People ex rel. Mayor of New York v. Board of Assessors

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 itssufiiciency to reheve 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 demarkation between public property held by the city for public uses, or for purposes of government, and such as is held for social or commercial purpose, 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 has unlawfully assessed it for purposes of taxation. The property so referred to was land, ana constituted the landing place for the Fulton Ferry on the Brooklyn side.

A writ of certiorari 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 relators, and an order was entered declaring the tax unlawful and void, and vacating the same, 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

' The question of law thus presented is, whether the Fulton Ferry landing place in Brooklyn is held by the city of Xew 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 goverment, and is exempt from taxation; Dillon on Municipal Corporations, section 773 (614) [3d ed.] 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; 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. The 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 water works 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 Daxforth said that “In the-absence of an expressed declaration to that effect, we cannot suppose that the legislature intended that the works thus imposed upon the city should be subject to tax 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 franchise 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 bounden 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 : 8 N. Y. State Rep., 655), Judge Earle 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 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. * * * Ho 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 doing so was guilty of a ■crime, and 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 of the waters within this state without authority of law, is punishable by fine,” etc.

A case in the United States supreme court will further illustrate the nature of a ferry, and at the same time answer the appellant’s 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 grant of the ferry franchise was a contract within the constitution of the United States, and that the questioned legislature 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 con- . tract 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 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 doings of the legislature as to this ferry must be considered rather as public laws than as contracts. They related to no public interest. They changed as those interests demanded. The grantees, likewise towns, being mere organizations for public purposes, are liable to have their public powers, rights and duties modified or abolished at

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 v. Kelly ( 94 N. Y., 526 ), it was held, that a highway over waters separating two cities would be a city purpose of either, and its credit might be used therefor.

The last of the large 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 francise as would a sale of the Rochester Water Works. The case 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 landing is employed by the city in its social or commercial capacity and for its own profits, and he relies on Judge Cooley’s treatise, and the case in Kentucky, growing-out of the taxation of Louisville by the commonwealth. In the treatise on the law of taxation, Judge Cooley, after stating that by implication all municipal property is exempted from taxation, proceeds as follows: “ But the municipal corporation may hold property, not for governmental purposes, but for a mere convenience of its people, or to supply some need which is commonly supplied by a private corporation, such as water or gas works,” the presumption to exclude such property from taxation would be very slight perhaps, not arising at all under the language of the law. Such property is deemed to be held by the corporation, as is' expreessd 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 the case of special assessments, would seem to be limiting the implied exemption unreasonably, and certainly more than the other cases limited it.

The case referred to by this writer is Louisville v. The Commonwealth (1 Duvall, 295). The various articles of property owned by the city of Louisville were assessed by the state of Kentucky, at an-aggregate valuation of $664,-000. The city moved the county judge to correct the assessment by exempting the property as municipal or by

The court, on appeal, reversed the judgment and remanded the case to the county judge, and laid down these rules for his guidance:

“ First. The public property of Louisville used for carrying on its municipal government is exempt.

“Second. Whatever property, such as court house, prison, and the like, which become necessary or useful for the administration of the municipal government and is devoted to that use, is exempt from such taxation.

“ Third. Whatever is not so used, but is owned or used by Louisville in its social or commercial capacity as a private corporation, and for its own profit, such as vacant lots, market houses, fire engines, and the like, is subject to taxation.”

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 assessed, including wharfs, engine houses, and other articles not used or needed for governmental purposes are not entitled to exemption.”

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 govermental.

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

- All property owned by a municipal corporation is held in trust for the inhabitants and is altogether public in its character. Darlington v. The 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. The Mayor ( 3 Hill, 531 ), settled no principle of law, and was substantially 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 this 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 a,nd 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 purposes, and the fact that such property is controlled by the city in its proprietary capacity, by no means renders such property private in 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 public work subjected it to taxation, the bridge between these 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

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 property owned by a municipality for public purposes, this landing place must be set down in that list.

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.

Pratt, J., concurs.

