorized to infer that payment or settlement liad been made. 98 U. S. 56; 12 Ala. 159; 135 Mass. 151; 155 Mass. 79; 38 Biard. 191; 21 Wend. 123; Rawle, Covenants, 5 ed. Í 204; 56 Miss. 700; 35-Sou. 218; 161 Mass. 487; 28 Pa. Sup. Ct. 587. If the agreement created a covenant which ran with the land, notice was not a requisite to its enforcement, and the lien of -Saenger, being a first lien, and .Sharum, holding the last mortgage and being the last purchaser, must discharge the Saenger lien, as well as the lien of the appellant. 20'Ohio St. 414; 44 La. Ann. 492; 24 La. Ann. 113; 27 La. Ann. 119; 1 La. Ann. 140; Simms on Covenants, 138 and 171; 1 Bradf. 40; 3 Cush. 500; 155 Mass. 444; 124 Mich. 545; 67 Minn. 25. If a lien of any kind in favor of Saenger was created ■by the agreement and notice was necessary to its enforcement, tbe fact that the wall was standing half on Mitchell’s lot was notice to all parties dealing with the property, and placed them on inquiry. 86 111. App. 380. And the wall standing as it did was sufficient notice to put all upon inquiry as to his rights thereto. 129 Iowa 569; 105 N. W. 61; 10 Phila. 341; 33 Ark. 465; 34 Ark. 391; 35 Ark. 195; 47 Ark. 533 ; 41 Ark. 169; 145 Ark. 306. There was no special notice to the Bank of Hoxie such as would charge it solely, as knowledge acquired by a bank officer in his private capacity and not while acting for the bank, and which was not communicated to any other officers of the bank, is not imputed to it. 3 it. C. L. 477 and 478; 65 Ark. 543. If shown, it also had notice that a settlement by notes had been made, and relied thereon. Saenger,. knowing of the existence of the mortgages to Sharum and the bank, is guilty of laches and estopped from maintaining the suit. By Sharum’s purchase a merger resulted, and the Sharum liens were extinguished, and the lien of Saenger, if any, and of the bank became the sole existing liens on the property.

      W. P. Smith and Lester L. Gibson, for appellee.
    The court’s finding of fact, upon conflicting evidence, will not be disturbed. 161 Ark. 1; 160 Ark. 508. Knowledge of an agent as to a material fact bearing upon the validity of a contract made on behalf of his principal is imputed to the latter. 21 R. C. L., Principal & Agent, p. 839-40, art. 21. Such knowledge, though acquired in a private capacity, if still within his memory, is imputed to his principal. Same citation, art. 22. The bank was therefore put on notice to investigate, and, failing to do so, its ■cláim should be held in- abeyance pending the intervener’s claim. 94 Ark. 503. The agreement between Saenger and Richardson created more than a personal obligation of Richardson for the payment for such part of the wall as he might use, and was a covenant running with the land and binding on his heirs and assigns. 7 R. C. L. Covenants, art. 23, pgs. 1107-8; 78 Ark. 65; 2 L. R. A. (N. S.) 87. See 28 Iowa 229; 102 N. W. 621. The title to the wall remained in the original builder or his assignee, sinee the terms of the agreement had not been carried out, and a lien existed for the payment of same. 15 C. J., art. 52, p.. 1240, Covenants, note (a); same citation, p. 1251, note (a); 155 Mass. 444., In any event the covenant created a lien on the land which equity will enforce. 120 Mich. 545. A lien existed by reason of the party wall agreement, whether the instrument was recorded or not. 30 Cye. p. 791; 27 La. Ann. 199. Where a lien is found to exist, it follows the land in the hands of a subsequent purchaser who takes with notice of its existence. 61 Minn. 65; 44 W. Va. 335. An interesting discussion of party wall contracts may be found in 89 Am. St. Rep. p. 941.
   Hart, J?,

(after stating the facts). The first question to be decided is, does the party wall agreement between C. J. 'Saenger and E. P. Richardson, executed on the 14th day of May, 1913, constitute a covenant running with the land? The agreement was in writing, and provides for the erection of a party wall thirteen inches wide, one-half of which was to be on the lots of the respective parties, and was to be owned in common. Inasmuch as Saenger was to erect his store building first, it was provided that the party wall should be erected by him and constitute a part of his store building. When Richardson desired to erect a building on his lot, the party wall became a part of such structure, and he was immediately to nay for one-half of the cost of it. The agreement further provided that it was binding upon the heirs or assigns of both parties. While the authorities are in conflict with respect to the legal effect of agreements providing for the construction of party walls between adjacent landowners, the question is no longer an open one in this State.

• In the case of Rugg v. Lemley, 78 Ark. 65, it was held that, under an agreement of an adjacent proprietor to. pay part of the cost of a party wall when he commenced to use it, a charge is created in the nature of an equitable lien upon the lot upon which the wall is erected, which is enforceable in equity.

The court recognized that there was a conflict in the authorities, and, after due consideration, adopted the rule that, where the covenant is similar to the one in this case and contains a clear manifestation of an intent that it should run with the land and bind the parties and their assigns, such party wall agreement creates an equitable charge, easement, and servitude upon the lots upon which it is built. In short, it was held that agreements of this sort, when duly acted upon, create cross-easements in the respective owners of the adjacent lots with which the covenants in the agreements will run so as to bind the parties and their' assigns. The distinction between real and personal covenants is that the former relate to the realty, having for their main object some benefit to the realty and inuring to the benefit of and becoming binding upon subsequent grantees, while the latter do not run with the land.

In the case before us, the contract between Saenger and Richardson was not.merely personal to them. The wall erected on the boundary line between the two lots was intended to be, and was, a part of the freehold. It was erected for the use and benefit of future, as well as the present, owners of the lots. The agreement under which the party wall was built did not restrict the right to use the wall to E. P. Richardson and C. J. Saenger. On the other hand, it expressly provides that the entire agreement was made binding on the heirs and assigns of both parties. The wall was intended for the use and convenience of both lots. Each of the adjacent owners had an equal interest in the wall. It was as firmly attached to, and became as much a part of, each lot as any other part of the buildings ere'cted on them could be, and the benefits and burdens attaching to the wall followed the ownership of the respective lots.

We have not set out the written agreement providing for the construction of the party wall in full, but we have, set out the material portions thereof. It is clear, from the portions which we have specially referred to, that the agreement for the party wall contains a covenant running with the land; for a covenant runs with the land when either the liability to assume its burdens or the right to use its benefits passes to the assignees of the landowners.

The chancellor was right in holding that T. J. Sharum had no notice, actual or constructive, of the agreement providing for the erection of the party wall, at the time he took the two mortgages from Mitchell which are sought to be foreclosed in this suit. The agreement for the party wall was in writing, but was not acknowledged or recorded. Therefore Sharum had no constructive notice of its execution or contents.. Crawford & Moses ’ Digest, § 1536.

It is admitted that Sharum had no actual knowledge of the claim of Saenger arising out of the agreement between him and Richardson for the erection of the party wall. The fact that. he might have known that Saenger had built the wall and that afterwards Mitchell, the grantee of Richardson, had used it as one of the walls of his building on his lot, would not 'constitute notice. The reason is that it is not shown that Sharum knew that Mitchell did not contribute his share of the cost of the building of the party wall, when he erected his store building in the summer of-1920, and made the party wall one of the walls of his building.

In the absence of notice to the contrary, Sharum had a right to presume that Mitchell had paid his share in the cost of the wall, since the ' agreement provided ' expressly that he should make the payment immediately upon the completion of his building of which the party wall became a part. Kells v. Helm & Yerger, 56 Miss. 700.

It is true, as contended by counsel for appellant, that one-half of the party wall was upon the land of Mitchell, and this would put any one upon notice of any matters affecting his title that an inquiry would disclose. This court has repeatedly held that actual possession of land at tbe time of another’s purchase is sufficient to put the purchaser upon inquiry of the possessor’s title. In the application of this rule Sharum, as a purchaser from Mitchell, would have no right to require the removal of the wall as a trespass upon his realty.

In Hawkes v. Hoffman, 24 L. R. A. (N. S.) 1038, the Supreme Court of Washington held that the mere existence, at the time one purchases a lot, of a party wall resting partly thereon and in use by the owner of .the adjoining lot, is not notice of an obligation to contribute to its cost upon making use of it. The reason is that the rule imputes notice only of those facts that are naturally and reasonably connected with the facts known, and of which the known facts can be said to furnish a clue.

