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 acts, 1882, 915, was withdrawn by the General Revenue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withdrawn.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
Page 143 U. S. 2
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
Page 143 U. S. 3
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,
Page 143 U. S. 4
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 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,
Page 143 U. S. 5
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,"
and that
"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
Page 143 U. S. 6
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.
Page 143 U. S. 7
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. "
Page 143 U. S. 10
MR. JUSTICE HARLAN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The contention of the water company that it acquired by the act
of 1882 an exemption from taxation which could not be withdrawn by
subsequent legislation, without its consent makes it necessary to
inquire whether that exemption was in
Page 143 U. S. 11
fact thus withdrawn, and if so whether the statute withdrawing
it impaired the obligation of any contract the company had with the
state by the act of 1882.
It is clear that the exemption allowed by the act of 1882 was
withdrawn by the general revenue statute of 1886. While the former
act exempted the water company from taxation of whatever character,
state, municipal, or special, the latter subjected to taxation
all property, real and personal, within the state, unless
expressly exempted by its provisions. The act of 1886 not only
failed to exempt the property of the water company from taxation,
but expressly required, as did the General Statutes in force prior
to 1882 (art. 12, ยง 4, c. 92), that every water company doing
business within the state should make, annually, a full and
complete statement, under oath, of all its property, including its
surplus or contingent fund, cash, stocks, bonds, and other
securities. And, that there might be no possible doubt as to the
scope of that act, the chapter of the General Statutes relating to
taxation, and other statutes specially named by their titles,
relating to revenue, and
all other acts and parts of acts,
"general
and special," inconsistent or not in conformity
with its provisions, were expressly repealed by the act of 1886.
The sweeping character of this repeal is further shown by the
specification of certain laws that were excepted from the repeal,
which specification did not include the act of 1882. The latter act
is special in its exemption of a particular company from taxation.
It was therefore inconsistent with the revenue act of 1886, which
embraced in terms all property, real and personal, within the state
not expressly exempted by its provisions from taxation. There is
thus a positive repugnancy between the special and general acts.
This being so, the repealing clause included the special act of
1882, and therefore subjected the property of the water company to
taxation as provided in the revenue act of 1886. In so holding, we
do no violence to the established rule that repeals by implication
are not favored,
State v.
Stoll, 17 Wall. 425,
84 U. S. 431;
Ex Parte Crow Dog, 109 U. S. 556,
109 U. S. 570;
Chew Heong v. United States, 112 U.
S. 536,
112 U. S. 549,
for, under the repeal of all special acts not in conformity with
the general statute, the act of 1882, not being
Page 143 U. S. 12
expressly excepted from such repeal, cannot stand with that of
1886.
Was the repeal, which was effected by the revenue act of 1886,
in violation of any rights acquired by the water company under the
act of 1882? We think not. The act of 1882 contained no clause that
"plainly expressed" the intention not to exercise the power,
reserved by the statute of 1856, to amend or repeal at the will of
the legislature, all charters of or grants to corporations, or
amendments thereof, and other statutes. There was no such
reservation in the act of 1854, incorporating the water company,
and therefore that act was not subject to the general statute of
1856.
Hamilton v. Keith, 5 Bush 458. But in respect to all
the acts passed after 1856, amending the charter of or relating to
the water company, including that of 1882, each must be read as if
all the provisions of the act of 1856 were incorporated in it,
because in no one of them is plainly expressed an intent to waive
the right of amendment or repeal at the will of the legislature. In
this view, the rights acquired by the water company under the act
of 1882 were subject to the reserved power of amendment or repeal,
saving, whenever that power was exerted, all rights previously
vested. In short, the immunity from taxation granted by the act of
1882 was accompanied with the condition -- expressed in the act of
1856, 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. Any other interpretation of
the act of 1856 would render it inoperative for the purposes for
which manifestly it was enacted.
These conclusions are sustained by many adjudications. In
Tomlinson v.
Jessup, 15 Wall. 454,
82 U. S. 457,
which involved the liability to taxation of a corporation, an
amendment of whose charter exempted it from taxation, this Court
said:
"It is true that the charter of the company, when accepted by
the corporators, constituted a contract between them and the state,
and that the amendment, when accepted, formed a part of the
contract from that date, and was of the same obligatory character.
