Amendment No. 10 to the Constitution, which directs that financial affairs of counties shall be conducted on a sound financial basis, has been construed many times by this court.
At the time the amendment was proposed, and when it was adopted, some of the counties were on a so-called "scrip" basis, and their warrants were depreciated. To afford such counties a means by which this floating indebtedness could be retired, a provision was inserted in Amendment No. 10 authorizing issuance of interest-bearing certificates of indebtedness, or bonds, . . . "to *Page 711 secure funds to pay indebtedness outstanding at the time of the adoption of this amendment."1
Determination of indebtedness of Benton county existing as of December 7, 1924, was made by the county court (Judge Berry sitting) September 21, 1938 — almost fourteen years after accrual of the right to fund the indebtedness.
The enabling act of 1925 is copied in the majority opinion. Under authority of this measure, there was, in the instant case, publication of the county court's finding that the 1924 indebtedness was $40,040.24. Act 210 provides that any dissatisfied property-owner may, by suit in chancery court, brought within thirty days after publication of notice that there has been a county court finding of indebtedness, . . . "have a review of the correctness of the finding made in such order; . . . but if no such suit is brought within thirty days, such finding shall be conclusive of the total amount of such indebtedness, and not open to further attack."
Article 7, 33, of the Constitution, allows appeals to the circuit court from all judgments of the county court, to be taken under such restrictions and regulations as may be prescribed by law.
The general statute adopted pursuant to the constitutional right appears as 2913 of Pope's Digest, the limitation being six months.
No suit was filed in chancery court to question correctness of the Benton County Court order, but in December, following publication of the notice, W. L. Marley prayed and was granted an appeal to the circuit court. The cause was set for hearing December 22, after motion to quash the appeal had been overruled.
This court granted temporary prohibition. By the majority opinion it is held that the writ shall be permanent. *Page 712
Respondent contends that Act 210 is void because it attempts to substitute the chancery court for the circuit court as the tribunal in which correctness of the county court judgment is to be determined. Petitioner replies with citations of opinions of this court which apparently uphold constitutionality of Act 210. The majority opinion holds that the Dowell-Slaughter Case2 is controlling. The proceedings in that case, however, were in chancery court. Validity of Act 210 was not questioned on the ground that it denied the right of appeal to the circuit court. In the opinion it is said:
"Inasmuch as the complaint concedes that the suit was not brought within the time limited by the act, the validity of the bond sale depends upon the validity of the act, for, if this suit must be brought within thirty days after the publication of the court order, and not thereafter, the instant suit was not brought within that time, and the demurrer was properly sustained for that reason, if the act itself is valid. For reversal of the decree of the court sustaining the demurrer, it is insisted that, under the allegations of the complaint, the county court was without jurisdiction to make the order, that there was no authority to issue bonds unless there was an outstanding indebtedness on December 7, 1924, and, as the complaint alleged there was no indebtedness as of that date, the truth of which allegation the demurrer confessed, there was no authority to issue bonds, and the action of the county court was coram non judice, and is open to the attack here made upon it. We do not concur in this view. The county court had the jurisdiction conferred by the amendment and the enabling act passed pursuant thereto to issue bonds to discharge the indebtedness named, and the court was required to find, before exercising this jurisdiction, that there was such debt, and the amount thereof, and, having made that finding, to publish notice thereof, to the end that the property-owners who were dissatisfied with such finding might have a review of the correctness of it made in the chancery court. . . . *Page 713
"It is finally insisted that if the statute be construed as we have construed it, it is unconstitutional as being arbitrary and unreasonable and inadequate to afford the property-owners can opportunity to resist the proceedings . . . As it appears from the allegations of the complaint that this proceeding to question the order of the county court was not begun within the time limited by law for that purpose, and no ground for avoidance was shown, the right to proceed was properly raised by demurrer."
Although the opinion discusses effect of failure to proceed in the chancery court within thirty days, and holds that such failure bars such inquiry at a later date, it does not say that the right of appeal to the circuit court is lost; nor was the question directly raised by the pleadings. The decision is that where the complaining party adopts the chancery court as a forum, he is bound by that court's finding that the complaint was not filed within thirty days.
