Lawrence Lewis.

American and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] online

. (page 45 of 73)
Online LibraryLawrence LewisAmerican and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] → online text (page 45 of 73)
Font size
QR-code for this ebook

decree, and in the subsequent part to have vested in the re-
spective parties the property or rights which it was agreed
they should severally own, if separate ownership was desired
or thought necessary.

However this may be, the order in which things were done
by the decree cannot control its construction ; for the true
inquiry is. What does the entire decree show was the declara-
tion of law made on the agreement of the parties as to the
rights of the respective parties ?

The first part of the decree, after directing the issue of ad-
ditional shares of stock and determining the number of share's
which each of the parties should have, declares that " the

Digitized by



equal undivided one third of the property of said company
Uhe consolidated company) to be consolidated and vested in it
by this decree shall be owned by said city, and represented by
the said stock, and the rights and interests therein, and in said
property of said mayor, aldermen, and inhabitants of the city
of Galveston, shall be in trust for the present and future inhab-
itants of the city of Galveston ; and all and every part thereof
shall be inalienable, and not subject to conveyance, assign-
ment, transfer, pledge, mortgage, or any liability for debt
whatever, in any other manner than by the vote of four fifths
of all the qualified voters of said city in favor of some clear
and specific proposition therefor."

This part of the decree declares what shall be the rights of
the parties then before the court, after the rights and prop-
erty of both were consolidate'd and vested by the decree in
the consolidated company.

It would seem that the declaration as to how the ownership
should stand after the property and rights of both parties
should by the decree be vested in the one in whose name the
business was to be transacted in the future, should control
that part of the decree by which the contemplated consolida-
tion was made.

Taken all together, the apparent intent of the decree is to
vest in the city of Galveston not only a right to receive one
third of the dividends, but also the further right to one third
of the entire property of the company, as consolidated ; it
being, however, subject to the control of the Galveston Wharf
Company for the uses and purposes for which the consolida-
tion was made.

This view is much strengthened by the fact that a power is
recognized, and a method is provided, in the decree, by which
not only the right and interests of the city in the stock which
it holds, but also in the property, i.e., an undivided one third
of the whole property consolidated and vested in the Galves-
ton Wharf Company, by the decree, may be alienated by the

Such a power of alienation is inconsistent with any other
relationship to the property than that of ownership, it not
appearing that a naked power was intended to be conferred.

The trust spoken of in the decree is evidently one imposed
not only on the Galveston Wharf Company, but also on the

Digitized by



municipal government of the city of Galveston for the benefit
of the inhabitants of that city.

We are of the opinion that the decree vests in the city of
Galveston title to an undivided one third of the I5J;*^<>' ^*ti


property consolidated by the decree, and that it ^^ ^^''*
clothes the wharf company with a power to be exercised in
its management through the directory to be selected in which
the city is to be represented as provided by the decree.

Section i, article 8, of the constitution, in providing for tax-
ation, seems to exempt all property belonging to municipal
corporations from taxation ; but section 9, article 11, provides :
" The property of counties, cities, and towns owned and held
only for public purposes, such as public buildings and sites
therefor, fire-engines and the furniture thereof, and all prop-
erty used or intended for extinguishing fires, public grounds,
and all other property devoted exclusively to the use and
benefit of the public, shall be exempt from forced sale
and from taxation."

It is contended that under this provision of the constitution,
even if the one third of the property belongs to the city, it
is subject to taxation, because not such property and so used
as to be entitled to the exemption.

It is property held only for purposes essentially public,
and may be said to be devoted exclusively to the use and
benefit of the public ; indeed it would be hard to imagine a
use more essentially public than is that of a wharf cm- wharf

,, iiir r« '^ PROPERTY 18 PUT

which extends along the front of a city, and upon ]S^^^^k2pt
which is received a large part of the articles which ****" taxation.
go to make up the inward and outward commerce of the
State. It is a property which all persons and vessels have
a right to use, under proper regulations, and without the use
of which the business of the city could not be conducted.
That compensation is received for its use does not withdraw
from it its public character. Dillon on Municipal Corpora-
tions, 103-113.