As we have already seen, the agreement of Richardson and his assigns to pay part of the cost of the party wall, when he commenced to use the wall, became a charge in the nature of an equitable lien upon the lot upon which the wall was erected, and was enforceable in equity. The party wall having become a part of the realty, the charge against it was in equity a lien for the purchase money, not only while the property was owned by Richardson, the vendee, but also by all subsequent purchasers having notice that the purchase money remains unpaid.

The principles from which courts of equity have proceeded in establishing this lien, in the nature of a trust, is, that a person who has got the estate of another ought not, in conscience, as between them, to be allowed to keep it and not pay the full consideration money. And third persons, having full knowledge that the estate has been so obtained, ought not to be permitted to keep it without making such payment, for it attaches to them also, as a matter of conscience and duty. Shall v. Biscoe, 18 Ark. 142; Day v. Gaines, 130 Ark. 167.

Mitchell built his store upon his lot in the summer of 1920, and used the party wall as one of the walls of it. As soon as he used the party wall, under the agreement of Ms grantor with Saenger, he became immediately bound to pay his part of the cost of it.

Saenger testified that, for some time, he was unable to agree with Mitchell about the cost of the party wall or that he was liable to pay any part of the same. During the -course of the negotiations he-frequently talked with Allbright, who was the cashier of the Bank of Hoxie, about the matter, and Allbright well knew that he claimed an equitable lien upon the lot for the payment of one-half of the- cost of the party wall. Allbright was the cashier of the Bank of Hoxie at this time, and also in December of the same year, when the mortgage of Mitchell to the bank in question was executed.

Notice to Allbright, who was the cashier of the bank, was notice to the bank.

The general rule is that the principal is affected with notice of all that -his agent knows in the line of Ms duty or within the scope of his powers. Peebles v. Columbian Woodmen, 111 Ark. 435.

A corporation must necessarily act through agents, and the general'rule is that knowledge -of an agent acquired in the ordinary discharge of his duties for the corporation is ordinarily to be imputed to the principal. Little Red River Levee Dist. No. 2 v. Garrett, 154 Ark. 76, and First Natl. Bank v. Duvall, 156 Ark. 377. Applying the principle decided by these cases to the facts of this 'case, it is manifest, we think, that Allbright, as cashier of the Bank of Hoxie, and in the discharge of his duties as such cashier, acquired knowledge of the terms of the party wall agreement and of the fact that neither Mitchell nor his grantor had paid for half of the party wall, as provided in the agreement. The knowledge acquired by the cashier was present in his mind at the time he took the mortgage on the lot in question from Mitchell to the Bank of Hoxie. That -such knowledge was in the cashier’s mind when the mortgage was executed-may be shown by circumstances as well as by dire’ct evidence.

As we have already seen, negotiations looking to a settlement of the equitable lien claimed by Saenger on the lot of Mitchell were pending during the period of the construction of the building by Mitchell in the summer of 1920, and for some time thereafter. During this time Saenger talked with the cashier of the bank about his lien and fully explained the nature of it to him. Finally, in October, 1920, Saenger reached an agreement with Mitchell whereby the value of the wall was placed at $1,068, and Mitchell executed to Saenger a number of promissory notes as evidence of the amount due. He paid two of these notes, amounting in the aggregate to $168. The balance of the amount due was unpaid. The notes given by Mitchell to Saenger were payable at the Bank of Hoxie, and were dated October 20, 1920. The mortgage of Saenger to the bank was executed on the 24th day of December, 1920. These facts: and circumstances clearly show that the knowledge of the equitable lien of Saenger existed in the mind of the cashier of the bank when the mortgage from Mitchell to the bank was executed.

It appears from the record that T. J. Sharum acquired the title of Mitchell in the lot in question in April, 1922, and counsel for appellant insist that this created a merger of the estates which extinguished the lien of Saenger. We do not think so. It results from the principles announced above that Saenger had no claim of personal liability against either Mitchell or Sharum. The reason is that neither of them was a party to the contract for the party wall, and became in no wise personally liable by the contract. The contract created a covenant running with the land, and Saenger had the right to enforce his equitable lien against the lot in the manner shown above; but he could not obtain a personal judgment against any of the parties to this suit for'the amount thereof. Saenger had nothing whatever to do with conveying the .land to Sharum, and we cannot see where the doctrine of merger has any application, in so far as he is concerned.

It follows that the decree will be affirmed.


source: Caselaw Access Project

author: Hart, J.,

license: Public Domain

text:
    Continental Supply Company v. Robertson.
    Opinion delivered October 20, 1924.
    1. Joint stock companies and business trusts — liability of trustees.' — Trustees of a business trust, doing business under ■a declaration vesting in them absolute authority over the trust business and property, are personally responsible for any indebtedness growing out of transactions in relation to the trust estate.
    2. Release — oonglusiveness.—A release executed in consideration of a settlement of accounts will not prevent the settlement from being impeached for . fraud or mutual mistake, but the party seeking to impeach the settlement must show affirmatively the mistake or fraud alleged.
    3. Account stated — conclusiveness.—An account stated and settlement thereof, shown to have been examined by both parties and expressly agreed to by them, is stronger evidence of the correctness of the account than if it had merely been mailed in the usual course of business and acquiesced in for a considerable time thereafter.
    4. Account stated — impeachment for mistake. — Where a supply company’s account was settled with the trustees of a business trust, and one of the trustees was expressly released from liability on his written guaranty of the account, after which the affairs of the business trust were wound up and a settlement made with all persons interested, in reliance upon the above settlement, held that the supply company could not, after a year’s delay, claim a further balance due because of a mistake made by it in the settlement.
    Appeal from Lee Chancery Court; A. L. Hutchins, Chancellor;
    affirmed.
    STATEMENT OP PACTS.
    The Continental Supply Company, a corporation, brought this suit at law against J. T. Robertson, D. H. Echols and J. B. Harris, to recover the sum of $1,575.33, alleged to be a balance due on an account for merchandise.
    The defendants averred that they had had a full settlement of their account with the plaintiff, and that the plaintiff should not be allowed to recover against them on the ground of mistake in the settlement, because of unreasonable delay and of chang’e of conditions which have resulted since the settlement.

      On motion of the defendants, which was consented to by the plaintiff, the ease was transferred to the chancery court.
    It appears from the record that the Continental Supply Company was a corporation dealing in tools, machinery and materials used in drilling oil wells, and J, T. Robertson, J. B. Harris and D. H. Echols were trustees of an association known as the Texas & Arkansas Oil & Gas Company, which was engaged in drilling oil wells on leased lands. On the '27th day of June, 1919, these trustees entered into a contract with the Continental Supply Company whereby they agreed to promptly pay to said Continental Supply Company all sums of money that might become due it from the Texas & Arkansas Oil & Gas Company, for any merchandise, machinery and materials sold and delivered or contracted to be sold and delivered to them by the Continental Supply Company.
    Large amounts of machinery and materials were purchased by the representative and agent of the Texas & Arkansas Oil & Gas Company from the Continental Supply Company under this contract, and payments were made from time to time. Some time in December, 1919, the Continental Supply 'Company sent to D. H. Echols, as secretary and trustee of the Texas and Arkansas Oil & Gas Company, a statement of account showing a balance due of $15,688.77. On December 22, 1919, D. H. Echols sent to the Continental Supply Company a check for the balance claimed to be due, and also mailed to it a letter as follows:
    “Inclosed herewith you will find our check for $15,688.77 in payment of the attached statement. This will be notice to you that the writer desires to be relieved of all responsibility for purchase of this company from a personal standpoint.
    ‘ ‘ Some time during the summer I signed, with J. T. Robertson and J. B. Harris, a guaranty for the payment of this company’s account to the extent of $40,000.

