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and on the 6th of May, 1903, the common, Congress of 1891. [26 Stat. at L. 827, chap. council received a communication from the 517, U. S. Comp. Stat. 1901, p. 549.) The board, through its secretary, wherein the grounds of the dismissal of the bill are set board requested the common council to in- forth in the foregoing statement of facts. vite bids for the bonds of the city for the Whether this case comes within the prin. purpose of constructing the system of wa-ciple laid down by this court in Dawson v. terworks, which bids were to be opened on Columbia Ave. Sav. Fund, S. D. Title & T. the 1st of August, 1903. Thereupon the Co. 197 U. S. 178, 49 L. ed. 713, 25 Sup. Ct. common council, on the same day, complied Rep. 420, upon the question of diversity of with the request, and directed the publica- citizenship, it is unnecessary to determine, tion of a notice for receiving bids for the because there is, in our opinion, a Federal bonds up to August 1, 1903.
question involved, which gave the circuit On the 30th of July, 1903, the complainant court jurisdiction to determine the case filed this bill against the parties named. It without reference to citizenship. It is is contended in the bill that, as trustee for averred in the bill that by reason of the the bondholders, the complainant can main- passage of the ordinance of the common tain this action, on the ground of an im- council of the city and the act of the legispairment of the obligation of the contract lature of Georgia, passed December 3, 1902, already mentioned, and that, as the water the obligation of the contract set forth in company has mortgaged to the complainant the bill was impaired. It is part of the the benefits of its contract with the city, duty of the Federal courts, under the imtogether with the other property of the wa- pairment of the obligation of contract clause ter company, as security for the payment in the Constitution, to decide whether there of its bonds, any such action as proposed be a valid contract and what its construcby the city will destroy the value of the tion is, and whether, as construed, there is bonds of the water company, and will any subsequent legislation, by municipality amount to the taking of complainant or by the state legislature, which impairs its trustee's property without due process of obligation. That the ordinance of the comlaw, and will deprive it of the equal pro- mon council of a municipal corporation may tection of the laws. The water company is constitute a law within the meaning of made a defendant for the purpose of binding this constitutional clause is too well setit, as averred in the bill, by the judgment tled to admit of doubt. St. Paul Gaslight and decree that may be rendered in this Co. v. St. Paul, 181 U. S. 142, 148, 45 L. ed. cause, so that the right and equity of sub- | 788, 791, 21 Sup. Ct. Rep. 575; Davis & F. rogation, or other rights and equities set up, Mfg. Co. v. Los Angeles, 189 U. S. 207-216, may be enforced and decreed against the 47 L. ed. 778-780, 23 Sup. Ct. Rep. 498. The water company, and that the water com- contract in this case provided in terms for pany may be held and decreed, on its part, the exclusive privilege of supplying water to specifically perform all the obligations of to the city and its inhabitants for thirty such contract. An injunction was asked years from the date of its completion. By for and granted, as stated, pendente lite. the ordinance of the city of 1902 the city It was also asked that the defendant city insisted that the water company had totally might be enjoined from refusing to carry failed to fulfil its contract to supply water out the contract with the waterworks com- to the city and its inhabitants. Such ordipany, and from placing any obstacle in the nance then went on and proposed to the way of the due performance thereof, ac electors an ordinance, the material portions cording to its terms.
of which have been set forth in the forego
ing statement. Messrs. Joseph Packard, Olin J. Wimberly, The act of the legislature, passed the day Louis F. Garrard, and John I. Hall for ap- before the day of the election, is also repellant.
ferred to in the statement and some of its Messrs. W. A. Wimbish, J. H. Martin, T. material provisions are mentioned. T. Miller, and Ellis, Wimbish, & Ellis for The ordinance and the act should properly appellees.
be considered together, and they evidently
contemplate an immediate execution of the Mr. Justice Peckham, after making the work in case the electors assented to the foregoing statement, delivered the opinion issuing of the bonds. If the provisions of of the court:
the ordinance and act were carried out, the The sole question arising herein is wheth-effect, of course, could be none other than er the Federal circuit court had the juris- disastrous to the water company, as the diction to determine the issue involved. obligations of the contract (if any) would That question alone has been certified to thereby be so far impaired as to render the this court by the circuit court, under the contract of no value. The source of the provisions of the 5th scction of the act of ability of the water company to pay the interest on its bonds, and the principal were not new and substantial duties in thereof, as they became due, was, by this positive opposition to those contained in the ordinance and act, entirely cut off.
