Hackler v. Baker , 1961 Ark. LEXIS 470 ( 1961 )

Paul Ward, Associate Justice.

This litigation stems from an attempt by Baxter and Marion Counties (adjoining) to enter into a compact, under the provisions of Act No. 2 of the First Extraordinary Session of the 1960 General Assembly, for the purpose of promoting industrial development in those counties. The primary issue concerns the constitutionality of said Act.

Provisions of the Act. Generally speaking, Act No. 2 provides a method whereby two or more adjoining-counties can form a compact “for the purpose of engaging- in joint efforts to secure and develop industry of mutual benefit,” and to finance the same by issuing bonds under Amendment No. 49 of the Constitution. The Act provides for the establishment of an Inter-County Commission (hereafter called Commission) composed of one person from each county (appointed by the County Judge) and the other one (where only two counties are involved, as here) selected by the said two appointees. The Commission is empowered to make contracts and agreements necessary to secure and develop industry, to acquire property, to construct buildings, and to hold title (as trustee) for the counties. Any contract (where there is a bond issue) and any sale of property must be approved by the county court of each county.

Act No. 2 further provides that each county to the compact may “issue bonds under Amendment No. 49” to provide the necessary money, and the counties, by agreement, shall determine the proportion of the total cost of any project each one is to bear.

The Compact. Baxter and Marion Counties, through the judge and court of each, took the necessary legal steps to enter into a compact under the provisions of Act No. 2. A provisional Commission was formed, an election in each county was called and held, and a provisional Lease Agreement was entered into with the Mar-Bax Shirt Co., Inc., looking to the establishment of a factory in a building to he erected on 25 acres of land in Baxter County near the Marion County line. Baxter County favored a bond issue by a vote of 2,378 to 1,375 and Marion’s vote was 1,473 for and 437 against.

Issues in Litigation. After the previously mentioned steps had been taken, four separate suits were filed challenging the constitutionality of Act No. 2 and other aspects of the proceedings.

One suit in Baxter County was filed by a taxpayer against the County Judge, questioning the constitutionality of Act No. 2 as being in conflict with Amendment No. 49 and Article 7, § 28 of the Constitution. In this same suit there was an intervention (and cross-complaint) filed by taxpayers, naming as additional third parties defendants the sheriff and county clerk, and also the provisional members of the Commission. Still another suit was filed in Baxter County which for all purposes of this opinion was the same as the intervention.

The intervention asserts, among other things, that Act No. 2 violates Amendment No. 49, Article 7, § 28 and Article 16, §§ 5 and 6 of the Constitution, and that the Lease Agreement is not economically sound. These two suits were consolidated and now appear here as No. 2423.

In Marion County two similar suits were filed, applicable to that county. These suits were .consolidated and now appear here as No. 2461. Cases No. 2423 and No. 2461 were consolidated for hearing on appeal. For the sake of convenience and clarity we will hereafter refer to those who first challenged the compact proceedings in each county as “appellants”, to those who sought to uphold said proceedings as “appellees”, and to the intervenors as “cross-appellants.”

Trial Below. The trial court held in favor of appellees, upholding the constitutionality of Act No. 2, after deleting certain portions of the proposed Lease Agreement. Appellees have not appealed from these “deletions.” We have used the word “proposed” and “provisional” in speaking of the compact, the Lease Agreement and the Commission because, as it developed during the trial below, legal confirmation depends on the outcome of this appeal. Testimony given at the trial by the two county judges was to the effect that confirmation will be forthcoming upon an affirmance of this court.

The Issues. Appellants contend that Act No. 2 violates Amp.udTn.ent No. 49 and also Article 7, § 28 of the Constitution. Cross-appellants make the same contention and in addition thereto they contend: (a) The expenditure by Marion County under the Lease Agreement is not an economical expenditure of money as provided by § 5 of Amendment No. 49; (b) The notice of election in Baxter County was not published as required by § 6 of said Amendment No. 49; and (c) Act No. 2 requires a compact before the bonds can he issued, and; (d) Marion County cannot issue bonds to erect a factory building in Baxter County.

Amendment No. 49. All of the arguments of appellants and of cross-appellants in this contention seem to he encompassed in one proposition, viz: Since Amendment No. 49 to the Constitution makes no provision for two counties to make a compact such as here attempted, Act No. 2, which does make such a provision, must necessarily and ipso facto he in violation of said Amendment. We do not agree that such conclusion is so easily deducible, and no decisions are cited to confirm it. Rather, we think, a broad view of the Amendment and the purpose of its adoption by the people tends to refute such conclusion. Before the adoption of Amendment No. 49 in 1948 no county (or city) had a constitutional right to lend its credit (vote bonds) — prohibited by the express terms of Article 16, § 1. Later, by Amendments to the Constitution (13 and 17 for example) this prohibition was modified for certain specific purposes — such as to purchase rights-of-way, and to build courthouses, jails and hospitals. In each instance the purpose for modifying the prohibition (against lending credit) was definitely stated. Likewise, in adopting Amendment No. 49 the purpose was just as definitely stated and understood, viz: “. . . for the purpose of securing and developing industry.” (§ 1 of No. 49.) For that “purpose” every county in the state was given the right to issue tax supported bonds. The question raised is: Do two counties, each having the right to issue bonds, have the right to form a compact (or go in together) to accomplish the same purpose for their mutual benefit? This right was given to them by the legislature in Act No. 2. To sustain appellants’ and cross-appellants’ contention they must take the position that the right to form such a compact is a right that springs from constitutional authority only. They have cited no authority, and we know of none, to sustain that position. As is well known, under our system of government the legislature represents the people and as such is the reservoir of all power not relinquished to the Federal Government or prohibited by the State Constitution. The right of counties to cooperate in a lawful undertaking for their benefit certainly has not been given away to our Federal Government, and it has not been prohibited by our State Constitution. As we see it, the legislature had the right to enact Act No. 2.

