People ex rel. Mayor v. Board of Assessors

DyKmaN, J.: By an implication which has received the sanction of elementary writers and judicial decisions, the property of municipal corporations held for governmental purposes is exempted from the operation of the revenue laws for the imposition and collection of taxes. Recognizing the maturity and potency of such implication, and its sufficiency to relieve the public property from the burden of taxation if allowed its full scope and operation, the learned counsel for the appellants endeavors to obviate its force and avoid its application -to this case by drawing a line of demarcation between public property held by the city for public uses, or for purposes of government, and such as is held for social or commercial purposes, and placing this property in question in the latter class. This argument will fall under review in the progress of our examination; and it will be important to ascertain. whether any such distinction is recognized in this State or has any appropriate application to this case. The city of New York presented a petition ■ to the Supreme Court, alleging, among other things, that it held certain lands in the city of Brooklyn for public and municipal uses and purposes, but that, nevertheless, the latter city had unlawfully assessed it for purposes of taxation. The property so referred to was land, and — 385 — constituted the landing place for the Fulton ferry on the Brooklyn side. A writ of certiora/ri was thereupon issued, and the defendants made return thereto, that the land was not held by the plaintiff for public and municipal uses and purposes, but for its private benefit and emolument. The issue thus made was tried at the Special Term and decided in favor of the relator, and an order was entered declaring the tax unlawful and void, and that the lands were exempt from taxation, and the defendants now appeal from that order. The facts were agreed upon, and in effect are, that the land in question was acquired for ferry purposes in colonial times, and ever since has been in use therefor, and now is leased to the Union Ferry Company for a landing' place. The question of law thus presented is whether the Fulton ferry landing place, in Brooklyn, is held by the city of New York in such a capacity or for such purposes as to render it subject to taxation. This form of the question casts the burden of the argument upon the appellants, where it properly should rest. Inasmuch as the implication has now ripened into a rule, that property held by a public or municipal corporation is held for purposes of government and is exempt from- taxation. (Dillon on Municipal Corporations [3d ed.], § 173 [614].) As, therefore, the appellants rested their case on the exception to the rule, they were bound to establish such exception and place within it the lands in question; and we must now see if they have demonstrated their proposition, or whether this ferry landing is held for a public and governmental purpose and so exempt from taxation. The leading case on this subject is the City of Rochester v. Town of Rush (80 N. Y., 302), which arose over an attempt, on the part of the town, to tax the water-works of the city. It was held they were exempt because the system of waterworks was imposed upon the city by legislative enactment,' which could only be valid because its object was public as concerning the health of the public and the safety of their property, and also because it was a product of taxation and stood in the place thereof, and the works could not be taken or diminished thereby. It was pointed out that a power to tax involves the power to sell for- a default in payment, and thus defeat the interest of the government, and in this connection Judge DaNeobth said that “ in the absence of an — 386 — expressed declaration to that effect, we cannot suppose that the legislature intended that the works thus imposed upon the city should be subjected to taxation in the towns and villages through or in which the work was to be constructed.” That case seems to control the case at bar. The ferry franchises held by the city of New York was imposed on that city in the same sense that the water-works system was imposed upon the city of Rochester. The latter city became bound to furnish water, while the former owed a duty to furnish ferry facilities. In the Mayor, etc., of New York v. Starin (106 N. Y., 19) Judge Earl in delivering the opinion of the court said: “ That a ferry franchise imposed upon the grantee the obligation to maintain a ferry with suitable accommodations for the convenience of the public.” The Rochester case and that at bar, have another element in common, for it is easily demonstrable that a ferry is a public and governmental object. In this Starin case the ferry is thus defined: “ In the consideration of this case it is important to determine what a ferry is. In a general sense it is a highway over narrow waters. * * * A. ferry is a continuation of the highway from one side of the water over which it passes to the other. * * * No one has the right to set up a public ferry and charge tolls for the transportation of persons and property, without the license of the sovereign. And at common law it is believed that one so doing was guilty of a crime, and he could be proceeded against by writ of quo