Henderson Bridge Co. v. Commonwealth

• Decision Date: 25 May 1895
• Citation: 31 S.W. 486,99 Ky. 623
• Parties: HENDERSON BRIDGE CO. v. COMMONWEALTH.
• Court: Kentucky Court of Appeals

31 S.W. 486

99 Ky. 623

HENDERSON BRIDGE CO. v. COMMONWEALTH.

Court of Appeals of Kentucky.

May 25, 1895

Cross appeals from circuit court, Franklin county.

"To be officially reported."

Action by the commonwealth of Kentucky against the Henderson Bridge Company for taxes on a franchise. From a judgment for plaintiff, but reducing the value fixed by the board for valuation, both parties appeal. Reversed on the appeal of plaintiff and affirmed on the appeal of defendant, and the judgment ordered to be set aside.

William J. Hendrick, for the Commonwealth.

Helm &amp Bruce, for defendant.

GRACE J.

This was an action filed in the Franklin circuit court by the commonwealth of Kentucky against the Henderson Bridge Company, seeking to recover of defendant the sum of $3,675.91, the amount of taxes claimed to be due and payable to the state by said company on its franchise as a corporation created by the laws of Kentucky, its property being located in the state of Kentucky, for and during the year 1894, under a valuation and assessment made by the board of valuation and assessment, viz. the auditor, secretary of state, and treasurer, as established by law, valuing said franchise as of date September 15, 1893; the value of said franchise being fixed at $865,157.46, excluding therefrom the value of the real estate and personal property owned by said defendant in this state; said company being chartered and incorporated by the state of Kentucky as the Henderson Bridge Company; the defendant having been so assessed, and the tax rate being 42 1/2 cents on each $100 in value of its franchise, of which assessment defendant was duly notified and, demand being made for amount due, failed to pay. The answer of defendant is divided into three paragraphs, not in either, however, denying its incorporation under and by the state of Kentucky, nor that its property and franchise is located in Kentucky. Defendant says: First. That though it obtained its charter from the state of Kentucky to build this bridge, yet that it also obtained important rights, powers faculties, franchises, and privileges from the state of Indiana; that under and by its charter from Kentucky it could only build its structure to low-water mark on the north side of the Ohio river; that being the northern boundary of the state of Kentucky. Defendant recites in this paragraph sundry provisions from the general incorporation law of the state of Indiana, as of date March 2, 1875, as amended by act of the legislature of date April 8, 1881, showing specially by this amendment that any foreign corporation duly incorporated under the laws of another state to build bridges over any of the streams forming the boundary line between the state of Indiana and such other state might have and enjoy all the rights, privileges, and franchises granted under and by their general laws to any home company formed and incorporated under their laws for that purpose; then reciting other provisions under the general incorporation laws of the state of Indiana, whereby it says it was finally authorized to construct, build, and operate so much of its structure as extended and was situated within the state of Indiana, and, in addition, to build so much trestle and embankment, and place thereon a railroad, as would take trains crossing this bridge out to the highlands. And it says that without these rights, privileges, and franchises the franchise granted by authority of Kentucky is and was of little or no value. From the recitals of the law of Indiana as made one might suppose that this company might have been incorporated under the laws of the state of Indiana had it so desired to extend and complete its structure and approach to this bridge on the Indiana side. The material defect of this plea, however, is that it does not allege that it was so incorporated under and by any law, general or special, of the state of Indiana. It only says that, being incorporated under and by the laws of Kentucky as the Henderson Bridge Company, that then it was granted certain powers and privileges under the laws of Indiana, not denying that it actually built, nor that it now owns and operates, its bridges and the approaches thereto under and by the charter and incorporation of the legislature of Kentucky. But it may be further said, suppose this charter was supplemented by a similar charter by the state of Indiana, authorizing the construction of that portion of the bridge north of low-water mark of the Ohio river, and that the state of Indiana levies and collects its tax both on the tangible property and the franchise, this would be but the exercise of a lawful and rightful authority and power. What possible excuse could this be to the defendant for refusing to pay taxes on its tangible property in Kentucky, and on its franchises granted in Kentucky? It is possible that it may then obtain franchises from both states, and acquire property in both, and exercise its franchise powers in both, and deny its duty to pay taxes to either. This part of defendant's plea is insufficient. Again, defendant says it was authorized and empowered to build and operate its bridge by permission and authority of the congress of the United States; that congress prescribed the dimensions and height of said bridge, and provided that, when built, same should be deemed a post route; that these were important powers, franchises, and privileges, without which neither the incorporation of its company, nor any franchise granted it by the state of Kentucky, was of any value. It affirms in its brief the right and power of the congress of the United States to charter companies, and to grant franchises to same, to build bridges over any and all navigable streams in the United States, and cites in support of this contention the case Luxton v. Bridge Co., reported 153 U.S. 525, 14 S.Ct. 891. It is not necessary, in order to the decision of this case, to question the power claimed, nor the authority of the case quoted. The commonwealth is not undertaking in this suit to impose or collect any tax from defendant on any franchise granted it by authority of the United States, and hence this decision has no application. The same objection lies to this part of the defendant's answer that is taken to that part of same pertaining to the state of Indiana; and that is that defendant does not affirm (as, of course, it could not truthfully) that it was in fact incorporated under and by the authority of the United States, or any act of congress, or that it built its bridge under any such act of incorporation or authority, not denying, as before stated, its incorporation under and by the laws of Kentucky, and not denying the fact that under and by said act of incorporation it was created a body corporate, and from this charter it derived its powers to build, own, operate, and collect tolls on, said bridge. Neither does counsel for defendant properly distinguish between rights, powers, and franchises granted by the state of Kentucky, under which it built, and to-day owns, this property, and the duties and burdens imposed by the congress of the United States, but confuses these duties and burdens with grants, privileges, and franchises in this: that while the defendant was created by the laws of Kentucky, and given the rights, powers, and franchises that it enjoys in the construction of this bridge, all that the congress of the United States undertook to do was to impose certain burdens and limitations on this power, by prescribing certain rules and regulations pertaining to the building of this bridge, so that its construction should in no wise interfere with the free navigation of the open river. This was quite legitimate, and altogether proper, and clearly within the power and duty of congress. And again congress declared that this bridge, when so constructed and built, should be deemed a post route. Yet neither of these things can in any just or appropriate sense be regarded rights, powers, privileges, or franchises conferred by the government of the United States, but as burdens imposed only. So this part of the answer of defendant was also defective and wholly insufficient, and the court below should have sustained the demurrer to the first paragraph of same, embracing these items noticed.

The second paragraph of defendant's answer is as follows "The defendant says that its bridge between the city of Henderson and the state of Indiana is used entirely for transporting interstate business,-transporting passengers and freight between the states of Indiana and Kentucky. The defendant therefore insists and alleges that the imposition of a tax by the state of Kentucky upon the franchise of the defendant corporation is a tax upon its right to do interstate business, and is an unlawful burden upon, and an attempt upon the part of the state of Kentucky to regulate, commerce between the states, in violation of that provision of the constitution of the United States which confers powers on congress to regulate commerce between the states." This paragraph again shows gross misapprehension on the part of defendant and its counsel of the questions involved in this case. This is a question only of the right of the state of Kentucky to levy and collect of defendant a tax upon its property owned and situated exclusively in Kentucky, and upon the value of its franchise as a corporation, created under and by the authority of the state of Kentucky, and upon a business being wholly done within the borders and limits of the state, and this tax, to the same extent precisely as that assessed and levied on all other corporations created by the laws of Kentucky, situated and doing business in its jurisdiction. This tax is only to the extent that the taxes of all individuals owning property...