U.S. Supreme Court
Louisville Water Co. v. Clark, 143 U.S. 1 (1892)
Louisville Water Company v. Clark
Argued November 23-24, 1891
Decided January 18, 1892
143 U.S. 1
The immunity from taxation conferred upon the Louisville Water Company by the Legislature of Kentucky by the Act of April 22, 1882, 1 Sess. acts, 1882, 915, was withdrawn by the General Revenue Act of May 17, 1886, Gen.Stats. 188$, c. 92.
The immunity from taxation granted to the company by the said act of 1882 was accompanied by the condition expressed in the Act of February 14, 1856, 2 Rev.Stats.Ky. 121, and made part of every subsequent statute, when not otherwise expressly declared, that by amendment or repeal of the former act such immunity could be withdrawn.
The withdrawal of the exemption from taxation conferred upon the company by the act of 1882 put an end to the obligation, imposed upon the company by that act, to furnish water free of charge to the city for the extinguishment of fires, cleansing of streets, etc.
The acquisition by the sinking fund of the city of the stock of the water company, whether before or after the passage of the act of 1882, was subject to the reserved power of the legislature at its will to withdraw the exemption from taxation by amending or repealing that act.
The Court stated the case as follows:
The plaintiff in error brought this suit in the Louisville Law and Equity Court for Jefferson County, Kentucky, to obtain a decree preventing the seizure and sale of its property by the chanroblesvirtualawlibrary
defendant, the sheriff of that county, for state and county taxes assessed for the year 1887. The suit proceeds in part upon the theory that the company's property was exempted from all taxation by an act of assembly passed April 22, 1882, which, it is alleged, constituted, in connection with previous enactments, a contract between it and the state, and that the general statute of Kentucky, relating to the collection of the public revenue, enacted in 1886, and under which alone the defendant could justify the contemplated seizure and sale, impaired the obligation of that contract. The relief asked was granted by the court of original jurisdiction, and the defendant was enjoined from collecting the taxes in question. That decree was reversed by the court of appeals of Kentucky, and the cause was remanded with directions to require the plaintiff to pay into court the taxes claimed, or, if it failed in that, the management of its business should be entrusted to a receiver until an amount sufficient to pay the taxes and costs of litigation was realized. To reverse that decree this writ of error was prosecuted.
Various statutes were referred to in argument as bearing upon the questions presented for determination. Their provisions, so far as it is material in any view of this case to advert to them, are as follows:
The Louisville Water Company was incorporated in 1854 without any exemption of its property from taxation and with authority to establish and maintain, within or near the City of Louisville, reservoirs, enginehouses, pumping machinery, etc., necessary to furnish at all times an abundant supply of fresh and wholesome water to the inhabitants of that city. It was made its duty to furnish water to the city for the extinguishment of fires and the cleansing of streets upon such terms as might be agreed between itself and the municipal authorities, and if the latter assented thereto, the water company was to have the exclusive right to furnish water to the inhabitants of Louisville by means of pipes and aqueducts upon such terms and for such time as might be stipulated between it and the city. Sess.Acts 1853, 1854, vol. 2, p. 121.
Subsequently, by an Act approved February 28, 1867, amending chanroblesvirtualawlibrary
its charter, the water company was authorized, with the consent of the general council of the city, to increase its capital stock, and the city was invested with power to subscribe for such stock, or any part thereof, and pay for the same in bonds issued for that purpose. Sess.Acts 1867, vol. 2, p. 167.