contract created and their performance proWas not this legislation, and legislation vided for by the ordinances and act. The of a kind materially to impair the obliga- act of the legislature aided the city by tion of the contract then existing, and not granting it power to itself erect waterworks only to impair, but to wholly destroy its and to issue bonds in payment of the cost value? We are not called upon now to say thereof, and the city was proceeding to avail whether the exclusive right for thirty years, itself of the power thus granted, when its granted to the water company by the con- progress was arrested by the filing of the bill tract to supply the city with water, was in this case and the issuing of a temporary legal and valid, because that is a part injunction. It would seem as if the case of the question whether the obligation of were really within the principle decided in the contract has been impaired by the sub- Walla Walla v. Walla Walla Water Co. 172 sequent ordinances of the city and the laws U. S. 1, 43 L. ed. 341, 19 Sup. Ct. Rep. 77; of the state. It cannot be determined that Vicksburg Waterworks Co. v. Vicksburg, 185 there is an impairment of the obligation of U. S. 65, 46 L. ed. 808, 22 Sup. Ct. Rep. 585, a contract until it is determined what the 202 U. S. 453, 50 L. ed. 1102, 26 Sup. Ct. Rep. contract is, and whether it is a valid con- 660; Davis & F. Mfg. Co. v. Los Angeles, 189 tract. If it be valid, it still remains to be U. S. 207, 47 L. ed. 778, 23 Sup. Ct. Rep. 498; determined whether the subsequent proceed- Knoxville Water Co. v. Knoxville, 200 U. S. ings of the city council and legislature im. 22, 50 L. ed. 353, 26 Sup. Ct. Rep. 224. In paired its obligation. The ordinance and act the last-cited case the water company conwere not mere statements of an intention tended that the agreement mentioned in that on the part of one of the parties to a contract not to be bound by its obligations. case constituted a contract, for which it acSu a denial on the part, even of a munic- quired for a given period the exclusive right ipal corporation, contained in an ordinance to supply water to the city and its inhabitto that effect, is not legislation impairing ants, and it insisted that the obligation of the obligation of a contract.
St. Paul this contract would be impaired if the city, Gaslight Co. v. St. Paul, 181 U. S. 142, acting under the acts of the legislature and 45 L. ed. 788, 21 Sup. Ct. Rep. 575. It was under the ordinance mentioned, established stated in that case that the ordinance in and maintained an independent and separate question "created no new right or imposed system of waterworks in competition with no new duty substantially antagonistic to those of the water company. It was held the obligations of the contract, but simply that such a question was one arising under expressed the purpose of the city not in the Constitution of the United States, and the future to pay the interest on the cost of that the Federal circuit court had jurisdic
construction of the lamp posts which were tion thereof without regard to the citizenI ordered to be removed. ... When the ship of the parties. It must be remembered
substantial scope of this provision of the that in the case before us the sole question ordinance is thus clearly understood, it is is whether the Federal circuit court had juseen that the contention here advanced of risdiction to determine the case, and we are impairment of the obligations of the con- not now concerned with the question as to tract arising from this provision of the or how the matter should be determined, but dinance reduces itself at once to the prop-only whether the circuit court had jurisdicosition that wherever it is asserted, on tion to determine it. As stated in Vicksburg the one hand, that a municipality is bound Waterworks Co. v. Vicksburg, 185 U. S. 65, by a contract to perform a particular act, at page 82, 46 L. ed. 808, at page 815, 22 and the municipality denies that it is liable under the contract to do so, thereby an im- Sup. Ct. Rep. 585, at page 592, in speaking pairment of the obligations of the contract of the question of jurisdiction: "We do not arises, in violation of the Constitution of the wish to be understood as now determining United States. But this amounts only to such questions in the present case, for we are the contention that every case involving a only considering whether or not the circuit controversy concerning a municipal contract court had jurisdiction to consider them.” is one of Federal cognizance, determinable
Concluding that the court below had such ultimately in this court. Thus, to reduce jurisdiction, because it presents a controverthe proposition to its ultimate conception sy arising under the Constitution of the is to demonstrate its error."
