Court Opinion

ID: 3272909
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:41:26.74958+00
Date Added: 2024-06-11T14:00:15.213133
License: Public Domain

If a generous and sympathetic uncle should announce that he proposed to distribute his income among his nephews and nieces (and others, possibly), and that he would augment the sum he proposed to distribute with other funds which he had borrowed, we might reasonably expect many hands with upturned palms to be extended to receive a fair share (and, in some instances, perchance, something more) of the bounty.
It is with regret, therefore, that I am constrained to conclude that there are constitutional objections to portions of the housing act under which the city of North Little Rock will share in the munificence of the federal government by having a proposed housing project for that city. My regret is somewhat assuaged, however, by the fact that a majority of my associates do not concur in the views which I entertain.
It may be freely conceded — and I do not hesitate to make the concession — that so far, at least, as appears from the briefs filed in this case, these housing projects have been uniformly sustained.
The latest case on the subject is that of Housing Authority of the City of Dallas v. Higginbotham, 143 S.W.2d 79, and this case cites the others also cited in the majority opinion. The Texas case primarily involved the right of the Housing Authority of the city of Dallas to condemn property, and it was held that the right existed. It was also held that the housing authority was exempt from taxation; but the provisions of the Texas Constitution, on the subject of exemption from taxation, quoted in that opinion, do not require, as does the Constitution of this state, that the property, to be exempt, shall be used exclusively for public purposes.
However, in the case of Knoxville Housing Authority, Inc. v. City of Knoxville, 174 Tenn. 76, 123 S.W.2d 1085, it was held by the Supreme Court of Tennessee that the housing authority property was exempt from *Page 277 
taxation, although the Constitution of that state is substantially identical with that of this state, in requiring that the exempt property shall be used exclusively for public purposes. In that opinion the Supreme Court of Tennessee also held the bonds issued by the housing authority to procure money to construct the improvement were also exempt from taxation.
We have, however, decided that such bonds could not be exempted from taxation in this state in the case of Jernigan v. Harris, 187 Ark. 705, 62 S.W.2d 5. There was involved in that case the validity of acts 131 and 132 of the 1933 general assembly. Act 131 provided the means whereby cities and towns of the state might purchase, construct and improve waterworks systems, and operate them. Act 132 authorized the cities and towns of the state to construct, own, equip, operate, maintain and improve sewage plants. Sewers and waterworks are not only property used exclusively for public purposes, but they are property which, from their very nature, cannot be used for other purposes. These were intended to be self-liquidating projects, and those acts were upheld notwithstanding their partial invalidity. To encourage and make possible those improvements, and to induce purchase of the bonds, with the proceeds of which the improvements were to be constructed, the acts provided that bonds might be issued and sold for that purpose, and should be exempt from taxation. We there held invalid this exemption from taxation, when the bonds were held by any person or agency whose property is not otherwise exempt from taxation.
I have not taken the trouble to inquire what states, besides Tennessee, whose courts have upheld exemptions of the housing authority from taxation, have a constitutional provision similar to our own. There may be others, but, if so, those cases would be persuasive only that we should give our constitution a similar construction, and are not compelling that we do so.
I find no constitutional objection to housing projects as such, and there are only three provisions of our act on the subject which I think are invalid. These are *Page 278 
found in 23, 24 and 26 of the act, which appear as 10081, 10082 and 10084, Pope's Digest, and the purpose of this dissenting opinion is to discuss the objections to those sections, which I am unable to reconcile with our own constitution, but which do not, in my opinion, render the entire act invalid, as its various provisions are separable.
Of necessity, the right of eminent domain was conferred upon the authority, otherwise the construction of the improvements would be impracticable, if not impossible. As a practical matter, it may be necessary to exempt them from taxation, to enable them to function. But, even so, this fact cannot affect our constitution. It must stand even though the housing authority must fall.
I am willing to agree — with some misgiving — that the right of eminent domain could be conferred upon the housing authority; but I think it does not follow that the property may also be exempted from taxation.
