Opinion
March 13, 1941.
1. SCHOOL DISTRICTS: Taxation. A school district has a right to maintain an action to prevent disbursement of taxes paid by a water company, which should be paid to the district, to municipalities other than the district.
The district has a substantial interest in preventing taxes which rightly belong to it from being paid to other districts under a statute which provides that all mains, pipes and equipment constituting a single distributing system for operating water, etc., to two or more incorporated municipalities shall be treated as personal property and taxable as such where situated. [Mo. Stat. Ann., Sec. 9977, p. 8015.]
2. SCHOOL DISTRICTS: Taxation: Parties. In an action by a school district under Section 9977, Missouri Annotated Statutes, to prevent taxes paid by a water company, which belong to the district, from being paid to other municipalities, where such property is taxed as personal property, all districts and municipalities into which the mains, pipes etc., flow have a right to defend and are necessary parties.
Under the general rule that all persons whose interest will necessarily be affected by the decree or without whose presence a company settlement of the question involved cannot be made, are properly joined as defendants.
In an action by a school district to enjoin the disbursement of taxes paid by a water company, which should be paid to the district, to municipalities other than the district, all the municipalities and school districts in which are located the mains, pipes, etc., of the water company are necessary parties to a complete determination of the issue.
Appeal from Circuit Court of St. Louis County. — Hon. John A. Witthaus, Judge.
REVERSED AND REMANDED ( with directions).
Joseph T. Davis for appellants.
(1) A law or a provision in the law which makes it applicable to a part of a class or to a part of the State, generally, is in violation of the Constitution of Missouri, which prohibits local and special laws, and is also in violation of the Federal Constitution. Massey-Harris Harvester Co. v. Bank, 104 S.W.2d 385; Waterman v. Chicago Bridge Iron Co., 41 S.W.2d 575; State ex rel. v. Knight, 21 S.W.2d 767; State ex inf. v. Armstrong, 286 S.W. 705; State ex rel. v. Hedrick, 294 Mo. 72; State v. Logan, 268 Mo. 176; State ex rel. v. Roach, 258 Mo. 562; State ex rel. v. Kimmel, 256 Mo. 611; Bridges v. Mining Co., 252 Mo. 56; State v. Miksicek, 225 Mo. 576; Hays v. Mining Co., 277 Mo. 288, 126 S.W. 1051; State ex rel. v. Messerly, 198 Mo. 351, 95 S.W. 913; State v. Anslinger, 171 Mo. 612; Henderson v. Koenig, 168 Mo. 372; State v. Julow, 129 Mo. 176; State v. Loomis, 115 Mo. 314; State ex rel. v. Miller, 100 Mo. 449; State ex rel. v. Hermann, 75 Mo. 340; Cotting v. Godard, 183 U.S. 79, 46 L.Ed. 92; Mix v. Board of County Commrs., 18 Idaho, 695, 112 P. 215, 32 L.R.A. (N.S.) 539; State ex rel. v. Mensching, 187 N.Y. 8, 79 N.E. 884, 10 L.R.A. (N.S.) 625; Mo. Const., Sec. 53, Art. IV, subsecs. 2, 19, 23, 28, 32, 33; Mo. Const., Sec. 3, Art. X; U.S. Const., Amends. 5, 14; 16 C.J.S., sec. 16, p. 51. (2) Evidence showing the history of a legislative enactment and the surrounding facts and circumstances prompting the act, as well as the facts and circumstances under which the law was enacted, is proper and should be admitted and considered. State ex rel. v. Forest, 162 S.W. 706, 177 Mo. App. 245; S.W. Mo. Light Co. v. Scuerich, 174 Mo. 235; Lexington ex rel. v. Bank, 130 Mo. App. 692. (3) In considering the constitutionality of the provision of the statute in question, as applied to water mains and pipes of a water company, the court errs in admitting evidence offered by defendants pertaining to gas companies when there is no issue in the case as to gas companies. Bacon v. Ranson, 58 S.W.2d 786; State v. Halbrook, 279 S.W. 395; State ex rel. v. St. Louis, 241 Mo. 231. (4) The provision in Section 9977, Revised Statutes 1929, as amended, relative to mains and pipes of gas companies being assessed as personal property is unconstitutional.
