Canaan v. Enfield Village Fire District

The Enfield Village Fire District is a public corporation created by the legislature for the promotion of the public welfare. It was organized in 1873 under the general law then in force authorizing its creation (G. S., c. 97), and it thereby became a body politic and was invested with certain limited governmental powers. Its essential character as a governmental agency, as contradistinguished from a private corporation, is as apparent as though the territory and the inhabitants of which it is composed had been specially designated by the legislature as a town. While its territorial boundaries are within the town of Enfield, it is, like a school district similarly situated (Union School District v. District, 71 N.H. 269), distinct from the town as a governmental agency. Within the limit of the powers conferred upon it, it may be deemed town. P. S., c. 2, s. 5.

In 1903, the legislature by special act (Laws 1903, c. 221) authorized and empowered the defendant to establish water-works "for the purpose of introducing into and distributing through said fire district an adequate supply of pure water in subterranean pipes, for extinguishing fires and for the use of its citizens and for other purposes." It was also authorized to acquire by purchase or by the power of eminent domain streams and ponds, and to build canals and reservoirs for its water-works. The act did not specifically define the territory within which this power might be exercised. So far as the acquisition of the property is concerned, it was not expressly limited to the territory of the district, or to that of the town of Enfield. By section 4 of the act it was provided: "The purchase of real estate and water rights already made by said fire district, the authority voted for the issue of notes or bonds for construction of the said water-works, and the vote of the town of Enfield exempting such notes and bonds from taxation are hereby ratified and confirmed, and all the property of said fire district used in the construction and operation of its water-works shall be exempt from taxation." Before the passage of this act the defendant purchased certain land and water-rights located in the town of Canaan, which it now uses for the supply of water to its water system, and the question, which is presented by an amendment of the original case (Canaan v. Enfield District, ante, 8), is whether this property is subject to taxation by the town of Canaan. It is apparent the legislature of 1903 intended to authorize the district to acquire real estate in Canaan, and in fact ratified and confirmed the acquisition of such property.

In behalf of the plaintiff, it is claimed that the exemption authorized in section 4 only applies to property of the defendant situated in the town of Enfield. It is argued that, though the language used is broad enough to include land situated in other towns owned by the defendant, the intention of the legislature found from the competent evidence bearing on the subject does not warrant so broad a construction. In support of this contention, the case of Newport v. Unity, 68 N.H. 587, is relied upon.

In that case it was held that real estate used for water-works and owned by Newport, but situated in Unity, is not exempt from taxation by Unity, under section 2, chapter 55, Public Statutes, which provides that "real estate . . . is liable to be taxed, except houses of public worship, . . . schoolhouses, seminaries of learning, real estate of the United States, state, or town used for public purposes, and almshouses on county farms." The question decided in that case is not precisely the same as the one presented in this case. In that case the element of a special exemption was wanting. Immunity from the tax burden was sought under the general statute of exemptions. But if the theory of the decision is sound, it affords much support to the plaintiff's contention, that the legislature did not intend to exempt other property of the defendant than that situated in Enfield. One ground upon which that decision was based is that before 1867, when the section above quoted was first enacted, there was no statutory exemption of the real estate of towns from taxation; that at that time towns had no general authority to purchase land beyond their limits; and that "if there were, at the time of the revision of 1867, no statutes authorizing towns to purchase real estate outside their limits, it seems plain that the statute is not necessarily to be construed as exempting such property from taxation. The legislature could not have had it in mind. Hence, when they subsequently authorized towns and cities to acquire for public purposes lands in other towns, it cannot be justly presumed that they intended such property to be exempt from taxation." If it is conceded that when the legislature authorizes a town to acquire land in another town for public purposes, a general statutory exemption of public property is not intended to apply to such extra-territorial property, it may be argued with some degree of plausibility that the legislature of 1903, by general words of exemption, did not intend to exempt the defendant's property located in Canaan. If the words of the exemption had been "the real estate of the district used for public purposes," in analogy to the general language used in section 2, chapter 55, Public Statutes, which the court held in Newport v. Unity did not apply to land located without the town of Newport, the intention to exclude the Canaan property from its operation would not have been more apparent. If the comprehensive language of the general law, exempting the real estate of towns "used for public purposes" from taxation, relates only to real estate located within the territorial boundaries of the town, similar language used in a special act creating a water district might reasonably be restricted to land in the town in which the district is located, in contradistinction to land of the district located in another town. It seems to be important, therefore, to consider whether the reasoning by which the decision in Newport v. Unity was reached is logically sound as an authoritative exposition of the legislative intention relative to the exemption from taxation of town property used for water-works purposes when located in another town.