There may be property owned by municipal corporations
which would be subject to taxation, but the enumeration of
certam things in the section of the constitution quoted, as
exempt from taxation, was not intended to operate as a
declaration that things not enumerated were subject; but
simply to indicate the character of things, and the uses to

Digitized by



which they must be appropriated, in order to be entitled to
the exemption.

The decree provides that dividends received by the city
" shall be disbursed and expended for the public good and
benefit of said present and future inhabitants of said city."

In the absence of any law expressly providing otherwise,
such property as a municipal corporation owns and uses for
a public purpose is held not to be affected by general laws
regulating taxation. Cooley on Taxation, 130, 131 ; Dillon
on Municipal Corporations, 773, 774, knd cases cited in the

Many cases exist in which examples are given of the char-
acter of property and uses to which it must be put, when
owned by municipal corporations, to make it, within the
meaning of the law, property " held only for public purposes,
or devoted exclusively to the use and benefit of the public,"
which, in this case, it is not deemed necessary to review,
among which are the following : Klein v. New Orleans, 99
U. S. 150; Water Commissioners v. Gaffney, 34 N. J. iji;
Gibson v. Howe, 37 Iowa, 170; Fall v. Mayor of Marysville,
19 Cal. 392; Piper v. Singer, 4 S. & R. 354; Directors of
the Poor v. School Directors, 42 Pa. St. 24 ; Louisville v.
Commonwealth, i Duval, 295 ; Trustees v. Champaign Co.,
76 111. 185.

The words "held only" and "devoted exclusively," used in
the section of the constitution quoted, would seem to convey
the idea that a municipal corporation may own property
which will not be exempt from taxation ; if so, the property
involved in this case is not of that character ; and it will be
time enough to consider what kinds of property, if any, be-
longing to a municipal corporation, is subject to taxation
when a case requiring its decision is presented.

If, however, the decree did not vest in the city the title to
one undivided one-third of the property of which it purports
to dispose, there ca^i be no doubt that the decree vests in the
city such a beneficial interest in the property, and in the
dividends to arise from its use, as would, on principle, render
it improper for the city to impose taxes which would in-
directly deprive it of a part of the dividends, which, under
the decree, it was evidently intended the city should receive.

In other words, can the city tax the property to the extent

Digitized by



of its beneficial interest therein, when to do so will diminish
its dividends, and in addition to this incur the increased ex
pense of collecting the tax.

In our opinion, it might just as well tax any other property
it owns, and pay the tax out of its own treasury, with a loss
to itself of the cost of collecting.

If the only beneficial interest of the city be to dividends,
these cannot be declared and paid until the expenses of oper-
ating and keeping up the entire property is first deducted
for dividends are not paid on gross receipts ; hence, it the
city can tax the entire property, the tax so levied and col-
lected must be deducted before a dividend is paid, and thus
the dividend be diminished.

A power to tax, under such circumstances, involves the
power of a municipal corporation to tax itself or its own
property, which it certainly cannot do, for obvious reasons.

There are no equities arising in favor of the city from the
fact that the dividends which the city will receive are dimin-
ished by the taxes paid to the city on the interest of the
wharf company in the property, for the city receives the en-
tire tax, and only accounts for one-third of it in receiving a
diminished dividend, caused by this tax, as do the other

If the dividends of the city will be diminished by the pay-
ment of State and county taxes on the interest owned by the
wharf company, this furnishes no reason to sustain the impo-
sition of an unauthorized tax. It is true that the taxation of
two-thirds of the property, which, under the decree, is the
interest of the wharf company, by the State and county, will
diminish the dividends which the city will receive ; but this
results from the fact that under the law that property is sub-
ject to taxation, as is the property of other persons, and its
association in ownership with other interests not subject to
taxation does not create an exemption in its favor. No pro-
vision is made, in the decree for adjusting what may seem to
be the equities of the parties in reference to dividends, result-
ing from the fact that the part of the property owned by the
wharf company is subject to taxation, while the part owned
by the city is not ; but in the absence of some such provision,
the rights of the parties would have to be adjusted in refer-
ence to dividends, as would the right of persons holding

9 Cor. Cas. — 2&

Digitized by



shares of stock in other corporations, except that the city
cannot diminish the dividends by the imposition of a tax in
its favor not authorized by law.