Lashly, Lashly, Miller Clifford, C.W. Detjen and Edwin F. Vetter for Martin L. Neaf, Assessor of St. Louis County; William J. Becker for Maurice Dwyer, County Treasurer; Walter Wehrle for Town School District of Clayton; Glen Mohler for City of Clayton.
(1) This court will affirm the judgment of the trial court in an equity case where it may be sustained upon any legal theory. Phoenix Brick Const. Co. v. Gentry County, 257 Mo. 39, 166 S.W. 1034; Huttig v. Brennan, 328 Mo. 471, 41 S.W.2d 1054; State v. Gomer, 340 Mo. 107, 101 S.W.2d 57; Muth Realty Co. v. Timmerberg, 178 Mo. App. 654, 161 S.W. 589; Leer v. Continental Ins. Co. of New York, 250 S.W. 631; Ransom v. Potomoc Ins. Co., 226 Mo. App. 664, 45 S.W.2d 95; Lyvers v. Rutherford, 230 Mo. App. 921, 80 S.W.2d 729. (2) It appears from the record herein that plaintiff-appellants do not own the property affected by the tax in question. A bill for an injunction to restrain the enforcement of an alleged illegal tax can be maintained only by one whose own property is affected by the tax, no one being permitted to enjoin the collection of taxes assessed against another. Robins v. Latham, 134 Mo. 466, 36 S.W. 33; Board of Education of Hopewell v. Guy County Auditor, 64 Ohio St. 434, 60 N.E. 573; Board of Commrs. v. Featherstone, 26 Wyo. 1, 174 P. 192; Oakwood Independent School Dist. v. Liberty Common School Dist., 10 S.W.2d 174; Mo. Riv., Ft. Scott Gulf Railroad Co. v. Wheaton, 7 Kan. 232; Center Township v. Hunt, 16 Kan. 430; Board of Supervisors of Du Page County v. Jenks, 65 Ill. 275; Norman v. Boaz, 85 Ky. 557, 4 S.W. 316; Eakins v. Eakins, 20 S.W. 285; High on Injunctions, sec. 573, pp. 544-545. (3) The Legislature has a wide discretion in selecting and classifying subjects of taxation. Royal Mineral Assn. v. Lord, 271 U.S. 577, 70 L.Ed. 1093; Honolulu Rapid Transit Co. v. Wilder, 36 F.2d 159; Ex parte Asotsky, 319 Mo. 810, 5 S.W.2d 22; Massey-Harris Harvester Co. v. Federal Reserve Bank, 340 Mo. 1133, 104 S.W.2d 385; Southern Package Corp. v. State Tax Comm., 174 Miss. 212, 164 So. 45; Barker Bros., Inc., v. Los Angeles, 10 Cal.2d 603, 76 P.2d 97; Bank of Miles v. Custer, 93 Mont. 291, 19 P.2d 885; Colgate v. Harvey, 107 Vt. 28, 175 A. 352.
A.U. Simmons for Willis W. Benson, Collector, etc., and City of Brentwood.
