UNITED STATES SUPREME COURT DECISIONS ON-LINE

Whether a municipality may list and tax its own property is a matter of state practice and, except as it may affect a right previously acquired and protected by the federal Constitution, presents no federal question.

This Court, in order to determine whether a contract has been impaired within the meaning of the federal Constitution, has power to decide for itself what the true construction of the contract is.

A contract of exemption may be impaired by wrongful construction as well as by an unconstitutional statute attempting a direct repeal.

A lease of property belonging to a municipality in which the lessees have expressly agreed to pay taxes due the state or federal government is not impaired by an assessment made by the municipality under power to tax acquired subsequent to the making of the lease.

Parties to a lease by a municipality not then possessing taxing powers are chargeable with notice that the power to tax may be subsequently conferred, and the conferring of such power does not impair the contract in the lease if there is no exemption expressly contained therein.

Doubts and ambiguities as to exemptions from taxation are resolved in favor of the public. St. Louis v. United Railways, 210 U. S. 273.

108 Va. 28 affirmed.

From the bill in 103, to enjoin the collection of city taxes, it appears that, prior to 1792 the Borough of Norfolk, Virginia, existed as a municipality of limited power. It clubjuris

Page 220 U. S. 473

had a mayor and council, but no power to tax. The town owned the Fort land, and appointed commissioners to subdivide the tract and let out the lots at public outcry. Thereupon the borough

"demised, leased, and farm-let lot No. 10 to Richard Evers Lee, his executors, administrators, and assigns, from August 26, 1792, for and during the term of ninety-nine years, and after that time renewable for the further term of ninety-nine years, and so on forever,"

he and they to pay yearly the rent of £6.6 and "the public taxes which shall become due on said land." It was provided that, if there should be arrears for three years in paying rent or taxes the town should advertise and lease out the lots and improvements for the remainder of the term of ninety-nine years, said Lee and his assigns to make good the deficiency, if any, between the first and last prices, together with all arrears of rent and taxes, the overplus, if any, to be paid over to said Lee or his assigns. If the rent and taxes were paid as stipulated, the borough and its successors were to renew the lease for the further term of ninety-nine years, and so on forever. The leases were renewed in 1892 on practically identical terms. Subsequently, the eastern portion of Lot 10 was assigned to John L. Roper and the western portion to the J. W. Perry Company, who, "relying on the stipulations and agreements therein, purchased the lease, and at great expense erected costly improvements on the land." The bill charged that it was the intention of all the parties, in both the original and renewal leases, that the stipulation as to the payment of public taxes applied solely to such taxes as might be imposed by Virginia and the United States, and neither the Borough nor the City of Norfolk had ever attempted to impose any municipal tax upon the property. But

"though the city owns the fee, it has for the year 1906 caused the lot to be assessed in the name of it, the said City of Norfolk at a valuation of $21,000, and intends to collect the tax of $346 from the lessees of lot 10. "

Page 220 U. S. 474

The bill also charged that the buildings, on being attached to the land, became the property of the city as landlord, and likewise free and clear from the payment of city taxes, notwithstanding which it had assessed the improvement to the lessee at a value of $6,500, and demanded the tax thereon.

Lot 9 was held by White on substantially identical terms, except that the renewal lease made in 1892 provided that the lessee should "pay all rent and all state and national taxes." The city contended that this change was without consideration, and did not modify the rights or liabilities of either party, because, from the instrument as a whole, it appeared that there was no intention to change, but only to renew and continue in force the original lease of 1792.

In each case, it was alleged that the assessment and collection of taxes for city purposes impaired the obligation of the lease contract.

The trial judge granted perpetual injunctions. Those rulings were reversed by the Court of Appeals of Virginia (108 Va. 28), and plaintiffs brought the case here, assigning as error that the collection of taxes by the City of Norfolk, in pursuance of authority conferred subsequent to the leases, impaired the obligations of the contracts. clubjuris

Page 220 U. S. 477