Henderson Bridge Co. v. City of Henderson , 90 Ky. 498 ( 1890 )

JUDGE BENNETT

delivered the opinion of the court.

The appellant was organized under an act of the Legislature ol this State, approved February 9, 1872, for the purpose of erecting and equipping a railroad bridge across, the Ohio river, and of charging certain tolls for the crossing of railroad trains thereon. The city of Henderson, the appellee, by its ordinance, approved - day of -, 18 — , and accepted by the appellant on the 10th day of February, 1882, granted to the appellant the right to construct its bridge and approaches on or over the center of its Fourth street, and on the line thereof, to low water-mark on the Indiana side of the Ohio river. Also the right of the use of the - land between W ater street, in said city, and low watermark on the Kentucky side of the Ohio river, extending one hundred feet below and three hundred feet above the said Fourth street, was granted to the appellant for erecting such wharves, elevators or other buildings deemed necessary or convenient for the successful operation of said company. It was also provided in said ordinance: “Nothing herein shall be construed as waiving the right of the city of Henderson to levy and collect taxes on the approaches to said bridge, or any building erected by said bridge company within the corporate limits of said city, the bridge itself, and all appurtenances thereto within the limits of said city.”

The appellant’s bridge was constructed across the Ohio river at the place designated in the above-named ordinance. The appellee caused all that part of the appellant’s bridge situated on the Ohio river, south of low water-mark on the Indiana shore, to be taxed for the purpose of paying the railroad and school taxes that the appellee was authorized to impose and collect on real estate within her limits; also the taxes for municipal purposes. The appellant contends that, as its bridge is not protected by the city, and as it does not receive any of its benefits, it should not be taxed by the city for city governmental purposes proper, or other local purposes which the city government may be authorized to levy and collect on the real property within her limits. The Louisville Bridge Company v. The City of Louisville, 81 Ky., 189, and other cases, are relied on in support of this contention. In the Louisville Bridge case, and others referred to by counsel, all that is decided is, that in order to authorize the city government to subject real estate situated within its corporate limits to taxation for ' city or municipal purposes only, there must be actual or presumed benefits to such property by the city government ’ being extended over it. It is upon this principle that farming lands, taken into the corporate limits of the city merely for the purpose of increasing the city revenue, i. e., for the exclusive benefit of the city, can not be taxed by the city for municipal purposes only. There must be some actual or presumed benefit to authorize such taxation. Accordingly this court held in the case supra that the Louisville bridge received no actual or presumed benefit from the city government proper, and, consequently, the bridge was not subject to city or municipal taxation. But, independent of this principle, this court has long since and often distinguished between the power of the city to tax real estate situated within its limits, for city or municipal purposes only, and for such district purposes as the Legislature might authorize; that the Legislature might create a city boundary, or designate any other boundary, without reference to existing civil or political districts, into taxing districts for certain local purposes. For instance, it is held in the case of the County Judge of Shelby County v. The Shelby R. Co., 5 Bush, 225, that the Legislature could create a certain portion of Shelby county into a taxing district for the purpose of aiding in the construction of a railroad through such district. The court, in that case, approves the language of the court in the case of the People v. Lawrence, 36 Barb., 194, to the effect that the “legislature are not confined in such taxation to existing political divisions. They may create a district for the purpose of taxation or assessment.” Also in case of Burnett v. Sacramento, 12 Cal., 76: “The burden may be levied upon the whole county or town, or on those most immediately benefited.”

This court, in the case of the City of Henderson v. Lambert, 8 Bush, 608, has decided that the act of March 9, 1867, authorizing certain counties, cities, etc., to aid in building the Evansville, Henderson and Nashville Railroad, and authorizing such counties, cities, etc., to levy and collect a tax for the purpose of paying any subscription that they might make to the capital stock of said road, had the effect to make such counties and cities voting said tax, taxing districts ; and we now hold that the appellee, having voted said tax, is a taxing district. She voted said tax, not under her ordinary powers of taxation for city or municipal purposes, but as a taxing district. In the same case it was held that, as the act of March 15, 1869, provided “that all the territory now embraced within the city of Henderson shall be and is: incorporated as a school district, which shall be under the control and management of a board of trustees appointed by the mayor,” such territory constituted a- taxing district, and the right to tax the land within such boundary for school purposes, and the right of 1 he city to tax the same land for city purposes, rested upon a different footing; that the former could not be deemed a city or municipal tax, but was a district tax, notwithstanding it was to be collected by the ordinary collecting agencies of the city.

