Henderson Bridge Co. v. Henderson City
173 U.S. 592 (1899)

Annotate this Case

U.S. Supreme Court

Henderson Bridge Co. v. Henderson City, 173 U.S. 592 (1899)

Henderson Bridge Company v. Henderson City

No. 82

Argued May 6, 9, 1898

Decided April 8, 1899

173 U.S. 592

ERROR TO THE COURT OF APPEALS

OF THE STATE OF KENTUCKY

Syllabus

This Court has jurisdiction to review the final judgment of the state court in this case for the purpose of ascertaining whether it deprived the defendants of any right, privilege or immunity set up by them under the Constitution of the United States.

The City of Henderson had authority to tax so much of the property of the Henderson Bridge Company as was permanently between low water mark on the Kentucky shore and low water mark on the Indiana shore of the Ohio River, it being settled that the boundary of Kentucky extends to low water mark on the Indiana shore.

The declaration of the state court that Kentucky intended by its legislation to confer upon the City of Henderson a power of taxation for local purposes coextensive with its statutory boundary is binding in this Court.

In order to bring taxation imposed by a state within the scope of the Fourteenth Amendment of the National Constitution, the case should be so clearly and palpably an illegal encroachment upon private rights as to leave no doubt that such taxation, by its necessary operation, is really spoliation under the guise of exerting the power to tax.

The taxation by the city, as property of the Bridge Company, of the bridge and its appurtenances within the fixed boundary of the city between low water mark on the two sides of the Ohio River was not a taking of private property for public use without just compensation in violation of the Constitution of the United States.

The Bridge Company did not acquire by contract an exemption from local taxation in respect of its bridge situated between low water mark on the two shores of the Ohio River.

The provision in the city's charter that

"no land embraced within the city's limits, and outside of ten-acre lots as originally laid off shall be assessed and taxed by the city council unless the same is divided or laid out into lots of five acres or less and unless the same is actually used and devoted to farming purposes"

has no reference to bridges, their approaches, piers, etc.

The power of Kentucky to tax this bridge is not affected by the fact that it was erected under the authority or with the consent of Congress.

The statement of the case will be found in the opinion of

the Court.

Page 173 U. S. 593

MR. JUSTICE HARLAN delivered the opinion of the Court.

This case arises out of the taxation by the City of Henderson, a municipal corporation of Kentucky, of a railroad bridge (with its approaches, piers, etc.) extending from a point within that city on the Kentucky shore across the Ohio River to low water mark on the Indiana shore.

The property subjected to taxation belongs to the Henderson Bridge Company, a corporation of Kentucky, but is under the care, management, and control of the Louisville & Nashville Railroad Company, also a corporation of that commonwealth.

Those corporations insist that the final judgment of the court of appeals of Kentucky here for review, affirming a judgment rendered in the Circuit Court of Henderson County, is in derogation of rights secured to them by the Constitution of the United States. The grounds upon which this contention rests will appear from the statement presently to be made of the history of the litigation between the City of Henderson and the corporations named in respect of taxes assessed upon the bridge property in question.

The city contends not only that the assessment of taxes upon this property was in all respects valid, but that the matters here in dispute, including the questions of constitutional law raised by the bridge and railroad companies, have been conclusively determined in prior litigation between the parties.

The facts which it seems necessary to state in order to bring out clearly and fully the various questions raised by the pleadings and discussed by counsel are as follows:

The Henderson Bridge Company was incorporated by an act of the General Assembly of the Commonwealth of Kentucky

Page 173 U. S. 594

approved February 9, 1872, with authority to construct

"a bridge across the Ohio River, extending from some convenient point within the corporate limits of the City of Henderson to some convenient point on the Indiana side of said river opposite the City of Henderson."

Acts Kentucky 1871-72, Vol. 1, 314.

The city's boundary, as defined by its charter granted February 11, 1867, extended "to low water mark on the Ohio River on the Indiana shore," and it had the power (with certain exceptions not material to be noticed here) to levy and collect taxes at a prescribed rate upon all property within its limits made taxable by law for state purposes.