warranto; and so by our Penal Code it is enacted that ‘a person who maintains a ferry for profit and hire, upon any waters within this State without authority of law, is punishable by a fine,’ ” etc.. The case in the United States Supreme Court will further illustrate the nature of a ferry, and at the same time answer the appellants argument, that a ferry is private property, because it is within the protection of the clause of the Federal Constitution forbidding the passage by the States of any laws impairing the obligation of contracts. The town of East Hartford held a ferry franchise from the State, and had boats and landings in full operation. The legislature, to induce a private company to rebuild its bridge, which had been destroyed by fire, resumed its grant of the franchise and discontinued the ferry. The town appealed to the courts, claiming that the — 387 — grant of the ferry franchise was a contract within the Constitution of the United States, and that the questioned legislation impaired its obligation, but the law was held valid, and in the course of the opinion the following doctrine was enunciated: “ The parties to this grant did not by their charter stand in the attitude toward each other of making a contract by it such as is contemplated in the Constitution and so could not be modified by subsequent legislation. The legislature was acting here on the one part, and public municipal and political corporations on the other. They were acting, too, in relation to a public object, being virtually a highway across the river over another highway up and down the river. From this standing and relation of these parties, and from the subject-matter of their action, we think that the doing of the legislature as to this ferry must be considered rather as public laws, than as contracts. They related to public interests. They changed as those interests demanded. The grantees likewise, the towns being mere organizations for public purposes, were liable to have their public powers, rights and duties modified or abolished at any moment by the legislature.” (East Hartford v. Hartford Bridge Company, 10 How [U. S.], at pp. 533, 534.) It is true the ferry-house is not the product of taxation, for it is coeval with the taxing power. A true test would be whether the establishment of a ferry, and the purchase of this land would be a proper subject for taxation or municipal indebtedness. The constitutional test would be whether it was a city purpose within section 11 of article 8 of the Constitution. In the case of The People ex rel. Murphy v. Kelly (70 N. Y., 475), it was held that a highway over waters separating two cities would be a city purpose of either, and its credit might be use'd therefor. The last of the large number of reasons given for the Rochester decision is presented here; for a sale of this landing place for unpaid taxes would as utterly defeat the interest of the government in imposing or granting the ferry franchise as would a sale of -the Rochester water-works. The ease now under consideration, therefore, seems to fall easily and directly within the decision of the Rochester case. The argument of the learned counsel for the appellants is, that this — 388 — lauding is employed by tbe city in its social or commercial capacity, and for its own profits; and he relies on Judge Cooley’s treatise and tbe case in Kentucky, growing out of tbe taxation of Louisville by tbe Commonwealth. In tbe treatise on tbe Law of Taxation (pp. 173, 174, 2ded.), Judge Cooley, after stating that, by implication, all municipal property is exempted from taxatiop, proceeds as follows: “ But a municipal corporation may bold property, not for governmental purposes, but for tbe mere convenience of its people, or to supply some need which is commonly supplied by a private corporation ; such as water or gas-works; and tbe presumption of an intention to excliide such property from taxation would be very shght, perhaps, could not arise at all on tbe language of tbe law. Such property is deemed to held by tbe corporation, as is expressed in one case, in its social or commercial capacity, as a private corporation, and for its own profit; and, therefore, it was held that vacant lots owned by a city, market-houses, fire engines, etc., were not presumptively excluded from taxation; but this, unless restricted to tbe case of special assessments, would seem to be hmiting tbe implied exemption unreasonably, and certainly more than other cases limit it. Tbe case referred to by this writer is City of Louisville v. The Commonwealth (1 Duvall, 295). Tbe various articles of property owned by tbe city of Louisville were assessed by tbe State of Kentucky at an aggregate valuation of $664,000. Tbe city moved tbe county judge to correct tbe assessment by exempting the property as municipal or by reducing the valuation. Tbe court exempted tbe City Hall only and made a small reduction otherwise, and tbe city appealed. Tbe court on appeal reversed tbe judgment and remanded tbe cáse to tbe county judge and laid down these rules for bis guidance: First. “ Tbe public property of Louisville used for carrying on its municipal government,” is exempt. Second. “ Whatever property, such as court-house, prison and tbe like, which became necessary or useful to the administration of the municipal government