Inland Waterways Co. v. City of Louisville

• Decision Date: 15 January 1929
• Citation: 227 Ky. 376
• Parties: Inland Waterways Company v. City of Louisville et al.
• Court: United States State Supreme Court — District of Kentucky

227 Ky. 376

Inland Waterways Company v. City of Louisville et al.

Court of Appeals of Kentucky. Chancery Branch, First Division.

Decided January 15, 1929.

1. Municipal Corporations. — To constitute "franchise" or "privilege" within Constitution, sec. 164, requiring advertisement and public sale as condition to grant by city of franchise or privilege, right possessed must be such as cannot be exercised without express permission of sovereign power or special immunity not belonging to public by common right, which can be exercised only by legislative grant.

2. Municipal Corporations. — Lease of land for temporary use does not partake of properties of franchise, as used in Constitution, sec. 164, requiring advertisement and public sale as condition to granting of franchise or privilege by city.

3. Wharves. — Wharves are not necessarily public, but may be operated privately by any riparian owner without franchise or regulation, with right to permit their enjoyment by such person as he may see proper.

4. Wharves. — Whether wharf is public or private depends on service that is rendered and nature of business, and not on title to land on which the wharf is operated or the facilities employed.

5. Municipal Corporations. — Contract of city leasing river front lands to private corporation for lessee's development of river terminals and construction of wharves and tracks and necessary equipment for transportation of freight from water to land, with provision for payment of rentals and city's recapture when land should be needed for municipal wharf purposes, held within city's authority under Loc. and Priv. Laws 1865, c. 1691, Laws 1894, c. 13, sec. 98, and Ky. Stats., sec. 2860, without necessity of preliminary advertisement and public sale required by Constitution, sec. 164, as condition to granting by city of franchise or privilege, since temporary operation of wharf on public property did not involve exercise of franchise.

6. Municipal Corporations. — Municipal corporation may own land and control its use, lease, and disposition, as other proprietors.

7. Municipal Corporations. — Contract by which city leased river front property to private corporation unde Loc. & Priv. Laws 1865. c. 1691, Laws 1894, c. 13, sec. 98, and Ky. Stats., sec. 2860, for development of land as river terminals, with requirement that lessee install necessary equipment to transfer freight from land to water and vice versa, but without preliminary advertisement and public sale required by Constitution, sec. 164, in case of conferring franchise or privilege, held not void as conferring right or privilege or power to engage in public terminal business which may be subject to government's regulatory power, since it merely grants temporary use of land, fixing certain conditions necessary for its enjoyment.

8. Navigable Waters. — Landowner may lease his lands for any lawful purpose and may prescribe such conditions as he is able to exact, and rights of riparian owner in this respect are equal to those possessed by any other proprietor.

9. Municipal Corporations. — It is well settled that delegated duties must be performed by public governmental agencies to which they are delegated, and that responsibility cannot be escaped by shifting these duties to others.

10. Municipal Corporations. — Lease of water front property by city to private corporation, under Loc. & Priv. Laws 1865, c. 1691; Laws 1894, c. 13, sec. 98, and Ky. Stats., sec. 2860, for purpose of temporary operation of river terminals, fixing rental and making lessee free from control of board of public works, held not void as attempt to redelegate duties of board respecitng wharves and landings, including right to fix reasonable charges for their use.

11. Eminent Domain. — City may acquire lands in contemplation of reasonable future necessities, by powers of condemnation, and may lease property so acquired temporarily until such time as it may be devoted to the use for which it was acquired; planning and providing for future within limits of reasonable discretion being permissible.

Appeal from Jefferson Circuit Court

BLAKEY, DAVIS & LEWIS for appellant.

WILLIAM G. DEERING for appellee City of Louisville.

MATT O'DOHERTY for appellee Nugent Sand Company.

OPINION OF THE COURT BY JUDGE WILLIS.

Reversing.