W e see no good reason why the boundary of a town or city should not be made a taxing district, as distinguished from the ordinary taxing power of. the towns: or cities, as well as other designated localities where there are no towns or cities. Under the power of the city to tax for the ordinary purpose of carrying on the city government, she can not impose a tax upon the estate within her limits for the purpose of aiding in building railroads or supporting schools. For such purpose there must be express authority, and that authority need not be conferred upon the city as a city, but as a taxing district, and the authority may be given the city authorities to collect this tax without militating against the proposition that such territory is a taxing district.

The city may, as a taxing district, assess property within its limits, and collect the taxes thereon, that she would not be authorized to assess and collect for municipal purposes only. In the former case the inquiry is, is the property within the taxing district? And does the act authorize its taxation? In thelatlatter case the inquiry is, is the property benefited, or presumably benefited, by the taxation? In the former case the Legislature has authorized the voters, of the district to vote the railroad or school tax upon the assumption that it will be a benefit to that or succeeding generations in the way of financial, moral1 or intellectual improvement. The assumption may turn out to be a mistake, or the enterprise may be only partially successful, or it may be detrimental. The chances pro and con must, in voting, be deemed to have been considered, and each voter must be* deemed to have agreed to take the risk of a benefit or a detriment, and to pay the tax voted without reference to how that matter may ultimately turn out. After such tax' is voted the owner of real estate situated in the taxing district will not be heard to say that his property, thus situated, is not benefited by the enterprise for which the tax was voted, and, in the nature of things, can not be benefited by it. None of the real estate may be, in fact, benefited by it, and if one could be relieved of the tax because he was not benefited by it, why not all? The answer is, that the tax is authorized and voted upon the assumption that it will be beneficial, and if this assumption turns out to be a mistake as to this or that piece of property, the tax must nevertheless be paid upon all of it.

It has been held by this court in the case of McFerran v. Alloway, 14 Bush, 581, that an island situated in the Ohio river, near the Indiana shore, and which could not be benefited by the building and the running of a railroad through the district to which the island belonged and was a part, was nevertheless liable for the tax that the district voted in aid of said road. The court in that case said: “The power on the part of the Legislature to establish the district or to authorize the particular precinct to vote the tax is conceded, and the fact that the local improvement has been or is being constructed in the taxing district is also admitted, and in such a case it seems to us the legislative discretion on the subject must control. The court has so often determined that such power existed in the Legislature of this State that it is no longer an open question, and the benefits to be derived from those living in the locality of the improvement having been determined by the Legislature in passing upon the act under which the tax was imposed, the court has no revisory power over it. In the judgment of the Legislature, this tax district is benefited by the improvement, and the fact that an actual benefit is not derived by one living in a remote part of the district in which it is difficult to approach the road or highway, is not an argument against the imposition of the burden.”

It is well settled that the appellee’s jurisdiction extends to the low water-mark on the Indiana shore, but she can not tax property that is surrounded by said river, such as an island, for city or municipal pxirposes, for the reasons already indicated. And in the Louisville bridge case this principle was applied to the bridge property. But it is manifest that the appellee, as a taxing district, may tax such property. If it was an island in the Ohio river, fronting the appellee, no one woxxld doxibt that the appellee, as ■a taxing district, could tax it. Instead, the appellant’s property, which is realty, and extends across the Ohio river, is taxed. This property is used for profit, and can not be less benefited by the appellee than an island would be if situated in the middle of the river, or near the Indiana shore, yet the appellee, .as a taxing district, may tax the island, and we see no good reason why the same rule should not be applied to the appellant’s property.

The appellee also seeks to tax the appellant for municipal purposes generally. This the appellee, under like conditions, according to the decision in the Louisville bridge case, supra, can not do. This, as ■said, the appellee can not do, because the appellant’s property, being situated in the Ohio river, is not sufficiently benefited by the appellee’s government to authorize it to tax the appellant’s said property for the support of its government proper. So the question is, does the contract entered into between the appellant and appellee, in which the appellant secured certain rights and privileges from the appellee, and in ■consideration thereof the appellee reserved the right to tax the appellant’s entire structure within its jurisdiction, amount to a contract right to tax the appellant’s property to low water-mark on the Indiana shore ?