The rights of the parties, in respect to such matters, rest as
fixed by the decree, which, having been confirmed by the
legislature, must be held to indicate the will of the law-mak-
ing power, as fully as though embodied in a statute. The
legislature might have withdrawn from the city the right to
receive any dividends at all.

The court below erred in dissolving the injunction sued
out to restrain the city from collecting the tax on an undi-
vided one-third of the wharf property, and its judgment will
be here rendered perpetuating the injunction heretofore
granted, and adjudging costs of the court below and of this
in favor of the appellant against the appellee.

And it is accordingly so ordered.

Reversed and rendered.

Municipal Property is not Taxable. — That a municipal corpora-
tion should for its own purposes assess and collect from itself a tax on its
own property is ah absurdity so great that it may be dismissed without
consideration. Whether the State or the United States may tax municipal
property, or whether one municipality may tax the property of another, are
questions of greater difficulty. There is a case in i Duval (Ky.). 298, where
the following rule is laid down : " Where property, such as court-house,
prison, and the like, which became 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 Louis-
ville 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,'' and the county judge was directed to correct an
assessment in accordance with this principle. Judge Dillon, with refer-
ence to this decision, " ventures to observe that in his judgment the ex-
emption should have been extended to all the property. Municipal cor-
porations are not usually allowed to hold or deal in property directly for
profit ; and this is not the purpose for which authority is given to erect
market-houses or wharves, or to purchase and own fire-engines." 2 Dill.
Mun. Corp. § 775. To this it may be added, that the putting out of fires
and prevention of conflagrations would seem to make fire-engines a much
the instruments of a public purpose as a court-house or jail. And it may
also be questioned whether the taxation of any part of the property of a
municipality does not fall within the reason stated by Judge Cooley, thus:
'* A State may, if the legislature see fit, tax all the property owned by its
municipal divisions ; but to do so would render necessary new taxes to
meet the demand of this tax, and thus the public would be taxing itself in

Digitized by



order to raise money to pay over to itself, and no one would be benefited
but the ofiicers employed." Cooley, Taxation, 131.

These reasons, however, hardly apply with as much force to a case where
one municipality owns property not used for its corporate purposes in
another. Such was the fact in West Hartford v. Board of Water Commis-
sioners, 44 Conn. 361. To supply the City of Hartford with water, the
Board bought a large tract of land in the neighboring town of West Hart-
ford. It was held that the portion used for storing and supplying the
water was not taxable, but that the unused portion was not exempt. And
in so far as the exemption of a part was concerned, it was held not to
affect the matter that the Board sold the water to consumers and paid
interest on the investment and incidental expenses by the water rents so
derived. •

In an Alabama case. Stein v. Mayor, etc., of Mobile, 24 Ala. 591, the in-
terest of the lessee of a city water-works system was held not exempt
from taxation.

But the general rule is that municipal property is not taxable. People
V. Solomon, 51 111. 37; Directors v. School Directors, 42 Pa. St 21, 25;
State V, Gaffney, 34 N. J. 133; People v. Doe, 36 Cal. 220; People v,
Austin, 47 Cal. 353 ; Gibson v. House, 37 Iowa, 168 ; Trustees v. Cham-
paign Co., 7 Leg. News, 160; Piper v. Singer, 4 S. & R. 354; Hall v,
Marysville, 19 Cal. 391 ; Low v, Lewis, 46 Cal. 549; Ft. Dodge v. More,
37 Iowa, 388.

The lands of a county used for a court house and other county purposes
cannot be taxed by the city in which they are situated, nor are they liable
for a street assessment. Worcester Co. v. Worcester, 116 Mass. 193.

A municipal corporation cannot levy a tax on bonds issued by the State
even though they be properly within th j corporation limits. It is not to
be presumed that the State intended, without an express grant to that
effect, to confer upon a municipal corporation a power thus .to depreciate
the State securities, and do what the State itself ought not to be presumed
to have done, in the absence of clear language so declaring. City Council
V, Dunbar, 50 Ga. 387.