There is a very extensive annotation to the case of Ferguson v. Illinois Central Railroad Co., 202 Iowa 508,210 N.W. 604, found in 54 A.L.R., Vol. 1, upon the right to acquire property by eminent domain for a public use. After citing cases from many states and by the federal courts, the annotator says: "The weight of authority supports the general proposition that the term `public use' under the law of eminent domain is not the equivalent of public benefit, public convenience or welfare, but that, in order to make the use a public one for which the power of eminent domain may be exercised, there must be a right on the part of the public, or some portion of it, or some public or quasi public agency on behalf of the public, to use the property after it is condemned. Under this rule, the test is the legal right of the public, or some portion of it, independent of the mere will or caprice of the owner; in other words, the use must exist as a matter of right, and not of favor. The courts have properly pointed out that almost any legitimate business enterprise, indirectly to some extent, may be regarded as of benefit to the public, and that an *Page 279 
indefinite field is opened up when the doctrine is accepted that public benefit alone is sufficient to make the use a public one, warranting the exercise of the power of eminent domain."
The line of demarcation drawn by the cases, holding, in some instances, that the right of condemnation exists, while, in others, that it does not, is not always clear.
In volume 1 (4th Ed.), Cooley on Taxation, 176, p. 385, it is said: "A more liberal construction of public purposes is consequently admissible in the law of eminent domain" (than is admissible in exempting the property from taxation), "where an error in the direction of too great liberality could not be seriously detrimental, than in the law of taxation, where a like error would result in injustice which might be seriously harmful."
It is my conclusion, therefore, that, while the right of eminent domain may be conferred upon the authority, the right of exemption of its property from taxation may not be claimed, for reasons now to be stated.
No one questions the benefit of the housing authority to the community in which it may be located, and I certainly do not. The removal of slum districts anywhere is something greatly to be desired. So, also, would be the improvement of the living conditions of many persons in this state who, through adverse conditions, are required to live in squalid surroundings. In many parts of this state, and especially in rural sections and on the farms of the state, are to be found homes having no baths. nor indoor toilets with running water connections, nor facilities for sewage disposal, nor screened doors and windows, and other desirable modern conveniences. The improvement of these homes, and the removal of these conditions, would be a great boon to the public generally; but it cannot be that so improving any one of such homes, or all of them, for that matter would make them, or any one of them, buildings "used exclusively for public purposes," as they must be before they can be exempted *Page 280 
from taxation under the provisions of our constitution. Article 16, 5.
There is, in my opinion, no difference, in principle, between building a large house, where a number of persons may reside, and building a single house, where only one family may reside. The benefits are greater in one case than in the other; in that, they affect more people in one case than in the other; but the difference is only in degree, and not in principle. There would be a public benefit in either case, but in neither case would there be a building to be "used exclusively for public purposes."
It is not proposed or contemplated that the buildings which the housing authority will erect shall be used exclusively for public purposes, or, for that matter, for any public purpose. When erected, the buildings will be rented to tenants, at a rental more or less nominal, which may or may not be collected, and each tenant will be assigned his respective space, from which he may exclude, or eject, all other persons and the public generally.
It appears to me to be a contradiction in terms to say that the properties of the housing authority will be devoted to a public use, when its express purpose is to limit the use to a restricted portion of the public, these being persons of small income. It may be conceded that these are the persons having greatest need for aid; but it cannot be a public use if only a restricted portion of the public may ever use it.
It was held by this court in the case of Cloth v. Chicago, Rock Island  Pacific Ry. Co., 97 Ark. 86,132 S.W. 1005, Ann. Cas. 1912C, 1115, (to quote a headnote), that "In order to constitute a public use, it is necessary that the public shall be concerned in such use, and the purpose for which the property is to be used must in fact be a public one."
The distinction which the cases make — and which I think should be observed — is between public benefit and public use. A public benefit is not sufficient. A public use is essential. *Page 281 
In the notes "(a), (b) and (c)" to 94 of the chapter "Public" in 50 C.J., p. 865, many cases are cited to support the statement of the law, there found, that "`Public benefit' is not synonymous with `public use.'"