(1) Appellants under the law cannot raise or complain of the constitutionality of the statute herein involved, since: Appellant School District No. 24 or the Lake School District is merely a taxing district and political subdivision of the State of Missouri and so created and brought into existence by the Legislature. Appellants Burkhard, Kram and Frommer as directors are mere ministerial officers and have therefore no direct interest in the constitutional question, nor will they be injured or prejudiced by the outcome of the litigation. State ex rel. Chicago, R.I. P. Ry. Co. v. Becker, 41 S.W.2d 188; 30 A.L.R., p. 387; State ex rel. v. Jones, 41 S.W.2d 393; City Council of City and County of Denver v. Board of Commrs. of Adams County, 33 Colo. 1; 16 C.J.S., sec. 242. (2) The Legislature of the State of Missouri has power to designate property as either realty or personalty, and to fix the situs for taxation, as long as there is no purely arbitrary discrimination in doing so. Shelbyville Water Co. v. The People, 140 Ill. 545; 1 Cooley on Taxation (4 Ed.), p. 602, sec. 288; 3 Cooley on Taxation (4 Ed.), p. 2145, sec. 1065; 61 C.J., p. 125, 127, secs. 57, 58; School Dist. of Plattsburg v. Bowman, 178 Mo. 654, 77 S.W. 880; State ex rel. K.C., St. J. C.B. Railroad Co. v. Severance, 55 Mo. 378. (3) Evidence showing the history of a legislative enactment and the facts and circumstances prompting the legislation is not under the law admissible evidence, since courts cannot inquire into the motives of the Legislature in enacting the law. Glasgow v. St. Louis, 107 Mo. 198, 17 S.W. 743; Cooley, Const. Lim. (5 Ed.), p. 225. (4) A legislative classification does not violate the constitutional requirements unless it is plainly without any basis in reason — that is, unless it is entirely arbitrary. And in determining whether or not it is arbitrary the following, among other, rules are to be applied: (a) A classification is not invalid merely because it affects only a few persons or corporations — or even if it affects only one — where it is broad enough to apply to others if they exist. (b) With respect to classification as with respect to other matters, a statute is presumed to be valid and constitutional, and a classification may not be held to be arbitrary unless shown to be so beyond a reasonable doubt. Thomas v. Buchanan County, 51 S.W.2d 95; Hull v. Baumann, 131 S.W.2d 721; State ex rel. Garvey v. Buckner, 272 S.W.2d 940; 1 Cooley, Taxation (4 Ed.), pp. 712-717, sec. 334; 61 C.J. 126-129, sec. 58; New York Rapid Transit Corp. v. City of New York, 303 U.S. 573, 82 L.Ed. 1024, 58 Sup. Ct. 721; Carmichael v. So. Coal Coke Co., 301 U.S. 495, 81 L.Ed. 1245, 57 Sup. Ct. 868; Ex parte Asotsky, 319 Mo. 810, 5 S.W.2d 22, 62 A.L.R. 95; Massey-Harris Harvester Co. v. Federal Reserve Bank of K.C., 340 Mo. 1133, 104 S.W.2d 385, 111 A.L.R. 133; Hines v. Hook, 338 Mo. 114, 89 S.W.2d 52; State ex rel. Hollaway v. Knight, 323 Mo. 1241, 21 S.W.2d 767.
Appeal from Circuit Court of St. Louis County. The plaintiffs (appellants) are School District No. 24 (a common school district), and the three directors of that district who sue in their capacity as directors and also as taxpayers. The defendants named in the petition are the following officers of said county: Neaf, the Assessor, Benson, the Collector, and Dwyer, the Treasurer. By leave of court others were permitted to intervene as defendants, to-wit: City of Clayton, Town School District of Clayton, and City of Brentwood. The petition, so far as pertinent here, states: that the St. Louis County Water Company is a privately owned corporation, selling water to various municipalities, industries and persons in said county; that its pumping and distributing plant and reservoirs are located in the plaintiff school district; that its mains, pipes, conduits and hydrants, used in transporting water to various parts of the county, are attached to and a part of the company's plant, appurtenant to the land upon which the plant is situate, and a part of the realty; that the defendant county officers have treated and will continue to treat such pipes, conduits, etc., as personalty for taxation purposes by virtue of an Act of the General Assembly found in Session Acts of 1937, pages 545-547, the same being an amendment to Section 9977, Revised Statutes 1929 (Mo. Stat. Ann., sec. 9977, p. 8015); that said Act of 1937 is unconstitutional for certain stated reasons; that if such property is treated as personalty for taxation purposes, the plaintiff district will be deprived of a large sum in taxes and the same will be distributed among the districts and municipalities where such pipes, conduits, etc., are located; the petition prays that the Act of 1937 be declared unconstitutional and defendants be restrained from treating such property as personalty for taxation purposes.