      “In payment of the account at this time, it is my desire to have you acknowledge receipt of advice from me that I will not be responsible further for any purchases made by this company or its agents.
    “Your prompt compliance with this request will be appreciated by the writer.”
    On December 27,1919, the Continental Supply Company mailed to D. H. Echols, as secretary of the Texas & Arkansas Oil & Gras Company, a reply to his letter, which is as follows:
    “We are in receipt of yours of the 22dinst., inclosing check for $15,688.77, against the account of your company, for which we wish to thank you very kindly. We also note your remarks to the effect that you wish to be released from the guaranty of $25,000, given by you, Messrs. J. T. Robertson and J. B. Harris, and wish to advise that this letter will indicate that you are released from this responsibility from this date, inasmuch as the other two gentlemen are still on this guaranty.
    “We are sending them a carbon copy of this letter.”
    Other facts will be stated in the opinion.
    The chancellor was of the opinion that the complaint should be dismissed for want of equity, and a decree was entered of record in accordance with his findings.
    The case is here on appeal.

      Bryan, Williams <& Cave, D. S. Plwmmer and Mamn & McCulloch, for appellant.
    The action is not barred by the statute of limitation. Section 6955, C. & M. Digest, applies to the limitation in this action. See also 151 Ark. 377. The account exhibited was covered by the guaranty. The alleged release was insufficient to discharge appellees from liability under their contract. There was no consideration for the release. There was no accord and satisfaction as defined in 1 C. J. 523. A release with reservation 'against the other .joint obligors is, in legal effect, no release at all but merely a covenant not to sue. I Williston on Contracts, 645. Even conceding that Echols was released, Robertson was released only to the extent of his right of contribution against Ecbols. 44 Ark. 349. See also 15 Ark. 290. The claim is not barred by laches.

      E. F. Boleson and G. W. Norton, for appellees.
   Hart, J.,

(after stating the facts). In the case before ns the defendants were indebted to the plaintiff in a large amount for machinery and materials purchased by the former from the latter, to be used in drilling oil wells on leased territory operated by the defendants as trustees for certain other persons associated with them for the purpose of drilling wells for oil and gas. In this connection it may be stated that the defendants were personally liable for the account under a written guaranty signed by them, and the facts as disclosed in the record also show them to be liable as trustees, of a business trust doing business under a declaration vesting in them absolute authority over the trust business and property, within the rule laid down in Betts v. Hackathorne, 159 Ark. 621.

Some time in December, 1919, the Continental Supply Company mailed to D. H. Echols, as trustee for the Texas & Arkansas Oil & Gas Company, which was the name under which his association was doing business, a statement of their account, showing a balance of $15,688.77. After receiving the statement, Echols wrote the plaintiff a letter on the letterheads of the Texas and Arkansas Oil & Gas Company, signed by himself as secretary, in which he asked to be personally released from all responsibility for purchases of his company or association. He sent a remittance of $15,688.77 with the letter. On December 27, 1919, the plaintiff acknowledged the receipt of the check and letters, and advised Echols that he was released from responsibility from this date. The settlement of the account by Echols was the only consideration for the release executed by the plaintiff. The effect of a release executed in consideration of the settlement of accounts between parties is not to render the settlement conclusive. If the account is impeached on the ground of fraud or mutual mistake, the release will not prevent the court looking into the settlement. The party seeking to impeach the settlement is bound to show affirmatively the mistake alleged. The force of the admission and the strength of the evidence which will be necessary to overcome it will depend upon the circumstances of each case. St. L. I. M. & So. Ry. Co. v. Morgan, 115 Ark. 529, and Hawkins Brothers v. Lesser-Goldman Cotton Co., 157 Ark. 299.

It is manifest, under the rule just announced, that an account stated and a settlement of it, which is shown to have been examined by both parties and expressly agreed to by them, will afford stronger evidence of the correctness of the account than if it had been merely delivered by mail in the usual course of business and acquiesced in for a considerable period of time thereafter.

In the instant case the account was settled and the balance paid by Echols, accompanied by a demand to be released from all further personal liability for purchases of his company. Echols expressly notified the plaintiff that he would not be responsible any further for any purchases made by the company or agent. This put the plaintiff upon notice that Echols, for some reason, desired to know the exact state of the accounts between the parties and to have the settlement made between them a final settlement. He states the reason that he did this was that he was about to retire from the company and to cease to act as trustee for his associates. He caused an audit of the affairs of his company to be made by a public accountant, in order that he might be advised of the exact state of its affairs. During the course of his investigation he did not find out any fact or circumstance which would lead him to believe that his company owed the plaintiff the account sued for in this action, or that his association or company was indebted to the plaintiff in any amount whatever. The affairs and business of the Texas & Arkansas Oil & Gas Company were wound up and the accounts between Echols and his co-trustees and their associates were adjusted and settled. All the property of the concern was sold to a foreign corporation. Robertson and Harris were advised of the action taken by Echols when he settled with the plaintiff. All three of the defendants engaged in winding up the affairs of the Texas & Arkansas Oil & Gas Company, under the belief that the company had made a final settlement with the plaintiff. They adjusted the accounts between each other and between themselves and their associates under this belief. They were not notified that the plaintiff claimed that there had been a mistake made in their final settlement until some time in the spring of 1921, more than a year after the final settlement had been made and some time after the affairs of the Texas & Arkansas Oil & Gas Company had been settled and the property and assets sold- to persons who were beyond the boundaries of the State.

The defendants testified that, at this time, none of the property and assets of the Texas & Arkansas Oil & Gas Company were in their hands or in the hands of any of their associates. The fact that the mistake was made in settlement of the account is attributable to no fault of the defendants. The purchase of the articles in question was made by another agent of the company, and the defendants were ignorant of the fact that it had been made until the claim was sent to them some time in March, 1921. If the plaintiff had proceeded promptly, or at least within a reasonable time, and discovered the mistake, the defendants could have had an adjustment of the matter with their associates. It is true that they were personally liable to the plaintiff, but it appears from the record that the items of the account sued on were received and used by another agent of the Texas & Arkansas Oil & Gas Company, in the usual 'Course of business, and, under these circumstances, the defendants could have deducted their proportionate part of the. account, if the claim had been presented to them before the property and assets of the Texas & Arkansas Oil & Gas Company had been sold and the proceeds thereof distributed.

Under tbe rule above announced it would be inequitable to allow a recovery against tbe defendants, and tbe case is brought witbin tbe principles of an equitable estoppel between tbe parties. Tbe account bas been .settled and tbe balance paid -upon tbe express demand that it should become a final .settlement. Tbe circumstances under which tbe settlement was made require more proof to overcome i-t than a mere account stated. Tbe plaintiff was expressly put upon notice, and bas waited an unreasonable time before discovering tbe alleged mistake. No excuse for tbe delay bas been shown.

On tbe other band, tbe defendants have shown that they would be put to a great inconvenience and perhaps - considerable loss by having to pay the' amount now. Tbe settlement and release executed under such circumstances are binding upon tbe parties, and tbe decree must be affirmed.


author: McCulloch, C. J.

text:
    Kent v. Plant.
    Opinion delivered October 27, 1924.
    1. Highways — presentation of claims against district. — Special Acts 1921, p. 767, repealing a prior act creating a road district and requiring claims for expenses to be presented to the commissioners of the district, was sufficiently complied with when claimants presented their claims to two of the three commissioners, though the third commissioner did not meet with the other two.
    2. Highways — assessment of benefits — relief.—Property owners seeking to restrain the collection of a special assessment authorized by Special Acts of 1921, p. 767, must show that the method of assessment adopted was not authorized.
    3. Highways — county court’s jurisdiction. — The statute of 1920 creating a road improvement district and authorizing lateral roads to be improved did not invade the jurisdiction of the county court, in view of the provision that the plans and specifications and estimates of cost be filed with and approved by the county court, and that the court should lay out the roads thus ■selected.

      Appeal from White Chancery Court; John E. Martineau, Chancellor;
    affirmed.

      Bnmdidge & Neelly, for appellants.

      J. N. Rachels, for appellee.
   McCulloch, C. J.

The General Assembly, at the’ extraordinary session in February, 1920, passed a special statute creating the New Hope Koad Improvement District, in White County, but, before any construction was begun, and after the preliminary expenses were incurred, the General Assembly of 1921 passed a statute repealing the statute creating the district, but providing for the payment of all claims against the district for expenses incurred. Section 2 of the repealing act, supra, provides that all claims must be presented to the commissioners of the district “duly verified as is required in actions on account, and, if not presented within six months from this date, they shall be forever barred.” This section further provides that, on the expiration of the period prescribed for presenting claims, it shall be the duty of the commissioners to levy a tax on real property in the district sufficient to pay the indebtedness, and that, if the assessments of benefits had been made and confirmed, the tax shall be based upon such assessments, but, if there had been no confirmation of the assessments, the tax shall be upon the “assessed value of the property for State and county taxation as it appeared upon the county assessment.”

