Miller v. City of Greenville, Miss.

• Decision Date: 04 November 1943
• Docket Number: 12536.,No. 12535,12535
• Citation: 138 F.2d 712
• Parties: MILLER et al. v. CITY OF GREENVILLE, MISS., et al. CHICOT COUNTY et al. v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

138 F.2d 712 (1943)

MILLER et al. v. CITY OF GREENVILLE, MISS., et al. CHICOT COUNTY et al. v. SAME.

Nos. 12535, 12536.

Circuit Court of Appeals, Eighth Circuit.

November 4, 1943.

COPYRIGHT MATERIAL OMITTED

George Vaughan and J. F. Koone, both of Little Rock, Ark. (Guy E. Williams, of Little Rock, Ark., on the brief), for appellants Charles G. Miller, and others.

Lee Cazort, Jr., of Little Rock, Ark. (John Baxter, of Dermott, Ark., on the brief), for appellants Chicot County and others.

William C. Keady, of Greenville, Miss., and O. C. Burnside, of Lake Village, Ark. (W. T. Wynn, H. P. Farish, and Sam C. Cook, all of Greenville, Miss., on the brief), for appellees.

Before WOODROUGH, THOMAS, and JOHNSEN, Circuit Judges.

WOODROUGH, Circuit Judge.

Statement: The City of Greenville, a municipal corporation in Mississippi, and the Union Planters National Bank & Trust Co., a national bank in Tennessee, as trustee under trust indenture, brought this action in the district court against the Arkansas Corporation Commission and its individual members, and against tax officials of Chicot County, Arkansas, for declaratory judgment to the effect that the portion of a bridge over the Mississippi river within the state of Arkansas, and owned by the City of Greenville, is exempt from taxation under the state's authority, and judgment for plaintiffs was entered as prayed.

It appears that United States Highway No. 82, after passing through the state of Texas, traverses the state of Arkansas until it reaches the Mississippi river at a point opposite the city of Greenville, Mississippi. Prior to the construction of the bridge in question a ferry, privately owned, linked the gap between the highway where it stopped on the Arkansas side of the river and where it again continued in the state of Mississippi, then ran into the state of Alabama and to the east. Under the Act of Congress, approved June 14, 1938, 52 Stat. 681, the city of Greenville was empowered to construct, maintain and operate a bridge across the river to fill the gap, and was authorized to acquire real estate and other property needed for the location, construction, maintenance and operation of the bridge and its approaches. The city was authorized to fix toll charges on the bridge on the condition that the tolls were adjusted so as to create revenue sufficient only to cover maintenance, repair and operating expenses and a sinking fund for the amortization of bonds whose proceeds were applied on the cost of the bridge, including interest. After providing a sinking fund sufficient for amortization, the bridge was to be operated and maintained free of tolls.

Under authority of the Act of Congress and supplementary authority of the state of Mississippi, G. L. Miss., 1938, Ch. 283, the city acquired lands and right of way easements for the purpose of constructing the bridge and its approaches, and began its construction work in December, 1938, completing the bridge in the fall of 1940.

The total cost of the bridge and its approaches was approximately four million dollars. The states of Arkansas and Mississippi covered the cost of making the preliminary survey and investigation with a contribution of about $6,000. The United States Government contributed $2,100,150 under the provisions of Title II of the National Industrial Recovery Act, Section 201, et seq., 40 U.S.C.A. § 401, et. seq., and the state of Mississippi contributed about $345,000. Bridge revenue bonds in the sum of $2,181,000 were sold by the city to the Reconstruction Finance Corporation, the major part of the proceeds being used to pay for the construction of the bridge. To secure repayment of the principal and interest on the bonds, the city executed and delivered a trust indenture to the plaintiff trust company in which it pledged the tolls to be charged for the use of the bridge. As of March 1, 1941, the city executed refunding bonds in the principal amount of $2,181,000 and exchanged them for the bonds issued and sold to the Reconstruction Finance Corporation. Another trust indenture was executed and delivered to plaintiff trustee to secure payment of principal and interest on these bonds. The trust indenture contained substantially the same provisions as the first with respect to security. Each of the trust indentures provided for the adjusting of the tolls so as to comply with the provisions of the statute, i.e., the tolls charged were to provide a fund sufficient only to pay the cost of maintaining, repairing and operating the bridge and its approaches, and to provide a sinking fund for the discharge of the principal amount of the bonds and interest thereon at 4 per cent, as soon as possible, but not to exceed forty years from September 1, 1940. In the opinion of the trial court, the city has no financial obligation with respect to the payment of the bonds or interest thereon under the terms and provisions of the trust indenture and bonds, "but the bondholders are wholly dependent upon the collection of tolls for the repayment of principal and interest of the bonds."

