ERROR TO THE SUPREME COURT OF THE STATE OF ARKANSAS.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This case presents a controversy over the constitutional validity of an assessment of benefits accruing to railway property from the improvement of a public road in Sevier County, Arkansas.
The road reaches from DeQueen, the county seat, to the eastern border of the county, eighteen miles. It had been a mere dirt road, not good in any season and impassable at times. The improvement consisted in reducing objectionable curves and grades, installing modern bridges and culverts, reconstructing the roadbed, putting on a hard and durable surface and generally fitting the road for economical and expeditious rural travel and transportation. To accomplish the improvement a road district covering approximately three miles of territory on either side of the road was created under a general law of the State, §§ 5399 et seq., Crawford & Moses Digest, 1921. Money to pay the cost of the improvement, estimated at $200,000, was to be obtained primarily through an issue of interest bearing bonds and ultimately through a special tax spread over a period of twenty years. The tax was to be laid on all lands, town lots, railroads and other real property within the district in the proportions in which they would be benefited by the improvement. Assessors appointed by the county court were to assess the benefits and to set forth in their report the name of the owner of each parcel, a description of the property, its "present assessed value" for general taxing purposes, and the amount of benefits assessed to it. When completed the assessment was to be filed in the county court, a time for hearing parties in interest was to be fixed and public notice thereof was to be given. The court was to review the work of the assessors and to equalize, lower or raise the assessment of benefits to particular parcels as justice might require. An appeal could be taken to the circuit court, which was to give a hearing de novo in respect of such objections as were set forth in the affidavit for appeal; and a further appeal could be taken to the Supreme Court of the State. A comprehensive statement of the various steps to be taken in the proceedings and of their nature is given in Commissioners, etc. v. St. Louis Southwestern Ry. Co., 257 U.S. 547.
Within the road district, at DeQueen, are two miles of main track, nine miles of side tracks, a depot and other buildings, which form part of a railway line, called the Kansas City Southern, which extends from Kansas City, Missouri, to Port Arthur, Texas. The assessed value for general taxing purposes of this railway property within the district was $129,615. The district assessors assessed it with benefits amounting to $21,270, or approximately 16 per cent. of its assessed value. The assessed value of the farm lands and town lots within the district for general taxing purposes was $897,660. The district assessors assessed them with benefits amounting to $448,354, or approximately 54 per cent. of their assessed value. Other property in the district, not requiring special notice here, was assessed with benefits amounting to $40,409. Thus the aggregate of the benefits assessed was $510,033. The special tax amounted to 70 per cent. of the benefits assessed, or 3 1/2 per cent. per annum for twenty years -- the full tax being intended to cover the bond issue with interest. The portion of the tax laid on the railway property was $14,899, or $744.45 per annum.
In regular course the assessment was reviewed by the county court and confirmed, the court finding that the lands and other real property in the district would be "greatly benefited" by the improvement and that the assessment of benefits was "fair, just and equal to all land owners."
Two companies interested in the railway property appealed to the circuit court and in the affidavit for appeal assailed the assessment, in so far as it affected them, on the grounds, first, that it was purely arbitrary, and therefore in contravention of the due process of law clause of the Fourteenth Amendment to the Constitution of the United States, because the railway property neither would nor could receive any benefit from the improvement of the road; secondly, that it was not in accord with the equal
protection clause of that Amendment, because the railway property on the one hand and the farm lands ant town lots on the other were assessed with benefits in grossly unequal proportions, to the detriment of the railway property, and, thirdly, that it was made in disregard of the commerce clause of the Constitution of the United States, because the benefits assessed to the railway property were not such as would or could accrue to that property, but were such as would accrue, if accruing at all, to the interstate business in which that property was being used, and therefore could not be made the basis of a special improvement tax without burdening interstate commerce.
While the appeal was pending in the circuit court the state legislature passed a special act (No. 98, approved February 7, 1920) recognizing the creation and boundaries of the district, approving the plans for the improvement of the road, confirming the assessment of benefits as sustained by the county court and declaring that the assessment "fairly represents the benefits that will accrue" to the railway property and other tracts in the district. The companies then took the position that the legislative confirmation was open to the same constitutional objections that were made to the original assessment.
A hearing was had in the circuit court at which the companies assumed the burden of establishing that their objections were well founded in so far as they turned on matters of fact. Much evidence was produced on both sides. The greater part was addressed to the question whether the railway property within the district would receive any substantial benefit from the improvement. The witnesses differed pronouncedly. Some expressed positive opinions on the subject without advancing anything of substance in support of their ...