It will be observed that 23 of the housing act. which appears as 10081, Pope's Digest, not only exempts the property of the housing authority from general taxation, but also exempts it from special assessments which may have been previously imposed. It is a matter of common knowledge that in many of the cities and towns of this state improvement districts were organized which levied special assessments to furnish water, sewerage, streets, sidewalk, etc. The housing authority act attempts to exempt the property of the authority from the payment of these taxes, although it is graciously provided that "an authority may agree to make payments to a state public body for improvements, services and facilities furnished by such state public body for the benefit of a housing project, but in no event shall such payments exceed the estimated cost to such state public body of the improvements, services or facilities to be so furnished."
In other words, the assessments of benefits, upon the security of which bonds may have been — and usually were — sold, to provide money to install an improvement, are annulled. They cease to be liens upon so much of the property within the improvement district as the housing authority acquires for its own purposes, and, pro tanto, the contract between the improvement district and the holders of its bonds is discharged, although the housing authority "may agree to make payments," which, in no event, shall exceed the estimated cost to the improvement district of the services furnished. This wholly ignores the theory upon which the special assessments were levied by improvement districts, which are assessed against the betterments or enhanced values of the property as a result of the improvements.
Section 24 of the act which appears as 10082, Pope's Digest, provides that the absence of a contract (under which the authority may agree to pay for services) shall in no way relieve any state public body from *Page 282 
the duty to furnish, for the benefit of said housing project, customary improvements and such services and facilities as such state public body furnishes customarily without a service fee.
It is easily conceivable that, although the housing authority might agree to pay, it might also fail to do so. Nevertheless, the lien for the betterments assessments has been removed and annulled. The housing authority act does, by its express terms, exempt the properties of the authority from taxation. But a higher authority for the exemption must be found. There is no exemption from taxation unless the constitution so provides. There are certain other properties exempt from taxation by the constitution, but they have no relation to the subject here considered, and any discussion of them would only confuse. That the general assembly cannot exempt any property from taxation, and that a statute attempting to do so is void, is settled by many decisions of this court. Among others are: Little Rock Fort Smith Ry. Co. v. Worthen, 46 Ark. 312; Fletcher v. Oliver, 25 Ark. 289; Wells-Fargo  Company's Express v. Crawford County, 63 Ark. 576, 40 S.W. 710, 37 L.R.A. 371. A later case, citing others, is Tedford v. Vaulx, 183 Ark. 240, 35 S.W.2d 346. See, also, Huntington v. Worthen (Little Rock  Ft. S. R. Co. v. Worthen), 120 U.S. 97, 7 S. Ct. 469, 30 L. Ed. 588.
The exemption of the property of the housing authority from taxation must, therefore, under our Constitution, in my opinion, be denied.
Section 26 of the act (10084, Pope's Digest) must, in my opinion, also fall, as being in excess of any power possessed by the General Assembly. This section authorizes the seizure of any unappropriated funds belonging to a city or county in which a housing authority may be found, or so much thereof as may be necessary, to pay the administrative expenses and overhead of the authority during the first year of its operation. It is not, in my opinion, within the power of the General Assembly to so appropriate and dispose of the revenues of either a city or a county. The act does not do so directly, but it *Page 283 
does so effectively by requiring "the governing body of the city or county (as the case may be)" to make the appropriation.
Among other many objections that might be offered to conferring power upon the housing authority to compel a city or county to take this action, is the probability — and, in many cases, the certainty — of requiring the city or county to violate amendment No. 10, which amendment requires both cities and counties to live within their annual income. Either a city or a county might have outstanding obligations (contractual or statutory) which it could discharge with its unappropriated funds, which it would be unable to discharge if it were required to divert its funds to another purpose.
For the reasons stated, I think the exemption from taxation and the diversion of the funds of either a city or a county, are unauthorized. Mr. JUSTICE MEHAFFY concurs in this view.