Kansas City v. Fairfax Drainage Dist.

PHILLIPS, Circuit Judge

(dissenting). I respectfully dissent from the construction placed upon the compact by the majority opinion and shall undertake to state my reasons therefor. Kansas City, Missouri, will be referred to as the city and the Fairfax Drainage District of Wyandotte County, Kansas, as the district.

An exemption from taxation must be in clear and unambiguous language and appear to be indisputably within the intention of the legislative body. Philadelphia & W. R. Co. v. Maryland, 10 How. (51 U. S.) 376, 393 (13 L. Ed. 461); Tennessee v. Whitworth, 117 U. S. 139, 145, 6 S. Ct. 649, 29 L. Ed. 833; McQuillin on Municipal Corporations (2d Ed.) vol. 5, § 2215.

Immunity from taxation will not be allowed unless granted in words too plain to be mistaken. Phoenix F. & M. Ins. Co. v. Tennessee, 161 U. S. 174, 177, 16 S. Ct. 471, 40 L. Ed. 660; Bank of Commerce v. Tennessee, 163 U. S. 416, 423, 16 S. Ct. 1113, 41 L. Ed. 211.

Both constitutional and statutory exemptions from taxation axe strictly construed and any doubt is resolved in favor of the public and against the property owner claiming exemption thereunder. Tucker v. Ferguson, 22 Wall. 527, 575, 22 L. Ed. 805; Covington & L. Turnpike R. Co. v. Sandford, 164 U. S. 578, 586, 587, 17 S. Ct. 198, 41 L. Ed. 560; Seton Hall College v. Village of South Orange, 242 U. S. 100, 106, 37 S. Ct. 54, 61 L. Ed. 170; Ford v. Delta & Pine Land Co., 164 U. S. 662, 666, 17 S. Ct. 230, 41 L. Ed. 590; Kansas City Exposition Driving Park v. Kansas City, 174 Mo. 425, 74 S. W. 979, 981; Stahl v. Kansas Educational Ass’n of M. E. Church, 54 Kan. 542, 38 P. 796; Cooley on Taxation, vol. 2, § 672; McQuillin off Municipal Corporations (2d Ed.) vol. 5, § 2215, p. 696.

In a broad sense, taxes may be said to include special assessments for local improvements since the right to impose such assessments has its foundation in the taxing power; but, as generally understood, there is a dear distinction between the two terms and ordinarily such assessments are not included in the terms “taxes” or “taxation.” Drainage Dist. No. 1 of Bates County v. Bates County, 269 Mo. 78, 189 S. W. 1176, 1177; Sullivan v. Blakesly, 35 Wyo. 73, 246 P. 918, 922; Elliott v. McCrea, 23 Idaho, 524,130 P. 785, 786: Schmidt v. Schmidt, 80 N. J. Eq. 364, 84 A. 629, 632.

Exemptions from taxes or taxation, either by constitution or statute, do not embrace .exemptions from local assessment or special taxation. Sheehan v. Good Samaritan Hospital, 50 Mo. 155, 11 Am. Rep. 412; School Town of Windfall City v. Somerville, 181 Ind. 463, 104 N. E. 859, 860, Ann. Cas. 1916D, 661; City of Wichita v. Board of Education, 92 Kan. 967, 142 P. 946; City of Kalispell v. School Dist., 45 Mont. 221, 122 P. 742, 744, Ann. Cas. 1913D, 1101; Wesley M. E. Church v. Columbia, 105 S. C. 303, 89 S. E. 641; Williams College v. Williamstown, 219 Mass. 46, 106 N. E. 687, 688; Corrigan v. Kansas City, 211 Mo. 608, 111 S. W. 115, 118; Edwards & Walsh Const. Co. v. Jasper County, 117 Iowa, 365, 90 N. W. 1006, 1011, 94 Am. St. Rep. 301; Louisville v. McNaughten, 44 S. W. 380; 19 Ky. Law Rep. 1695; Town of Franklinton v. Police Jury, 126 La. 2, 52 So. 172; Beatrice v. Brethren Church, 41 Neb. 358, 59 N. W. 932, 933; Buffalo City Cemetery v. Buffalo, 46 N. Y. 506, 509; Whittaker v. Deadwood, 23 S. D. 538, 122 N. W. 590, 591, 592, 139 Am. St. Rep. 1076; Wey v. Salt Lake City, 35 Utah, 504, 101 P. 381, 382; Chicago v. Bap*364tist Theological Union, 115 Ill. 245, 2 N. E. 254, 255-257; Illinois Cent. R. Co. v. Decatur, 147 U. S. 190, 197-202, 13 S. Ct. 293, 37 L. Ed. 132; New Orleans v. Warner, 175 U. S. 120, 138, 139, 20 S. Ct. 44, 44 L. Ed. 96) McQuillin on Municipal Corporations (2d Ed.) vol. 5, § 2215, p. 696.

