City of Parkersburg v. Baltimore & O. R. , 296 F. 74 ( 1923 )

WOODS, Circuit Judge.

The vital question to be decided is whether the city of Parkersburg has lost the right to collect taxes on property of the Baltimore & Ohio Railroad Company situated in the city. The right to be perpetually free from city taxation is asserted by the railroad company on these grounds: (1) Exemption or commutation by a city ordinance of June 8, 1855, a contract with the city of the same date and subsequent ratification thereof; (2) adjudication of July 13, 1897, that the attempted exemption or commutation was valid; (3) laches of the city in acquiescing in the assertion of the validity of the exemption or commutation from 1855 to 1893, and from 1897 to 1921. The material facts will appear from a summary of the bills and the course and status of the litigation.

On April 10, 1894, the Baltimore & Ohio Railroad Company filed a bill in the Circuit Court for the District of West Virginia and on August 6, 1895, an amended and supplemental bill to enjoin the city of Parkersburg from the threatened forcible collection of $1,042.73 taxes claimed for the year 1893. .The bill set out an ordinance of the president, recorder, and, trustees of the town of Parkersburg and a contract made in pursuance thereof between the town and the Northwestern Virginia Railroad Company, both dated June 8, 1855. Under the ordinance and contract the railroad company was to receive from the town the right to the free and exclusive use and occupation for railroad purposes of the lands, banks, shores, and water rights within described boundaries, and “the right to lay and use railroad tracks with suitable switches and turnouts along and across such of the streets and alleys of the said town a's they may deem necessary to connect their stations and other improvements.” These rights were subject to the obligation of the railroad company to keep the streets open for traffic, to grade and keep in repair the portion of the streets between sidewalks and tracks, and to construct and maintain a certain culvert. All the property of the railroad company then owned, or thereafter acquired, used for railroad purposes, was to be “free from all town taxes, assessments and charges.” The consideration tot the town was the grant of all the right, title, and interest of the railroad company in lands conveyed to it by Jackson and others, to be used by the town exclusively for wharfage purposes, the construction of two wharfs on the Ohio river, one of them at the foot of Court street, subject to the condition that rates for wharfage should not exceed the lowest rate at certain cities named, except by consent of the railroad company, and that the railroad company should have free wharfage. By the records of the town council of July 13, 1855, it appears that .the ordinance and contract were for the adjustment of conflicting claims of title to the banks of the Ohio and Kanawha rivers.

On February 15, 1865, at a foreclosure sale, the Baltimore & Ohio Railroad Company became the purchaser of the property of the Northwestern Virginia Railroad Company, and thereafter conducted its business under the name of Parkersburg Branch Railroad Company. After the foreclosure sale, on May 30, 1865, and May 10, 1867, ordinances were passed declaring the ordinance of June 8, 1855, to be in full force and virtue, but making no special reference to the attempted tax exemptiom The ordinance of May 10,. 1867, extended the railroad’s use of the streets in the city upon condition that the railroad company, in accordance with the agreement of June 8, 1855, with the Northwestern Virginia Railroad Company, should construct the wharf on Court street to be fhe property of the city. On March 15, 1870, in consideration of the payment of $7,500, the railroad company was released from its obligation to build the wharf on Court street.

On these facts, set out in the bill and exhibits, the court on April 10, 1894, issued a temporary injunction ex parte. The city on May 7, 1894 filed a demurrer to the original bill on the ground that it appeared from the face of the bill that complainants were not entitled to the injunction asked. Afterwards, on June 14, 1894, the city filed its answer alleging lack of power in the city council to exempt the railroad company from taxes or to commute taxes in the manner set up in the bill, and setting up other defenses. On June 20, 1894, plaintiff filed exceptions to the answer of 'the city as impertinent and immaterial. Plaintiff filed an amended and supplemental bill on August 16, 1895, and obtained another temporary injunction. On September 3, 1895, the city demurred to the amended and supplemental bill, setting out its grounds of objection with more detail.

