Louisville Water Co v. Commonwealth of Kentucky

• Decision Date: 11 April 1898
• Docket Number: No. 179,179
• Citation: 170 U.S. 127,42 L.Ed. 975,18 S.Ct. 571
• Parties: LOUISVILLE WATER CO. v. COMMONWEALTH OF KENTUCKY
• Court: U.S. Supreme Court

170 U.S. 127

18 S.Ct. 571

42 L.Ed. 975

LOUISVILLE WATER CO.

v COMMONWEALTH OF KENTUCKY.

No. 179.

April 11, 1898.

T. L. Burnett, for plaintiff in error.

James P. Helm, for the Commonwealth of Kentucky.

Mr. Justice HARLAN delivered the opinion of the court.

This action was brought by the commonwealth of Kentucky to enforce a lien in its favor upon certain real and personal property of the Louisville Water Company, a Kentucky corporation; which lien, it was alleged, was for taxes amounting to $12,875 for the year 1886. The property upon which the state claimed this lien included the pipes, mains, buildings, reservoirs, engines, pumping stations, etc., belonging to the water company.

The company denied its liability to state taxation for the year 1886, or for any year subsequent to the 22d day of April 1882, the date of the passage of an act to which we will presently refer.

In the court of original jurisdiction a judgment was rendered for the commonwealth, and that judgment was affirmed in the court of appeals of Kentucky.

The history of the legislation in Kentucky in reference to this company appears in Water Co. v. Clark, 143 U. S. 1, 12 Sup. Ct. 346, a suit involving the question of the liability of the company for state and county taxes for the year 1887.

The water company was incorated in 1854 without any exemption of its property from taxation. But, as stated in that case, it was made its duty to furnish water to the city for the extinguishment of fires and the cleansing of streets, upon such terms 'as might be agreed between itself and the municipal authorities'; and, the latter assenting, 'the water company was to have the exclusive right to furnish water to the inhabitants of Louisville, by means of pips and aqueducts, upon such terms and for such time as might be stipulated between it and the city.' 2 Sess. Acts 1853-54, p. 121.

By an act approved February 14, 1856, it was provided that 'all charters and grants of or to corporations, or amendments thereof, and all other statutes, shall be subject to amendment or repeal at the will the legislature, unless a contrary intent be therein plainly expressed: provided, that whilst privileges and franchises so granted may be changed or repealed, no amendment or repeal shall impair other rights previously vested.' 2 Rev. St. Ky. 121.

Subsequently, by an act approved April 22, 1882, which took effect from its passage, it was made 'the duty of the Louisville Water Company to furnish water to the public fire cisterns and public fire plugs or hydrants of the city of Louisville for fire protection, free of charge.' But the same act provided: 'The sinking fund of the city of Louisville being the owner of the stock of the Louisville Water Company, and said water company by virtue thereof is the property of the city of Louisville, therefore the Louisville Water Company is hereby exempt from the payment of taxes of all kinds, of whatever character, state, municipal or special.' 1 Sess. Acts 1882, p. 915.

In 1886 the general assembly of Kentucky passed a general revenue statute,—commonly known as the 'Hewitt Statute,'—which did not take effect until September 14, 1886, after taxes were assessed for 1886. It was conceded in the case of Water Co. v. Clark, above cited, that the property of the water company was subject to taxation under that statute, unless it was exempted from taxation by the above act of April 22, 1882.

The contention of the water company was that the exemption from taxation given by the act of 1882 could not be withdrawn by subsequent legislation without violating the contract clause of the constitution of the United States. This contention made it necessary to inquire whether that exemption was in fact withdrawn, and, if so, whether the statute withdrawing it impaired the obligation of any contract the company had with the state by the act of 1882.

This court held that the exemption allowed by the act of 1882 was withdrawn by the revenue statute of 1886; and that, as the water company's exemption was acquired in 1882 subject to the power of amendment or repeal reserved by the above act of 1856, which saved, whenever that power was exerted, all rights previously vested,—the state could, as it did by the revenue statute of 1886, withdraw the exemption given in 1882.

But the question remained whether the withdrawal of the exemption could take effect while the company was under an obligation imposed upon it by the act of 1882 to furnish water to the public fire cisterns and public fire plugs or hydrants of the city of Louisville for fire protection, 'free of charge.' The court was of opinion that the contention of the water company, that the general statute of 1886 impaired the obligation of its alleged contract, could not be fully disposed of without determining the question just stated. It therefore said:

'It is, however, contended that the exemption from taxation could not be withdrawn while the water company remained under the obligation imposed by the first section of the act of 1882 to furnish water to the city for fire protection free of charge. But no such obligation remained after the passage of the act of 1886, which, as we have seen, had the effect to withdraw the immunity from taxation granted by the second section of the act of 1882. In determining the object and scope of the act of 1882 we must look at all of its provisions. The water company was under a duty by its charter,...