City of Fort Smith, Arkansas v. J.D. Carter, Mary Lois Carter, Lee Hackler, and Patricia Hackler
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SUPREME COURT OF ARKANSAS
No. 07220
CITY OF FORT SMITH, ARKANSAS,
APPELLANT,
VS.
Opinion Delivered January 10, 2008
APPEAL FROM THE CRAWFORD
COUNTY CIRCUIT COURT,
NO. CV2002186,
HON. GARY RAY COTTRELL, JUDGE,
J.D. CARTER, MARY LOIS CARTER, LEE
HACKLER, AND PATRICIA HACKLER,
APPELLEES,
REVERSED ON DIRECT APPEAL;
DISMISSED ON CROSSAPPEAL.
ANNABELLE CLINTON IMBER, Associate Justice
The instant appeal arises out of a dispute as to whether a circuit court can award
attorney’s fees to a mortgagee of condemned property taken by eminent domain, under
Arkansas Code Annotated § 1815605(b) (Repl. 2003). Two years ago, we heard a previous
appeal of the same matter in City of Fort Smith v. Carter, 364 Ark. 100, 216 S.W.3d 594
(2005). Upon remand, the circuit court ordered the City of Fort Smith to pay attorney’s fees
to J.D. and Mary Lois Carter, the owners in possession of the condemned property, and Lee
and Patricia Hackler, the mortgagees of the property. The City now appeals the circuit
court’s order with regard to the Hacklers. The City argues that section 1815605(b) does
not provide for an award of attorney’s fees to mortgagees of condemned property. The
Hacklers’ crossappeal, asserting that the circuit court was correct in awarding them
attorney’s fees, but the lower court erred in not awarding them the full amount of fees
requested. Because we find merit in the City’s argument on direct appeal, we do not address
the Hacklers’ crossappeal.
The City of Fort Smith operates a water supply utility that accumulates water in Lake
Fort Smith. In 2002, the City chose to acquire certain land in the area around Lake Fort
Smith in an effort to expand the lake. One of the parcels to be acquired was a twentyacre
tract that was titled in the name of J.D. and Mary Lois Carter. Less than a year earlier, the
Carters purchased the land from Lee and Patricia Hackler for the purchase price of $60,000.
The Hacklers held a mortgage on the land to secure the Carters’ outstanding debt.
On April 3, 2002, the City filed a petition for order of immediate possession, under
Arkansas Code Annotated § 1815409, and deposited a sum of $14,000 with the Crawford
County Circuit Court. The circuit court entered an ex parte immediate order of possession,
and the Hacklers and the Carters responded, arguing that the City’s valuation of the property
at $14,000 was deficient. After a trial, a jury found that the reasonable value of the property
was $30,000 and awarded compensation in that amount, plus interest. The Carters and the
Hacklers then filed a motion for attorney’s fees under Arkansas Code Annotated § 1815
605(b). The circuit court declined to grant an award pursuant to the statute, but found that
the Carters and the Hacklers were entitled to an award under Rule 11 of the Arkansas Rules
of Civil Procedure.
The City appealed the circuit court’s order to this court in City of Fort Smith v.
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Carter, supra. We determined that the City’s actions were not subject to sanctions under
Rule 11, and then addressed the Carters and the Hacklers’ argument on crossappeal. They
contended that the circuit court erred in denying them attorney’s fees under section 1815
605(b) because the term “corporation” in the statute applied to all corporations, including
municipal corporations. The City disagreed, arguing that the statute only applied to private
corporations. This court held the term “corporation” to be ambiguous, and construed the
statute in favor of the landowners, pursuant to our wellsettled rules governing the
interpretation of eminentdomain statutes. We reversed and remanded the case for the circuit
court to determine (1) the amount of attorney’s fees due the Carters under section 1815
605(b) and (2) whether the Hacklers qualified as “landowners”— a prerequisite for the
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award of attorney’s fees under the statute.
On remand, the circuit court held a hearing at which the Hacklers claimed they should
be considered “land owners” under section 1815605 because as mortgage holders they had
an interest in the title to the property. The City, however, argued that although the Hacklers
had an interest in the property it was not an ownership interest in the context of the statute
because the eminentdomain statutes did not contemplate that a mortgagee could be a
landowner of property. The circuit court agreed with the Hacklers and entered an order
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In the instant appeal, the Hacklers make a res judicata argument, asserting that in the
previous appeal this court determined that section 1815605(b) was applicable to the Hacklers as
mortgagees. The Hacklers misread our holding in that opinion. While we determined that section
1815605(b) did apply to municipal corporations and did decide that the Carters were
“landowners” under the statute, we left the determination of whether the Hacklers, as mortgagees,
were “landowners” to the circuit court on remand.
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awarding both the Carters and the Hacklers attorney’s fees. The City then filed the instant
appeal challenging the circuit court’s order with regard to the Hacklers.