Under the bills and demurrers the validity of the attempted tax exemption waá elaborately argued before Hon. Nathan Goff, Circuit Judge. The demurrers were overruled on July 13, 1897, in a formal decree containing this provision:

“And thereupon came the defendants and asked leave to file their separate answers, heretofore tendered in this cause, to the original bill and the same being considered by the court and ordered filed, and leave is given them to file answer to said amended and supplemental bill within 30 days from this date.”

Thereafter, on August 11, 1897, the city filed its answer to the amended and supplemental bill reiterating the defenses set up in the answer to the original bill, again alleging the invalidity of the ordinances and contracts of the city council in so far as. they purported to exempt the Northwestern Railroad Company and the Baltimore & Ohio Railroad Company from taxes, and alleging that, even if the attempted exemption of June 8, 1855, of the Northwestern Virginia Railroad Company was valid, the Baltimore & Ohio Railroad Company did not acquire such exemption by purchase at the foreclosure sale.

On June 9, 1920, an order was mad© in the District Court striking the cause from the docket. On January 17, 1921, on motion, an order was made restoring the cause to the docket, the order reciting that it appeared to the court—

“from the last order entered in said cause that tbe same was heretofore submitted to tbe court upon tbe motion of tbe plaintiff to perpetuate a temporary injunction theretofore granted, and upon the motion of the defendant, the city of Parkersburg, to dissolve said temporary injunction, and that neither of said motions, so far as the record discloses, have been disposed of by the court.”

On June 3, 1922, counsel for the city moved that the cause be set for hearing. Plaintiff’s counsel objected and moved to strike out the answers—

“upon the ground that the said the city of Parkersburg has acquiesced in the injunctions awarded herein on the 10th day of April, 1894, and the 16th day of August, 1895, and through the lapse of more than a quarter of a century has failed to take any action looking to the dissolution of the said injunctions, and has long since abandoned its claim for the taxes, the collection of which was restrained by said injunctions, and has failed to do or offer to do equity herein, and for other reasons appearing in the record.”

On January 10, 1923, counsel for the city moved to dissolve the preliminary injunctions and dismiss the suit. By final decree, dated February 7, 1923, the answers of the city of Parkersburg were stricken from the record and the preliminary injunctions were made permanent. The appeal is from this decree.

The town of Parkersburg was chartered in 1820. Neither the original charter nor any amendment confers, either directly or by implication, power to exempt property from taxation. Taxation being an essential function of government, the authority to relinquish it must be clearly conferred, and every doubt will be solved against the existence of the power of exemption and against the averment that such a power has been exercised. Wilmington & Weldon Railroad v. Alsbrook, 146 U. S. 279, 294, 13 Sup. Ct. 72, 36 L. Ed. 972; St. Louis v. United Railways Co., 210 U. S. 266, 273, 28 Sup. Ct. 630, 52 L. Ed. 1054; J. W. Perry Co. v. Norfolk, 220 U. S. 472, 480, 31 Sup. Ct. 465, 55 L. Ed. 548; Whiting v. West Point, 88 Va. 905, 14 S. E. 698, 15 L. R. A. 860, 29 Am. St. Rep. 750; Richmond v. Virginia Railway & Power Co., 124 Va. 529, 98 S. E. 691; 3 Dillon’s Municipal Corporations (5th Ed.) § 1310.

All attempts of the municipal council to exempt from taxation or to ratify such attempted exemption, being without legal foundation, were absolutely void; and no omission of the council to levy and collect taxes could operate to confer the right of exemption by estoppel. Marsh v. Fulton County, 10 Wall. 676, 19 L. Ed. 1040; Loan Association v. Topeka, 20 Wall. 655, 22 L. Ed. 455; Parkersburg v. Brown, 106 U. S. 487, 501, 1 Sup. Ct. 442, 27 L. Ed. 238; Daviess County v. Dickinson, 117 U. S. 657, 6 Sup. Ct. 897, 29 L. Ed. 1026; Bloomfield v. Charter Oak Bank, 121 U. S. 121, 136, 7 Sup. Ct. 865, 30 L. Ed. 923; Barnett v. Denison, 145 U. S. 135, 139, 12 Sup. Ct. 819, 36 L. Ed. 652; Brenham v. German-American Bank, 144 U. S. 173, 183, 12 Sup. Ct. 559, 36 L. Ed. 390. “The protection of public corporations from such unauthorized acts of their officers and agents is a matter of public policy in which the whole community is concerned. And those who aid in such transactions must do so at their peril.” Thomas v. City of Richmond, 12 Wall. 349, 20 L. Ed. 453.