The opinion in that case is based to some extent upon the assumption that previous to 1867 the property of towns used for public purposes was taxable, and that the legislature of that year created the exemption having reference solely to intra-territorial property, for the reason above suggested. If this assumption is sound, it affords weight to the plaintiff's contention that, upon a strict construction, the legislature of 1903 did not intend to extend the defendant's exemption to property which, though used for public purposes in Enfield, was located in Canaan, and that the express mention of the exemption, though unnecessary, was inserted out of abundant caution. If the property in question falls within the taxable class of property, it is taxable unless it is clearly exempted by express legislative language. And the court in Newport v. Unity, holding that the public water-works of Newport located in Unity fell within the general statutory definition of ratable estate, decided that they were taxable, the same as they would be if owned by an individual or a private corporation. If the court had started with the opposite assumption, viz., that being property devoted to a public use by a town the water-works were not taxable unless specially made so by statute, the conclusion that the legislature did not intend to exempt them, though located in an adjoining town, would have been less obvious. The evidence of that legislative intent would have been less convincing, and the decision would not be an authority for the proposition that, in the absence of an express legislative exemption, the property of towns used for public purposes is taxable. By applying that doctrine to the case at bar, and adopting the rule of strict construction which is observed when the question relates to the exemption of the property of private corporations or of individuals (Portsmouth Shoe Co. v. Portsmouth, ante, 222), it might not be difficult to hold that the legislature did not intend to exempt the defendant's extraterritorial property, and hence that it is taxable. But a re-examination of the grounds of that decision, it is believed, will show that they are fallacious.

When the legislature in 1867 excepted from taxable real estate the "real estate of the United States, state, or town used for public purposes," it did not thereby introduce an innovation, and withdraw from taxation property otherwise subject to that burden. It did not create a new class of non-taxable property. It merely recognized an ancient and uninterrupted rule, which would have been as controlling if it had not been put into legislative language. "It is certainly not true that all lands in the town were ever taxed, or now are. Lands owned by the town are not taxed, and yet are not exempted by any statute; the parsonage, school-lot, etc., are of this description. All buildings are to be taxed; but was it ever heard of to tax a meeting-house, schoolhouse? Were the public buildings in Exeter, Concord, Hanover, etc., ever taxed? There are and always have been exemptions, where the statute has not expressly made any. They depend on invariable usage, growing out of the reason and nature of the thing. They are more ancient than our statutes (1770), and are not repealed except by express clauses for the purpose, or by provisions necessarily and manifestly repugnant." Smith, C. J., note to Kidder v. French, Smith (N.H.) 155, 157 (1807). In Grafton County v. Haverhill, 68 N.H. 120, 121, it is said: "It is therefore reasonable to consider that, however general may be the enumeration of taxable property, public property held by the state and counties and municipalities for public and governmental uses was intended to be exempted, unless the right or duty to tax it was provided for in the most express and positive terms, or by necessary implication. Cool. Tax. 172; Black Tax Tit. 410." In recognition of this principle, it was held in that case that county courthouses and jails were exempt from taxation, although county buildings were not included in the statutory exemption of public property.