In 1882, an ordinance was passed by the common council of the city granting to the Henderson Bridge Company the right

"to construct on or over the center of Fourth Street in the City of Henderson, and of the line thereof extended to low water mark on the Indiana side of the Ohio River, such approaches, avenues, piers, trestles, abutments, toll houses, and other appurtenances necessary in the erection of, and for the business of, a bridge over the Ohio River from a point in the City of Henderson to some convenient point on the Indiana side of said river, and for such purposes, the use of said Fourth Street is hereby granted, subject to the terms and conditions hereinafter expressed;"

also, the right

"to use the space between Water Street, in said city, and low water mark in the Ohio River, extending one hundred feet below the center of Fourth Street extended and three hundred feet above the center of said street extended to the Ohio River for the purpose required by said company."

The company was also permitted to

"erect, or authorize or cause to be erected, grain elevators within said space above high water mark, and may construct therefrom to the river such apparatus and machinery as may be necessary to convey grain from boats to such elevators, and may have the use of said space for the landing of boats laden with freight for such elevators, and construct floating docks or use wharf boats within such space for the accommodation of such boats and the conduct of the business of such bridge and of the said elevators free of

Page 173 U. S. 595

wharfage, subject to the terms and conditions hereinafter expressed."

The fourth section of that ordinance declared that it should not 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 fifth section provided that before any of the rights or privileges so granted should inure to the benefit of or vest in the bridge company, the latter should, by proper authority, append to a certified copy of the ordinance their acceptance of, and agreement to abide by and faithfully keep, its terms and conditions, such acceptance and agreement to be acknowledged by the proper authority of the company, as provided in the case of a deed under the laws of Kentucky, and delivered to the clerk of the Henderson City Council.

The bridge company duly accepted the ordinance, with its terms and conditions, agreed to abide by and faithfully keep the same, and its acceptance was acknowledged and delivered to the city council.

In 1884, an agreement in writing was entered into between the bridge company and the Louisville & Nashville Railroad Company reciting that the former was about to proceed with the erection of a bridge over the Ohio River at or near Henderson and of a railroad connecting the Henderson Division of the Louisville & Nashville Railroad Company at Henderson with the Southeast & St. Louis Railway in or near Evansville, Indiana; that certain railroads, including the Louisville & Nashville Railroad Company, had by agreement guarantied to the bridge company an income from traffic amounting to $200,000 per annum, and that it was deemed for the interest of all parties, and had been requested by the bondholders under the mortgage placed on the bridge, that the Louisville & Nashville Railroad Company should assume the control, management, and care of the track of said railroad so to be constructed, and should effect the usual repairs to such bridge caused by

Page 173 U. S. 596

ordinary wear and tear, and pay taxes imposed on said track and the bridge on compensation being made therefor by the bridge company. By that agreement, the bridge company undertook to pay the railroad company absolutely and in each year during the continuance of the agreement, in equal quarter-yearly payments, the sum of $10,000 per annum, which amount, or such parts thereof as were required, the railroad company agreed to apply to the maintenance of the track and roadbed of said railroad in good condition and repair, and towards the usual and ordinary repairs of the bridge, and also to pay all taxes imposed on said track or bridge structure and each of them.

On the 8th day of December, 1887, the city, by petition filed in the Circuit Court of Henderson County, Kentucky -- that mode of collecting taxes being authorized by the local law -- brought suit against the Henderson Bridge Company to recover the sum of $44,324 as the amount of taxes, with penalties thereon, due from the bridge company under ordinances passed by the city in 1885, 1886, and 1887, levying and assessing taxes for certain purposes. The petition referred to the above ordinance authorizing the construction of the bridge, and among other averments in it were the following:

"The defendant commenced the construction of said bridge in the year 1883, and completed same in the month of July, 1885, and at a cost of about $2,000,000, and on the ___ day of July, 1885, the first train ran over said bridge. The approach to said bridge is constructed over Fourth Street, near the principal portion of said city, commencing at the west line of Main street, and extending to the main structure of said bridge at Water Street (though, plaintiff claims, not in accordance with the terms of said ordinance). The rights and privileges granted by the plaintiff to the defendant were of great value, and the plaintiff was influenced and induced to so grant them by the belief in the right on the part of the plaintiff to tax said bridge as other property is taxed within the city limits. By the building of said bridge through the rights and privileges so granted by the plaintiff, the system of roads north of the Ohio River has been connected with the