United States, the judgment of the Circuit In the case at bar the conditions are en Court is reversed, and the case remanded to tirely different. There was not merely a that court to take proceedings therein acdenial by the city of its obligation under the cording to law. contract, but the question is whether there Reversed.
SECURITY TRUST & SAFETY VAULT , tised the same to be sold, and would sell .COMPANY, of Lexington, Kentucky, the same, unless restrained by order of the
Trustee of Clara D. Bell, Plff. in Err., court. It was averred that the claim for CITY OF LEXINGTON, Kentucky, and E. personal property owned by the plaintiff as
back taxes was for alleged omissions of T. Gross, Delinquent_Tax Collector for trustee, which had not been assessed for Said City, Defts. in Err.
city taxation for the years stated, and that Constitutional law-due process of law, the tax was based on alleged assessments notice and hearing.
imposed in December, 1898, for these years, The failure of the Kentucky stat- made by the city assessor of Lexington. utes to require notice to be given of a spe- The plaintiff denied that the pretended ascial assessment for back taxes on omitted sessments made in 1898 for those years were property, made by the regular assessor under Ky. Stat. § 3179, after the time pro- there had been no assessment for the back
any assessments at all, and alleged that vided by law for the making of the general taxes of those years or for any of them. It assessment, does not deprive the taxpayer of his property without due process of law,
was averred that certain entries which had where the state court has afforded him full been made in the assessor's books for the opportunity to be heard on the question of years mentioned, purporting to assess the the validity and the amount of the tax, and, property for these back taxes, were interon such hearing, has reduced the tax. * polated among the assessments for those
years, but were not legally made; that [No. 55.]
such entries were not assessments, nor any
step in the valid assessment of back taxes Argued October 23, 24, 1906. Decided De
in those years, and were made by the city cember 3, 1906.
assessor without any notice to, or conference N ERROR to the Court of Appeals of the with, the plaintiff of his intention to make
State of Kentucky to review a judgment the same, or any assessment, and the plainwhich affirmed a judgment of the Fayette tiff at no time, either before or since said . County Circuit Court reducing a tax and en- pretended assessment, had been given or alforcing it as reduced. Affirmed.
lowed any opportunity or privilege to make See same case below, 27 Ky. L. Rep. 591, any complaint or show cause against the ag85 S. W. 1081.
sessment before any competent officer or tri
bunal whatever. It was also averred that all Statement by Mr. Justice Peckham: the property of plaintiff as trustee, during
The plaintiff in error, which was plaintiff each of the years covered by the claim for below, filed its petition in the Fayette coun- back taxes, had been duly assessed, and, if ty circuit court, state of Kentucky, in equi- it had been given the opportunity, plaintiff ty, on February 3, 1899, for the purpose of would have established the fact of such asobtaining an injunction restraining the de- sessment, and that it had been fully and fendants in error from the collection of cer- legally paid. tain back taxes accruing during the years The plaintiff averred that collection of 1894 to 1898, both inclusive, imposed in taxes based on assessments made as above favor of the city of Lexington, and which the stated would be in violation of the Constituplaintiff asserted were illegally assessed. tion of the United States and of the state A temporary injunction was prayed for and of Kentucky, forbidding that a citizen should granted, restraining the collection of the be deprived of his property without due tax, and upon the trial the amount of the process of law. taxes was reduced, and, as so reduced, de
The defendants in their answer averred clared to be a lien on the property of the that all of the property (with an exception plaintiff in error as trustee, and judgment not material) on which the defendants were accordingly was entered, which judgment
which judgment claiming taxes as upon omitted property, was, upon appeal to the court of appeals of had in fact been omitted by the plaintiff the state, affirmed, and the plaintiff brings from its assessment lists during the years the case here by writ of error.
mentioned, and that the lists made out by In the amended petition it is averred that the plaintiff for those years had been imthe plaintiff, as trustee, owned certain real perfect and improper lists, and that there estate in the city of Lexington, and that the was omitted therefrom a large part of the tax collector of the city, asserting a claim personalty owned by the plaintiff as trusfor back taxes from 1894 to 1898, both in- tee. The defendants averred that all the clusive, in favor of the city, against the omitted property was properly assessable for trust estate in the plaintiff's hands, for the respective years, and that there was due $13,964.96, had, to satisfy the claim, levied thereon, in 1898, as the back taxes on the on the real property held by it as trustee said omitted property, the sum named, to and described in the petition, and had adver-wit, $13,964,96; and the defendants denied
*Ed. Note.-For cases in point, see Cent. Dig. vol. 10, Constitutional Law, $ 893.