It is conceded, according to the Louisville bridge •case, that, the appellee’s jurisdiction to the Indiana shore is for police purposes only. But it is clear that this is owing to the fact that the property situated in or over the water of the Ohio river not being actually or presumably benefited by the city government, is not subject to the payment of municipal taxes; consequently the jurisdiction of the appellee on said water is, of necessity, ordinarily confined to police purposes only. So, as said, the question is, has the appellee the power to tax said property by reason of a contract made with the appellant?

Now the appellant obtained from the appellee the-right to construct its bridge and approaches on or over the centre of its Fourth street, and on the line thereof to low water-mark on the Indiana side of the Ohio river, <fec,; also the right to the use of the land between Water street, in said city, . and low watermark on the Kentucky side of the Ohio river, extending one hundred feet below and three hundred feet above the said Fourth street, was granted to the appellant for erecting such wharves, elevators or other buildings deemed necessary or convenient for the successful operation of said enterprise.

In consideration of said grant it was agreed “nothing herein shall be construed as waiving the right of the city of Henderson to levy and collect taxes on the approaches to said bridge, or any buildings erected by said bridge company within the corporate limits of said city, the bridge itself, and all appurtenances thereto within the limits of said city.”

The appellant contends it was only meant to reserve the right to tax such property of the appellant as wasthei-etofore subject to taxation by the city government, and as that part of the bridge situated on the water of the Ohio river was not, for the reason above indicated, subject to taxation, the reservation relates to that part of the bridge that the appellee had the right to tax under the law. It is evident that the contract was well considered, and prudently drafted by men skilled in that kind of work, and it is not presumed that they engaged in a mere nudum pactum, but they meant to set forth a business transaction. Now, that business transaction was evidently this: The appellant desired rights and privileges that it did not possess, and which it could not possess without the consent of the appellee. So it said to the appellee, grant these privileges, and you may tax, what? Only the approach to said bridge? No, because the appellee already had the right to tax that, and it had made no concessions that could possibly be construed as waiving that right. What right, then, was granted? Why, the right to tax the “bridge itself.” The bridge, as distinguished from its abutments and approaches, is that part that is over the water. Now, the appellee, according to the Louisville Bridge case, in its municipal capacity, had no right to tax that part of the bridge over the water. Why, then, say that it did not waive the right to tax it ? To waive a right there must be a claim of right to waive. Well, it is said, as the appellee had no right to tax the bridge, there was, in fact, no right to waive. As an abstract proposition of the right to tax the bridge on the water (according to said case), this contention is true-; but it is equally true that the appellee had the right, if asserted and agreed to, to claim that the bridge should be taxed in consideration of the privileges granted. This claim of right, it must be presumed, was asserted and agreed to, and expressed in the contract by the term “ not waiving the right.” If the contract does not mean this, then it means nothing. It is not supposed that the contracting parties only meant to reserve a right that they already had, and about which there was no possible ground of dispute; but when it is considered that the right to tax the bridge to the Indiana shore might be legitimately obtained by contract, and that the appellee granted to the appellant rights and privileges essential to its enterprise, designed to make money, and is making a large per cent., it is entirely reasonable to suppose that the appellee would contract for the right to thus tax the appellant in consideration of granting these essential rights and privileges, by which the appellant acquired the right to conduct and operate so profitable a business enterprise. As said, the privilege was granted to the appellant upon the consideration of the appellee reserving the right to tax the entire property to the Indiana shore, which was expressed by the term, “nothing herein shall be construed as waiving that right.” To give the contract any meaning, it means this, otherwise it would be a mere nudum pactum.

The appellant, at least for the purpose of collecting taxes, should be considered as a part of a railroad, and, consequently, falls within the principle announced iu Elizabethtown and Paducah R. Co. v. Trustees of Elizabethtown, 12 Bush, 239, opinion by Judge Lindsay.

The judgment is affirmed.

Judge Pryor dissenting.

Chief Justice Holt

delivered the following separate opinion:

The Legislature, by authorizing the imposition and collection of tlie railroad and school taxes upon the real estate within the city limits, created a taxing district. The power to collect these taxes was, therefore, conferred upon the appellee as such a district, and the appellant’s property being within it is liable for them.

As to the municipal taxes proper, the appellant’s property is within the corporate limits, and, in my opinion, receives such benefits from the municipal government as render it both legally and justly liable for them.

Upon these grounds I concur in an affirmance of the judgment of the lower court.