The Act of 1937 reads as follows:
"All mains, pipes, meters and other equipment, constituting parts of a single, common or unified distributing system for supplying water or gas to two or more incorporated municipalities, belonging to any water company or gas company, firm, corporation, association or persons shall be treated, for tax purposes, as personal property and shall be taxable as such where situated."
The defendants, in their returns to the order to show cause why an injunction should not issue and in their answers, among other defenses, alleged a defect in the party defendants. After trial on the merits, the chancellor entered a decree for defendants, refused to issue an injunction, and ordered the petition of plaintiffs dismissed. Plaintiffs have appealed.
In this court the defendant county officers have raised the additional objection that there is a fatal defect of parties plaintiff; that is, that on the face of the petition the plaintiffs have no right to maintain this action. This point, as well as the alleged defect in the parties defendant, has been ably briefed by both sides; and, in our view, these are the only questions necessary for us to consider.
As to the right of plaintiffs to maintain the action, respondents state their position as follows: "It appears from the record herein that plaintiffs (appellants) do not own the property affected by the tax in question. A bill for an injunction to restrain the enforcement of an alleged illegal tax can be maintained only by one whose own property is affected by the tax, no one being permitted to enjoin the collection of taxes assessed against another."
Respondents cite the case of Robins v. Latham, 134 Mo. 466, 36 S.W. 33, and cases from the courts of other states. In Robins v. Latham, the plaintiff alleged that a levee district had been illegally organized; that it had illegally collected a tax from plaintiff and other taxpayers and prayed that the treasurer be enjoined from making disbursement. This court said that the petition did not allege the amount of tax paid by plaintiff and thus failed to show that he would sustain a substantial injury; also that the petition failed to show that plaintiff had paid the tax under duress. For these reasons this court refused injunctive relief to plaintiff. We fail to see how that case supports respondents' contention in the instant case. Here the plaintiff is not trying to restrain the assessment of taxes against, and the payment of taxes by, the St. Louis County Water Company. The real purpose of the instant action is to prevent disbursement of taxes paid by the water company to municipalities and school districts other than School District No. 24. Our statutes confer upon school districts the power to sue and be sued. The plaintiff district has a substantial interest in preventing taxes which rightfully belong to it from being paid to other districts. It has just as much interest in that question as it would in preventing property belonging to it from being taken and used by other districts. Also, individual taxpayers in District No. 24, if they allege and prove substantial injury, are proper, but not necessary, parties to restrain the disbursement outside the district of taxes which should be paid to the district. We hold that the record does not show a defect of parties plaintiff.
Is there a defect in the parties defendant? It seems to us that the same reasons, which give the right to plaintiff school district to bring this suit, give the right to defend it to all other school districts and municipalities into which the mains, pipes, etc., of the water company run. If this property is taxed as realty, the taxes go to the plaintiff school district; if it is taxed as personalty, the taxes go to the districts and municipalities where the property is located.
State ex rel. School District v. Neaf, 344 Mo. 905, 130 S.W.2d 509, was a mandamus suit between substantially the same parties as those in the instant case. There the plaintiff sought to have the same statute declared unconstitutional and to compel the assessment of the same property as realty in School District No. 24. We said: "On the record the Lake School District is the only complainant. If relator, the Lake School District, is directly interested in the taxation of said property as a part of the real estate of the company, by the same token the many municipalities and school districts in St. Louis County are directly interested in the taxation of said property where located."
32 Corpus Juris, page 296, sec. 477 (2), speaking of parties in injunction suits, says: "Under the general rule all persons whose interests will necessarily be affected by the decree, or without whose presence a complete settlement of the questions involved in the action could not be attained, are, of course, properly joined as defendants. So also persons without whose joinder no effectual decree can be rendered in plaintiff's favor are indispensable parties, since the court ought not to interfere at all except in a mode which would be effectual for the purpose of the decree. Also, under another general rule of equity practice, all persons not joined as plaintiffs who have an interest in the controversy, presented by the bill of such a nature that any decree completely adjudicating the rights of those before the court must necessarily affect the rights of the former, are indispensable parties without whom the court cannot lawfully proceed."