The same principle is clearly stated in Franklin Street Society v. Manchester, 60 N.H. 342, where it is held that the constitution does not exempt church property from taxation. The court say (p. 349): "So long as towns, under the act of 1791, exercised parochial functions and raised taxes for supporting and maintaining houses of public worship, those places of worship were exempt from taxation as public property by the nature of things, and not by the constitution or by statute. After the act of 1819, when towns were no longer subject to church rates, and the whole management of public worship, including its support, was left to the religious societies authorized and organized for that purpose, the natural reason for exempting this property from taxation ceased." The exemption of such property was neither secured by any constitutional provision, nor granted by any express legislative enactment; but resulted from the very great improbability that the state, through its legislature, should intend to include its own property in a general statutory designation of taxable property. Stated otherwise, such an intention could only be found from express and unequivocal language used in the statute authorizing the tax. In the absence of language necessarily leading to that conclusion, the presumption is that the property of towns, which is properly used in promoting the public welfare, is not taxable. And this presumption, entertained and acted upon for so many years, has established a rule of the non-taxability of municipal property, except when specially designated as taxable. It is not an accurate statement to say that the property of the state is exempt from taxation; the fact is, it does not belong to the taxable class of property enumerated in a general taxing statute; and it is not exempted from the operation of the statute, for it does not fall within it. Formal exempting language, in a legal view, is as unnecessary as it is harmless. It creates no exemption, and is at most but a mere legislative recognition of a class of non-taxable property. The idea is well expressed in Yale University v. New Haven, 71 Conn. 316,331, 332, with reference to the exemption of college buildings in that state: "When the legislature in 1822 saw fit to formally declare that property of the United States, of the state, and of municipal governments, and ``the buildings occupied as colleges,' etc., should be exempt from taxation (Public Acts of 1822, p. 35), it did not alter the character of the property or the reason of its not being taxed. The declaration was not an exemption, in the strict sense of the word, as to buildings occupied as colleges and schools, any more than as to property of the United States. They were untaxed, as they had been for nearly two hundred years, without any legislative declaration, because they are not ``ratable estate'; because they had been placed in that class of property which ought not to be taxed, by virtue of a public policy too clear to be questioned, and which had been followed without any specific legislation by our government from its very beginning." See, also, Camden v. Village Corp., 77 Me. 530; Stiles v. Newport, 76 Vt. 154; Milford Water Co. v. Hopkinton, 192 Mass. 491, 497; West Hartford v. Commissioners, 44 Conn. 360; Rochester v. Rush, 15 Hun 239; S.C., 80 N.Y. 302; People v. Assessors, 111 N.Y. 505, 509; Black v. Sherwood, 84 Va. 906; Van Brocklin v. Tennessee, 117 U.S. 151, 153.

It would seem that, both upon principle and authority, the public property of towns is not taxable unless specifically made so by clear legislative language. The presumption, which has by long and universal acquiescence become a rule of law, is against its taxability. If the court in Newport v. Unity had started with the premise that public property of a town is not ordinarily included in a general taxing statute, and cannot be taxed unless specifically mentioned, it is probable that it would not have held substantially that the water-works in question were taxable because not specifically exempted from the operation of the general statute. Treating the property as taxable unless specifically exempted, authorizes a strict construction against its exemption; while viewing it as non-taxable unless specifically designated as taxable, authorizes a strict construction against its taxableness. In the one case the evidence would show that the legislature did not intend to exempt it from the operation of a general taxing statute; while in the other it would show that the legislature did not intend to include it in the class of property subject to taxation. And as no property is taxable in the absence of legislative authorization (Bill of Rights, art. 28; Const., art. 5; Sunapee v. Lempster, 65 N.H. 655; Carpenter, J., in Boody v. Watson, 64 N.H. 162,195; Nashua Savings Bank v. Nashua, 46 N.H. 389, 392), and as the rule of the non-taxableness of public town property has been recognized for more than one hundred years, it is a reasonable, if not an inevitable, finding, that in a general statute enumerating the kinds of property subject to taxation the legislature did not intend to include the property of towns.