that the valuation of the property, as fixed | Joseph D. Hunt, and John R. Allen for in the assessment, was any larger in propor- plaintiff in error. tion than the value of the assessment gener- Messrs. George C. Webb, George S. Shankally placed on similar property in the city of lin, J. R. Morton, and E. P. Farrell for deLexington. After the assessment was made, fendants in error. it was averred that the delinquent tax collector demanded payment of the same, which Mr. Justice Peckham, after making the was refused and thereupon he levied upon foregoing statement, delivered the opinion the property on the 31st of December, 1898. of the court: The answer then set up the making of the There are in the state of Kentucky two assessment on the property omitted, and distinct methods by which an assessment showed that it was made substantially as for so-called back taxes can be made. One averred in the amended petition, by insert- method is an assessment by a special backing in each of the books for the various tax assessor, elected as provided for by an years an additional assessment on account ordinance of the city of Lexington. This of omitted property, and that, after each ordinance the court of appeals of the state of the entries of assessment in the various of Kentucky has held, contrary to the conbooks had been made by the assessor, hetention of the plaintiff in this case, did not signed his name after the words, "Assessed displace the regular assessor, or affect his by me;" and it is averred that the assess right to make an assessment for back taxes. ment was also recorded by the assessor in the The other method provides for an assessback-tax assessment book kept by the city ment by the regular assessor, under $ 3179 of Lexington, and was by him reported to of the laws relating to the city of Lexingthe auditor of the city of Lexington on the ton, which section, among other things day that the assessment was made, Decem- therein contained, provides that: “Whenber 31, 1898. The defendants also averred ever the assessor shall ascertain that there that, more than thirty days prior to the has, in any former year or years, been any time the assessment was made, the city, property omitted which should have been through its duly authorized officers and taxed, he shall assess the same against the agents, had notified the plaintiff that it person who should have been assessed with had omitted from its assessments for the it, if living; if not, against his representayears 1894 to 1898, both inclusive, a large tive.” portion of the estate held by it as trustee, In this case the assessment for back taxes and, at the time of giving such notice, the was made by the regular assessor, but not officers of the city had furnished and deliv- until December 31, 1898, under the aboveered, as a part of such notice, an itemized quoted provision in § 3179. It was, how. statement of the securities and other per- ever, a special assessment, made after the sonal property belonging to the estate, and regular assessment in the assessor's books held by the plaintiff, on the respective dates of 1898, and after such books had been for taxation for the respective years, and transmitted within the time prescribed by that payment of the taxes upon this omitted law (§ 3180), December 1, 1898, to the auproperty was repeatedly demanded of the ditor, subject to the inspection of the pubplaintiff by the city during a period of more lic. In regard to the regular assessment, than thirty days prior to the assessment, the statutes of Kentucky provide (§ 3181) and the plaintiff refused to pay any addi- for a board of equalization, which sits on tional taxes or to list the omitted property, the first Monday of January, and continand that ample time and opportunity were ues in session not longer than four weeks. afforded plaintiff to show that the property The auditor must deliver to the board the had not been omitted from the yearly as assessment books filed with him by the assessments, and the plaintiff failed to do so. sessor, and it is to hear all complaints
A reply and rejoinder were filed, and, against the assessments made by the assesupon the pleadings, the parties went to sor, and may determine the same, but it trial.
cannot increase the assessment without noJudgment was given for the defendants, tice to the party whose property is to be inrefusing the injunction, and providing for creased. The section is part of the general the sale of the real estate to satisfy the statutes as to assessments for the annual amount due for back taxes, as stated in the taxes, and it refers evidently to the assessjudgment. The total amount of back taxes ments made by the assessor up to the 1st due on the omitted property was, by such of December preceding, and which appear judgment, reduced from $13,964.96, the in the book which the law directs to be sent amount claimed by the defendants, to the to the auditor and by him transmitted to sum of $8,626.63.