Appellants are owners of property in the district, and they instituted this suit against the tax collector to restrain him from collecting the tax extended on the taxbooks for the payment of the claims .allowed by the commissioners. The right to collect the tax was challenged on numerous grounds, but the chancery court decided against the contention of appellants, and dismissed their complaint for want of equity.

The first contention is that the claims against the district, which were all small amounts, except the claim of the engineer of the district, were not presented to the commissioners as required by statute, and were therefore barred. The commissioners named in the statute were W. H. Abington, C. B. Smith, and W. T. Daniels. Daniels resigned, • and the county court appointed Otho Martin in his place. -'After the enactment of the repealing statute, Smith did not meet with the board, and the only meetings were held by Abington -and Martin. The proof shows that Dr. Abington, the chairman of the board, repeatedly notified Smith, who failed to attend. It is the contention of counsel for appellants that it was necessary, under the statute, for claimants to present their respective claims to all of the members of the board, and that presentation to one of them, even though he was chairman or secretary of the board, would not be sufficient compliance. This contention is, we think, unsound. The language of the statute is that claims against said district must be presented to the commissioners thereof,” and counsel liken this to a contract made by a school board or other legal board where it is necessary that all the members be present, or be notified to be present, or at a regular meeting of which all have notice. There is, we think, no .analogy between the two questions, because the right of the’ claimants to recover is not based upon any contractual relation between the claimants and the district arising at the time of the presentation of the claims, but it is based upon a liability arising under previous contracts, and the validity of those contracts is not drawn in question here. All that the claimants were required to do was to present their claims to the board of commissioners — nothing more — and, when that was done, no further action on the part of the claimants was required, except to bring suit within ninety days, if the claims be rejected. If there was any irregularity in the allowance of the claims on account of the failure of one of the members of the board to attend, this does not defeat the right of the claimants to recover where the claims are not shown to be unfounded. There is no attempt in the present case to show that the claims are not based upon subsisting liability of the district for which the statute provided payment.

It is further contended that the clerk is about to extend the taxes on assessments of benefits which have never been confirmed, in defiance of the statut'e, which expressly provides that, if the assessments have not been confirmed, the tax shall be based on the value of real property in the district as assessed for taxation for State and county purposes. The record, as abstracted, is not clear on this point. -It is not shown what basis has been adopted for the extension of taxes, and, in order for appellants to obtain relief, they must show that a method of assessment has been adopted which is not authorized. Of course, the tax must be extended on the basis set forth in the statute, and, if a wrong basis has been adopted, the property owners have the right to an injunction, but this would not defeat the right to levy the tax, which should be levied on one of the bases specified in the statute. In the present condition of the record, however, we cannot discover that the wrong basis was adopted, the burden being upon appellants to establish that fact before they are entitled to relief.

An attack is made on the validity of the original statute under which the claims were incurred, on the ground that the statute authorized lateral roads to be selected by the commissioners and improved. The provision of the statute authorizing the selection of laterals is- carefully guarded by a further provision that, when roads were selected for laterals, plans and specifications should be made and estimates of costs filed with the county court, and subject to the approval of the county court, and that the court should lay out the roads thus selected. Under our decisions in numerous cases, this was not an invasion of the jurisdiction of the county court so as to invalidate the statute.

Our conclusion upon the whole case is that the chancery court was correct in denying injunctive relief to appellants, and the decree is in all things affirmed.


author: Wood, J. Hart, J.,

text:
    Howard-Sevier Road Improvement District No. 1 v. Hunt.
    Opinion delivered October 27, 1924.
    1. Judgment — res judicata. — A decree in a suit by certain taxpayers in their own right and on behalf of all other taxpayers sustaining the validity of the assessment of benefits in a highway improvement district is res judicata in another suit involving the same subject-matter and cause of action brought by other taxpayers, under Crawford & Moses’ Dig., § 1098.
    2. Judgment — res judicata. — A judgment in a suit by a trustee for bondholders against a highway district, upholding the validity of the assessment of benefits therein, is res judicata in a suit by taxpayers of such district challenging the Validity of such assessment, as the issues in both cases are the same.
    3. Judgment — full faith and credit to ' foreign judgment.— Where a judgment of a Federal court is duly pleaded and ' proved, it is the duty of the trial court to give it full faith and credit.
    Appeal from Howard •Chancery Court; L. F. Monroe,. special-Chancellor;
    reversed.

      Lamb & Frierson, D. K. Hawthorne, Daily & Woods, and Rose, Hemingway, Cantrell & Loughborough, for appellants.
    1. The decision of the Howard Chancery Court in the suit brought by Kennedy- et al. is res. judicata. 15 R. C. L. 1035; 151 111. App. '245'; 28 Kansas 289-291; 13 S. C. 290; 35 Conn. 526; 13 Wash. 141; 112 Fed. 705; 114 S. E. 689, 184 N. C. 471; 154 Ala. 242, 45 So. 586; 123 111. 122, 13 N. E. 161; 253 111. 625, 97 N. E. 1092'; 149 la. 345; 128 N. W. 533; 113 Ky. 864, 69 S. W. 763; 68 S. W. 15, 16; 127 Pac. 313; 16 How. 142; Crawford & Moses’ Digest, § 1098; 158 Ark. 585.
    2. The decree of the United States District Court in the case of Guardian Savings & Trust Company, Trustee, v. Howard-Sevier Road Improvement District No. 1, is res judicata of the controversy attempted to be raised in this case. A judgment in a suit is a bar to any defenses that could have been pleaded, whether they were in fact pleaded or not. 19 Ark. 420; 41 Ark. 75; 41 Ark. '230.; 76 Ark. 423; 105 Ark. 488; 119 Ark. 413. There cap. he no valid issue of bonds until a valid assessment of benefits has been made. 150 Ark. 94; 258 Ark. 378. It was the duty of the district therefore to set up in the Federal suit the fact that there wias no valid assessment of benefits, if that was a fact; and when it failed to do so, and permitted a decree to enforce the mortgage upon the assessment of benefits, the district, and the property owners as well, lost the right to contest the validity of the assessment of benefits. I Freeman on Judgments, 4th ed., § 179; 2 Black on Judgments, 1st ed., 584; 162 Pac. 498; 82 Ore. 541; 89 Sou. 514; 216 Fla. 169; 25i8 S. W. 609; 134 Ark. 109; 142 Ark. 267; 137 Ark. 187; 152 Ark. 18; 148 N. W. 586; 96 Neb. 619; 176 S. W. 933; 165 Ky. 9; 250 S. W. 217; 113 N. E. 60; 273 111. 501; 184 S. W. 470; 59 Pac. 976; 9 Okla. 133; 98 N. W. 802; 125 la. 28; 17 S. W. 502; 106 Mo. 510; 168 U. S. 59.
    3. The appellees in their testimony severally admitted that they knew of the assessment of benefits and of the time when it was equalized, and that they did not protest; that they knew that.the road was being built, and voiced no opposition. They waited until the road was completed with the proceeds of the bonds- and the contributions from the Federal Government and the State, and now, having received all the benefits and advantages of the improvement, seek to repudiate the debt. They are estopped. 55 Ark. 148, 155; 159 Ark. 84; 158 Ark. 59; 185 U. S. 1; 194 U. S. 553; 36 Okla. 234; 128 Pae. 308; 40 Okla. 474; 139 Pac. 273.