I think effect of the opinion, and of the opinion in Stranahan, Harris Oatis, Inc. v. Van Buren County,3 is to say that Act 210 is a limitation upon the time for questioning correctness of the county court finding of the amount of indebtedness or the time within which suit may be filed, but the Act does not, nor can it, take from the circuit court a jurisdiction conferred by the Constitution.
In the Dowell-Slaughter Case the demurrer admitted there was no indebtedness existing December 7, 1924, yet the opinion holds that the county court had jurisdiction to make the order selling $65,000 worth of bonds.
In the case at bar the circuit court's jurisdiction on appeal is definitely fixed; but, under authority of the Dowell-Slaughter Case, petitioners would have the right to demur.
Since the limitation of six months on appeals from the county court to circuit court was fixed by the General Assembly, under a discretion as to time conferred by the Constitution, it was within the legislative power to *Page 714 say that a failure of complaining parties to file suit in chancery court within thirty days would foreclose inquiry at a subsequent date; or, expressed differently, the legislature had a right to say that a finding by the county court, notice of which was given by publication, would become conclusive unless challenged within thirty days.
Respondent's second petition is that no indebtedness existed as of December 7, 1924; that a judicial finding to that effect is shown of record, and that the determination made by Judge Berry September 21, 1938, was res judicata.
My construction of the majority opinion is that it only holds that no appeal can be taken from the order of September 21. Other judgments by the county court affecting the issue (all in 1938) were: October 24, order for issuance of bonds; November 15, order directing the treasurer to set up a "Bond and Debt Retirement Account," and to place to the credit thereof $40,120.91 realized from the sale of bonds, and "that said sum remain in said account until further orders of this court with reference to paying said debts and of transfer to other accounts for the purpose of paying said indebtedness"; November 16, order transferring money from Bond and Debt Retirement Account to county general fund, and to "pay warrants drawn on the above-named fund out of the county general account."
I do not understand that the majority opinion prohibits the circuit court from entertaining an appeal from the order directing sale of the bonds, or from the other orders mentioned, each of which, under innumerable decisions of this court, has the effect of a judgment, from which appeal may be taken within six months.
The most serious question is respondent's allegation that the county court's 1938 finding that the mentioned indebtedness existed in 1924 is res judicata. I think it was.
Attached to the response — and we must assume that this information was before the court, inasmuch as certified copies of the records in question are presented with the response of the then circuit judge — is a certificate of the county and probate clerk for Benton county, authenticating *Page 715 certain exhibits, including those numbered 4, 5, 6, 7, and 8.
Exhibit 4 is the report of the county treasurer for the fourth quarter of 1924. Various items are identified. The cash balance of all funds on hand at the close of the preceding quarter (September 30, 1924) was $24,689.41. Quarterly receipts increased this item to $29,640.03. Expenditures were $14,515.19 for the quarterly period, leaving a balance of $15,124.84. TO this report is attached the certificate of County Judge W. R. Edwards: "By the court examined, found correct in full, and in due form of law. Said report is therefore approved and in all things confirmed by the court."
Exhibit 5, copied from Record Book "X" at page 510, is as follows: "On this fifth day of January, 1925, the county clerk and county treasurer of Benton county . . . are hereby ordered by the court to make and file with this court on or before the first Monday in February, 1925, a sworn statement of the financial condition of Benton county, as the same existed on the first day of January, 1925. Said statement to be made to show the amount of money in the treasury . . . to the credit of each fund on said day; the amount of outstanding warrants [drawn] on each fund, and the amount of unadjusted claims pending in the county court."
Receipt of the report is noted, . . . "which report is in words and figures as follows: [Balance to the credit of] county general fund, $961.12; circuit court, $2,957.01; jail, overdrawn, $329.65; county home, $860.77; justices of the peace, $1,006.21; officers' salaries, $578.98; bridges, $7,835.85 highway improvement, $414.42, total of balances, $14,614.35."
Indebtedness was: "Outstanding general revenue scrip, $13,117.75; circuit court, $1,944.18; jail, $315.31; county home, $179.95; justices of the peace, $334.57; officers' salaries, none; bridges, none; highway improvement, $337.09; total, $16,328.87."