the board of equalization. It does not refer
to an extraordinary assessment made by the Messrs. John T. Shelby, George R. Hunt, assessor for back taxes subsequently to the time provided for by law for the making proof in such a proceeding as this was upon of the general assessment. The assessor the plaintiff to establish that there was no must return the general assessment which notice of the assessment given it; but it he makes in his book under § 3179 to the also held that the defendant had, in fact, auditor on or before December 1 in each proved that there was notice given to the year. Section 3180. This book remains in plaintiff in error before the assessment was the auditor's office subject to the inspection made. This applies to a notice in fact, but of the public until transmitted, in the Janu- the court of appeals did not hold that there ary following, to the board of equalization was any notice made necessary by the statunder $ 3181. In the case before us the as- ute in regard to such a special assessment as sessment for the back tax was made De-above described. An assessment made on cember 31, 1898, by entering a separate as- December 31, 1898, in the manner set forth, sessment for each year in the assessor's although imposed before the meeting of book for that year, and therefore these va- the board of equalization in January followrious assessments were not contained in the ing, was not imposed at a time which made books of the assessor as they were sent to the general statutes as to assessments apthe auditor on December 1 of each year, plicable, and therefore the taxpayer had no respectively. The assessor's books for the statutory notice or opportunity furnished years prior to 1898 were obtained in some him to appear and be heard before the board. way, and the entries of the assessments He may have examined the assessor's books were therein made, because, as stated, there for the various years 1894–1898, when filed were no other books provided. We find no in the auditor's office on the 1st of Decemprovision of the statute as to assessments ber, by the assessor, and prior to December for back taxes, which requires notice of 31, when this assessment was made, and such assessment if made at any time other found that there was no assessment made than in the regular course for the general as-against him for any back taxes. There was sessment as provided for in the generalno statutory obligation imposed on him to statute. If the assessment happens to be again examine the books, lest perchance made in the assessor's book prior to Decem- they may have had an interlined assessment ber 1 in any year, it, of course, goes with made in them, for the making of which the the book to the auditor, and remains there law provided no notice. It follows that the for inspection by the public until taken be subsequent assessments placed in
such fore the board of equalization. Such an books, and not appearing on any book when assessment would carry with it the provi- sent to the auditor by the assessor, would sion of the law of the state applicable to the not be made under any statutory provision city on the subject of assessments, includ- for notice, and would not afford the tax. ing the general notice under the law provid- payer an opportunity to be heard before the ing for such assessment. But that, of course board of equalization in regard to the illecannot apply where the assessment is not gality of such tax. made on or before December 1 in the regu- If the statute did not provide for a nolar assessment book. That book the tax- tice in any form, it is not material that, as payer must omit to examine at his peril, a matter of grace or favor, notice may have when filed with the auditor, or when before been given of the proposed assessment. It the board of equalization. As sent to the is not what notice, uncalled for by the statauditor December 1, 1898, the book did not ute, the taxpayer may have received in a contain the assessment in question. And particular case, that is material, but the as to the books of the former years, they question is whether any notice is provided had passed out of the legal custody of the for by the statute. Stuart v. Palmer, 74 N. assessor, and he could not take any such Y. 183, 30 Am. Rep. 289. Before this special books, and, without notice, impose a con- assessment could be actually enforced or clusive assessment for back taxes for the during the process of enforcement the taxparticular year the book had been made use payer must have an opportunity to be heard of as an assessment book. Such assessment as to its validity and extent. In Weyercould not be enforced unless the taxpayer haueser v. Minnesota, 176 U. S. 550, 44 L. could thereafter at some time, and as a ed. 583, 20 Sup. Ct. Rep. 485, it was held that matter of right, be heard upon the question the taxpayer was entitled to an opportunity of the validity and the amount of such tax. to be heard before the tax could be enforced The general statutory notice as to the reg. (see page 556, L. ed. page 586, Sup. Ct. Rep. ular assessment proceedings cannot be re- page 488), that the filing of the tax list garded as notice of this special assessment, therein spoken of was, in effect, as held by made years after the completion of the old the court, the institution of an action assessments.
against each tract of land described in it, In regard to the question of notice, the and the taxpayer thereafter had opportu. court of appeals held that the burden of nity to make any defense he might have.