And it may be equally true, as stated by counsel, that the
Page 143 U. S. 13
exemption from taxation added greatly to the value of the stock
of the company, and induced the plaintiff to purchase the shares
held by him. But these considerations cannot be allowed any weight
in determining the validity of the subsequent taxation. The power
reserved to the state by the law of 1841 authorized any change in
the contract as it originally existed, or as subsequently modified,
or its entire revocation. The original corporators or subsequent
stockholders took their interests with knowledge of the existence
of this power and of the possibility of its exercise at any time in
the discretion of the legislature. The object of the reservation
and of similar reservations in other charters is to prevent a grant
of corporate rights and privileges in a farm which will preclude
legislative interference with their exercise if the public interest
should at any time require such interference. It is a provision
intended to preserve to the state control over its contract with
the corporators, which without that provision would be irrepealable
and protected from any measures affecting its obligation. There is
no subject over which it is of greater moment for the state to
preserve its power than that of taxation. . . . Immunity from
taxation, constituting in these cases a part of the contract with
the government, is, by the reservation of power such as is
contained in the law of 1841, subject to be revoked equally with
any other provision of the charter whenever the legislature may
deem it expedient for the public interests that the revocation
shall be made. The reservation affects the entire relation between
the state and the corporation, and places under legislative control
all rights, privileges, and immunities derived by its charter
directly from the state."
So in
Railroad Co. v. Maine, 96 U. S.
499,
96 U. S. 510,
where the question was as to the liability to taxation of a
consolidated corporation which came into existence while a general
statute was in force, providing that any act of incorporation
subsequently passed might be amended, altered, or repealed at the
pleasure of the legislature in the same manner as if an express
provision to that effect were therein contained, unless there was
in the act of incorporation an express limitation or provision to
the contrary. In that case, the Court said:
"There was
Page 143 U. S. 14
no limitation in the act authorizing the consolidation, which
was the act of incorporation of the new company upon the
legislative power of amendment and alteration, and, of course,
there was none upon the extent or mode of taxation which might be
subsequently adopted. By the reservation in the law of 1831, which
is to be considered as if embodied in that act, the state retained
the power to alter it in all particulars constituting the grant to
the new company, formed under it, of corporate rights, privileges,
and immunities. The existence of the corporation, and its
franchises and immunities, derived directly from the state, were
thus kept under its control."
To the same effect are
Railroad Co. v. Georgia,
98 U. S. 359,
98 U. S. 365;
Hoge v. Railroad Co., 99 U. S. 348,
99 U. S. 353;
Sinking Fund Cases, 99 U. S. 700,
99 U. S. 720;
Greenwood v. Freight Co., 105 U. S.
13,
105 U. S. 21;
Close v. Glenwood Cemetery, 107 U.
S. 466,
107 U. S. 476;
Water Works v. Schottler, 110 U.
S. 347,
110 U. S. 352;
Louisville Gas Co. v. Citizens' Gas. Co., 115 U.
S. 683,
115 U. S. 696;
Gibbs v. Consolidated Gas Co., 130 U.
S. 396,
130 U. S. 408;
Sioux City Street Railway v. Sioux City, 138 U. S.
98,
138 U. S.
108.
In harmony with these views is the decision of the Court of
Appeals of Kentucky in
Griffin v. Kentucky Insurance
Company, 3 Bush 592, where the question was as to the validity
of an act, passed in 1868, repealing the charter of an insurance
company granted in 1865 and which did not expressly reserve the
power of repeal. The court said:
"The charter was certainly a contract with a legal obligation
which could not be constitutionally impaired by ordinary
legislation. But what is its obligation? Had the charter itself
reserved the power to repeal it, that reservation would have been
part of the contract, and have molded its obligation accordingly,
and such qualified obligation would not have been impaired by an
exercise of that power."
After observing that although there was no such reservation in
the company's charter, there was one in the act of 1856, the
proviso of which, while securing the rights of beneficiaries and
others, did not affect the mere power to repeal the franchise, the
court proceeded:
"That statute [1856] in its prospective operation is
constitutional, and therefore a law of the state, and as it has
never been repealed, it
Page 143 U. S. 15
applies to the charter of the Kentucky Insurance Company unless,
as argued, the nonreservation in the charter itself of power to
amend or repeal it implied a repeal, as to it, of the general
statute. But, there being nothing in the language of the charter
importing any such intention, if the mere pretermission of special
reservation of the power to amend or repeal should be construed as
a negation of the power, the statute of 1856 would be superfluous
and inoperative because, in relation to charters reserving the
power, there was no necessity for that enactment, which therefore
was intended to operate only on charters which do not reserve the
power already reserved by statute. Then was this general
reservation of power, like a special reservation in the charter
itself, a part of the contract, or was the contract made subject to
it, and the obligation defined or modified by it? We think so. And
whatever might be thought of the policy of such legislation or of
the policy or justice of the repealing statute over which the
judiciary has no jurisdiction, our conclusion as to the mere power
of repeal is, as we think, sustained by reason and abundant
authority."