Special Exemption of Cemeteries from Taxation. Repeal by
Subsequent General Statute.— Some of the States, either by statute
or constitutional provision, exempt cemeteries from taxation. For exam-
ple, Missouri, by section 6, article 10, constitution of 1875, provides that
" the property, real and personal, of the State, counties, and other muni-
cipal corporations, and cemeteries shall be exempt from taxation." The
questions which arise in this kind of litigatibn are usually questions of
interpretation and construction. In State v. Wesleyan Cemetery Associa-
tion, II Mo. App. 561, it was held that if the property was used as a ceme-
tery at the time the taxes sued for were assessed, there could be no re-
covery. In another case, between the same parties, 1 1 Mo. App. 570, the
same point was affirmed. It appeared that the cemetery company was
exempt from taxation by a special charter granted it in 185 1. It was con-
tended that the exemption was repealed by certain general enactments
subsequently, but this was denied by the court which applied the

Digitized by



rule generalia specialibus non derqgant. Earl Derby v. Commissioner.
L. R., 4 Exch. 222 ; Fitzgerald v, Champenys, 2 Johns. & Hun. 31, 53, 54,
Jenk. Cent. 120. The reason why a general enactment will not repeal a
prior particular enactment unless it specially refers to it, is well stated by
Sir W. Page Wood : " The reason in all these cases is dear. In passing
the special act, the legislature had their attention directed to the special
case which the act was meant to meet, and considered and. provided for
all the circumstances of that special case ; and having done so they will
not be considered by a general enactment passed subsequently, and mak-
ing no mention of such intention, to have intended to derogate from that
which, by their own special act, they had thus carefully supervised and
regulated. Fitzgerald v. Champen)rs, supra. See also upon this point
Sedg. Stat, and Const. Law (2 ed.), 98 note. St. Louis v, Alexander, 23
Mo. 483; State v. McDonald, 38 Mo. 529; Deters v, Renick, 37 Mo.
597; State V, Macon, 41 Mo. 453; Williams v. Pritchard, 4 Term R. 2;
State z/. Minton, 23 N. J. L. 529; Blain v, Bailey, 25 Ind. 155.

In Appeal Tax, etc, v, Baltimore Cem. Q>., 50 Md. 432, the charter of
the company provided that " the land of the company dedicated to the pur-
poses of a cemetery shall not be subjea to taxation of any kind." The
assessors assessed it, including gate-houses and all permanent improve-
ments of the cemetery. The court, however, held that the special exemp-
tion in the charter constituted a contract not subject to impairment.

What Property of Cemetery is Taxable.— It is obvious that the
property of a cemetery company may be put to various uses. Some of it
may lie idle, another portion may be used for burial purposes, and upon part
of it buildings may be erected. It became a question, in Appeal Tax, etc, v,
Baltimore Cem. Co., 50 Md. 433. The exemption was of ** the land oi the
company dedicated to the purposes of a cemetery," and it was argued that
this exemption does not extend to, or include, the impr(n>ements on the
land, because by the tax-law the assessors were required, in valuing real
estate, to estimate the value of the land per acre and " separately to value
the improvements thereon." But the court held the point not well taken.
" But this requirement," said Bartol, C. J., " was not designed to convert
the improvements into personalty, or to separate them from the realty,
nor can it be construed to have that effect : it was intended only to point
out the mode in which the assessment should be made, and the whole
a^jegate value of the land, with the improvements, ascertained. The whole
context shows that the permanent improvements are treated as realty, as*
the law regards them ; and in our judgment the exemption of the lands
from taxation necessarily embraces also an exemption of the permanent
improvements thereon used for the purposes of a public cemetery^ and which
are essential to the use and enjoyment of the land for the purpose contem-
plated in the charter. Such was the character of the improvements in this
case." Appeal Tax, etc., v, Balto. Cem. Co., supra.