      J. W. Bishop and Shaver, Shaver & Williams, for appellees.
    1. To make a matter res judicata, these things are fundamentally necessary: identity of the thing sued for, identity of cause of action, identity of persons and quality in the persons for or against whom the claim is made. 34 Cyc. 1666. It is uniformly held that a decree only binds parties to the record, that the proceedings must be between the same parties, and that strangers to the record are not bound. 63 Ark. 154; 96 Ark. 451; 105 Ark. 86; 108 Ark. 574; 110 Ark. 494; 113 Ark. 380; 116 Ark, 501. A judgment is evidence of nothing in a subsequent action between different parties, except that it has been rendered. 96 Ark. 455; 35 Ark. 451; 94 U. S. 608.
    Appellants rely solely upon a fiction of construction that appellees were parties to the proceeding wherein Kennedy and others wiere plaintiffs, when as a matter of fact they were not. A rule permitting any one to be deprived of property or the right to protect and defend it by a mere fiction of construction would violate and set at naught all protection guaranteed to the property owner by the Constitution. Art. 2, § 2, Const. Ark.; 49 Ark. 498; 64 Ark. 349; - 77 Ark. 589; 117 Ark. 394. Persons who might have been made parties to litigation between strangers, but were not, are not bound by the judgment. 249 U. S. 246. See also 148 Ark. 629;.Mth Amendment, U. S. Const.; art. 2, § 8, Const. Ark.
    2. There is no merit in the contention that appellees are estopped. There is no question of repudiation of liability in the case, no personal obligation, liability or contractual rights are involved, but only the question of the validity and correctness of the assessment of benefits. Th'e assessment of benefits is not a contract, but a remedy in which there are no vested rights. Page & Jones, § 166; 145 Ark. 441; 11 Supreme Court Reporter (U. S.), 790; 179 U. S. 489; 181 U. S. 34-42. See .also 147 Ark. 290; 150 Ark. 567; 97 Ark. 43; 115 Ark. 97; 70 Ark. 451.
   Wood, J.

On the 23rd day of June, 1923, the Howard-Sevier Road Improvement District No. 1 of Howard and Sevier counties, Arkansas (hereafter called district), instituted an action in the chancery court of Howard” County against delinquent lands. This case was numbered 211 on the docket of the trial court. The complaint alleged the organization of the district and the levying of assessments under the authority of the act creating the same and the failure to pay these assessments. The complaint set forth a list of the supposed owners and a description of the lands returned delinquent, together with the amount of the assessment and penalty set opposite the names. It was alleged that the assessments, penalties, interest and cost had not been paid on the lands mentioned. The prayer was that notice be given of the pendency of the action as provided by law, and that, unless the sums due were paid, a judgment be entered for the several amounts and for the sale of the lands described, to satisfy the same. After the institution of the suit, John C. Gardner, the receiver of the district, was joined as party plaintiff. .

J. M. Hunt and others, taxpayers in the district, filed an answer denying the allegations of the complaint, and set up affirmatively that the commissioners of the district had wholly failed to comply with the law requiring them to obtain and file a certified copy of the list of lands alleged to be delinquent. The parties filing the answer as defendants in the above cause also instituted an action in the Howard Chancery Court against the district and its commissioners, for themselves and “all those who have a general common interest with them in this suit.” This case was numbered 258 on the docket of the trial court. In their complaint they attacked the validity of the assessment of benefits as a whole, which the district and the receiver were attempting to collect, in their suit against the lands of the district. They set up in detail the causes which they alleged made the assessment as a whole invalid. They alleged in substance that the assessment of benefits sought to be charged against their lands was an arbitrary legislative assessment, the Legislature having -ratified and adopted an invalid assessment made by the board of assessors under a void act; that the assessment was so excessive as to amount to a confiscation of property; that it was in excess of any possible benefit to the property by reason of the improvement, and was greater in amount than the value of all the property in the district; that the attempted assessment was by the zone system, in which none of the elements affecting the benefits to their property were considered; that they had never had a day in court to challenge the assessment of benefits. They alleged that they were not seeking to avoid or repudiate any just and legal assessment that might be made against their property by reason of the construction of the improvement; that they were ready and willing to submit to any just and proper assessment of benefits made in the manner provided by law. They prayed that the assessment of benefits now standing against their lands be canceled, and that the district be restrained from prosecuting the suit for the collection thereof, and that a reassessment of benefits by reason of the improvement be ordered, to the end that a fair, proper and legal assessment of benefits be ascertained and fixed.

The answer of the district and its receiver alleged the appointment of a receiver under the terms of the act creating the district, and set up and made an exhibit to the answer a copy of the decree of the United States District Court of the Western District of Arkansas, validating $380,000 of the bonds of the district “secured by first mortgage on the assessment of benefits.” All of the allegations of the complaint were denied except as to the due organization of the district and the qualification of the assessors and the making of the assessment by them. The'answer admitted that the assessment made by the assessors was under a special act passed at a special session of the Legislature, which session was declared void by the Supreme Court. They alleged that such assessment was afterwards validated by act Noi 13 of the special session of the General Assembly in January, 1920; that, after the assessment was thus validated, a large amount of bonds were issued and sold and the proceeds used in the construction of the roads provided for under the original act creating the district and act No. 13, supra, amending the same. It was further alleged in the answer that on the 9th of April, 1921, T. G. Kennedy and others, for themselves and all other taxpayers in the district, instituted an action in the Howard Chancery Court against the commissioners as representatives of the district, and also in their individual capacity, in which suit they attacked the validity of the assessment of benefits as a whole, alleging that the same was arbitrary, discriminatory, and confiscatory, in violation of the due process clause of the Constitution of the United States, and also contrary to the Constitution of the State of Arkansas. It was alleged that the district duly appeared and was made a party to the suit, and answered, denying all the grounds upon which the validity of the assessment of benefits was challenged. It was also alleged that the Howard Chancery Court rendered a decree in that cause sustaining the validity of the assessment of benefits, and that no appeal had been prosecuted from that decree; that the issues in the suit of Kennedy et at. against the district and its commissioners were identical .with the issues in the present suit; that such suit was a class suit instituted by the taxpayers in the district in their own behalf and also for all other taxpayers within the district, and the district and receiver pleaded that the decree in that case sustaining the assessment of benefits was res judicata of the present action.

The causes were consolidated and tried together in the chancery court. Testimony was adduced on the issue as to the validity of the assessment of benefits, and the cause was heard upon this testimony and upon the pleadings and exhibits in the consolidated causes. Among other things the court found that “there is no merit to the plea of res judicata made by the plaintiffs in cause No. 211 and by the defendants in cause No. 258; that none of the parties plaintiff in case No. 258 and defendants in case No. 211 were parties to the cases pleaded in bar.” The court further found that “the attempted assessment of benefits is arbitrary, confiscatory, and an unwarranted exercise of the taxing powers.” The court thereupon entered a decree canceling the assessment of benefits and enjoining the collection thereof or any levy made for that purpose, and directed that the commissioners appoint assessors to “assess the real, jnst, fair, true and actual benefits as have accrued against the several tracts 'and parcels of land in the district by reason of the construction of said improvements.” The plaintiffs in case No. 211 and defendants in case No. 258 excepted to the findings and decree of the court, and duly prosecuted this appeal.

1. • It will be observed from the above resumé of the pleadings in these causes that the appellees contend that the assessment of benefits which the appellants are attempting to enforce is, as a whole, an invalid assessment, for the reasons alleged. On the other hand, the appellants contend that the assessment of benefits was valid, and that such issue had already been determined by the former decrees of the Howard Chancery Court and the District Court of the United States, Western District of'Arkansas, adversely to the appellees, which decree they pleaded as res judicata of the matters raised by the appellees in their pleadings in these causes. Therefore the first question for our determination is whether or not the court erred in holding that there was no merit in appellants’ plea of res judicata.

The appellants’ pleadings and the exhibits thereto established the following facts, which are undisputed by the appellees, to-wit: On the 9th of April, 1921, T. Gr. Kennedy and others instituted an action in their own right and for all other taxpayers within the district' against the district and the commissioners in their representative and individual capacities, in which the assessment of benefits now under review, as a whole, was challenged on the ground that it was “unfair, unjust, discriminatory, confiscatory■ and not uniform,” and in violation of the due process -clause of the Constitution of the United States and contrary to the Constitution of the State of Arkansas, and therefore void; the cause was heard upon the pleadings raising the issue of the validity of the assessment, and the evidence adduced, and a decree was entered on the 9th of November, 1921, sustaining the validity of the assessment of benefits, and dismissing so much of the complaint in that, action as challenged the validity of such assessment for want of equity.

The appellees contend that they were not parties to that action, and hence were not bound by the decree, citing the ease of Cooper v. McCoy, 116 Ark. 501, and other cases which hold that, in order that a former judgment may constitute a bar to another suit, it must be rendered in a proceeding between the same parties, or their privies, involving the same subject-matter and cause of action, and must be determined on its merits. The same subject-matter was involved in the case of Kennedy et al. v. District as is involved in these consolidated causes, and that cause was heard upon its merits, and the cause of action was the same, as to the validity of the assessment of benefits.