Page 173 U. S. 597

Louisville & Nashville Railroad south of the river, and the said bridge company's property has become so valuable that its bonds, to the amount of about $2,000,000, are worth a premium of 8 1/2 percent"

The assessment against the bridge company on account of the bridge and its approaches was upon a valuation of $600,000 in 1885 and $1,000,000 in each of the years 1886 and 1887. In its petition, the city claimed a lien upon the bridge from the beginning of its approach at Main Street, in the City of Henderson, to low water mark on the Indiana side of the Ohio River, for said taxes and the penalties thereon.

The bridge company in its answer denied the material allegations of the petition, and alleged:

That the city had no authority to levy taxes for the purposes indicated in the ordinances referred to;

That the declaration in the ordinance granting the right to construct the bridge within the city's limits meant, and was intended to mean, nothing more than that the city did not waive any right to tax then possessed by it;

That the bridge was built only for the purpose of laying a single railroad track on which to move locomotives and cars between Kentucky and Indiana over the Ohio River;

That, except as to that part of the bridge commencing at the west line of Main Street, in the City of Henderson, and extending to the main structure at Water Street, the bridge company derived no assistance or protection from the city, and that part between the Kentucky and Indiana shores, upon stone piers and pillars resting upon the bed of the Ohio River, was not subject to taxation by the city;

That the bridge was located and constructed in conformity with the two acts of the Congress of the United States, the one entitled "An act to authorize the construction of bridges across the Ohio River and to prescribe the dimensions of the same," approved December 17, 1872, and the other entitled

"An act supplemental to an act approved December 17, 1872, entitled 'An act to authorize the construction of bridges across the Ohio River and to prescribe the dimensions of the same,'"

approved February 14, 1883, 17 Stat. 398, c. 44; 22 Stat. 414;

Page 173 U. S. 598

That the whole of said bridge between the Kentucky shore and the Indiana shore, 1,968 feet in length, was over the water of the Ohio River, except the piers or pillars that support it;

That the Ohio River was a navigable stream within the entire control and jurisdiction of Congress and the courts of the United States, and that assumption of control by the City of that part of the bridge for purposes of taxation, or for any purpose except for executing writs from its police authorities, would be in violation of the Constitution of the United States, the laws of Congress, and the rights of the defendants; and

That, as the bridge derived no profit, protection, or advantage from the government of the city, to subject it to city taxation would be to take private property for public use without just compensation, in violation of the Constitution of the United States as well as of the Constitution and laws of Kentucky and of the defendant's rights in the premises.

The answer of the bridge company further alleged:

That the Louisville & Nashville Railroad Company was a necessary party to that suit;

That, when it constructed its bridge, it was the settled law of Kentucky, as shown by the judgment of the Court of Appeals of Kentucky in Louisville Bridge Co. v. Louisville, 81 Ky. 189, that the part of the bridge erected over and across the Ohio River was not liable to municipal taxation;

That, relying upon such being the law of Kentucky, the defendant and the Louisville & Nashville Railroad Company entered into the above agreement of February 27, 1884; and

That to grant to the plaintiff the relief prayed for or any part thereof would be a direct impairment of the contract between the bridge company and the railroad company.

The railroad company, having been made a party, adopted the answer of the bridge company.

The state circuit court adjudged that, the bridge being in an incomplete condition on the 10th day of January, 1885, the city was not entitled to tax it for that year. But, as to the years 1886 and 1887, it was adjudged that the bridge and the approach thereto were subject to taxation for all the purposes

Page 173 U. S. 599

and for the amounts claimed in the city's petition, and that the city had a lien upon the bridge structure, masonry piers, and the approach thereto, situated within its boundary extending to low water mark on the Indiana side of the Ohio River, for the taxes assessed for the years 1886 and 1887, with interest and costs expended. The bridge company was directed to pay said sums, with interest and costs, to the plaintiff on or before a named day.