By an Act approved March 9, 1867, it was provided, among other things, that the General Council of Louisville should not have power to pass ordinances diminishing the resources of the sinking fund of that city as then established, until the city's debts then, or which might subsequently become, chargeable upon that fund, were paid, and that the whole resources of that fund from year to year should be sacredly set apart to the payment of such debts until they were fully discharged. The mayor, the president of the board of aldermen for the time being, and three persons to be chosen by the general council on joint ballot, and their successors in office, were constituted the Commissioners of the Sinking Fund of the City of Louisville, with corporate powers and existence, with authority to do and perform all things necessary to execute the duties required and the powers given them by the act. The funds, estate, and income belonging then or subsequently to that fund were vested in and placed under the control and management of said board of commissioners. If injured, withheld, or abstracted, the board could sue for and recover the same or any part thereof in their corporate name. The commissioners were directed to apply the fund to the payment of the city's debts chargeable on the same when they could do so on fair terms, and when that could not be done to invest the surplus in bonds of the city, or for which it was bound, or bonds of the State of Kentucky, or in such good and solvent stocks as might be approved on the vote of a majority of each board elect of the general council, by yeas and nays. Sess.Acts. of 1867, vol. 2, pp. 417, 420.
A subsequent act approved March 15, 1869, added to the resources of the sinking fund of the city the stock owned by it in the Louisville Water Company; also an annual tax of forty cents on each one hundred dollars worth of such real and personal property as might be taxed for city purposes in that city, chanroblesvirtualawlibrary
to be levied and collected in cash as provided. It also provided that no other than the bonded debt of the city should be charged upon the sinking fund unless provision was made for the payment thereof at the time of the charge sufficient in the opinion of the commissioners to pay it. Sess.Acts of 1869, vol. 2, p. 462.
The charter of the City of 1870 directed the general council to establish and maintain a fire department with such force, organization, apparatus, engines, etc., as were sufficient to provide against fires, etc. By that charter it was further declared that the waterworks, as an institution of the city, should remain as then established by law, but the general council should not take further stock in the company without an ordinance first passed for that purpose, declaring the amount to be taken, how to be paid for, and the tax necessary to be levied to meet the same, which ordinance should be subject to approval or rejection by the qualified voters of the city at a general election called for that purpose; also that no tax or water rent should be levied for the purpose of paying for the use of water for public purposes or for paying the expense of conducting and max or water rent should be levied for the purpose of paying for the use of water for public purposes or for paying the expense of conducting and max or water rent should be levied for the purpose of paying for the use of water for public purposes or for paying the expense of conducting and managing the works except upon the lands and tenements of the water district. Sess.Acts of 1869-70, vol. 2, pp. 60, 61.
That charter was amended and the resources of the sinking fund were further increased by the Acts of March 3, 1871, and March 21, 1871, investing the commissioners of the sinking fund with power to purchase from the city, or from individuals holding the same, certificates of stock in the water company; such stock, when purchased, to be held as a part of the sinking fund of the city. Sess.Acts of 1871, vol. 1, p. 325; Sess.Acts of 1871, vol. 1, p. 352.
The fourth section of article 12 of chapter 92 of the General Statutes of Kentucky, adopted in 1873, made it
"the duty of the president, treasurer, or secretary of any gas or water company or association in this state to report, under oath, to the auditor of public accounts, on or before the 10th day of July every year, a full and complete statement of all property, real, personal, or mixed, including buildings, engines, machinery,
pipes above and below ground, reservoirs, retorts, tanks, meters, lamp posts, together with any and all other species of property connected with or in any way belonging to or under the control of such gas or water company, and any surplus accumulated, or contingent fund on hand, cash on hand, stocks, bonds, or other securities, and the total cash value thereof."
The fifth section of the same article made it
"the duty of the president, treasurer, secretary, mayor, or agent of any toll bridge company, incorporated city, mining or other incorporated or manufacturing company, gas or water company or association, in or doing business in this state, under or by virtue of any act of incorporation named in this article, to pay into the treasury, on or before the 10th day of October in each year, a tax upon each one hundred dollars of the value of the property owned, possessed, held, or represented by such company, city, or association, equivalent to the tax collected upon real estate."
Gen.Stat. 1873, p. 745.