47 Corpus Juris, page 87, sec. 174(2) ". . . A person who has an interest in the subject matter in litigation of such a direct and immediate character that it would be legally affected by a judgment rendered in the case is a necessary party defendant, as is, also, a person who has a right to litigate over again in a new proceeding the same questions involved in the case, . . ."
In State ex rel. v. Sanderson, Collector, 54 Mo. 203, injunction was sought to restrain the collection of taxes levied to pay the interest on bonds issued to a railroad. This court held that the county court, who issued the bonds and levied the tax, and the railroad were necessary parties.
Appellants argue that the only necessary defendants are the officials charged with the duty of assessing and collecting taxes; that the various school districts and municipalities are not charged with any duties which could be enjoined by this action.
Appellants' argument on this point is answered, in principle, by the authorities which we have already cited. It is answered directly by the opinion of the St. Louis Court of Appeals in the case of School District No. 4 v. Smith. 90 Mo. App. 215. That was a suit by a school district against a county clerk to declare illegal and void certain proceedings looking to a change of boundary between two school districts and to restrain the transfer of school taxes of certain taxpayers from the plaintiff district to another district. The trial chancellor sustained a demurrer to the petition. The Court of Appeals held that injunction was the proper remedy, but sustained the ruling on the demurrer, saying:
"The sixth and last ground of demurrer, to-wit, `that there is a defect of parties defendant in that school district number eight is a necessary party.' presents a more difficult question for solution. No restraining order or judgment is asked against the district or its officers and no such judgment or order can be directly rendered against the district or any of its officers. The sole relief prayed for is to enjoin the defendant from performing certain official acts which can be performed by none other than defendant as clerk of the county court; but the defendant has no interest in the subject-matter in controversy while the district has, and should the defendant be enjoined, the injunction would operate through him upon the district as much so as if it were a party to the proceedings and the district would be effectually deprived of the benefits it would otherwise derive from the disputed territory as though the decree was in terms directed against it and its officers. [High on Injunctions (3 Ed.), sec. 1551.] In A., T. S.F. Ry. Co. v. Wilhelm, 33 Kan. 206, it was held that, `Where an action is brought against the sheriff and treasurer of a county to restrain the collection of taxes levied by a school district for building and library funds upon the ground that the levies are excessive, a final injunction would not be granted until the officers of the school district directly interested in the collection of taxes are made parties defendant.' To grant the relief prayed for would be as effectual against the school district as though it were a party to the proceedings and it would thus be deprived of its rights without the opportunity of being first heard. This is opposed to the fundamental principles of the law. [State ex rel. Lemon v. Buchanan Co. Board of Eq., 108 Mo. l.c. 241.] We, therefore, hold there was no error in sustaining the demurrer and affirm the judgment."
We hold that the municipalities and school districts in which are located the mains, pipes, etc., of the water company are necessary parties to a complete determination of the issues herein.
It would seem that the reasons which make it necessary to bring in as defendants the various school districts and municipalities would also make it necessary to bring in the St. Louis County Water Company as a defendant. This taxpayer has a direct and substantial interest in the result of this litigation. If its property is treated as realty, it will pay taxes at a low rate, only in the plaintiff district where no high school is maintained and there is no municipality. If such property is treated as personalty, portions of it will be assessed at higher rates in some of the districts and other portions will be subjected to the additional burdens of municipal taxes. Appellants' brief shows that the pipes, mains, etc., of the water company extend into some forty-two school districts and eighteen cities and towns, and the assessed valuation thereof as personalty is more than two million dollars.
As the parties necessary for a complete determination of the issues herein are not before the court, we do not pass upon other points contained in the briefs.
Accordingly, the decree of the chancellor dismissing the petition is hereby reversed and the cause remanded so that plaintiffs, within a reasonable time to be fixed by the chancellor, may amend their petition and bring in new parties defendant if they so desire. All concur.