It is true that it has been held in numerous cases that a city may make a valid contract to pay or allow the whole or a part of the taxes as compensation for a continuous service rendered, such as furnishing water to the city. This is put on the ground that in such case there is no exemption from taxes, but an agreement in substance that the amount of the taxes should be paid from year to year as compensation for the current service rendered. Conery v. New Orleans Waterworks Co., 41 La. Ann. 910, 7 South. 8; Board of Councilmen v. Capital Gas & Electric Light Co. (Ky ) 29 S. W. 855; Town of Cannan v. Enfield Village Fire District, 74 N. H. 517, 70 Atl. 250, 258; Maine Water Co. v. City of Waterville, 93 Me. 586, 45 Atl. 830, 49 L. R. A. 294; Phillips v. City of Portsmouth, 115 Va. 180, 78 S. E. 651; Bartholomew v. City of Austin, 85 Fed. 359, 29 C. C. A. 568; Grant v. Davenport, 36 Iowa, 405; Montclair Water Co. v. Town of Montclair, 81 N. J. Law, 573, 79 Atl. 258; Alpena City Water Co. v. City of Alpena, 130 Mich. 413, 90 N. W. 36; Id., 213 Mich. 518, 90 N. W. 323.

Stearns v. Minnesota, 179 U. S. 223, 21 Sup. Ct. 73, 45 L. Ed. 162, is relied on as sustaining the validity of the ordinance and contract of exemption. Minnesota received a grant of land’from the United States “for the purpose of aiding in the construction of a railroad * * * from * * * St. Paul to the head of Lake Superior.” The state granted the land to the Lake Superior & Mississippi Railroad for railroad purposes and no other. In consideration of the grant the railroad agreed to pay, on or before the 1st day of March of each year, 3 per cent, of the gross earnings “in lieu and in full of all taxation and assessments.” The lands were, however, to be subject to the usual land tax as soon as sold or leased. Other lands involved in the litigation were granted to the Northern Pacific Railroad Company by the United States, the railroad being required by its congressional charter to obtain the consent of any state through which it might pass before commencing work. The state of Minnesota gave its consent to the construction of the road on the condition that the lands and other property of the railroad company should pay the same per cent, of its gross earnings to the state as had been exacted of the Lake Superior & Mississippi Railroad, in full and in lieu of all taxes. Afterwards the Legislature of Minnesota undertook by státute to subject the property of both railroads to the taxes levied on all other property in the state, in addition to the percentage of gross earnings stipulated in the grants to be in full of all taxes.

It is to be observed that the question was not one of complete exemption from taxation, but of the right of a state to "grant land and affix as a condition of the grant the measure of taxes which the grantee was to pay each year. The majority of the court held that the method of taxation provided by the grant was not an exemption; that it was by virtue of the contracts fixing the tax that land not before subject to taxation as property of the state and of the United States was made taxable ;' that in bringing it in as taxable property the state could attach any condition precedent it saw fit; and that therefore the state could not impose the current rate of taxation for other property in addition to the 3 per cent, of gross earnings contracted to be in full of all taxes. None of this reasoning nor the conclusion of the court can apply to the facts in the case before us. Four judges dissented from the majority-view, insisting that the contract was an attempt to exempt property from taxation and impose an unequal tax in violation of the state Constitution, and further that the statute of the state exacting the 3 per cent, of gross earnings, in addition to the tax imposed on other property was m violation of the constitutional requirement of uniform taxation.

No authority has been cited, and we think none can be found, holding that a municipal council, without legislative authority, may for a lump consideration in land or money bargain away the power and duty to tax. Statement of the claim of such power is its own refutation. If a municipality could bargain with one taxpayer to accept a gross sum in commutation of all future taxes, it could so bargain with all. The exercise of such a power would destroy the continuous flow of financial resources essential to the life of the municipality and implicit in the word “taxation.”