(dissenting).—No question is made as to the ownership of the land assessed, nor as to its being taxable in the city of Brooklyn, if taxable in any place. The city of New York owns to low water mark on the Long Island shore, and the land is at the water’s edge, but it has been held by the court of appeals that whether this land was originally below low water mark or not, it would be taxable in Brooklyn for the reason that the low water mark was the mark of low water upon the lands as continued: into the East river by filling in or by permanent structures annexed to the main land. Luke v. City of Brooklyn, 43 Barb., 54 ; affirmed in the court of appeals; Orr v. City of Brooklyn, 36 N. Y., 661 . This land is not exempt by statute in express terms. 2 R. S. (7th ed. Barb.) 982, § 4; Chap. 293, Laws of 1881.

The assessors, therefore, are right in putting the land on the tax list unless an exemption Is shown by the following facts: The property is the Brooklyn terminus of the Fulton street ferry. The ferry is very old, and has always been the property of the city of New York. It had been carried on by the city for seventy years before 1707. In 1708, the English government granted a strip of land between high and low water mark to prevent competition when the strip was unoccupied at the time of the grant. Since that time the city of New York has had the exclusive right to run ferries to and from the opposite lands of Long Island, Richmond county, and New Jersey, These ferries are leased out to individuals or corporations, in the present case the Union Ferry Company. The claim is that the land in the various termina of these ferries outside of the city of New York is held for public use, and on that account not taxable. • That is the question presented on this appeal. Municipal governments are usually local, but modern necessities

The direct object of the water works was for the purpose of promoting the health and safety of the people, and the legislature imposed the duty of constructing and maintaining the system upon the city of Rochester, and to pay the cost out of taxes imposed. This was a legal public use, and so determined by the legislature, and the property was decided, by the court of appeals, to be the result of taxation, and could not be taken or diminished by taxation. In^the present case it does not appear how the property was acquired, wholly by grant from the English crown, or by private purchase, or by filling in land adjacent to upland, which is most probable. The power of the legislature to fix a public use is sufficient to authorize the talcing of lands for a ferry right. Such a power was upheld in respect to railroads (Buffalo, etc., R. R. Co. v. Brainard, 9 N. Y., 100 ), and ferries would easily fall within the same principle.

There is no legislation in respect to this ferry right except that the legislature has approved of the application of the ferry requirements to the sinking fund of the city of New York. Chapter 410, Laws of 1882.

This approval fell short of making the running of the ferry a duty imposed by law upon the city of New York. It is consistent with a private ownership of the ferry and not sufficient to create, at all hazards, a municipal duty to keep it running as a means of government. Unless the land be an agency or means of city government, it is taxable. The People v. Forrest, 97 N. Y., 97 .

In that case the legislature had authorized private corporations to erect water works to supply villages, and had authorized condemnation of land as for a public use, and had authorized villages to contract for the water and raise money by tax to perform the contract; yet it was held not to be a governmental agency and therefore taxable. The city of New York leases its ferry right to a company which agrees to conduct and maintain a ferry, and is. to receive the fee for ferriage. This case differs, it seems to me, from the City of Rochester v. The Town of Rush.

There is no legislative declaration authorizing the condemnation of lands, and there is no such legislative appro

In this case, the proceeds were all appropriated by law for the improvement of the docks, out of which the dock rates came. There was no beneficial occupation. The ferry right is a privilege granted and not a duty imposed. The city takes the rent and indeed applies it to the payment of its debts, but it could have applied it on any obligation incurred for the municipal government. The legislature approved of the application, but this approval did not impliedly destroy the proprietary right of the city of New York to maintain the ferry. By this very act of 1882, the legislature prohibited any other person or corporation than the city of New York from keeping the ferry between New York and Long Island, under a heavy penalty for every offense. Chap. 410, Laws of 1882, section 1966.

The case is not similar to the suspension bridge over the East river. That is built by taxation-—land is condemned for it as for a public use, and it is put under the control of the cities of New York and Brooklyn, and its revenues unappropriated directly by the legislature, thus excluding all possible inference that it is taxable in either city, and still further it is declared a public highway, subject to toll. The land in the present case is of large value, without regard to-the structures on it for ferry purposes. The city of New York has other ferry rights along the water front of Long Island and presumably other landing places which would all be exempt. Under the rule of exemption, claimed by respondent, lands could not be purchased and made free of taxation if used in connection of these ferry rights of the city of New York. The same question will arise in Richmond v. Queens County.

The subject is so important that I deem it safest to follow the statute until the court of appeals can pass upon the question.

Order reversed with costs, and proceedings affirmed.