But it is urged that this conclusion is not unlimited, but must be confined to real estate of towns located within their respective boundaries. It is not claimed that there is any special provision of the constitution imposing such a limitation, or that there is any statute providing in terms for the taxation of extra-territorial property owned by towns. That a town may acquire property in another town for public purposes when authorized to do so by the legislature, is not seriously controverted. In fact, the present proceeding assumes that the defendant has the title to the land in question located in Canaan and is chargeable with the tax assessed thereon. Moreover, there can be but little, if any, doubt that the legislature of 1903 ratified and confirmed the defendant's purchase of the land in Canaan. This was equivalent to an express authorization, not to acquire governmental jurisdiction over a part of Canaan, but to become the owner of the land for the purposes specified. Schneider v. Menasha,118 Wis. 298. The contention therefore is, not that the defendant could not become the owner of the land, but that, unlike other land owned by the defendant within its own territory and held for water-works purposes, this extra-territorial land is not, and cannot be, held for public purposes within the meaning of the rule excluding such property from the list of taxable property when located within the town or district claiming the immunity; and hence it is inferred that it is taxable. But argument and discussion are unnecessary to prove that the public character of the use made of the property does not depend upon its territorial location. An imaginary line drawn around land used as a reservoir for the supply of pure water to the inhabitants of an adjoining town, and a legislative act annexing the land thus designated to such town, would not affect the character of the use, or make it public if it was not so before. The admission that such intra-territorial property would be held for public purposes is a concession that when located extra-territorially it serves the public to the same extent, and for all practical purposes its use is the same. Schneider v. Menasha, 118 Wis. 298. When, therefore, it is settled or admitted that the public waterworks of a town are not taxable unless specially included in the tax list, it would seem to follow that the tax immunity must extend to its land used in connection therewith located in another town. In the absence of express statutory authority to tax it, legislative authority for its public use by the town indicates intention that it should be treated as non-taxable, as in the case of intra-territorial property. In this view of the case it is not apparent why the location of the property should determine the question of its subjection to the tax laws. The authorities generally recognize no such distinction. See Stiles v. Newport, 76 Vt. 154; Somerville v. Waltham,170 Mass. 160; West Hartford v. Commissioners, 44 Conn. 360, 369; People v. Assessors, 111 N.Y. 505, 507; Camden Country v. Washington,60 N. J. Law 367; Hackettstown v. Mt. Olive, 63 N. J. Law 191. If writer-works like the defendant's are devoted to a public purpose when located within the water district, they serve the same purpose when located outside the district; and since it is conceded that in the former case they partake sufficiently of a public character to be free from the burden of taxation, no sufficient reason is suggested why in the latter case they do not in fact possess the same character. While it may be conceded that the legislature of 1903 had in mind the decision in Newport v. Unity, and that it constitutes some evidence bearing upon the question of its intention in making the special exemption of the defendant's water-works, it does not outweigh the evidence of the very general understanding for more than a hundred years, that the public property of towns is not taxable unless specially made so by clear legislative language. The act must be read in the light of that understanding, and the exempting clause be deemed a mere recognition of it.

But it is said that this cannot be deemed a correct statement of the legislative purpose, because it authorizes one 'town to withdraw real estate from the taxable property of another town, causing an increased burden of taxation to fall upon the inhabitants of the latter town, without any compensation therefor; that the constitutional provision of equality prohibits such a result; and that therefore it cannot be presumed the legislature has attempted to authorize it. If this contention were sound, it would afford a cogent evidentiary reason for holding that the exemption granted to the Enfield District, though broad enough to include its land in Canaan, was not intended to have that effect. A construction that makes a statute unconstitutional in its operation is not to be adopted when it is reasonably susceptible of another and constitutional construction. Leavitt v. Lovering, 64 N.H. 607, 608. But it will not be contended that the taxpayers of Canaan, much less the town, have a right to have the taxable real estate in the town remain intact for the purposes of raising a revenue. If the state sees fit to appropriate a part of it for public purposes, the taxpayers' rights are not invaded when it is freed from the tax burden. Otherwise the lands taken by the state for a state house, state prison, state library, etc., would be taxable because, aside from their public character, they constitute ratable estate. The same practical hardship as is presented in this case would have arisen if the state had sequestered the land and water-rights in Canaan, now owned by the defendant, for a fish hatchery. It would have been withdrawn from the taxable property of Canaan, but no one would contend that the rights of the taxpayers of Canaan would be invaded thereby. Individual and private rights must yield to the public convenience and necessity. People v. Assessors,111 N.Y. 505, 510. If the inhabitants of Canaan can successfully raise this objection in respect to the defendant's water-works located in that town, by similar reasoning the inhabitants of Enfield living outside the district could insist that that part of the water-works system located within the district should be taxed as other property in the town is taxed. If Canaan may tax the property in that town because it is obliged to furnish police protection and highways for its security and convenience, Enfield may claim the same right for the same reason with respect to the defendant's property located therein. The fundamental difficulty with such an argument is that it treats the district or precinct as a private corporation having property and doing business in the town. But the defendant in this case is a public corporation using its property for public purposes. It is as much an agency of the state as the towns of Enfield and Canaan; and so far as it holds its property in that capacity for the public benefit, it is, on principle, no more taxable for it than a county is for its courthouses and jails. Grafton County v. Haverhill,68 N.H. 120. Unlike a private corporation, it is not engaged in a gainful occupation. It holds its property in trust for the benefit of the public — not exclusively for the private benefit of its inhabitants. Unlike a strictly private corporation or individual, it cannot charge what it chooses for its water, or refuse to furnish water to those who comply with its reasonable regulations. Turner v. Water Co., 171 Mass. 329. In a legal sense, its property belongs to the state. The next legislature may abolish it, even against the unanimous protest of all its citizens, and turn the property over to a new district with different territorial boundaries, upon terms deemed to be equitable, — a power which has been exercised with reference to school districts. Laws 1885, c. 43, P. S., c. 89, ss. 14-27. Sargent v. District, 63 N.H. 528; Union School District v. District, 71 N.H. 269. "It would seem to follow that the inhabitants of a school district have no rights in the existence or in any of the corporate functions of the district, which can be regarded as vested rights, or which can be set up as beyond legislative control. The authority of the legislature in the premises being supreme, any such vested rights in the district as a body, or in the inhabitants composing it as individuals, would be inconsistent with that authority in the legislature, and hence cannot exist." Farnum's Petition, 51 N.H. 376, 379, Wooster v. Plymouth,62 N.H. 193, 208. Since the defendant is an agency of the government, receiving all its powers from the legislature and holding its water-works located in Canaan for the benefit and convenience of the public, the constitutional doctrine of equal and proportional taxation, as applied to the facts of this case, has no application.

