Columbia County Rural Development Authority v. Hudgens

Robert H. Dudley, Justice.

The single issue on appeal is whether a corporation organized under the Rural Development Authority Act has the authority to exercise the power of eminent domain for the purpose of acquiring, constructing and equipping a multi-use water supply lake.

The Columbia County Quorum Court approved Amended Ordinance No. 83-1, which recited that the county’s water supply wells for residential and industrial use were being depleted and called for an election to determine whether to adopt a 1% sales and use tax within the county in order to construct a multi-use water supply lake. The voters approved the tax and the cities of Magnolia, Taylor, Waldo, Emerson and McNeil entered into an agreement with Columbia County to pool the money collected from the tax to finance the project. The stated purpose of the interlocal agreement is to provide for a multi-use water supply and recreation lake. The Columbia County Quorum Court subsequently passed Ordinance No. 83-3 which provided for the creation of the appellant corporation, the Columbia County Rural Development Authority.

The appellant contends that it has the power of eminent domain as set forth in Ark. Stat. Ann. § 35-401, since it will supply water to the contracting cities. The appellees are landowners within the area covered by the proposed lake site. The City of Magnolia was allowed to intervene.

The trial court held that appellant did not have the power of eminent domain to acquire the land in question for a multi-use water supply lake. We reverse. Jurisdiction is in this court under Rule 29 (1) (c).

Our Rule on the authority to exercise eminent domain is clear:

Statutes which relate to the power of eminent domain should be strictly construed in favor of the landowner largely because they are in derogation of the common right. This rule is particularly applicable where there is an alleged delegation of power. As a result of strict construction, the power itself must be clearly expressed by the statute or necessarily implied ###

City of Little Rock v. Sawyer, 228 Ark. 516, 309 S.W. 2d 30 (1958).

Since 1895, corporations organized for the purpose of supplying water to municipalities clearly have had authority to exercise the power of eminent domain. Ark. Stat. Ann., Title 35, Chapter 4 (Repl. 1962). The rationale behind the legislation is that supplying water to municipalities meets a public purpose. Constitutionally, private property can be taken under the power of eminent domain only for a public use. See City of Little Rock v. Raines, 241 Ark. 1071 at 1083, 411 S.W.2d 486 (1967).

In 1.963 the Rural Development Authority Act was passed. Ark. Stat. Ann. Title 20, Chapter 14 (Repl. 1968). Section 20-1403 (a) of this act provides for the formation of public corporations which are authorized to acquire real property for private use as well as public use. An example of private use is the authorization to acquire small farms and consolidate them into adequate farming units. Ark. Stat. Ann. § 20-1403(g)(2)(b). An example of public use is the authorization to build reservoirs and water works for community purposes. Thus, the original Rural Development Authority Act included the power of eminent domain for private use, making the act constitutionally suspect. By Act 75 of 1967 the power of eminent domain was removed from the Rural Development Authority Act. By this action the General Assembly deleted the power of eminent domain when it was based solely upon the type of corporation which sought to exercise the power. It is important to note, however, that the General Assembly left intact the 1895 statute, § 35-401, which authorizes the power of eminent domain to any corporation organized for the specific purpose of supplying water to municipalities. The legislative intent was to stop the delegation of the power of eminent domain based upon the type of entity formed and base it instead upon the purpose served. Similarly, while neither the Arkansas Business Corporation Act nor the Arkansas Nonprofit Corporation Act confer any inherent power of eminent domain upon corporations created thereunder, such corporations may acquire the power as a result of the purpose served. To illustrate, Ark. Stat. Ann. § 35-210 confers the power of eminent domain on any type of corporation providing telephone and telegraph services, Ark. Stat. Ann. § 35-301 confers the power on a corporation providing electricity. Ark. Stat. Ann. § 35-601 confers the power on companies which develop or convey petroleum or natural gas.

We hold that the corporation formed under provisions of the Rural Development Authority Act and organized for the purpose of supplying water to municipalities has the power of eminent domain. The remaining issue is whether this multi-use water supply project is “organized for the purpose of supplying any town .... with water.” See Ark. Stat. Ann. § 35-401.

It is undisputed that the primary purpose of this project is to supply the municipalities of Magnolia, Taylor, Waldo, Emerson and McNeil with water. The initial county ordinance, 83-1, recites that the water supply in the county is by wells, that those wells are being depleted and that a water supply lake is needed as a new source of water. The ordinance also provides that a decision on the location of the proposed lake site is to be made solely on the basis of suitability for public water supply purposes. The City of Magnolia was allowed to intervene upon its contention that the corporation was acting on behalf of the city in an effort to construct a water supply lake. Selwyn Whitehead, the chairman of the Magnolia Water Commission, testified that the project is for a much needed water supply. Walker Moore, the Mayor of Magnolia, testified that the project is for water supply.

The proposed large lake will obviously provide incidental benefits, such as flood control and recreation, but the only proof is that the main purpose of the project is for water supply to the municipalities. We hold that the corporation was organized for the purpose of supplying water to the municipalities and, for that purpose, has the power of eminent domain.

Reversed.

Hickman, J., and Hollingsworth, J., dissent.