But even if the ordinance and contract of June 8, 1855, had been a valid exemption from taxation of the Northwestern Virginia Railroad Company, the exemption would not extend to the Baltimore & Ohio Railroad Company, alleged to be the real purchaser at the foreclosure sale made to the Parkersburg Branch Railroad Company in February, 1865. Immunities and exemptions were not mentioned in the mortgage, nor in the deed of conveyance under foreclosure. Conveyance of the property of a railroad with the franchises, rights, and privileges does not carry to the purchaser at a foreclosure sale the right of exemption from taxation which had been enjoyed by the mortgagor. Rochester Railway Co. v. Rochester, 205 U. S. 236, 27 Sup. Ct. 469, 51 L. Ed. 784; Yazoo & Mississippi R. R. Co. v. Vicksburg, 209 U. S. 358, 28 Sup. Ct. 510, 52 L. Ed. 833; Wright v. Georgia R. R. & Banking Co., 216 U. S. 437, 30 Sup. Ct. 242, 54 L. Ed. 544; Morris Canal Co. v. Baird, 239 U. S. 126, 131, 36 Sup. Ct. 28, 60 L. Ed. 177.

Therefore the Baltimore & Ohio Railroad Company, as purchaser under the name of Parkersburg Branch Railroad Company, took the property in February, 1865, stripped of the tax exemption in favor of the Northwestern Virginia Railroad Company, if it had ever existed. The Baltimore & Ohio Railroad Company avers that, even if this be true, it was exempted from taxation by the ordinances of May 30, 1865, and May 10, 1867, passed after the foreclosure sale.

Assuming, without deciding, die requirement of the Constitution of West Virginia of 1863 that all taxation shall be equal and uniform to apply only to taxation by the state and not to that by municipal corporations, we think the city ordinances of May 30, 1865, and May 10, 1867, are unavailing to protect the Baltimore & Ohio Railroad Company from taxation. These ordinances in general terms declare the ordinance of June 8, 1855, and a’l other ordinances accepted by the Northwestern Virginia Railroad Company and not repealed, to be binding on the city and on the Parkersburg Branch Railroad Company, “as the successors to the former parties thereto.” No mention is made of exemption from taxation attempted by the ordinance of June 8, 1855. These ordinances fail to relieve the Baltimore & Ohio Railroad Company of its taxes for total want of power in the council to exempt from taxation. It follows that all the attempts of the municipal council by ordinances and contract to exempt the railroad company from taxation were absolutely void.

The city has not lost its right to collect the tax by adverse adjudication in this litigation. An order or decree on a demurrer and the entry of final judgment thereon is an adjudication of a point involved. Bissell v. Spring Valley Township, 124 U. S. 225, 8 Sup. Ct. 495, 31 L. Ed. 411; Wiggins Ferry Co. v. Ohio & Mississippi Railway, 142 U. S. 396, 12 Sup. Ct. 188, 35 L. Ed. 1055. But an order overruling a demurrer is not an adjudication of the merits, when there is no final decree or judgment, and leave is granted to file an answer raising the same question made by the demurrer. Here, in overruling the demurrer to the bill, the defendant was given leave to file an answer putting in issue questions made by the demurrer. This was refusing to decide the issue on demurrer, leaving it for decision on the final hearing.

“A demurrer to a complaint because it does not state facts sufficient to constitute a cause of action, is equivalent to a general demurrer to a declaration at common law, and raises an issue which, when tried, will finally dispose of the case as stated in the complaint, on its merits, unless leave to amend or plead over is granted. The trial of such an issue is the trial of the cause as a cause, and not the settlement of a mere matter of form in proceeding. There can be no other trial except at the discretion of the court, and if final judgment is entered on the demurrer, it will be a final determination of the rights of the parties, which can be pleaded in bar to any other suit for the same cause of action. Under such circumstances, the trial of an issue raised by a demurrer which involves the merits of the action is, in our opinion, a trial of the action within the meaning of the Act of March 3, 1875.” Alley v. Nott, 111 U. S. 472, 475, 4 Sup. Ct. 495, 496 (28 L. Ed. 491); Virginia v. West Virginia, 206 U. S. 290, 27 Sup. Ct. 732, 51 L. Ed. 1068; Kansas v. Colorado, 185 U. S. 125, 22 Sup. Ct. 552, 46 L. Ed. 838; Anderson v. Olsen, 188 Ill. 502, 59 N. E. 239; Foster-Eddy v. Baker (C. C.) 192 Fed. 624. The limitation of the general doctrine expressed in the words we have italicized applies. The rights of the parties were, therefore, unadjudicated, and the cause was pending for trial when the final decree for a permanent injunction was entered February 7„ 1923.