; In Sheehan v. Good Samaritan Hospital, ’supra, the court, at page 158 of 50 Mo., said:

“We think the judgment of the court below was clearly right. The taxation from which the defendant was exempted was for the ordinary taxes raised for the purposes of revenue. Taxes are charges or burdens imposed by the legislative power upon persons or property to raise money for public purposes, or to defray the necessary expenses in' administering the government, and it was from taxes of this description that the Legislature intended to exempt defendant’s property. The tax bill here sued on is not regarded as a tax, but as an assessment for improvements, and is not considered as a burden, but as an equivalent or compensation for the enhanced value which the property ■derives from the improvement. This ques-tion is well settled both in this state and elsewhere.”

From the foregoing authorities, it seems to me there can be little doubt that the word “taxes,” in the compact, did not include special assessments for local improvements.

However, counsel for the city contend that the language “assessments *' * * of any kind or character whatsoever” includes special assessments for local improvements-, such as are here involved.

The word “assessment,” in its general sense, means the quasi-judicial tax proceedings.by which the name of the owner, the description of the property, the value thereof and the pro rata to be collected thereon is determined and set forth by the assessing officers on| the tax rolls. It is the statutory mode by which general taxes are. imposed. United States v. Erie Ry. Co., 107 U. S. 1, 2 S. Ct. 83, 27 L. Ed. 385; Chicago & N. W. Ry. Go. v. Forest County, 95 Wis. 80, 70 N. W. 77, 79; Wason v. Major, 10 Colo. App. 181, 50 P. 741, 743; Urquhart v. Wescott, 65 Wis. 135, 143, 26 N. W. 552, 556; People ex rel. N. Y. C. & H. R. R. Co. v. Priest, 169 N. Y. 432, 435, 62 N. E. 567; 5 C. J. 816, § 2. True, in a more limited sense, it means the mode by which taxes for benefits on account of local improvements ■ are imposed, upon the property benefited, for the purpose of raising funds with which to pay for such improvements. 5 C. J. p. 819, § 3. The burden thus imposed is not generally referred to as an “assessment” but rather as a “local assessment” or “special assessment.” 5 C. J. p. 819, § 3, 38 C. J. p. 129; Whitmore v. Hartford, 96 Conn. 511, 114 A. 686, 691; Chicago v. Baptist Theological Union, 115 Ill. 245, 2 N. E. 254, 256; Huston v. Mayo, 120 Miss. 523, 82 So. 334, 335.

An impost, in its usual sense, means a duty on imports. B Cuvier's Law Dictionary, vol. 2, p. 1514. In its 'broader sense, it means any public tax. City of Madera v. Black, 181 Cal. 306, 184 P. 397, 400.

In determining whether the parties to the compact used the phrase “taxes, assessments or imposts” in the Sense of local or special assessments for local improvements as well as general taxes, we have a right to take into consideration the situation of the parties and the reasonableness of such construction. In Pressed Steel Car Co. v. Eastern Ry. Co. (C. C. A. 8) 121 F. 609, 611, Circuit Judge Sanborn, writing the opinion of the court, said:

.«i. ® -* jpjle e0llir(; should, as far as possible, put itself in the place of the parties when their minds met upon the terms of the agreement, and then, from a consideration of the writing itself, its purpose, and the circumstances which conditioned its making, endeavor to ascertain what they intended to agree to do — upon what sense or meaning of the terms they used their minds actually met. * * w
“Where the language of an agreement is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that the contract is fairly susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpretation which makes it a rational and probable agreement must be preferred to that which makes it an unusual, unfair, or improbable contract.”