The instant case involves our interpretation of section 1865105. We review matters
of statutory interpretation de novo. See CJ Building Corp. v. TRAC10, 368 Ark. 654, ___
S.W.3d ___ (2007). We have repeatedly held that attorney’s fees are not allowed except
where expressly provided for by statute. See id. The first rule of statutory construction is
to apply a plain reading to the statute, construing it just as it reads, by giving the words their
ordinary and usually accepted meaning in common language. Cave City Nursing Home, Inc.
v. Ark. Dept. of Human Servs., 351 Ark. 13, 89 S.W.3d 884 (2002). When the language of
the statute is plain and unambiguous, there is no need to resort to rules of statutory
construction. Id. A statute is ambiguous only where it is open to two or more constructions,
or where it is of such obscure or doubtful meaning that reasonable minds might disagree or
be uncertain as to its meaning. Id. When a statute is clear, however, it is given its plain
meaning, and this court will not search for legislative intent; rather, that intent must be
gathered from the plain meaning of the language used. Id. This court is very hesitant to
interpret a legislative act in a manner contrary to its express language, unless it is clear that
a drafting error or omission has circumvented legislative intent. Id.
Act 1207 of 1995, Ark. Code Ann. §§ 1815601 through 1815607 (Repl. 2003 &
Supp. 2007), was enacted to enable municipal corporations to expand their water supply
facilities through eminent domain. A municipality may obtain an order of immediate
possession of the property by filing a petition with the circuit court, in the county where the
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property is located, and depositing with the court a sum, which in its opinion, is the
reasonable value of the property to be taken. See Ark. Code Ann. § 1815409 (a)(2) (Repl.
2003). Ark. Code Ann. § 1815605 provides for an award of attorney’s fees in certain cases
when a jury decides that the deposit made by the petitioning municipality is less than the
reasonable value of the land. See id. Specifically, section 1815605 (b) states,
In the case of application for orders of immediate possession by the
corporation or water association, if the amount awarded by the jury exceeds
the amount deposited by the corporation or water association in an amount
which is more than twenty percent (20%) of the sum deposited, the landowner
shall be entitled to recover the reasonable attorney’s fees and costs.
Id. (emphasis added). The dispute in the instant case hinges upon the meaning of the term
“landowner” in section 1815605(b).
The City argues that the term “landowner” describes the traditional view of a real
property owner as the person who has title to the land and the possessory right to occupy the
land. The Hacklers, on the other hand, contend that a mortgagee has legal title to the
mortgaged property and is therefore a landowner for purposes of the statute.
By applying a plain reading to the term “landowner,” it is apparent that the term does
not describe the Hacklers as mortgagees of the property. In BLACK’S LAW DICTIONARY (8th
ed. 2004), the term “landowner” is defined as “one who owns land.” Id. at 895. This
definition of “landowner” does not contribute much to our analysis; however, the definition
of the general term “owner”does lend to our inquiry. The term “owner” is defined as “one
who has the right to possess, use, and convey something; a person in whom one or more
interests are vested.” Id. at 1137. Moreover, in common parlance “owner” is defined as one
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who “possesses property.” OXFORD AMERICAN DICTIONARY 590 (2d Ed. 2001). Thus, it
is clear that the common understanding of the term “landowner” is someone who is entitled
to possess and convey land.
Our court has long held that despite the fact that a mortgagee has legal title to the
mortgaged land, the mortgagee does not have absolute title thereto and does not have the
right to possess the land until the mortgagor defaults on the mortgage. In Moore v. Tillman,
170 Ark. 895, 282 S.W. 9 (1926), we clearly stated that a mortgagee possesses a security
interest and is not an absolute owner of the property:
[A] mortgage of lands is not a conveyance thereof carrying the absolute and
unrestricted title thereto. On the contrary, while a mortgage at law does carry
the legal title, it is not, either at law or in equity, an absolute, unconditional,
and indefeasible title. It becomes such only after the mortgagor has breached
the condition of the mortgage and his equity of redemption has been
foreclosed. In other words, while the legal title under the law does vest in the
mortgagee, still this is only for the purpose of enabling him to obtain security
for the satisfaction of the debt or obligation due him by the mortgagor; and,
when that satisfaction is obtained, the legal title vests and remains in the
mortgagor . . . . Thus, after all is said and done, a mortgage, in common
parlance as well as legal acceptation, is an instrument evidencing a security
for debt. . . .”
282 S.W. at 11 (emphasis added). In the instant case, the Hacklers held a mortgage on the
condemned property, but at the time that the City filed its condemnation action the Carters
had not defaulted on the mortgage, and, therefore, the Hacklers did not have a right to
possess the property. Accordingly, the Hacklers were not “landowners” with a right to
possess and convey the property as contemplated under section 1815605(b).
The Hacklers cite our opinion in Bank of Oak Grove v. Wilmot State Bank, 279 Ark.
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107, 648 S.W.2d 802 (1983), for the proposition that under Arkansas law a mortgagee has
legal title to the mortgaged land, and, therefore the Hacklers, as mortgagees and title holders,
were “landowners” here. We disagree. The Bank of Oak Grove case involved a conflictof
laws issue, and, although our court discussed Professor Robert A. Leflar’s views concerning
mortgage theories in Arkansas, we declined to decide whether Arkansas is a lien theory or
title theory state. Thus, because the Hacklers were mortgagees without right of possession
to the condemned land under section 1815605(b), they were not entitled to attorney’s fees
under that statute. Accordingly, we conclude that the circuit court erred in finding otherwise.
The circuit court’s order awarding attorney’s fees to the Hacklers is reversed on direct
appeal, and the crossappeal is dismissed as moot.
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