Missouri Pacific Railroad v. Western Crawford Road Improvement District

Background

In 1920 the State of Arkansas created a road improvement district in part of Crawford County. The district’s commissioners planned the work, hired engineers and lawyers, and made preliminary assessments, then abandoned the project after finding costs likely exceeded benefits. The special law required that preliminary expenses — $20,611.80 in the record — be a first lien on district lands and paid by a tax levied on assessed property value. A chancery court ordered a 1.65% levy. A railroad company, facing a $2,396.62 bill though its estimated benefit was $1,960, sued to block the tax as violating due process. The Arkansas Supreme Court upheld the levy, and the case came to the U.S. Supreme Court.

Reasoning

The main question was whether charging preliminary investigation costs by assessed property value instead of by each owner’s estimated benefit violated the Fourteenth Amendment. The Court said a State may fund road projects either by special benefit assessments or by general or district taxation and is not required to use benefit-based assessments for preliminary expenses. The preliminary inquiry involves all landowners, so distributing costs by assessed value or other reasonable methods is constitutionally permissible. The Court further held that applying the levy to expenses of an abandoned project did not change the outcome and found no evidence of arbitrary or abusive taxation in the record. The Court therefore affirmed the judgment upholding the levy.

Real world impact

Local courts and governments can recover planning and investigation costs from all landowners in a special district using assessed-value levies, even if the project is abandoned. Property owners seeking relief must show clear arbitrariness to overturn such taxes.