This appeal involves the validity of a lease given by the city of Louisville upon real property held by it, but not presently utilized, for wharf purposes. The Inland Waterways Company complains of a judgment declaring the lease invalid. The leased lands front upon the Ohio river and were acquired by deeds to the city for ultimate use for landings and wharves. They are not now needed by the city for that purpose, and it is not prepared to use them immediately for a public wharf or landing. Until such time as the city may so require the lands, it has leased them to promote, if possible, the development of a useful and valuable river terminal business, realizing meanwhile some return upon the investment.

Inasmuch as some of the terms of the lease are thought to give character to the act of the city different from that of temporarily leasing its idle lands, a summary of the provisions of the contract is appropriate. It leases to the Inland Waterways Company for a fixed term, and upon express conditions, two separate tracts of land, fully described, both of which front upon the Ohio river; grants a right to extend railroad tracks from one of the parcels of land to the west line of Thirty-third street; reserves the right to use any portion of the leased premises for storage or other city purposes without obstructing the lessee in its use of the same premises; fixes an annual rental and provides for additional rental of one-half the net profits realized by the company after allowing operating expenses and a return of 8 per cent. per annum on its investment; authorized the company to make subleases, within specified limitations, but the lease is not assignable or transferable without the consent of the city; specifies conditions under which other similar property, then under lease to others, might be brought within the operation of this lease; limits the duration of the lease to periods within the lawful power of the city to grant; and provides for a recapture when and as the city may need the land or any portion of it for municipal wharf purposes.

The purpose defined in the contract for which the land is to be used by the lessee is to develop both parcels of land as river terminals. The company covenants to construct wharves, ways, tracks, and structures, and to install reasonably necessary equipment to transfer freight from river craft to land conveyance and vice versa, and to make deliveries from land to water and from water to land. The company further covenants to render public river terminal service for reasonable compensation, without discrimination as to the charges or character of service, but the business is to be free of any control by the board of public works, except such inquisitorial powers as the contract allowed to assure the city of fair treatment in matters of expenditure affecting the net profits in which the city was ultimately concerned. There are many other provisions, but they are not invoked as affecting the character of the contract, being mere details worked out to provide for various contingencies, and clearly within the power of the city and the purview of the contract, if a lease of this kind may be made at all.

A brief history of legislation and litigation respecting the subject-matter of the contract will clarify consideration of the case. By an act of the Assembly approved June 3, 1865 (Loc. & Priv. Laws 1865, c. 1691), it was provided:

"That the General Council of the City of Louisville shall have, and are invested with the power and authority, from time to time, by ordinance, to purchase or lease and improve, for the use, benefit, and in the name of said city, any additional or other ground within said city, and fronting and near to the Ohio river, as shall be considered necessary for wharves, or places for landing of water crafts of any description, or lumber, or other articles brought to the city by water."

Pursuant to the power thus delegated, considerable land along the river front was acquired by the city. The particular lands included in the present lease were acquired by several deeds dated February 1, 1865, August 3, 1868, August 5, 1868, May 2, 1877, and November 22, 1883. Other lands of the same character were taken by condemnation proceedings. In 1879 an action was brought by Curran and others to recover some of the land condemned in 1867 for wharf purposes on the ground that it was not being devoted to the public use for which it had been condemned, and on the specific allegation that the land was not being used for wharf purposes and had reverted to the former owner, as though abandoned. This court affirmed a judgment denying the relief sought (Curran v. City of Louisville, 83 Ky. 628) and upheld the right of the city to keep the lands until its financial situation and the business conditions justified it in devoting the property to the use for which it was acquired. A second similar attempt made in 1912 by the heirs of Curran to recover the same property for the same reasons met a like fate. Curran v. City of Louisville, 148 Ky. 592, 144 S.W. 1057. The court said that the city's delay, however long extended, while keeping itself in position ultimately to use the land for the purposes for which it was acquired, did not entitle the former owner to recover it.

The act of July 1, 1893 (Laws 1893, c. 244), for the government of cities of the first class, provided by section 98 that the wharves and landings should be under the control of the board of sinking fund commissioners, but contained no provision respecting the extent of the authority of the city over the property in the meantime. On February 24, 1894, the act for the...