130 Ky. 61 | Ky. Ct. App. | 1908
Opinion of the Court by
Affirming.
This suit was instituted in the Marion circuit court by T. G. Albritton, revenue agent, for the purpose of assessing certain dividend-paying stocks, bonds, and cash held by the sinking fund commissioners of Lebanon, Ky. In 1884 a charter was granted by the State Legislature to J. M. Cardwell and others as incorporators of the Lebanon Waterworks Company. The capital stock of this company was fixed at $100,000. The company was organized under this charter to supply the town of Lebanon with water. In 1886 the charter of the Lebanon Waterworks Company was amended so as to authorize the city of Lebanon to purchase its stock up to an amount not to exceed .150 shares of a par value of $100 each, and, for the purpose of mailing this purchase, the city was authorized to issue its bonds, which were to mature at a stated time. The act further provided that for the purpose of paying the bonds, which the city should thus issue, a sinking fund should be created, and that the city should annually pay into said fund a sum sufficient to liquidate the bonds at maturity. For the purpose of managing this fund a commission of three was appointed. It appears from the record that $55,000 of the stock of the water company were at that time delivered to the city and a like amount of city bonds were issued to the water company, and by it sold upon the market. At the time of the institution of this suit there had been paid into the sinking fund each year a sum approximating $1,600, and the aggregate amount then in the hands of the commisisoners was about
For the State it is urged that the city holds these stocks and bonds and this cash in a private or proprietary capacity, and not in its governmental or public capacity, and that, therefore, it is subject to taxation; whereas, the sinking fund commissioners contend that it is held for a purely'governmental or public purpose, and is exempt from taxation. The debt which this sinking fund was created to liquidate was originally incurred by the city by legislative authority in the erection and installation of a waterworks system for the city. The same act which authorized the city to incur this indebtedness required that a fund be created for the purpose of liquidating this indebtedness at its maturity. The city owns all of the stock of the waterworks company, and the waterworks company, in addition to supplying the city with water, is held and operated for the purpose of extinguishing fires, sprinkling streets, flushing gutters and sewers, thereby ministering, not only to the comforts and necessities of the citizens of said town, but promoting and subserving the public health and conveniences of the city. The sinking fund was created for the sole
The city is an arm or branch of the State government, and in the administration of its public .affairs it acts as an agent of the State, and no property held by it for a purely public or governmental purpose is subject to taxation any more than the public property of the State itself is subject to taxation. In the case of the City of Louisville v. Commonwealth, 1 Duvall 295, 85 Am. Dec. 624, Judge Robertson, speaking for the court, held that a courthouse, prison, and such property as was necessary or useful to the administration of municipal affairs, and devoted to such uses, were exempt from taxation, but, when such property was used by the city in its private capacity, such as market houses, fire engines, etc., it was subject to taxation. Since the date of this decision the trend of legislative enactment, and judicial interpretation as well, has been to extend and enlarge the exemption from taxation of the different classes of property held by cities in their governmental capacity, and contributing to the health, comfort, and convenience of its citizens, and the rule announced by Judge Robertson has been materially modified and extended. In the more recent case of the City of Owensboro v. Commonwealth, 105 Ky. 344, 49 S. W. 320, 12 Ky. Law Rep. 1281, 44 L. R. A. 202, it was held that property used by a city in connection with its fire department, and even public parks, was exempt from taxation. In the case of the Board of Councilmen of Frankfort v. Commonwealth, 94 S. W. 648, 29 Ky. Law Rep. 699, it was held that: “The Legislature authorizes munici
Considered in its true light, the sinking fund in the hands of the commissioners is but so much taxes collected by the city for the purpose of liquidating an indebtedness created solely for a purely public purpose, and hence it not subject to taxation, and, the circuit judge having so held, the judgment is affirmed.