261 S.W.2d 820 | Tenn. Ct. App. | 1953
This appeal by the County Chairman, County Trustee and the Tax Assessor of Unicoi County presents the question of whether properties of the City of Johnson City, a municipality with situs in Washington County, are exempt from taxation by Unicoi County wherein the properties are located. With the exception of a water line serving a few customers in the village of Unicoi, the Chancellor found that all of the property described in the bill was being used exclusively for a public purpose within the sense of the constitutional and statutory exemption. Accordingly, it was decreed that such property with that exception be stricken from the tax rolls of Unicoi County and that the collection of any tax on property declared by the decree to be exempt from taxation be perpetually enjoined. Defendants have assigned two errors: (1) That the Chancellor erred in
The bill was filed by the City of Johnson City on June 22,1950, against the officials of Unicoi County above mentioned alleging that complainant owned in connection with the operation of its municipal water system many acres of land in Unicoi County whereon is located an infiltration plant and that it also owned within the county certain riparian rights. It was further alleged that, although exempt under Code Section 1085(1), such properties had been assessed for taxes by Unicoi County for the year 1950; that, as previously held in a decree of the Chancery Court of Unicoi County, such properties were being used exclusively for public purposes and, under the statute, are exempt from taxation by Unicoi County. The prayer of the bill was for a declaratory decree holding such properties exempt from taxation and holding the former decree res adjudieata.
The answer admitted that the property of the city located in Unicoi County had been assessed for taxation for the year 1950. It was denied, however, that such properties were exempt on the ground that they were being used exclusively for municipal purposes. Former adjudication was denied, and a declaration of the rights of the parties requested.
By Chapter 121 of the Private Acts of 1909 the City of Johnson City was empowered to acquire, own and operate a municipal water system for the purpose of furnishing water to its inhabitants and people residing in the territory adjacent to the city. Acting under this
Several years later, in order to meet the growing demands of its inhabitants for water, the city purchased the Davis Springs with a small acreage surrounding the Springs, merging the new supply with that already being taken from Blue Springs and treating the whole in the same manner as formerly. Still later, and in 1929, the city acquired for the same purpose 1,200 additional acres in what is known as the Bed Pork area of Unicoi County. Following this purchase another suit was filed by the city to enjoin a threatened assessment of its properties for taxation by Unicoi County. This case was heard by Chancellor S. E. Miller who filed a memorandum opinion holding that the properties were being used exclusively for municipal purposes and were not subject to taxation. A recent search failed to locate a decree based upon Chancellor Miller’s memo. Later, another tract of 100 acres was purchased as a site for a filtration plant and,
At the time of the assessment in 1950, the city owned in Unicoi County about 1,900 acres of land in the four separate tracts above mentioned together with the lower riparian rights on North Indian Creek. The 1,200 acres comprising the Bed Fork area is mountainous and contains streams of water flowing into North Indian Creek from which, as stated, the city takes water into its filtration plant. As we understand the record, it is not necessary to run the water flowing from Blue Springs and from Davis Springs into the filtration plant but only to put it through a process of chlorination. However, the overflow from these springs, if any, passes into North Indian Creek above the filtration plant. From these sources the city takes into its line 5.3 million gallons of water per day. Of this amount, 3.3 million gallons come from the two Springs mentioned and 2 million gallons are taken from the Creek through the filtration plants and thence into the line.
The record shows that the main line, 14 miles in length, runs through the unincorporated Town of Unicoi, located in Unicoi County, thence through open country, cutting across a corner of Carter County, and then into Washington County before reaching the corporate limits of Johnson City. Another line extends from Johnson City through Washington and Carter counties a distance of
Except an annual rental of $35 for a cabin which the city permitted to be occupied for a few years and then discontinued renting, it has received no revenue from its land holdings in Unicoi County. During one year the city received for dead timber removed to reduce the fire hazard some several hundred dollars. It permitted one of its tenants who was employed as a caretaker to grow four-tenths of an acre of tobacco and another was allowed to graze a few cattle on some of the open land. The city received nothing for these uses.
ISection 28 of .article 2 of the State Constitution provides :
“All property, real, personal or mixed, shall be taxed, but the Legislature may except such as may be held by the State, by counties, cities or towns, and used exclusively for public or corporation purposes”.