The argument is made that the city has lost its right to collect the tax for the year 1893, the tax enjoined, and taxes for all subsequent years as well, by laches, in that the municipal authorities failed to attempt to collect the taxes from 1855 to 1893, and after the temporary injunction in 1897 failed to bring the cause on for a final hearing until 1921.

When an act is within the general scope of municipal power, and is not expressly forbidden by law, the conduct of its officers may be attributed t© a municipality as laches or estoppel according to circumstances. Illustrative cases are Bank v. Dandridge, 12 Wheat. 64, 63 L. Ed. 552, and Boone v. Burlington, 139 U. S. 684, 11 Sup. Ct. 687, 35 L. Ed. 319. But the attempt to exempt from taxes being entirely without the scope of its power, the council in attempting to confer exemption did not represent the municipality. The effort to bind the city by the attempt was of no more effect than would have been an effort by the council to legislate or make contracts for another municipality or the entire state. In such case no laches or attempt at ratification by the council could bind the city. “A contract of a corporation, which is ultra vires, in the proper sense, that is to say, outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the Legislature, is not voidable only, but wholly void, and of no legal effect. ' The objection to the contract is, not merely that the corporation ought not to have made it but that it could not make it. The contract cannot be ratified by either party, because it could not have been authorized by either. No performance on either side can give the unlawful contract any validity, or be the foundation of any right of action upon it.” Central Transp. Co. v. Pullman’s Palace Car Co., 139 U. S. 24, 59, 11 Sup. Ct. 478, 488 (35 L. Ed. 55); Jacksonville, etc., Railway v. Hooper, 160 U. S. 514, 524, 530, 16 Sup. Ct. 379, 40 L. Ed. 515; California Bank v. Kennedy, 167 U. S. 362, 368, 17 Sup. Ct. 831, 42 L. Ed. 198; Marsh v. Fulton County, 10 Wall. 676, 19 L. Ed. 1040; Parkersburg v. Brown, 106 U S. 487, 501, 1 Sup. Ct. 442, 27 L. Ed. 238; Daviess County v. Dickinson, 117 U. S. 657, 6 Sup. Ct. 897, 29 L. Ed. 1026; Flowers v. Logan County, 137 Am. St. Rep. 357, 368, 375, note; Neacy v. Drew, 176 Wis. 348, 187 N. W. 218; Mayor of Hogansville v. Planters Bank, 27 Ga. App. 384, 108 S. E. 480; Milster v. Spartanburg, 68 S. C. 33, 46 S. E. 539; 2 Dillon on Municipal Corporations (5th Ed.) § 951; Bigelow on Estoppel (5th Ed.) 466.

As to attempts to found a right of action on a void contract and acts done under it, the court said in Thomas v. Railroad Co., 101 U. S. 71, 86 (25 L. Ed. 950):

-“To hold that they can is, in our opinion, to hold that any act performed in executing a void contract makes all its parts valid, and that, the more that is done under a contract forbidden by law, the stronger is the claim to its enforcement by the courts.”

Contrary to these express decisions of the Supreme Court, the suit of the Baltimore & Ohio Railroad Company is a plain attempt to obtain the affirmative relief of injunction by virtue of void ordinances and a void contract, and omissions and actions alleged to constitute laches and ratifications. Such a suit is without foundation.

