Exchange Trust Co. v. Drainage Dist. No. 7, Poinsett Cty.

Background

Roy Rice and other homesteaders held land in Poinsett County, Arkansas, east of the St. Francis River. The county court annexed their lands into Drainage District No. 7 in 1918 to secure drainage and protection from flooding. Many of the annexed tracts had belonged to the United States when the district was formed in 1917, but Rice received a final federal certificate on February 14, 1919 and a patent on June 3, 1919. Plans and assessments for the improvement were approved in May–June 1919. Rice sued to stop the assessments, arguing they were invalid because the lands had been government property when the district was organized.

Reasoning

The Court addressed whether the drainage assessments could be enforced against these landowners. It held that Rice and the other homesteaders could not now avoid the assessments after they asked to be annexed and took the benefits of the district. The Court also found that by June 1919 Rice had, at minimum, an equitable title from his final certificate and then a patent, so the improvement work and bonds affecting the land occurred after the property rights had passed to him. The Court therefore upheld the district’s ability to assess the lands.

Real world impact

The decision means local drainage and levee districts may collect assessments from landowners who sought annexation and who held final federal certificates or patents before the district’s assessments were approved. The Court also approved a consent order cancelling certain foreclosure decrees and barring taxing for improvements made before final federal certificates were issued, while allowing taxes for costs contracted afterward. The state supreme court was reversed only where inconsistent with this conclusion.