American Bemberg Corp. v. City of Elizabethton

• Decision Date: 20 November 1943
• Parties: AMERICAN BEMBERG CORPORATION et al. v. CITY OF ELIZABETHTON et al.
• Court: Tennessee Supreme Court

175 S.W.2d 535

180 Tenn. 373

AMERICAN BEMBERG CORPORATION et al. v. CITY OF ELIZABETHTON et al.

Supreme Court of Tennessee.

November 20, 1943

Appeal from Chancery Court, Carter County; S.E. Miller, Chancellor.

Suit by the American Bemberg Corporation and another against the City of Elizabethton and others to enjoin defendant named from assessing and collecting taxes on their property. Decree sustaining a demurrer to the bill, and complainants appeal.

Affirmed.

Cox Taylor, Epps & Miller, of Johnson City, as solicitors for the complainants, and Geo. F. Dugger, of Elizabethton, for complainants.

Susong Parvin & Fraker, of Greeneville, and M. W. Snell, of Elizabethton, for defendants.

PREWITT Justice.

Complainants filed their bill to have declared unconstitutional Chapter 3 of the Private Acts of 1943, and to enjoin the defendant City of Elizabethton from assessing and collecting taxes on their property. The Act in question undertakes to extend the corporate limits of the City of Elizabethton so as to bring the area owned by complainants into the city limits.

Complainants assert that the Act violates contracts had with the City in that their plants were located near the City with the understanding that their property was not to be taken into the corporation of the City; that said Act violates the obligation of a contract, which offends both the State and Federal Constitutions; and that in entering into said contracts the City was acting in its private or corporate capacity and not exercising a governmental or legislative function.

The City filed a demurrer, which was sustained, the chancellor holding that the Legislature in passing the Act was exercising a governmental or legislative power, and, further that the purpose and effect of the contracts of 1925 and 1927 were to exempt complainants' property from taxation, and therefore in violation of Section 28 of Article 2 of the Constitution of Tennessee, which requires all property to be taxed according to its value so that taxes shall be equal and uniform throughout the State.

The contracts or resolutions passed by the City provided that complainants' property would not be included in the city limits without their consent, and even if their consent was obtained, then all taxes of the City were to be remitted for ten years following such consent.

In Town of Oneida v. Pearson Hardwood Flooring Co., 169 Tenn. 449, 452, 88 S.W.2d 998, 999, this Court said "The Legislature, clothed with power to create municipal corporations, may at will alter their boundaries without the consent of the municipality or the inhabitants of its territory. That is a political power which, in the absence of a constitutional restraint, is not open to review or hindrance by the courts. Section 3320 and subsequent sections of the Code of 1932 impose no restraint upon legislative action. Despite those provisions the Legislature may, by special act, extend or contract the corporate limits of a municipality. The power to detach territory from a municipal corporation is analogous to the power of annexing new territory. Williams v. Nashville, 89 Tenn. 487, 15 S.W. 364; McCallie v. Mayor, etc., of Chattanooga, 3 Head 317, 318; 19 R.C.L. p. 732, § 38; 43 C.J. p. 109.

"When by the change of the corporate boundaries of Oneida defendant's property was placed beyond the municipal limits, it was no longer subject to taxation by the town. Miller v. Pineville, 121 Ky. 211, 89 S.W. 261; Attorney General of State of Michigan ex rel. Kies v. Lowrey, 199 U.S. 233, 26 S.Ct. 27, 50 L.Ed. 167; Laramie County v. Albany County, 92 U.S. 307, 23 L.Ed. 552."

The contraction of boundary lines by a legislative act so as to interfere with the payment of bonds issued by a municipality might be subject to constitutional objection, as was held in Von Hoffman v. City of Quincy, 4 Wall. 535, 18 L.Ed. 403.

It is true that a municipality often acts in its corporate or private capacity. Memphis P. & L. Co. v. City of Memphis, 172 Tenn. 346, 112 S.W.2d 817; 43 C.J. 179; Illinois Trust & Savings Bank v. City of Arkansas City, 8 Cir., 76 F. 271, 34 L.R.A. 518; Cunningham v. City of Cleveland, 6 Cir., 98 F. 657.

So then the Legislature in passing the Act in question was performing a legislative or governmental act, and this being true, the City was without power to adopt the resolutions of 1925 and 1927 so as to perpetually bind the City.

Complainants also insist that said resolutions were not in violation of Section 28 of Article 2 of the Constitution of Tennessee, which provides that all property shall be taxed according to its value.

In Railway Company v. Wilson County, 89 Tenn. 597, 15 S.W. 446, it was held that the County Court of Wilson County was without any authority to exempt a railroad company from taxation even though it...