Special assessments while in the nature .of taxation, must be based upon benefits accruing to property by reason of local improvements. 19 C. J. p. 720, § 218; Id. p. 731, § 232. The burden of such taxes always falls upon a limited few, namely, the owners of the property benefited by such improvements. If one or more of such number is exempt, the burden necessarily falls upon the remainder out of proportion to the cost of such improvements and the benefits accruing to their property. Illinois C. R. R. Co. v. Decatur, supra, pages 202, 203, of 147 U. S. (13 S. Ct. 293). Due to this fact, it has not *365been the policy of the states to exempt property from special assessments for local improvements. The property of counties, townships and municipalities is usually exempt from general taxation but seldom from special assessments for local improvements. See cases cited note 72, p. 696, vol. 5 (2d Ed.) McQ.uillin on Municipal Corporations.

At the time the¡ compact was entered into, the property of the city was not exempt in Missouri from special assessments for local improvements. Drainage Dist. v. Bates County, 269 Mo. 78, 189 S. W. 1176; Houck v. Little River Drainage Dist., 248 Alo. 373, 154 S. W. 739. Likewise, property of Kansas City, Kansas, was not exempt from special assessments for local improvements in the átate ' of Kansas. Hines v. City of Leavenworth, 3 Kan. 186; City of Wichita v. Board of Education, 92 Kan. 967, 142 P. 946; Commissioners of Franklin County v. City of Ottawa, 49 Kan. 747, 31 P. 788, 33 Am. St. Rep. 396. It would be an unusual circumstance for a state to place public utility property within its borders, belonging to a city of a foreign state, in a more advantageous position, with reference to special assessments for local improvements, than its own cities, towns and villages.

In the year 1911, the Supreme Court of Kansas held that the waterworks property of the city situated’ within the state of Kansas was subject to general taxation. State v. Holcomb, 85 Kan. 178, 116 P. 251, 50 L. R. A. (N. S.) 243, Ann. Cas. 1912D, 800. At the time the compact was entered into, the property of Kansas City, Kansas, and of the city were exempt from general taxation within their respective states. Constitution of Alissouri, art. 10, §§ 6 and 7; Constitution of Kansas, art. 11, § 1.

It is reasonable to suppose that the purpose of the compact was to avoid the effect of the decision in State v. Holcomb, supra, and to place the city, as respects its property situate in the state of Kansas, in a position of equality with the cities of Kansas in matters of general taxation, and not to place the city, as respects such property, in a more favored position than the cities of Kansas as to special assessments for local improvements.

Exactions authorized to be made by a drainage district, whether in the form of special assessments or in the form of taxes, are essentially assessments for local improvements (Sullivan v. Blakesley, 35 Wyo. 73, 246 P. 918, 922; In re Bonds of Orosi Public Utility District, 196 Cal. 43, 235 P. 1004, 1008; Huston v. Mayo, 120 Miss. 523, 82 So. 334, 335; Lainhart v. Catts, 73 Fla. 735, 75 So. 47, 52; Drainage Dist. v. Bates County, 269 Alo. 78, 189 S. W. 1176, 1177; Alunn v. Board of Supervisors of Greene County, 161 Iowa, 26, 141 N. W. 711, 715; Billings Sugar Co. v. Fish, 40 Alont. 256, 106 P. 565, 572, 573, 26 L. R. A. (N. S.) 973, 20 Ann. Cas. 264; Carlyle v. Bartels, 315 Ill. 271, 146 N. E. 192, 193; Lake Arthur Drainage Dist. v. Board of Commissioners of Chaves County, 29 N. M. 219, 222 P. 389; Booth v. Clark, 42 Idaho, 284, 244 P. 1099, 1100, 1101; 19 C. J. p. 714), and must be based upon benefits (Madsen v. Bonneville Irr. Dist. 65 Utah, 571, 239 P. 781, 783; Myles Salt Co. v. Board of Commissioners, 239 U. S. 478, 36 S. Ct. 204, 60 L. Ed. 392; 19 C. J. p. 720, § 218; Id. p. 731, § 232).