In Hoboken v. North Bergen, 43 N. J. L. 148, there was about five acres
of land in the cemetery property that was not used for burial purposes,
but was cultivated by the superintendent of the cemetery, who resided in
a house on the five acres. This house and five acres was assessed, but the

Digitized by



court held it exempt, under a law providing that the cemetery and all
burial lots sold therein should be free from taxation. Replying to the
contention that the exemption extended only to land actually used for
burial purposes, the ccurt said : " Such construction of the general act is
too narrow. The space required for burial purposes constantly increases,
and a reasonable quantity of land for future occupancy should be provided.
Land acquired for such purpose is not taxable. Seventeen acres is not an
unreasonable quantity of land for a cemetery in the vicinity of the city of

A somewhat different view was taken in Woodlawn Cemetery v. Inhabi-
tants of Everett, 1 18 Mass. 354, wherein it was held that under the statutes
of the Commonwealth land is not " dedicated for" a cemetery or for the
burial of the dead, so as to be exempt from taxation, or " used or appro-
priated" to the purpose of a burial ground, so as to entitle the owner to
use it for that purpose for the future without municipal permission, until
it has been devoted or set apart and some active measures taken toward
preparing the ground for that purpose.

in 1850 a parcel of land was conveyed to a cemetery corporation organ-
ized under the St. of 1881, c. 114, and the corporation voted to appropriate
it to the purposes of a cemetery or burial place 01 the dead. In 1858 the
vendor foreclosed a mortgage given by the corporation and took possession
of the land. In 1868 another cemetery corporation voted to purchase the
land for the purposes of a cemetery, and applied to the town in which the
land lay for permission to use the land for burial purposes ; the town
refused to grant permission. The corporation then bought the land, and
gave notice to the town that it was dedicated to the uses and purposes of
a cemetery, and passed a vote that it was so dedicated. A house on the
land was used by the gardener of the corporation, a hot-house for propa-
gating, for the cemetery was built thereon, and the land was used to pile
manure, grave markers, stone posts, wood and lumber for the cemetery,
and for cutting sods for lots therein ; but no part of the land was ever
used for burials, or laid out into lots or permanent avenues, and no
attempt was made to sell any part of it for burial purposes. Held, in an
action to recover back a public tax levied on the land in 1870, that the
land had not become so " dedicated to the burial of the dead'' within the
General Sts. c. 11, § 5, cl. 8, as to be exempt from taxation.

In People v. Cemetery Co., 86 111. 337, the exemption was of property
held by the company •• subservient to burial uses." The company had 1 53
acres of land in two tracts near Chicago, besides the land which they had
in actual use for burial purposes, and upon this 153 acres were built certain
stables, etc., occupied by men and teams employed in the cemetery. The
court held the property not within the exemption. " Here are two large
tracts of land," said the court, '* not used, or likely for years to come to be
used, for cemetery purposes. While we may concede the right of the
company to purchase and hold the land to be appropriated some time in
the distant future for burial purposes, yet we cannot hold, under a fair
or reasonable construction of its charter, that the land can be held free
from taxation."

Digitized by



In Mulroy v. Churchman, 52 Iowa, 238, where out of 40 acres of land
alleged to be held by a church as a burying ground, only one acre was
actually used for burial purposes, the 39 acres remaining were held taxable.

Whether Exemption from Taxation Applies to Special Assess-
ments. — In Barry z/. Wesleyan Cemetery Co., loMo. App. 587, it was held
that where, by the charter of a corporation, its realty is exempted from
taxes and assessments, so long as the same is used for a cemetery, such
property, while so used, is exempt from liability for special taxes for im-
provements of the street in front thereof. *

In Olive Cemetery Co. v, Philadelphia, 93 Pa. St. 129, the charter of a
cemetery company contained the following clause : That no street, lane,
or road shall hereafter be opened through the said tract occupied as a
cemetery without the consent of a majority of the lot-holders ; and the
same, when used as a place of sepulchre, shall be exempt from taxation
except for State purposes." A sewer was constructed on a street along the

Online LibraryLawrence LewisAmerican and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] → online text (page 45 of 73)