Disregarding the jail item of $329.65 shown on the exhibit "in red," and presumably an overdraft, the excess of warrants outstanding, over balances, was $1,714.52. *Page 716 The unadjusted claims are not shown in this report, but inasmuch as the court's order directed that they be determined and listed in the report, it must be presumed there were no such claims — although such presumption is no doubt erroneous.
There was this judicial finding: "Said report is by the court examined, approved, and ordered spread of record."
In Record "Z," at page 252, there appears an order "In the Matter of the Building of the New Court House." The order is exhibit 7 to the response herein, and is:
"On this 29th day of October, 1927, a day of the October term, the court makes a further investigation of the fiscal affairs of Benton county to determine whether the contract made by the commissioners with Messinger Dalton for the building of the proposed court house should be approved, and finds from the previous assessment of real and personal property of the county, and the taxes collected therein, and the general county revenue received from all other sources, and from the amounts heretofore required to be expended for the necessary expenses in the administration of the affairs of the county, and upon a reasonable estimate of the probable receipts and expenditures necessary to administer the affairs of the county in the fiscal year beginning the second Monday in November, 1927, and the following years, from 1928 to 1947, inclusive, that the county is now out of debt, and that there will be annually a margin left to meet the annual payments of $10,000 for construction of the courthouse, as provided by the appropriation of $200,000 made by the quorum court of the county in December, 1926, after the indispensable governmental expenses of running the county are deducted from the total revenues to be annually levied and collected. W. R. Edwards, County Judge."
Exhibit No. 8 is a transcript of the proceedings of the quorum court, December 1, 1926. A committee had been appointed to examine the condition of the old courthouse and to make recommendations. The report recited that a suitable building could be erected . . . *Page 717 "for approximately $200,000, to be appropriated and paid in twenty annual installments out of the five mill tax levies authorized by law to be made for general county purposes, leaving a balance thereof sufficient to take care of the general county expenses; that the county court will get out of debt from levies already made for the fiscal year 1927, and [we] earnestly recommend that a new courthouse be built."
I am unable to construe these orders, judgments, and reports, in a manner different from what their language imports.
Disregarding the order of January, 1925 — which seemingly does not take into account "unadjusted claims" pending — we have before us a definite judicial finding of the county court, made in pursuance of a specific purpose (issuance of bonds), that on October 29, 1927, the county "is now out of debt." Upon this judgment purchasers of courthouse bonds relied, and the bonds were sold after this solemn judgment had been rendered, from which no appeal was taken. At the expiration of six months it became final; and, in my opinion, neither Amendment No. 10 nor Act 210 was intended as a relief measure in circumstances such as we are dealing with. It is true the determination of county obligations — or, rather, a lack of obligations — was not made pursuant to Act 210, followed by publication in a newspaper. But there was no necessity for the performance of a useless task.
In Stahl v. Sibeck4 we said:
". . . Here the county court is attempting to set aside its previous order solemnly adjudicating the indebtedness of Pulaski county as of October 7, 1924, on the ground that the court made a mistake in the amount of the indebtedness, in the very teeth of the provisions of 1 of the enabling act, No. 210 of 1925, p. 608. This section of the act provides that: `The county court shall, by order entered upon its records, declare the total amount of such indebtedness.' . . . The order of the county court in 1925 found that the county was indebted *Page 718 in the sum of $350,000. No person brought any suit to review the finding within the time limited, and it thereupon became `conclusive of the total amount of such indebtedness, and not open to further attack,' and is res judicata."
Provision in Act 210 for publication of the county court's finding of indebtedness, upon which it is proposed to predicate a bond issue, is for the benefit of taxpayers. It is difficult to understand why a judgment finding that there was no indebtedness, even though no publication in a newspaper was made, is not conclusive of the facts recited when the period for appeal has expired. Certainly no taxpayer's rights were impaired through failure of the county court to cause publication of its judgment that no indebtedness existed.
Since the circuit court, under the Constitution, has jurisdiction to entertain appeals from the county court, prohibition has been improperly granted, and the writ should be quashed.
1 In Matheny v. Independence County, 169 Ark. 925, 277 S.W. 22, the term "outstanding at the time of this amendment" was construed. In the same opinion it was said: "It is evident that the framers of [Amendment No. 10] intended that thereafter counties, cities, and towns, should confine their expenses for any fiscal year to the revenues for that year."