Code Section 1085(1) provides that there shall be exempt from taxation:
*237 “All property of the United States, .all property of the State of Tennessee, or any connty, or of any incorporated city, town, or taxing district in the state that is nsed exclusively for public, county or municipal purposes.’ ’
As early as Smith v. City of Nashville, 88 Tenn. 464, 12 S. W. 924, 7 L. R. A. 469, it was held that property held by a municipality for the purpose of supplying water to its inhabitants is being used exclusively for a public purpose within the sense of the Constitution and of the statute.
In City of Knoxville v. Park City, 130 Tenn. 626, 630, 172 S. W. 286, 287, L. R. A. 1915D, 1103, it was said:
‘ ‘ The true test to be applied is whether the municipality sought to be subjected to taxation is engaged in the administration of the property in question for a public purpose; that is, for governmental purposes. It is the character of the use to which the property is put, and not so much the person who owns or administers it, or the place where the property may be situate, that is determinative of this question of exemption from taxation. ’ ’
The opinion in that case, prepared by Mr. Justice Williams, contains an exhaustive and learned review of a wide range of cases dealing with this question. The facts were that the City of Knoxville acquired by purchase a water system located in the City of Park City, the west boundary of Park City being within 300 feet of the east boundary of the City of Knoxville for a distance of about 1 mile. In purchasing the private water company supplying both municipalities, the City of Knoxville assumed the contract then in existence between the company and Park City and continued to operate within the limits of both cities. In this situation, the City of Park City
In distinguishing these holdings from the question posed, however, it was said:
“It is difficult to conceive how the city of Knoxville has any public or corporate purpose to serve within the corporate limits of Park City. All municipal purposes therein are those of Park City, created by legislative act to exercise them. The furnishing of a water supply for itself and its inhabitants is its municipal purpose and cannot be Knoxville ’s.
“Nor may it logically be conceived that the city of Knoxville serves even incidentally its own corporate public purpose by means of the Park City system. What is the primary ‘public purpose’ of Park City may not be an incidental ‘public purpose’ of Knoxville. The Legislature will be taken to have intentionally lodged the full power and duty in that regard in its local governmental representative, Park City.”
■ The general question was re-examined a short time later in Johnson City v. Weeks, 133 Tenn. 277, 180 S. W. 327, 3 A. L. R. 1431, in which the situation was more nearly analogous to that presented in the instant case. Mr. Justice Williams wrote the opinion in that case also and reviewed the holdings in Smith v. City of Nashville,
The opinion reiterates the holding of (Smith v. City of Nashville, supra, that a water line does not lose its character. of being public property exclusively used in furtherance of a public purpose merely because it extends beyond the corporate limits of the municipality, sustaining it on the reasoning that the existence of sickness and epidemics is a matter of concern to nearby urban populations. Distinguishing City of Knoxville v. Park City on the ground that in that case the municipality sought to be taxed was furnishing water to the inhabitants of a separate municipality, it was held that the Chancellor erred in holding the line running to the National Soldiers Home subject to taxation.
Except as to the lines serving the Town of Unicoi which the Chancellor held subject to taxation, we .cannot escape the conclusion that these cases require an affirmance of the Chancellor’s holding as to the filtration plant and water lines. We think the rule of incidental use which they clearly recognize applies. The sale of water to inhabitants of the Town of Unicoi constitutes only a minor fraction of the sum total of sales to inhabitants
The question remains: Are the city’s holdings in the watershed within the protection of the exemption? The city insists and the proof shows that, in order to prevent erosion and afford a more uniform flow of water from the springs and creek throughout the year by preventing a rapid run-off during heavy rains, it is desirable to keep the watershed in timber and that for purposes of sanitation it should be kept as free of human habitation as possible. To do this it is desirable, if not necessary, to own a good part of the land comprising the watershed though pollution may be overcome or mitigated by filtration. Hence, it is argued, its entire properties in Unicoi County are being used exclusively for municipal purposes.
We think there is merit in this argument. The exemption would be of little value if a municipality could be forced to choose either to keep its watershed too small to ensure an adequate supply of pure water or lose its right to an exemption for all of its property not immediately and directly used in the operation of its system.
While we are fully conscious of the possible serious effects of the loss of revenue to Unicoi County, we are
In this view of the case, it becomes unnecessary to decide whether the county is concluded by the decree and memorandum opinion in earlier litigation.
Affirmed and remanded. Costs to be taxed to appellants.