88 Tenn. 464 | Tenn. | 1890
This record raises the question of the liability of the city of Nashville for a privilege tax on its water-works under the revenue Act of 1887.
The petition alleged the construction and maintenance of the water-works by the city in its corporate capacity, for the public good, and not as a private enterprise for pecuniary gain or profit, and this Court held that, in the absence of express statutory provision on the subject, the exemption from taxation arose by implication of law from the public ownership, nature, and use of the property, as revealed by the allegations of the petition. It was further decided, however, that the city could not in that mode question its liability for that part of the tax assessed in favor of the Stat'e, but that its remedy was to pay the same under protest and sue to recover the amount in thirty days, as provided by the Act of 1878. Hence, so far as the • State was concerned, the petition was dismissed. ' As to the county, it was retained and remanded for further proceedings.
Subsequently the amount claimed for the State w’as paid under protest, and suit to recover the same was brought in due time. This new suit and what remained of the former one were then consolidated by mutual agreement, and heard together before the Hon. W. K. McAlister, Circuit Judge, without the intervention of a jury.
Judgment was for the city, and there is an appeal in error on behalf of the State and county.
P. J. Elannigan, Comptroller of the city, was the only witness introduced. "We give the material part of his evidence in his own words, as found in the bill of' exceptions. He said “that said city always owned and operated the water company, * * * and it was maintained by levying a tax upon persons living in said city who used the water supplied; that the water was used for the purpose of extinguishing fires, sprinkling streets, and the use and benefit of citizens in said city; that there were several factories adjacent to said city, but beyond its corporate limits, and several thickly settled places in close proximity to said city, which from time to time were annexed to said city; that the factories laid their own pipe connecting with the city’s water-mains, and, in eases of emergencies, when their private water supplies were exhausted, they used water furnished by the city, but this was only occasionally. The main reason why connections were made was to provide for an abundant supply of .water in case of fire. That in all there were about $6,000 paid by factories and persons living adjacent to the corporate limits annually; that
It is seen at once that the water-works are corporate property; that is 'not denied. The debate is with respect to the nature of the use. As to that, for the sake of convenience, we divide -all the purposes for which the city furnishes water into three classes: (1) To extinguish fires and sprinkle the streets; (2) to supply citizens of the city; (3) to supply persons and factories adjacent to but beyond the corporate limits.
If the business were confined to the first class, there would be no ground to base a discussion upon, so clearly would the use be exclusively for public advantage.
We think there can he but little more doubt about the second class, especially in view of certain words in the city charter, to which we will advert presently. Nothing should be of greater concern
The eighth subsection of Section 14 of the charter of the city of Nashville (Acts 1883, Ch. 114) enumerates some of the powers conferred upon the Mayor and City Council in these words: “ To provide the city with water by water-works, within or beyond the boundaries of the city, and to provide for the prevention and extinguishment of fires, and organize and establish fire companies.”
Here the first clause, “ To provide the city with water by water-works,” is very broad and comprehensive, and was obviously intended to authorize the corporation to furnish the inhabitants of
It can make no difference whether the water be furnished the inhabitants as a gratuity or for a recompense, the sum raised in the latter case being reasonable and applied for legitimate purposes. So raising a fund to help defray the expenses of operating the water-works and to keep down the interest on the city’s indebtedness, incurred in the construction thereof, is no more engaging in business for gain and profit than would be the assessment and collection of taxes for that or any other legitimate object. To the extent that money is realized by sales of water (if it be so termed), the necessity of laying taxes in the usual way is diminished. If the water were furnished free of charge, then the expense of operating the works and meeting the interest on the debt would have to be met by an increased tax assessment.
¥e believe the views here expressed are sustained not only by sound reason and policy, but also by the weight of adjudged cases. In a Connecticut case it was decided that land owned by the city of Hartford and used for reservoirs for
By Act of the Legislature of Hew York a certain Board of Commissioners of Rochester were authorized to determine and execute the best and most expedient plan of supplying that city “with a sufficient quantity of pure and wholesome water for the use of its inhabitants and the extinguishment of fires.”' As a part of this plan, lands were purchased in the town of Rush and a reservoir was erected thereon. Water was supplied therefrom for the city’s own use and for the consumption of the inhabitants, the latter paying prescribed water rates. . The amount of rents received from consumers of the water was less than the interest on the - bonds issued for the construction of the works. One question submitted to the Courts ou those facts was: “Can the town of Rush legally impose a tax upon the said property of
Other cases in harmony with these two might be cited, but that is not deemed necessary.
The cases relied on as in direct conflict we do not find to be so. The strongest adverse case is that of City of Louisville v. Commonwealth, 1 Duvall, 295. There the Court, in discussing the implied exemption of municipal property from taxation, used this language: “ The more precise and distinctive test' for classification is this: Whatever property, such as court-house, prison, and the like, which becomes necessary or useful to the administration of the municipal government, and is devoted to that use, is exempt from State taxation; but whatever • is not so used,. but is owned and used by Louisville in its social or commercial capacity as a private corporation, and for its own profit — such as vacant lots, market-houses, fire-engines, and the like — is subject to taxation.” 1 Duvall, 298.
It will be observed that reservoirs or waterworks are not enumerated here, and we are not informed, and cannot with certainty determine from the language used, on which side of the line the learned Judge would have placed such property if he had mentioned it in the classification of exempt
The Iowa case does not touch the question at all. There the water-works were owned and operated by a private company, and not by the city. The company bound itself to furnish the city of Des Moines and its inhabitants with pure and wholesome filtered water at certain rates, and, after a limited period of time, to sell all. of its property used in its business to the city, at its election. Because of this arrangement and contract with the city, the company denied its liability for taxes. Chief Justice Rothrock, in delivering the opinion of the Court, said: “The fact that the city is furnished water, for which it pays what is presumed to be a fair consideration, does not change the property from a private to a public use. The reservation of the'.city of the right to purchase the works does not invest it with any title or right to the property, or in any sense make it public property until it shall elect to purchase.” In the Matter of the appeal of the Des Moines Water Company, 48 Iowa, 324.
If possible, the decision in the case of Baily v. Mayor, etc., of the City of New York, 3 Hill, 531, is still farther from the question before us. That was an action against the city for damages for injuries resulting from the negligent and unskillful construction of a dam by the city’s Water Commissioners. The Commissioners were held to be the agents of the city in such a sense that it
Mr. Cooley and Mr. JDesty both lay down the rule that municipal property is by implication exempt from taxation • when put to a public use, and that it is not exempt when not so used. They ■ give instances of both classes and cite the cases. Each author gives some prominence to the Kentucky’ case reported in 1 Duvall; but Mr. Cooley, in his concluding sentence, says that the doctrine of that case would seem to limit implied exemptions unreasonably, unless restricted to the case of special assessments. Cooley on Taxation, 172, notes 3 and 4; 1 Desty on Taxation, 48, 49.
"With respect to the third class there is an equally obvious, though altogether different, solution of the question. It is this: The tax in litigation was assessed against the city of Nashville for “ exercising the privilege of running a water company” within her own limits, in a city “ of 40,000 inhabitants or over,” the amount of the tax, as to the State’s part, being determined by the statute according to population. There is no assessment for the privilege of doing the business of a water company elsewhere than in the city; hence, if there be liability to the tax for furnishing water to any other persons than her own citizens — to individuals and factories adjacent to and beyond her corporate limits — that liability cannot be adjudged in this case, because not put in issue. Moreover, in addition to the lack of
Let the judgment be affirmed.