In a brief opinion of the state circuit court, it was said that the taxable boundary of the city was coextensive with its statutory boundary. Referring to the case of Louisville Bridge Co. v. Louisville, 81 Ky. 189, the court held that that case decided nothing more than that the legislature did not intend that the bridge there in question should be subject to taxation. It was further said:

"Several cases are relied on where the Court of Appeals have relieved parties from the payment of taxes on agricultural lands when the city limits had been extended without the owner's consent. The rule, if one has been established by those cases, should not be extended to cases where property has been voluntarily brought within such boundaries. The party thus bringing in his property should be treated as one who sanctioned the extension of a city so as to include his agricultural lands. All that can be deduced from these cases is that, in each extension of a town or city, the court will hear the complaints of any taxpayer, and grant or not grant him relief as the merits of his particular case may demand. In this case, the defendants voluntarily placed their property within the legally established limits of the city, and should pay the taxes assessed on other property holders of the city after 1885."

The bridge company and the railroad company prosecuted an appeal to the Court of Appeals of Kentucky, and the city was granted a cross-appeal from so much of the judgment as disallowed its claim of taxes for 1885.

In the Court of Appeals of Kentucky, the judgment was affirmed. In its opinion, it is apparently conceded that the city could not, under its charter, tax the bridge structure over the river for ordinary municipal purposes -- that is, "for the support

Page 173 U. S. 600

of its government proper." But it was said that if the city was created a taxing district, it could do so. Referring to the contract or terms upon which the bridge company acquired the right to construct its bridge within its limits, and particularly to the clause declaring that the ordinance should not be construed as waiving the right of the city to tax the bridge and its appurtenances within the corporate limits of the city, the court said:

"The appellant contends it was only meant to reserve the right to tax such property of the appellant as was theretofore 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, etc., 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

Page 173 U. S. 601

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 percent, 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 construct and operate so profitable a business enterprise. So it seems much more reasonable to suppose that the contracting parties intended to do this reasonable thing -- to-wit, to receive some consideration for the grant of privileges, rather than indulge in a mere nudum pactum. The appellant, at least, for the purpose of collecting taxes, should be considered as a part of a railroad -- consequently falls within the principle announced in Elizabethtown & Paducah Railroad v. Elizabethtown, 12 Bush, 239."

14 S.W. 493.

Chief Justice Holt delivered a separate opinion, in which he said:

"The legislature, by authorizing the imposition and collection of the 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."

14 S.W. 493, 496.

The bridge company and the railroad company sued out a writ of error from this Court, but the writ was dismissed

Page 173 U. S. 602

upon the ground that although a federal question may have been raised in the state court, the judgment of the latter court rested upon grounds broad enough to sustain the decision without reference to any such question. Mr. Justice Blatchford, delivering the opinion of the Court, said:

"The opinion of the state court is based wholly upon the ground that the proper interpretation of the ordinance of February, 1882, was that the bridge company voluntarily agreed that the bridge should be liable to taxation. This does not involve a federal question, and is broad enough to dispose of the case without reference to any federal question. This Court cannot review the construction which was given to the ordinance as a contract by the state court. There is nothing in the suggestion that the taxation of the bridge is a regulation of commerce among the states, or is the taxation of any agency of the federal government. The case of Louisville Bridge Co. v. City of Louisville, 81 Ky. 189, was not decided until May, 1883, more than a year after the ordinance of the City of Henderson was accepted by the bridge company, in February, 1882. The contract of February, 1884, between the bridge company and the railroad company, was made more than two years after the ordinance of February, 1882, came into existence. Neither the opinion of the Court of Appeals in the present case nor that of Chief Justice Holt nor that of the circuit court of the state, puts the decision upon any federal question, and, on this writ of error to the state court, we are bound by its interpretation of the contract contained in the ordinance, in view of the Constitution and laws of Kentucky, and cannot review that question."

Henderson Bridge Co. v. Henderson,141 U. S. 679, 141 U. S. 689.

By an act of the General Assembly of Kentucky approved April 9, 1888, the charter of the City of Henderson was repealed, and the city reincorporated with the following boundaries:

"Beginning at a stone on the west side of the Madisonville Road; thence north 48

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