City of Newport v. South Covington & C. St. Ry. Co.

• Decision Date: 21 June 1889
• Citation: 89 Ky. 29,11 S.W. 954
• Parties: CITY OF NEWPORT v. SOUTH COVINGTON & C. ST. RY CO.
• Court: Kentucky Court of Appeals

11 S.W. 954

89 Ky. 29

CITY OF NEWPORT v. SOUTH COVINGTON & C. ST. RY CO.

Court of Appeals of Kentucky.

June 21, 1889

Appeal from chancery court, Campbell county; J. W. MENZIES Chancellor.

"To be officially reported."

This was a suit by the city of Covington against the South Covington & Cincinnati Street Railway Company to recover certain municipal ad valorem taxes. Judgment for defendant. Plaintiff appeals.

Crawford & Irwin, for appellant.

John C Benton and C. B. Simrall, for appellee.

HOLT J.

In 1867 the appellant, the city of Newport, through its council adopted an ordinance, which inter alia provides "Section 1. That from and after the passage of this ordinance there shall be granted unto the Newport Street Railway Company, [now the appellee by change of name,] their successors and assigns, the exclusive privilege of constructing and operating a street railway of double or single track, with all necessary turn-outs and switches, on, over, and along the streets herein named." "Sec. 6. Said company shall pay into the city treasury for the next five years the sum of ten dollars annually as a license for each and every car run and operated upon said railway, and at the expiration of said five years the city council may fix the license at a less or greater sum than ten dollars, but not to exceed twenty dollars, per car." Section 7 of the amendment of 1874 to the city charter provides: "Said board [of councilmen] shall also have power to cause to be annually levied, collected, and paid into the city treasury an ad valorem tax on the real, personal, and mixed estate within the limits of said city, subject to taxation by the city, under the laws of the state, except as hereinafter provided. Said tax shall not exceed two dollars on each one hundred dollars valuation, at a fair cash value, upon every class or description of property. Merchants and others paying a license or specific tax on their business or calling shall be exempt from an ad valorem tax thereon." The appellant is now claiming from the appellee the municipal ad valorem tax upon its property, to-wit, track, horses, cars, etc., for the years 1879 to 1886, inclusive. Limitation is pleaded as to the taxes of the first three or four years named; but the entire claim is resisted upon the ground that the company is exempted from the payment of an ad valorem tax by reason of the payment by it of the $10 annually upon each of its cars, in conformity to the ordinance of 1867. It insists that this is a tax upon its business, and that its property is therefore exempt from municipal ad valorem taxation, because the city charter says: "Merchants and others paying a license or specific tax on their business or calling shall be exempt from an ad valorem tax thereon." The action was submitted upon the pleadings, and dismissed.

By the ordinance, which provided for the annual payment of the $10 per car, the company was granted not only an extraordinary but an exclusive, privilege. It was given permission to do what no other party can do. Such a privilege may be granted to a corporation for a price or bonus, and, if so, the sum paid therefor is not to be regarded as a tax upon its business or its property. In case of a tax upon the business it properly should be estimated...