The only remaining question is whether the appellees here, although not parties by name in the suit of Kennedy et al. against the district, were, in law, parties because of the fact that Kennedy et al. had instituted the action in their own right and for the benefit of all other taxpayers in the district. So far as we are aware, this precise question has never before been decided by this court, and is therefore one of the first impression in this State.

Our statute (§ 109i8, C. & M. Digest) provides:

“"Where the question is one of a common or general interest of many persons, or where the parties are numerous, and it is impracticable to bring them all before the court within a reasonable time, one or more may sue or defend for the benefit of all.” This statute is decisive of the question, and it but declares the doctrine which is supported with practical unanimity where considered in other jurisdictions.

Numerous authorities are cited in the briefs of appellants to sustain this view. Out of the array we select the case of Harmon v. Auditor of Public Accounts, 123 Ill. 122, which is fairly representative of the others. In that case an action was instituted by certain property owners against the town of Mount Morris, Illinois, and its officers and the Chicago & Iowa Eailroad Company, to enjoin the town and its officers from issuing bonds to the railroad company. The issue was joined as to the right of the defendant town to issue the bonds, and the cause was finally adjudicated, denying the plaintiffs the relief sought. After this adjudication, four other taxpayers and property owners of the town instituted an action against certain bondholders and officers of the town, county and State, seeking to personally enjoin the collection of taxes upon their property for the payment of bonds issued to the railroad company. Judge Magruder, speaking for the Supreme Court of Illinois, of the action first brought by the taxpayers, among other things said: “The Pinckney bill was filed by certain property owners and taxpayers, as representatives of a. class. Though not formally stating that it is filed on behalf of all the other taxpayers in the town, yet it constantly refers to them and their interests in the questions involved.” And then, speaking of the last action brought by other taxpayers, he said: “The present suit was begun by Harmon and others, also taxpayers and property owners of the town, as representatives of the same class for whose benefit the Pinckney bill was filed. The complainants in this proceeding were represented by the complainants in the former suit, and are therefore bound by the decree therein entered. The remedy in suits of the character here indicated is in the interest of a class of individuals having common rights that need-protection, and, in the pursuit of that remedy, individuals have the right to represent the class to which they belong. This jurisdiction, in some respects, rests on the principles of a proceeding in rem. We therefore think that there is sufficient identity between the parties filing the present bill and those who filed the bill in the Pinckney case to justify the pleading ■ of the decree entered there as res judicata in this case.” And, further along, he announces principles which are apposite to the case at bar as follows: “The value of a plea of former recovery is not to be determined by the reasons which the court rendering the former decree or judgment may have given for doing so.. Nor is such former judgment or decree conclusive only as to questions actually and formally litigated. It is conclusive as to all questions within the issue, whether formally litigated or not. The principle of res judicata reaches further. It extends not only to the questions of fact and of law which were decided in the former suit, but also to the grounds of recovery or defense which might have been, ■ but were not, presented.”

In addition to the authorities cited in appellants’ briefs, see Freeman on Judgments, § 178; Elreno v. Cleveland Trinidad Paving Co., 107 Pa. 163; Gallagher v. Moundsville, 34 W. Va. 730, 12 S. E. 859; Ashton v. Rochester, 133 N. Y. 187, 30 N. E. 965, 31 N. E. 334; Dewey v. St. Albans Trust Co., 60 Vt. 1, 12 Atl. 224; Cincinnati v. Emerson, 57 Ohio St. 132, 48 N. E. 667.

2. The judgment of the District Court of the United States, Western District of Arkansas, in which the Guardian Savings & Trust Company, as trustee for bondholders, instituted an action against the district and its commissioners, and in which the plaintiff sought t-o validate and collect the first installment on mortgage bonds of the district in the sum of $380,000, was likewise res judicata of the appellees’ contentions in the ease in hand. The district, in that case, represented the taxpayers, and they were bound by the judgment- of the Federal court. Orcutt v. McGinley, 148 N. W. 586, 96 Neb. 619; Stone v. Wynn, 176 S. W. 933, 165 Ky. 9; Rose v. Port of Portland, 162 Pac. 498, 82 Ore. 541; Town of Tallassee v. State, 89 So. 514, 206 Ala. 169; Pear v. East St. Louis, 113 N. E. 60, 273 Ill. 501; 1 Freeman on Judgments, 4th ed. § 178; 2 Black on Judgments, 1st ed. 584, and numerous other authorities cited in appellants’ briefs.

The issue in the Federal court case as to the validity of the, bonds necessarily involved the issue as to whether there had been a valid assessment of benefits, for, if there was no valid assessment of benefits, there could be no valid issue of bonds. Western Randolph County Rd. Imp. Dist. v. Clifford, 150 Ark. 94. It is not pretended that the action in the Federal court was collusive or simulated between the bondholders and the district to have the first issue of -bonds of the district validated. As the district represented the taxpayers, it was bound to plead for them any defense that could have been set up which would have rendered the bonds invalid, and a good defense would have been that, for any reason whatsoever, there was no valid assessment of benefits. The district could, and should, have pleaded such ■ defense for the benefit of the taxpayers. See Ellis v. Clark, 19 Ark. 420; Morris v. Curry, 41 Ark. 75; Jones v. Terry, 41 Ark. 230; Church v. Gallic, 76 Ark. 423; Ederheimer v. Carson Dry Goods Co., 105 Ark. 488; Jimmerson v. Fordyce Lbr. Co., 119 Ark. 413.

The judgment of the United States District Court, after setting out the bonds, recited: They are “the valid obligations of said district, and are each duly secured by a first mortgage on the assessment of benefits of said district, bearing even date -to the bond issue, and duly recorded.” The judgment in that case was duly pleaded and in evidence in these consolidated causes. It was the duty of the trial court to give full faith and credit to 'this judgment. State ex rel. Craighead County v. St. Louis-S. F. R. Co., 162 Ark. 443; Shaw v. Polk, 152 Ark. 18; Davies v. Patterson, 137 Ark. 187; Harris v. Harris, 142 Ark. 267.

The facts of this record present a typical case for the application of the doctrine of res judicata above set forth, and exemplify the wisdom of the rule declared by our statute. This was a large district of several hundred taxpayers. If, at the end of two lawsuits involving -the validity of an assessment of benefits in this district, in which all the taxpayers thereof were duly represented and in which it was adjudged that the assessment of benefits was valid, other taxpayers could bring new suits, and so on down, until every taxpayer by name had been excluded, then indeed the only, security upon which the bonds were issued and sold and the money furnished to make 'such improvements would be as flickering and insubstantial as the “borealis race.”

The rationale of the doctrine of res judicata is well expressed by Judge Mitchell, in State of Wisconsin v. Torinus, 28 Minn, 175-179. “The doctrine of res judicata,” says he, “is founded upon two maxims of the law, one of which is that ‘a man should not be twice vexed for the same cause,’ the other that ‘it is for the public good that there be an end of litigation;’ and it is undoubtedly true that, if there be any one principle of law settled, it is that, whenever a cause of action, in the language of the law, ‘transit in rem adjudicatam/ and the judgment thereupon remains in full force and unreversed, the original cause of action is merged and gone forever. After judgment on the merits, a party cannot afterwards litigate the same question in another action, although some argument might have been urged on the first trial that would have led to a different result. Such a judgment is final and conclusive, not only as to matters actually decided, but as to every other matter which the parties might have litigated and had decided as incident to and essentially connected with the subject-matter of the litigation, as the facts then existed. The discovery of new evidence, not in the power of the party at the former trial, forms no exception to the rule. The doctrine is so just, and so necessary to the peace and good order of society, that we have no desire to either modify it or unreasonably limit its application.”

The district, as we have seen, represented all the taxpayers in the Federal suit.

Since Kennedy and the others who instituted the original action attacking the validity of the assessment of benefits as a whole, which appellants are here seeking to enforce, represented the appellees and a-11 the taxpayers and property owners of the district who were in the same class, it follows, from our statute and the above authorities, that the appellees were parties to that original action the same as if they had been made so by name. The appellees are bound by the unreverséd judgment of the trial court in that case, determined on the merits, that the assessment of benefits was valid. There is no contention here that that cause was a simulated or collusive lawsuit' on- the part of Kennedy and the others named with him and the district and its commissioners to obtain a judgment of the court validating the assessment. That it was. not a collusive suit is abundantly shown by the opinion of this' court in the case of Holcomb v. Kennedy, 158 Ark. 585, where one branch of that lawsuit was reviewed and decided.