In October, 1941, defendant county officials of Chicot county notified the city of their intention to cause an assessment for taxation to be made upon the assessment rolls of Chicot county, Arkansas, with respect to the portion of the bridge which they claimed lay within the state of Arkansas, for the years 1941 and 1942. In January, 1942, the defendant commissioners of the Arkansas Corporation Commission likewise notified the city of their intention to return for assessment for 1941 and 1942 the portion of the bridge which they claimed lay in the state of Arkansas.

Plaintiffs' amended and substituted complaint set out the above facts and pleaded that the portion of the bridge lying within the state of Arkansas was not subject to assessment for taxation under that state's authority on the following grounds:

(a) That the city under the Act of Congress had been designated as an agency of the United States and was acting as such in owning and operating the bridge;

(b) That Congress intended that the bridge should be tax exempt;

(c) That under the Constitution of the United States the several states are exempt from taxation by each other and that in owning and operating the bridge the city performed essential governmental functions of the state of Mississippi, and under the state laws was invested with the state's constitutional immunity;

(d) That the portion of the bridge lying within the state of Arkansas was public property, used exclusively for public purposes and, therefore, exempt from taxation under Article 16, section 5, of the Constitution of Arkansas;

(e) That the denial of exemption by defendants was a denial to the city of the equal protection of the laws of Arkansas guaranteed by the 14th amendment to the Constitution of the United States;

(f) That the assessments would impair a contract between the state of Arkansas as one party and the city and bondholders as the other party, arising under Article 16, section 5 of the Arkansas Constitution, to grant and maintain the tax exemption, and that the impairment of the contract would violate section 10, article 1, of the Constitution of the United States;

(g) That the taxation in question would result in an undue burden on interstate commerce.

The county officials filed a motion to dismiss upon the grounds that the district court had no jurisdiction over the subject matter or over the county officials, and that the complaint failed to state a claim or cause of action upon which relief could be granted.

The commissioners filed a motion to dismiss, and a separate answer, the latter consisting of a general denial, and specific denials of the allegations of the complaint. Their motion to dismiss presented grounds therefor as follows: "(1) because plaintiffs have a plain, adequate and speedy remedy in a Chancery Court of the State by way of injunction, and (2) because plaintiffs have a plain, adequate and speedy remedy by way of a hearing before the Corporation Commission, appeal to the Circuit Court, advancement of the case in said Court, appeal from the Circuit Court and the advancement of the case in the Supreme Court and appeal from the Supreme Court."

At a hearing on the motions to dismiss, it was stipulated that in the event the court should overrule the county officials' motion to dismiss, they would refuse to plead further and the court might prepare a final order as to them. Plaintiffs then made the following motion: "On behalf of the plaintiffs we move for judgment on the pleadings, as they now stand, it being agreeable to the County Officials and to the Corporation Commission that such motion be made at this time in order to raise the issues of law for the final determination by this Court." Decision as stated was for plaintiffs.

Opinion: We direct our inquiry first to the grounds upon which the plaintiffs assert federal equity jurisdiction to render the declaratory judgment prayed for: (1) That there is a controversy arising under the Constitution and laws of the United States; (2) that diversity of citizenship exists and the bridge property is exempted from taxation by Article 16, Section 5 of the Arkansas constitution; (3) that declaratory judgment by the federal equity court affords appropriate remedy.

(1) Diversity of citizenship and sufficiency of amount involved are established, but we do not find that the case presents a controversy arising under the Constitution or laws of the United States. The contract of the holders of the bonds secured by the bridge tolls was entered into in the light of the Act of June 14, 1938, providing for the construction of the bridge, and Article 16, Section 5 of the Arkansas Constitution, and if neither the act nor the constitutional provision provides exemption of the bridge property in Arkansas from taxation under the state's authority, then such taxation would in no wise impair the obligation of the...