and is devoted to that use, is exempt from State taxation.” Tim'd. “ But whatever is not so used, but is owned and used by Louisville in its social or commercial capacity as a private corporation and for its own profit, such as vacant lots, market bouses, fire engines and tbe like, is subject to taxation.” — 389 — The idea of revenue was considered of controlling importance in that case, for the opinion contains these words: “ The true principle of taxation is equality of contribution according to means, .and charity is no part of the means of the donor or of the mere custodian of the barren title; it is of no pecuniary profit or appreciable value to the nominal owner, it is not, therefore, a fit subject of taxation. Consequently, although the legislature has the power to tax it, yet no statute for taxing the property of all persons, will be interpreted as embracing property dedicated to public use or merely benevolence.” Another quotation will show how that court classified different items: “ Much the larger portion of the property as assesssd, including wharves, engine houses and other- articles not used or needed for governmental purposes, aré not entitled to exoneration.” Judge Cooley and the decision in this Kentucky case are both opposed to the law of this State; both would subject water-works to taxation, while the Rochester case has definitely settled the law in favor of exemption. The Louisville case holds that fire engines and houses are held in a social or commercial capacity, while in Smith v. The City of Rochester (76 N. Y., 506), our Court of Appeals held they were public and governmental. The word governmental is a term of very broad signification, and good government may to-day leave the service of water to a locality open to competition among individuals whose property will be taxed, and in the future erect it into a governmental monopoly, free from taxation and in the charge of the municipality. The service of water to the inhabitants of a locality is brought within the domain of government when a public service would be the best service, and the judge of this is the legislature, and the fact that it has given over such service to a municipality as a monopoly, is proof of a high order that it has in that locality become a governmental purpose. Moreover, property owned by a municipal corporation is held in trust for the inhabitants and is altogether public in its character. (Darlington v. Mayor, 31 N. Y., 164.) In this latter case Judge Denio has shown with his usual perspicuity, that the decision of the Supreme Court in the case of Bailey v. Mayor (3 Hill, 531), settled no principle of law, and was sub — 390 — stantially repudiated by the court of errors when the case was subsequently carried to that court. (2 Denio, 433.) With the repudiation of that case, and some others which were criticised in the same opinion, the doctrine contended for by the' appellants loses its place in the jurisprudence of this State, and there is no reason for its restoration. The powers of a municipal corporation are divided between such as are governmental and public, and proprietary and private; and it is believed that a failure to discriminate between these two kinds of powers and the manner and purposes of their exercises, has sometimes led to confusion and misapplication of terms, because property held and controlled by a city in its proprietary capacity, and used solely to promote the mere convenience of the public, may with propriety be said to be held for public purposes; and the fact that such property is controlled by the city in its proprietary capacity, by no means renders such property private m its character. The profit which the ferry brings to the city of New York does not subject it to taxation, for the city of Rochester was authorized, and did charge for water, and yet its water-works were held exempt. Moreover the corporation of New York city has no control over the ferry revenue. It is devoted to the sinking fund by a law which the city cannot modify or repeal It would be entirely competent for the State to operate a ferry and take toll, and if it did it would be conceded -to be a governmental and public work. It can make no difference that this function of government has been delegated to the municipal authority. .If a profit arising out of a puofic work subjected it to taxation, the bridge between these two cities would be taxed, for it produces a revenue to each, and revenue is synonymous with profit. The Union Ferry Company and its profit has no more relation to the question under consideration, than would a single ferryman rowing a scow with a few passengers for a share of the tolls under an agreement with the city. The ferry company is doubtless taxed for all its property. Within the decision in Darlington’s case {supra), the land in question is public property devoted to a public use and is not therefore subject to. taxation. If immunity be accorded to any properly owned by a municipality for public purposes this landing place must be set down in that list. — 391 — The appellants have failed to show the prevalence of any exception in this State to the general rule or implication which exempts the property of a municipal corporation from taxation, and the order appealed from should be affirmed with costs. Pkatt, J., concurred.