3. The appellees contend that this court, in the ■ cases of Frazier v. McHaney, 117 Ark. 394, and Meyer v. Board of Imp. Paving Dist., 148 Ark. 629, has •already decided that suits of this nature do not come within the above doctrine of class suits. The issue of res judicata was not raised in either of those cases, and, if it had been, those cases are easily differentiated on the facts from the present case, and have no application here.

In the case of Frazier v. McHaney, supra, certain railroad corporations, and a trustee for one of them, instituted an action against the Fourche Drainage District, challenging the assessments on their own lands in the district. No attack was made upon the validity of the assessment of benefits as a whole, and the action was instituted by the plaintiffs, not as a class action but simply as bn action to correct assessments against their particular property and none other. After the decree was rendered, Frazier and others-filed petitions asking to be made parties for the purpose of prosecuting an appeal to this court. We held that they were not parties to the action, and that'only those who were parties- when the decree was entered would have the right to prosecute an appeal.

In the case of Meyers v. Board of Improvement of Paving District, supra, the plaintiffs instituted the- action attacking the validity of the assessment of benefit's as-a whole, made under the ordinances creating improvement districts in the city of Van Burén. The statute under which the ordinances were passed, among other things, provided that “all persons who shall fail to begin legal proceedings within thirty days after, such publication for the purpose of correcting or invalidating such assessment shall be forever barred and precluded.” The action was instituted within the thirty days by the plaintiffs, Meyers and others, and some one of them, for himself and others similarly situated, who might wish to join in the action. The action therefore was a class action in which the plaintiffs represented the other taxpayers in the district similarly situated. Several months after the institution of the action, and after the time had expired in which an action could be brought for invalidating the assessment, other property owners who had not joined, by name, in the original action, asked and were permitted by the trial court to become parties plaintiff. Speaking of this ruling of the trial court, we said: “We think the court should not have permitted the new parties to be made plaintiffs. Several months had then expired since the publication of the notices of the ordinances creating the district, and the effect of the court’s action was to permit these persons, by adopting the pleadings of the persons whose names are set out above, to prosecute the° litigation which the statute required them to begin within thirty days. ’ ’ The effect of this ruling was merely to treat as new parties those who sought to come into the suit after the time when an action to invalidate the assessment of benefits could have been brought, and who then sought to be-made parties and to have the case from that time on proceed in their names to a final decree. The effect of the ruling of the trial court was to substitute these parties for those who. had originally instituted the action, and this ruling, we held,- was tantamount to the bringing of' a new suit after the time had elapsed in which a suit could have been brought.

The question of res judicata, as we have already said, was not raised, and the issue now under review was not considered nor ruled upon, and the language of the opinion in the case above quoted certainly would not be controlling here, and, we believe, has no application to the.facts of this record. We conclude therefore that the trial court erred in holding that there is no merit in appellant’s plea of res judicata. Having reached this conclusion, the other interesting questions so elaborately ■and ably argued in the briefs of counsel for the respective parties pass out, and it would be supererogation, pure and simple, to consider and decide them. Hence .we have not done so.

For the error indicated the .decree is reversed, and the cause is remanded with directions to dismiss the appellees’ complaint in case No. 258 for want of equity, and for such' other and further proceedings in case No. 211 as may be- necessary to enforce the collection of the •levies based on the assessment of benefits according to law, and not inconsistent with this opinion.

Hart, J.,

(dissenting). My dissent in this case is upon the ground that there was. a legislative assessment of benefits which is. shown by clear and convincing evidence to be palpably arbitrary and in plain abuse of legislative power and that this question was not an issue, either in the former suit in the State chancery court or in the Federal court sitting in chancery.

The doctrine of res judicata rests upon the principle that parties .ought not to be permitted to litigate the same issue twice.

In Dawson v. Parham, 55 Ark. 286, the court in effect said that, to render a judgment conclusive, it must appear by the record of the prior suit that the particular matter sought to be concluded was necessarily tried or determined, or it must be shown by extrinsic evidence, consistent with the record, that the judgment necessarily involves the determination of the matter.

Again, in the case of Pulaski County v. Hill, 97 Ark 450, the court said: “The true test of whether or not a particular point, question or right has been concluded by a former suit and judgment is whether such point, question or right was distinctly put in issue, or should have been put in issue, and was directly determined by such former suit and judgment. It is true that the judgment is also conclusive of ‘all matters properly belonging to the subject of the controversy and within the scope of the issues.’ It is not the recovery, but the matter actually alleged by the parties and upon, which the recovery proceeds, which- creates the estoppel, and the judgment does not conclude rights or matters which were -not put in issue, and which it was-not necessary -to put in issue in the suit.” ■ -

In the application of this well established rule to the facts of this case I do not think that-it -can be said -that the suit -of Kennedy and other taxpayers against -the commissioners of the road improvement' district in the chancery court can be said to be a decision of the issue raised in the case before us. The complaint in that case attacked the assessment of benefits on the ground that all the lands in the district were arbitrarily assessed at the same amount per acre without regard to value or distance from the highway, or the benefits which the particular tracts will receive from the' construction of the highway. The complaint alleges' that the lands of the plaintiffs are far removed from the highway and are benefited very little, if any, by the improvement.

The complaint further alleges that the farms in the district were assessed much higher, according to the value of th¿ benefits received, than -the lots in the town of Mineral Springs. Thus it will be seen that the assessment of benefits is attacked on the ground that a" wrong basis for assessing benefits was adopted in the first place. That is to say, that the zone system of assessing benefits as adopted by the commissioners was arbitrary and discriminatory. It will also be seen that while the assessment of benefits was attacked on the ground that other irregularities and discriminations in the assessment of benefits were made, nowhere is the assessment attacked oil the ground that the assessment as a whole was so unreasonably high that it resulted in a confiscation of the lands of the district. In fact, the assessment of benefits in that case' was attacked on the theory that it ' was - an assessment of benefits made by a subordinate body appointed.1 by the Legislature for that purpose, and was therefore subject to attack for irregularities, and also for adopting a wrong basis of assessment.

In the case before us, none of these grounds of attack are relied upon. The complaint recognized that act No. 13, approved February 3, 1920, confirms the assessment of benefits made by the board under the original act and adopts the .assessment of benefits made by the board as a legislative assessment of benefits. This the Legislature had the right to do under our former decisions. This court has held that, because the Legislature could in the first place have levied the assessment itself, subject only to the right of the assessed landowners to have an arbitrary abuse of that power reviewed by the courts, it can adopt as correct the assessment made by a board created for that purpose and treat the act of adoption as a reassessment of the lands by the Legislature. Coffman v. St. Francis Drain. Dist., 83 Ark. 54, and Sudberry v. Graves, 83 Ark. 344.

The special act referred to as confirming the assessment of benefits made- by the commissioners concludes with the following: “And the same in all respects ratified and confirmed, and declared to be the assessment of the district until the board orders a reassessment.”

The Supreme Court of the United State also lays down the rule that the Legislature may itself fix the basis of assessment and that its action cannot be assailed under the Constitution unless it is palpably arbitrary and a plain abuse of power. Houck v. Little River District, 239 U. S. 254.

The issue of whether the assessment of benefits made by the Legislature was palpably arbitrary and largely in excess of the local benefits was not raised or determined in the Kennedy suit. Kennedy and othei taxpayers joining with him in the suit had the right to bring it and to control the allegations of the complaint. They were bound for the costs in the case if they lost, and had a right to select the grounds upon which they would attack the assessment of benefits. They proceeded upon the theory that the assessment of benefits was made by a board appointed for that purpose, and they had a right to attack it- as made by a board of assessors.

Hunt, on the other hand, believed that act No. 13, confirming the assessment of benefits, made it a legislative assessment, and that it could be only attacked upon the ground that it was a plain abuse of legislative power. Thus it will be seen that the point of attack made by him in no sense depends upon the proof made in the Kennedy case, and the issues in the two cases are wholly distinct. Each one, as a property owner in the district, had a right to attack the assessment of benefits from his own viewpoint, and, where' separate and distinct grounds were relied on, it does not seem to me that Hunt and the other landowners joining with him in the present suit should be concluded by the decree in the Kennedy suit based upon entirely different grounds and a wholly distinct and separate cause of action.