Article 7, § 28 of the Constitution. We are unable to agree with the argument that the project undertaken by Baxter and Marion Counties (under Act No. 2) violates the above section of the Constitution. It reads:

“The county courts shall have exclusive original jurisdiction in all matters relating to county taxes, roads, bridges, ferries, paupers, bastardy, vagrants, the apprenticeship of minors, the disbursement of money for county purposes, and in every other case that may be necessary to the internal improvement and local concerns of the respective counties. The county court shall be held by one judge, except in cases otherwise herein provided.”

As heretofore mentioned, all essential steps must be approved by the county court. No “tax” can be voted without the county court’s approval, and the same is true of the “disbursement of money.” The order of the trial court, which we approve, specified that the proceeds of the bonds should be turned over to the county courts and not to the Commission. We see no reason why the disbursement of such proceeds in this instance, under the general laws, should not be subject to the same safeguards as any other revenues. No actual abuse of these safeguards is before us at this time. It is not pointed out to us how two counties should encounter any more legal difficulties in disbursing bond proceeds than one county would have. The latter was approved in the case of Wayland v. Maurice Snapp, County Judge, 232 Ark. 57, 334 S. W. 2d 633, where an industry was established under said Amendment No. 49.

(a) There is no merit in the contention that the proceeds of the bonds will not be economically spent as required by § 5 of Amendment No. 49. This section reads:

“The governing body of the municipality or the County Court of the county shall exercise jurisdiction over the sale or exchange of any such bonds voted by the electors at an election held for that purpose and shall expand (expend) economically the funds so provided. ’ ’

In the first place no part of the bond proceeds have been spent, and no evidence was introduced to show the money will not be spent economically. As has been heretofore pointed out, the County Courts will have jurisdiction over the proceeds of the bonds.

(b) It is here contended that the Notice of Election was not published as required by § 6 of Amendment No. 49. The objection is that the Notice was published only twice while the above section requires it to be published four times. To support the objection attention is directed to Intervenors’ Exhibit No. 4. But this Notice (given by the sheriff) is the one referred to in the first part of said Section 6, and its function is to let the people know an election will be held. It does not have to be published four times. Further down in the section there is another provision which requires that “Notice of the election shall be given by the . . . County Judge of the county by advertisement weekly for at least four times . . .” There is no contention that this latter notice was not properly given as required by Amendment No. 49.

(c) Again we can find no merit in the contention that Act No. 2 requires a “compact” before bonds can be issued under Amendment No. 49. It must be understood that the word “compact” used in Act No. 2 refers to no single written agreement or contract, but generally to the undertaking to proceed jointly in an effort to secure industries. There is no contention that Baxter and Marion Counties have not taken every step required by said Act and Amendment up to this time. Further steps must necessarily await the conclusion of this litigation. Also, we think, appellants and cross-appellants attach undue significance to the words “issue bonds.” Undoubtedly the legislature had in mind the issuance of bonds that were legal and binding on the taxpayer, and not to the mere preparation and printing of bonds. They point out no alternative procedure, and we know of none, that would more fully comply with Act No. 2 than the procedure here followed.

(d) Finally, and somewhat more troublesome, is the contention that bonds issued by Marion County (under Amendment No. 49) cannot be used to erect (or help erect) a (factory) building in Baxter County. This contention is based on the wording in § 1 of the Amendment which reads:

“Any city of the first or second class, any incorporated town, and any county, may issue, by and with the consent of the majority of the qualified electors of said municipality or county voting on the question at an election held for the purpose, bonds in sums approved by such majority at such election for the purpose of securing and developing industry within or near the said municipality holding the election, or within the county holding the election.”

Special significance is attached to the phrase “for . . . securing and developing industry . . . within the county holding the election.” Of course, in this case the election was held in Marion County and the building is to be built in Baxter County. This circumstance, they say, shows a violation of the plain provisions of the above section. It must be conceded that, if the words “securing and developing industry” means (necessarily) the same as the words “securing and developing a factory building,” this case must be reversed.

However, we do not feel that we are obligated to, or that we should, be bound to such a strict interpretation of the Amendment. We have heretofore briefly mentioned the purpose for the adoption of Amendment No. 49. It is certainly reasonable to assume that the people’s principal concern was to create jobs and thus prevent unemployment and loss of’ population rather than to assure the erection of a building. The accepted meaning of the word “industry” as shown by Webster’s New International Dictionary, is “systematic labor or habitual employment; esp., human exertion employed for the creation of value.” Therefore, if it can reasonably be said (and we think it can) that the money expended by Marion County (in this instance) will furnish employment to its citizens, the Constitution has not been violated in letter or spirit. Manifestly the people of Marion County felt that an industry domiciled only two miles from the county border would be beneficial and would likely furnish them with employment, because they approved it by a larger percentage of votes than did the people of Baxter County.

In liberally construing the provisions of Amendment No. 49 (if a liberal construction is required) to effectuate its acknowledged purpose, we are following the well recognized rule of constitutional interpretation as it is clearly stated in the case of Myhand v. Erwin, 231 Ark. 444, 330 S. W. 2d 68, which construed this same Amendment. It was there stated:

“This court has been liberal in its construction of constitutional amendments, so as to carry out ■ the obvious purpose of the people adopting the amendment.”

It is our conclusion therefore from what we have heretofore said that the decree of the trial court must be, and it is hereby, affirmed.

Affirmed.

McFaddin and Johnson, JJ., dissent. George Bose Smith, J., not participating.