Nor can we agree, as held by the District Court, that the plaintiff, Baltimore & Ohio Railroad Company, is entitled to have a final decree for a permanent injunction in its favor on the ground that the city, the defendant, failed to press the cause for a hearing. The railroad company was the actor. The temporary injunction adjudged nothing, and had no effect, except to stay the collection of the tax until the final decree. The decree of the District Court makes the deliberate failure of the complainant to press for 'a final decree equivalent to a final decree in its favor. Neglect of a plaintiff, the actor in the cause, to prosecute his case to final judgment, may well result in its dismissal; but the neglect of the defendant, who sought no affirmative relief, or the neglect of both parties to bring the cause to a final hearing, is not a ground for granting affirmative relief against the defendant, without a trial on the merits. Surely the defendant was guilty of no delay of which the plaintiff was not equally guilty. If the parties are equally guilty of delay, neither can avail itself of the delay of the other as laches. Nordman v. Meyer, 118 Iowa, 508, 92 N. W. 693, 694; Mays v. Morrell, 65 Or. 558, 132 Pac. 714; 21 C. J. 215; Kansas City Southern R. Co. v. Boles, 88 Ark. 533, 115 S. W. 375, 378; Georgia R. & Banking Co. v. Wright, 124 Ga. 596, 53 S. E. 251, 266. Relieving the plaintiff of the responsibilities and' penalties of neglect to prosecute, and imposing them on the defendant, is reversing the rule of law.

The last position taken by the complainant is that the city of Parkersburg must abide by the void ordinances and contract until it offers to restore the consideration received from the railroad companies for the exemption. If the Northwestern Virginia Railroad Company had continued business, and continued to own the railroad property in Parkersburg, and were the plaintiff here, it could set up in this equity suit that it was entitled to a return of the property known as the Jackson lots and the value of its use, if that could be made without detriment to the city, or to payment of the value of the property to the city and interest. In the adjustment the Northwestern Virginia Railroad Company would be required to account for the value of all the benefits received by it in the transaction with interest, and for the taxes it should have paid for all the intervening years, with interest. This we understand would be the result of the principle sanctioned in Louisiana v. Wood, 102 U. S. 294, 26 L. Ed. 153; Parkersburg v. Brown, 106 U. S. 487, 503, 1 Sup. Ct. 442, 27 L. Ed. 238; Chapman v. Douglas County, 107 U. S. 348, 360, 2 Sup. Ct. 62, 27 L. Ed. 378; Salt Lake City v. Hollister, 118 U. S. 256, 263, 6 Sup. Ct. 1055, 30 L. Ed. 176; Pennsylvania Railroad v. St. Louis, etc., Railroad, 118 U. S. 317, 318, 6 Sup. Ct. 1094, 30 L. Ed. 86; Railway Companies v. Keokuk Bridge Co., 131 U. S. 371, 389, 9 Sup. Ct. 770, 33 L. Ed. 157; Luther v. Wheeler, 73 S. C. 83, 52 S. E. 874, 4 L. R. A. (N. S.) 746, 6 Ann. Cas. 754.

But the property conveyed and the benefits conferred by the Northwestern Virginia Railroad Company on the city was for the consideration of exemption of the Northwestern Virginia Railroad Company from its taxes. This promise of exemption, though void, was actually performed, and the Northwestern Virginia Railroad Company was in fact exempted from taxation for the whole period of its existence after June 8, 1855, the date of the ordinance and contract, until its property was sold in February, 1865. The city is now barred by the statute from recovery of these taxes. The Northwestern Virginia Railroad Company has therefore received all that the city council attempted to promise for the city in consideration of the conveyance to the city of the Jackson lots, and it has no claim against the city either legal or equitable for failure of consideration.

It is equally evident that the Baltimore & Ohio Railroad Company has no valid claim. As we have seen, the ordinance and contract of June 8, 1855, even if they had been valid, would have conferred no right of exemption on the Baltimore & Ohio Railroad Company, purchaser at the foreclosure sale'. It follows that the Baltimore & Ohio Railroad Company, the plaintiff here, has no equity to require return of the Jackson lots conveyed by the Northwestern Virginia Railroad Company to the city as consideration for exemption' of the property of the Northwestern Virginia Railroad Company or an accounting of their value to the city.