It is, however, contended that the exemption from taxation could
not be withdrawn while the water company remained under the
obligation imposed by the first section of the act of 1882 to
furnish water to the city for fire protection, free of charge. But
no such obligation remained after the passage of the act of 1886,
which, as we have seen, had the effect to withdraw the immunity
from taxation granted by the second section of the act of 1882. In
determining the object and scope of the act of 1882, we must look
at all of its provisions. The water company was under a duty by its
charter, passed before the act of 1856, to furnish water for the
extinguishment of fires and the cleansing of streets, not free of
charge but upon such terms as might be agreed upon by it and the
city. And the legislature certainly did not assume to impose upon
it the obligation to furnish water for fire protection free of
charge except in connection with the grant to it of immunity from
taxation. Accepting, however, the benefits of this exemption from
taxation, it became bound to supply
Page 143 U. S. 16
water for public purposes free of charge. But that obligation
remained only so long as the exemption continued in force. The act
of 1882 is to be regarded as an entirety, and meant nothing more
than that the company should furnish water for fire protection free
of charge so long as the immunity from taxation continued. This
view is in harmony with the act of 1856, which expressly declares
that while privileges and franchises granted to corporations after
its passage could be changed or repealed, no amendment or repeal
should impair other rights previously vested. The effect of the
withdrawal of the immunity from taxation was therefore to leave the
water company in the position it was before the passage of the act
of 1882 in respect to its right to charge for water furnished for
public fire cisterns, fire plugs, or hydrants.
Much reliance was placed by the plaintiff upon
Commissioners' Sinking Fund v. Green & Barren River
Navigation Co., 79 Ky. 73, 75, 83. But there is nothing in
that case inconsistent with the views we have expressed. it was
there decided that the legislature could not, consistently with the
Constitution, or with the above statute of 1856, take from the
Green and Barren River Navigation Company, without making
compensation therefor, the right it acquired under a contract with
the state, concluded in 1868, to take, for a term of years, tolls
from vessels navigating Green and Barren Rivers, in consideration
of its agreement, which had been fully performed, to maintain and
keep in repair at its own expense such line of navigation. The case
before us presents no such features. As already indicated, in
losing an exemption from taxation, the water company regained its
rights to make such charges for water furnished for fire protection
as it could rightfully have done before the act of 1882 was passed
and while its property was subject to taxation.
We have thus far considered the case as one between the state
and the water company as a private corporation. It is not perceived
that the result should be different if we regarded the case as one
necessarily involving proprietary rights of the City of Louisville
or the rights of creditors whose debts were or are charged upon the
sinking fund of that municipality.
Page 143 U. S. 17
The various acts referred to were passed, as was the act of
1882, in view of the general statute of 1856, and as none of them
contained a provision expressly waiving the right of amendment or
repeal, it must be held for the reasons already stated that the
acquisition by the sinking fund 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, by amending
or repealing that act, to withdraw the exemption from taxation.
Such withdrawal did not impair the obligation of any contract
rights of creditors whose debts were charged upon the sinking fund,
because such rights, whenever acquired, were subject to the power
to amend or repeal the statute granting to the water company
immunity from taxation. The withdrawal of that immunity, it is
suggested, impaired the value of such rights; but in view of the
reservation contained in the act of 1856, that result must have
been regarded as possible when those rights were acquired. No right
of any creditor has been impaired even in value except as that
result has followed from the reserved power to amend or repeal the
statute in question. The act of 1886 has simply restored the water
company and all persons interested in it, directly or indirectly,
to the situation in which they were when the act of 1882 was
passed, and the power to effect that result was reserved by the
general statute of 1856 because not expressly waived by the act of
1882.
We therefore hold that it was competent for the legislature to
withdraw the exemption from taxation granted by the act of 1882.
The authority reserved in the act of 1856 to amend or repeal
constituted a part of whatever contract was made by the act of
1882, and its exercise, in the present instance, cannot be said to
have impaired the obligation of such contract, or, in any just
sense, to have impaired rights previously vested.
Decree affirmed.
MR. JUSTICE GRAY concurs in the result.