It should be here stated that by an Act approved February 14, 1856, entitled "An act reserving power to amend or repeal charters and other laws," it was provided, in respect to all charters and acts of incorporation granted after that date, that
"All charters and grants of or to corporations, or amendments thereof, and all other statutes, shall be subject to amendment or repeal at the will of the legislature, unless a contrary intent be therein plainly expressed, provided that whilst privileges and franchises so granted may be changed or repealed, no amendment or repeal shall impair other rights previously vested,"
"when any corporation shall expire or be dissolved, or its corporate rights and privileges shall cease, by reason of a repeal of its charter or otherwise, and no different provision is made by law, all its works and property, and all debts payable to it, shall be subject to the payment of debts owing by it, and then to distribution among the members according to their respective interests, and such corporation may sue and be sued as before, for the purpose of settlement and distribution as aforesaid."
2 Rev.Stats.Kentucky 121. This act was preserved in the General Statutes adopted in 1873, and was in express terms made applicable to all charters and chanroblesvirtualawlibrary
grants of or to corporations, or amendments thereof, "enacted or granted since the 14th of February, 1856." Gen.Stats.Kentucky 1873, p. 616.
Such were the relations between the state, the City of Louisville, and the water company when the Act of April 22, 1882, was passed, amending the charter of that company and exempting it from the payment of taxes of all kinds, state, municipal, and special. That act provided:
"1. It shall be the duty of the Louisville Water Company to furnish water to the public fire cisterns and public fire plugs or hydrants of the City of Louisville for fire protection free of charge."
"2. The sinking fund of the City of Louisville being the owner of the stock of the Louisville Water Company, and said water company by virtue thereof is the property of the City of Louisville, therefore the Louisville Water Company is hereby exempt from the payment of taxes of all kinds, of whatever character, state, municipal, or special. This act shall take effect from and after its passage."
Sess.Acts 1882, vol. 1, p. 915.
It thus appears that when the act of 1882 was passed, as well as ever since February 14, 1856, a general statute of Kentucky reserved the power to amend or repeal all charters and grants to corporations, or amendments thereof, "at the will of the legislature, unless a contrary intent be therein plainly expressed."
On the 17th of May, 1886, a general statute was passed amending the revenue laws of the state. Acts 1885-86, pp. 140-141, 202. This act has become chapter 92 of the General Statutes of 1888. It declares that
"all property, real and personal, within this state not herein expressly exempt by law shall be assessed, as nearly as practicable, according to a uniform rate, in the manner hereinafter provided,"
and contains a section similar to section 4 of article 12 of chapter 92 of the General Statutes of 1873. It is admitted that the property of the water company is subject to taxation under the act of 1886 unless it was entitled, after and notwithstanding its passage, to the exemption given by the Act of April 22, 1882. chanroblesvirtualawlibrary
The following sections of article 12 of the act of 1886 indicate the extent to which previous laws were affected by it:
"SEC. 5. Chapter 92 of the General Statutes; the Act of March 28, 1872, entitled "An act to amend chapter 83 of the Revised Statutes, entitled Revenue and Taxation;'" the amendment to said Act of March 28, 1872, entitled "An act to amend an act approved March 28, 1872, authorizing sheriffs to sell real estate to pay revenue tax," approved April 19, 1873; the Act approved April 2, 1878, entitled "An act to amend section 6, article 6, chapter 92 of the General Statutes," an act to amend article 2 of chapter 92 of the General Statutes, title, "Revenue and Taxation," approved May 8, 1884, and all other acts, general and special, and parts of acts, inconsistent herewith, or not in conformity herewith, are hereby repealed; but nothing in this act shall interfere with any existing local option, or any special or prohibition law in any county, nor with any local or general law for creating or collecting county levy, or with chapter 1315 of the Acts of 1879-80, or with an act entitled "An act for the benefit of the branch penitentiary at Eddyville," approved April 7, 1886."
"SEC. 6. Nothing in this act shall be held to repeal or in any way impair the force and effect of any local or special act or any general law now in force or that may hereafter be passed providing for the appointment of collectors of state revenue, or county levy and poll tax, in any County of the state, nor shall anything herein be construed to repeal or impair the force of any special or local law giving to counties or towns, for road or street purposes, the fines collected for violations of the road and bridge laws of said county."
"SEC. 7. That this act shall take effect from and after September 14, 1886, but it shall not operate as a repeal of existing laws as to any assessment made licenses granted or obligations or penalties incurred under any existing law. "