The language of the exemption clause is: “[Neither] the state of Kansas, nor any county, township or municipality * * * or any official thereof shall ever assess, levy or collect any taxes, assessments or imposts of any kind or character whatsoever.” This language, as I shall hereinafter undertake to show, limits the exemption to taxes, assessments and imposts assessed and levied by the state of Kansas or by a county, township, city, town or village thereof, or by the respective officials thereof. Therefore, it includes the state and all the public or quasi-public corporations thereof, which have power to levy and assess general taxes, and it omits certain public corporations such as drainage districts, irrigation districts and the like, which may assess only special assessments for local benefits or* improvements. The failure to include these quasi municipal corporations, which may levy only special assessments for local benefits or improvements, forcibly indicates that the contracting parties, when drafting the exemption provisions of the compact, had in mind only general taxes.

Therefore, it is my opinion that the contracting parties employed the words “taxes, assessments or imposts” as practically synonymous with each other and with the purpose of covering all manner of public exactions in the nature of general taxes; that special or local assessments were not within their contemplation at the time the compact was entered into, and that it was their intention to grant immunity only from assessment, levy and collection of general taxes.

However, assuming that the language of the compact is broad enough to include an exemption from special assessments for local improvements, the question remains: Does *366the word “municipality,” as employed in the compact, include drainage districts?

“Municipality,” in its proper sense, includes only cities, towns, and villages. State v. Little River Drainage Dist., 291 Mo. 267, 236 S. W. 848,, 850, 851; Freeland v. Stillman, 49 Kan. 197, 30 P. 235, 236; D’Arcourt v. Little River Drainage Dist., 212 Mo. App. 610, 245 S. W. 394, 396; Levy Court of Washington County v. Woodward, 2 Wall. 501, 17 L. Ed. 851; Nakdimen v. Ft. Smith & Van Buren Bridge Dist., 115 Ark. 194, 172 S. W. 272, 274; O’Leary v. Board of Fire & Water Commissioners, 79 Mich. 281, 44 N. W. 606, 608, 609, 7 L. R. A. 170, 19 Am. St. Rep. 169; Thaanum v. Bynum Irrigation Dist., 72 Mont. 221, 232 P. 528, 530; Hanson v. Cresco, 132 Iowa, 533, 538, 109 N. W. 1109, 1111, 1112; 43 C. J. p. 74.

In its broad or generic sense, it may also include counties, townships, sehool districts, drainage districts, irrigation districts and the like, which are quasi municipal corporations. In re Bonds of Orosi Public Utility Dist., 196 Cal. 43, 235 P. 1004, 1010; Hanson v. Cresco, supra, page 1112 of 109 N. W. (132 Iowa, 533); 43 C. J. p. 74.

Counsel for the city contend that the word “municipality,” in the tax exemption clause of paragraphs numbered 1 and 2 of the compact, is used in its broad or generic sense so as to include both municipal corporations proper and also quasi municipal corporations. On the other hand, counsel for the district contend that the word “municipality” is there used in its proper or restricted sense, and that it includes only cities, towns and villages.

Paragraph numbered 1 of the compact reads as follows:

“(1) [Neither] the state of Kansas,, nor any. county, township or municipality located within said state, or any official thereof shall ever assess, levy or collect any taxes, assessments or imposts of any kind or character whatsoever on the portion of the waterworks plant of the municipality of Kansas City, Missouri, now or hereafter located within the territory of the state of Kansas.”

Paragraph numbered 2 of the compact, by identical language, creates the same exemption in favor of the waterworks plant of Kansas City, Kan., located in the state of Missouri.

An application of the doctrine of “ejusdem generis” to the clause “The state ■* * * nor any county, township; or municipality,” etc., would include quasi municipal corporations such as counties, townships and drainage districts and exclude municipal corporations proper such as cities, towns, and villages. I do not think the doctrine of ejusdem generis should be applied here. It is usually applied to limit and not to expand the meaning of the general words used. Lewis’ Sutherland, Statutory Construction (2d Ed.) vol. 1V§§ 422 to 434, inc. If this doctrine were applied to the language here under consideration, the word “municipality” would be expanded to its broadest sense, namely, to include quasi municipal corporations, the general character of the subjects specifically enumerated in the language which precedes the word “municipality,” and it would be limited so as to exclude cities, towns and villages, municipalities proper, which are not of the same general class as the subjects specifically enumerated. Furthermore, to apply the doctrine here, it would be necessary to read into the clause under consideration, after the word “or” and before the word “municipality,” the word “other.”