Again, it is said that the suit by the bondholders in the Federal court concludes the plaintiffs in the present case. Now the commissioners in the present case brought suit against delinquent lands to collect the assessment of benefits against the land. This suit was filed on the 23rd day of June, 1923. On October 4, 1923, J. M. Hunt and other landowners in the district filed a eomulaint' in equity against the commissioners of the district' in which they attacked the assessment of benefits as being a legislative assessment of benefits and as'being so excessive as to be arbitrary and’ a plain abuse of legislative powers. These two suits, were consolidated for the purpose of trial.

The suit in the Federal court was decided on October 22, 1923, and recites that it is heard only as to the first bond issue. Judgment was rendered against the'road district for the amount of interest due, and a receiver was appointed to collect assessments in satisfaction thereof.

The present suit by the commissioners of the road district to collect the assessments against the lands was pending at the time the suit in the Federal court was decided. Before that suit was decided, J. M. Hunt and other landowners in the district had filed a suit in the State court contesting the assessment of benefits made by the Legislature on the ground that it was arbitrary, and this suit was pending when the suit in the Federal court was determined. Therefore I do not think that the decision in the Federal, court concludes the landowners in the case before us.

Moreover, the pleadings in this case show that the decree in the Kennedy case alone is relied on to sup- ■ port the plea of res judicata. The suit in the Federal court is only pleaded by way of equitable estoppel. It does not seem to me that the adjudication in the Federal court that the commissioners have made default in the payment of interest of the first issue of bonds and the appointment of a receiver to collect the unpaid assessments ought to conclude the landowners from raising the point that the assessment of benefits is arbitrary and for that reason beyond the power of the Legislature to make.

In the majority opinion it is said"that, if the contention of the landowners should be allowed to stand, “then indeed the only security upon which the bonds were issued and sold and the money furnished to make such improvements would be as flickering and insubstantial as the borealis race.”

A sufficient answer to this is that courts ought to be as zealous to protect the rights of the landowners as those of the bondholders. Section 22 of our Bill of Rights provides that the right of property is before and higher than any constitutional sanction, and that private property shall not be taken, appropriated, or damaged for public use, without just .compensation therefor.

We have repeatedly held that local assessments rest upon local benefits, and that whenever a local assessment is not grounded upon and measured by the extent of the particular benefit, it is pro tanto a taking of private property for public use without any provision for compensation.

In discussing the question of legislative assessments in Coffman v. St. Francis Drainage District, 83 Ark. 54, this court quoted from a former decision the following: “But the power of the Legislature in these matters is not unlimited. There is a point beyond which the legislative department, even when exerting the power of taxation, may not go consistently with the citizen’s right of property. As already indicated, the principle underlying special assessments to meet the cost of public improvement is that the property upon which they are imposed is peculiarly benefited, and therefore the owners do not, in fact, pay anything in excess of what they receive by reason of such improvement. But the guaranties for the protection of private property would be seriously impaired if it were established, as a rule of constitutional law, that the imposition by the Legislature upon particular private property of the entire cost of a public improvement, irrespective of any peculiar benefits accruing to the owner from such improvement, could not be questioned by him in the courts of the country. ’ ’

This brings me to a discussion of the evidence which shows ¡that the legislative assessment was arbitrary. According to the evidence adduced in favor of the landowners, three persons went to the taxbooks and made a list of the real property in the district. They took the taxbooks of the lands in the district and a map of the district and made an appraisement, of the value of each tract of land and also its kind and character. The tabulation as made set out the valuation of each tract of land and the improvements on it.

According; to the compilation shown by this exhibit, there were 22,099 swamp and waste acres, of the value Of $72,718; 4,160 acres of woodland that'can be cultivated, at the value of $20,010; 1,410 acres of pasture land of the value of $5,640; 10,780 acres in cultivation, at the value of $182,505; 38,499' acres in all, with a value of $280,873, and a value of improvements of $77,050; with a total value for all lands and all improvements of $357,923.

The persons who- made this compilation testified that they were familiar with each tract of land in the improvement district. Their testimony was corroborated by that of other landowners-. The total assessment of benefits amounts to $706,711.20.

The record shows that the road is about seventeen and a half miles long and extends from Mineral Springs, a small -town in Howard County, in a southwesterly direction to a point where the public road crosses Little River in Sevier County. There are no large towns in the district. The district has received $120,000 in Federal aid. There have been two bond issues. The first was for $380,000 and the second was for $250,000. All of this money, except $19,000, which the district lost by reason of a bank failure, has been expended one way and another in making this improvement. Thus it will be seen that the proposed cost of the road is about $40,000 per mile. The road is not a link in any important highway system. The improved road does not even begin or end at one of the county seats of Howard and Sevier counties.

The record also shows that two loan companies which had been making farm loans in the territory embraced in the road improvement district withdrew from this territory because of the excessive assessment of benefits made by the commissioners of the road improvement district. It is also shown that there is no sale for even the best farm lands in the district. .

Several witnesses testified that their farms had depreciated in value greatly on account of being placed in the improvement district. The owners offered their farms for sale and were not able to get anything near as much as they could before the district was organized. The lower price was due entirely to the fact of the excessive taxes levied upon the lands by the road districts. The evidence is clear, unequivocal and decisive that the assessment of benefits is so unreasonably high as to make it plain that the Legislature abused its power. The evidence clearly shows that the assessment of benefits is so excessive as to render it very doubtful whether the lands to be benefited will suffice to pay the assessments against them. To enforce their collection would be the exercise of arbitrary power by the Legislature, instead of the assessment of benefits against the lands.

In discussing the question in Allen v. Drew, 44 Vt. 174, Judge Bedfield, speaking for the court, said: “We have no doubt that a local assessment may so transcend the limits of equality and reason, that its exaction would cease to be a tax, or contribution to a common burden, and become extortion and confiscation. In that case, it would be the duty of the court to protect the citizen. ’ ’

Finally, it is insisted that the landowners are concluded from maintaining this action by the doctrine of equitable estoppel; and this I consider the most difficult question in the case. To support this plea it is claimed that they knew that the road was being constructed and that many, of the landowners paid the first assessment on- their property. In this connection it may be stated that Hunt and others have not paid any assessments on their lands. It is true that many of the landowners did pay the first assessment; but they did this because the collectors of taxes refused to receive the State and county taxes unless the landowners would also pay these local assessments. At that time this court had not decided that the landowners had a right to pay the State and county taxes and refuse to pay local assessments. Thus it will be seen that this first payment made .by the landowners was in effect a payment made under protest, and no estoppel should be grounded upon it.

The second and third installments of interest were paid by the commissioners taking part of the money which they had 'borrowed and paying the interest on the bonds. The landowners did not lmow that they were doing this. The district was created by a special act, and the notice required by the Constitution as to local or special bills was not given or exhibited to the Legislature. Since the landowners have received actual notice of the passage of the act, they have, by suit and otherwise, protested in every way possible against the construction of the improvement.

One of the commissioners of the district stated that the attorneys for the bondholders were also the Little Bock attorneys for the district. It is true that the district also had' a local attorney; but the knowledge of the 'attorneys for the district, who were also attorneys for the bondholders, must be imputed to the latter. Bank of Hoxie v. Meriwether, ante, p. 39. The attorneys for the district necessarily acquired knowledge of all the proceedings with regard to the construction of the improvement. -They must have known that the landowners were bitterly opposed to the project on account of its excessive cost. They knew the length of the road, and the fact that it was not a part of any highway system. They knew the number of acres of land in the district and the amount of the assessment of benefits. .

It is a -significant fact that two loan companies engaged in making private farm loans in the territory comprising the road district withdrew from it as soon as they learned the amount of the assessment of 'benefits and that the road would be constructed under the act. Their agents testified that they did this because the road taxes were so high that, instead of the value of the lands being increased by the construction of the road, their value would be decreased thereby to such an extent that they would not longer be security for the private loans.

These things and other matters which necessarily came to the knowledge of their attorneys, who are also attorneys for the district, put them on notice that the assessment o£ benefits was arbitrary and a plain abuse of legislative power. Therefore I am of the opinion that there is no ground of equitable estoppel against the landowners.

The result of my views is that the assessment of benefits as made by the Legislature amounts to a virtual confiscation of the lands in the district, and, on that account, should be declared void, and a new assessment ordered to 'be made under the provisions of the original act.