Nor does it follow from this result, that if the legislature should authorize the defendant to engage in purely commercial pursuits and had the power to do so, property acquired by it in an adjoining town and used by it would escape taxation. A discussion of the supposed analogy would not be useful and is unnecessary. It is sufficient to hold that when an agency of the state, like the defendant, maintains water-works for the benefit of the public, its property so used is not taxable, though in part located in an adjoining town, in the absence of express legislation making it taxable. See Opinion of the Justices, 155 Mass. 598. It is also a misconception to say that while the 'use of the water-works is public as to the inhabitants of the district, it is private as to the inhabitants of Canaan. This argument, as before shown, would also prove that the use is private as to the inhabitants of Enfield not living within the district. But its fallacy consists in treating the taxpayers or the citizens of the district as though they were stockholders in a private corporation and were benefited by having the exclusive right to use the water. Evidently they have no such right. All the citizens of Canaan, and in fact everybody, may enjoy the advantage and convenience of the defendant's water supply. No one is excluded from the public benefit; and though a resident of Manchester may never go to Enfield to quench his thirst and may never have property interests there, his right to the public benefit is none the less real. His convenience in connection with that of all other people, and not merely and exclusively that of the inhabitants of a part of the town of Enfield, seemed to the legislature to require or justify the establishment of the works and its maintenance by the defendant. State v. Griffin, 69 N.H. 1, 29-31.

Whether the legislature may authorize the taxation for state purposes of some municipal water-works, and exempt others or omit to include them in the designated classes of taxable property, is a question that is not germane to the present inquiry. The sole question presented is whether under chapter 221, Laws 1903, the tax assessed upon the property of the water district by Canaan is a legal tax; and that question is answered in the negative by holding that municipal water-works are not taxable as real estate unless expressly made so by statute, and that the express exemption of such property in the statute in question was merely a recognition of a fundamental principle relating to the taxability of public property that had been recognized and acted upon for a long period of time. So construed, the statute violates no provision of the constitution. Whether there may be other special statutes or charters relating to the taxation of public water-works, whose true construction might show that they are violative of the constitution, it is unnecessary to determine in the present case; for if it were conceded that there are such statutes, the validity of the statute now under consideration would not be thereby impaired. It is unnecessary to define the extent of the legislative power of imposing taxes upon public corporations in a case like this, where the effect of the statute is, not to impose a tax upon the property, but to leave it in the untaxable class of property.

In accordance with the provision of the agreed case, there must be judgment for the defendant.