Under the maxim of “expressio unius est exelusio alterius,” the express enumeration of county and township, which are quasi municipal corporations, manifests an intent to exclude all other quasi municipal corporations. Lewis’ Sutherland, Statutory Construction (2d Ed.) vol. 11, §§ 491 to 494, inc.; 25 C. J. p. 220. This rule was applied to language substantially identical with the language of the clause here under consideration by the Supreme Court of Kansas in the case of Freeland v. Stillman, 49 Kan. 197, 30 P. 235, 236. The language of the statute there under consideration, read as follows: “Wherever any elector or electors of any county, township, or municipal corporation in this state,” etc. The question presented was whether the phrase “municipal corporation” included sehool districts, and the court said:

“Although a sehool district possesses corporate capacity, and is declared in the statutes to be a body corporate, it doesi not fall within the definition of a municipal corporation. A sehool district belongs in the same class as counties and townships, which ‘are denominated in the books and known to the law as quasi corporations, rather than as corporations proper. They possess some corporate functions and attributes, but they are primarily political subdivisions — agencies in the administration of civil government — and their coiporate functions! are granted to enable them more readily to perform their public duties.’ Beach v. Leahy, 11 Kan. 23. Cities, towns, and villages are municipal corporations proper, and the distinction between *367municipal corporations and quasi corporations is dearly pointed out in the ease just cited. See, also, Eikenberry v. Township of Bazar, 32 Kan. 556 [31 Am. Rep. 198]; Marion Co. v. Riggs, 24 Kan. 255; Dill. Mun. Corp. § 20; 15 Amer. & Eng. Enc. Law, 952. It is said that, in the broader sense, municipal corporations include all public corporations, including quasi corporations, sueb as counties, townships, and school districts, and the title of the act is referred to as an evidence that this signification was intended by the Legislature. The fact, however, that counties and townships were specifically named in connection with municipal corporations, forbids such an interpretation, and shows clearly that it was not the intention of the Legislature that municipal corporations should include quasi corporations like counties, townships and sehool districts. If the Legislature had intended that the term ‘municipal corporations’ should be extended in its meaning so as-to embrace all quasi corporations, counties and townships would not have been mentioned; and, having named these, it is evident that the Legislature intended to exclude all other quasi corporations.”

Likewise, in the instant case, by specific enumeration of counties and townships, the parties to the compact must have intended to exclude other like quasi municipal corporations, unless we are to imply the word “other” or the words “other like,” so that the sentence would read, “neither the state of Kansas nor any county, township or ‘other1/‘other like’ municipality.’’ If this had been the sense intended, ordinarily the drafters of the compact would have said, “any county or other municipality” and' would have omitted the word “township.”

It seems to me, therefore, that the specific enumeration of counties and townships and the omission of the word “other” manifest an intention, on the part of the drafters of the compact, to exclude all quasi municipal corporations other than counties and townships and to employ the word “municipality” in its proper sense in contradistinction to its generic sense.

There is another rule of construction which, if applied, forbids a construction of the word “municipality” in its broad or generic sense. Words used in one sense in one part of a contract, as a general rule, are -deemed to have been used in the same sense in another part of the instrument, where there is nothing in the context to indicate •otherwise. 13 C. J. 532, § 491; Pringle v. Wilson, 156 Cal. 313, 104 P. 316, 24 L. R. A. (N. S.) 1090; Maupin v. So. Surety Co., 205 Mo. App. 81, 220 S. W. 20; Chicago Home for Girls v. Carr, 300 Ill. 478, 133 N. E. 344; Lyou v. Gray (Tex. Civ. App.) 288 S. W. 545.

The word “municipality” occurs three times in the compact preceding paragraphs numbered 1 and 2. It occurs also in paragraphs numbered 1 and 2 in the sentence of which the clause now under consideration is a part and in each of these five instances the context shows unmistakably that it is employed1 in its restricted or proper sense. It must be deemed to have been used in the same sense in the clause under consideration, unless the context there indicates otherwise. The context, for the reasons above stated, does not indicate otherwise, but rather points to the use of the word “municipality” in its proper sense.

It is my conclusion that the exemption applies only to the state and any county, township, eity, town or village thereof. It follows that the compact did not exempt the city -from the special assessments levied by the district.