The ordinance of May 30, 1865, contains no statement of any consideration whatsoever going from the Baltimore & Ohio Railroad Company to the city, and hence it may be left out of consideration. The ordinance of May 10, 1867, bears the title:

“An ordinance to widen Washington street, and to authorize the Parkersburg Branch Railroad Company to extend their track through the city to the Ohio river.”

Sections 1, 2, and 3 all relate to privileges and powers granted to the Baltimore & Ohio Railroad Company, and they are very valuable privileges and powers. None of them impose any duty from the railroad company to the city. By section 4 the railroad company is required to put in a wharf at .the foot of Court street as one of the conditions of the powers and privileges granted in the preceding sections of the ordinance. It is a distinct and separate requirement of the railroad. Sections 5, 6, 7, and 8 relate entirely to the widening of Washington street to 60 feet. Section 5 provides that it shall be widened to 60 feet. Sections 6 and 7 provide for the acquisition by condemnation of the land required for the purpose by the city. Section 8 provides that the land required shall be conveyed to the city; but it provides further that, if the railroad company should determine to construct an extension on any of the land so condemned, then the land shall be conveyed to the railroad company, with the provision that it shall leave a passway of 7 feet and spaces between the piers on Washington street free and unobstructed. Section 9 provides that the city shall issue its bonds for $15,000 to pay for the land so required and that the railroad company shall pay the remainder not met by the sale of the city bonds.

From this statement it is evident that the railroad company received very valuable rights and privileges from the city. For these it assumed only two obligations, that imposed by section 4 to build a wharf at the foot of Court street, and the other to pay for the land condemned any balance after the applicatioil of the proceeds of the city’s bonds for $15,000. There is no allegation in either bill that the railroad company paid anything at all for the acquisition of the property. The only thing, therefore, that could possibly be regarded as a consideration by the railroad company for the many lights and privileges granted in the ordinance of May 10, 1867, was the undertaking to construct a wharf at the foot of Court street. The ordinance amending the ordinance of May 10, 1867 provides for the payment of $7,500 as the consideration of the release of the railroad company from the obligation to build the wharf at the foot of Court street.

With this analysis, reading in connection the ordinances of May 30, 1865, May '10, 1867, and the ordinance of March 15, 1870, amending the ordinance of May 10, 1867, it is evident that the obligation to build the wharf at the foot of Court street, and the payment of $7,500 for release from that obligation was not a consideration for exemption from taxation which is not mentioned, but for the numerous privileges and rights specifically conferred on the railroad company by these ordinances. This is made all the more evident by the fact that section 3 of the ordinance of May 30, 1865, and the same section of the ordinance of May 10, 1867, declaring in force the ordinance of June 8, 1855, and the deed executed at the same time, relate exclusively to permission to the railroad company to use steam on their trains, and malee no mention of tax exemption.

We cannot construe these ordinances as expressing beyond doubt an intention to .exempt the Baltimore & Ohio Railroad Company from taxation, and expressing that the $7,500 paid in discharge of the obligation to build the wharf at the foot of Court street was a consideration for an attempted exemption from taxation. Such a construction would violate the rule so well established that the power to exempt and the intention to exempt must be clear beyond doubt.

Take, however, the contrary view, and assume in favor of the plaintiff that the $7,500 paid by the plaintiff March 15, 1870, was paid entirely as a consideration for the exemption from taxes. Give the plaintiff credit for the entire sum of $7,500 and interest from March 15, 1870, as a valid equitable claim against the city in favor of the plaintiff. The city would have the clear equity to set off against this debt of $7,500 the taxes and interest thereon owing by the plaintiff from February 15, 1865, the date when plaintiff acquired the railroad property, to January 1, 1894. The aggregate of these taxes for these 29 years owing to the city and interest thereon would far exceed the $7,-500 and interest considered as a payment for exemption from taxation. Thus it plainly appears that the plaintiff has received in illegal exemption from taxes which it is now too late for the city to recover, much more than the consideration paid for the exemption, and that it has no legal or equitable claim against the city.

The plaintiff’s claim for exemption being without foundation, and the record disclosing no ground for equitable relief, the District Court should have dismissed the bill.

The decree of the District Court is reversed.