
    Board of Councilmen of City of Frankfort v. White.
    (Decided May 18, 1928.)
    Appeal from Franklin Circuit Court.
    1. Municipal Corporations.-—The acts, undertakings, and engagements of municipal corporations are those in furtherance of strictly governmental powers, conferred or delegated expressly or by necessary implication by their charters, those which they may or may not exercise under their charters in carrying out strictly local municipal ventures, and those which they sometimes perform in strictly private capacity.
    2. Municipal Corporations.—The governmental functions, which a municipal corporation may exercise consist of such portions of strictly governmental duties as -Legislature representing state may see proper to delegate.
    3. Municipal Corporations.—The undertakings in which a municipal corporation may engage in carrying out strictly local municipal ventures are those appertaining exclusively to provisions for local benefits to and convenience, comfort, and welfare of its inhabitants.
    4. Municipal Corporations.—Generally, undertakings of municipal corporations in private capacity exclusively are ultra vires, and cannot be provided for with funds collected for public purposes.
    5. Municipal Corporations.—Municipality, in performance of its strictly governmental functions, may acquire and hold such property, real or personal, as may be appropriate and necessary in discharge of such functions, including necessary buildings and structures for housing of municipal officers and storing and preservation of personal property acquired and owned in discharge of such functions.
    6. Municipal Corporations.—(Property of municipality, acquired in and necessary to discharge of strictly local municipal purposes under authority of municipal charter, is held for a public purpose, and hence exempt from appropriation to satisfaction of municipality’s debts, as well as from taxation.
    7. Municipal' Corporations.—All property of municipal corporation, acquired for and devoted to any of public uses, for accomplishment of which it may levy and collect taxes, and included in either its governmental functions or strictly local municipal ventures, is exempt from levy and sale under execution in satisfaction of municipality’s debts, but strictly private property of such corporation may be appropriated by judicial process for such purpose.
    S. Municipal Corporations.—(House and lot, long since acquired by city in its strictly (governmental capacity and now being used for storage of tools and implements necessary in maintaining and repairing public streets, held not subject to seizure and sale for satisfaction of judgment against city.
    
      9. Municipal Corporations.—Proceeds from rental of opera house for which, «pace in city building not required for city offices and legis- ' lative hall, for which building was erected, was inclosed and equipped so as to reap income until necessary to occupy it in discharge of municipal functions, held not subject to seizure for satisfaction of judgment against city.
    P. M. DAILEY for appellant.
    LESLIE MORRIS for appellee.
   Opinion of the Court by

Judge Thomas

Reversing in part and affirming in part.

Appellee and plaintiff below, R. E. White, recovered in the Franklin circuit court a judgment against appellant and defendant below, board of councilmen of the city of Frankfort, for the sum of $500 and costs. It was not paid, and this equity action in the nature of a bill of discovery was instituted by plaintiff in the same court to subject certain property of the defendant in the judgment, which plaintiff claimed was not held by it in its governmental capacity, nor was it necessary to be so held to enable it to perform any permissible public functions as a municipality. One of the items of property so sought to be subjected was a small house and lot owned by the city, and which it used as a store house for its tools and implements employed in the maintenance of its streets and for the discharge of other public duties. The second item of property sought to be appropriated to the payment of the judgment was rent due from the Frankfort Amusement Company, to defendant in the execution, as lessee of the Capital Theater, a structure owned by the city and rented by it to the amusement company, which was served with garnishee process in the bill of discovery action. The trial court subjected to the payment of the judgment the rent due by the amusement company, but declined to subject the toolhouse or the lot upon which it stood, and, complaining of that judgment, the board of councilmen prosecute this appeal. Plaintiff has prayed and obtained a cross-appeal in this court whereby he seeks a reversal of so much of the judgment as declined to subject the toolhouse. The question presented therefore is: Whether any of the property involved, being owned by a municipal corporation, may be sequestered by usual judicial processes employed in satisfaction of judgments in the manner attempted by plaintiff in this case?

The acts, undertakings, and engagements of municipal corporations are universally conceded to.be: (1) Those in furtherance of strictly governmental powers conferred or delegated either expressly or by necessary implication by their charters; (2) those which it may or may not exercise under authority from its charter in carrying out its strictly local municipal ventures; and (3) those which it sometimes perforins in a strictly private capacity. The governmental functions which it may exercise under class (1) consists of such portions of strictly governmental duties as the Legislature representing the state may see proper to delegate to. it. The undertakings in which it may engage under classification (2) aré those appertaining exclusively to the providing for local benefits to its inhabitants, and for their convenience, comfort, and welfare; and all other undertakings or acts of the municipality not coming within classifications (1) and (2) are necessarily listed in classification (3) . In making such classification we would not beunderstood as thereby determining that it was competent or lawful for the municipality to embark in any of the undertakings coming exclusively within classification (3), since most generally, if not always,, they are ultra vires, and, unless the delegated authority is sufficiently broad to include the acts covered by the first two classifications it would seem not to be lawful for it to provide them with its funds collected for public purposes. Hence the opinions of courts of last resort, and contents of text-books based thereon, ’will be found on examination to be in apparent and hopeless conflict as to what particular func tions a municipality may rightfully exercise or in what engagements it may undertake and provide for with public funds, and which conflict grows out of the fact of wide and multiplied differences between the powers conferred by the particular charter under consideration. .

Such differences may exist in the same sovereignty, as was true in this commonwealth until the adoption of our present Constitution, which required the classification of municipalities and that each one of the same class should be governed by the same charter. Even now, under such requirement, the charter enacted for one class of municipalities might be, and.in fact is, widely different with respect to delegated powers from that enacted for another class. Before the requirement of classification of cities and their operation under the same charter for each class the municipality was chartered by a special act of the Legislature, and two of them rarely ever imposed the same delegated duties, nor was there conferred upon them the same municipal powers. Therefore an opinion dealing with the powers and authority of a particular municipality would necessarly not be a precedent, unless the same or substantially the same delegation was made in each charter.

Notwithstanding such conditions it is everywhere adjudged that a municipality may in the performance of its strictly governmental functions, included in classification (1), acquire and hold such property, real or personal, as may be appropriate and necessary in the discharge of such functions, and which includes necessary buildings and structures for the housing of municipal .officers and for the storing and preservation of whatever personal property that it may acquire and own in the discharge of such functions. The cases and text authorities also hold that whenever the charter is sufficiently .comprehensive to authorize and permit the acquisition of property by the municipality in the carrying out of the functions included in classification (2), it is competent and lawful for it to do so with funds raised by taxation, and when so acquired such property as well as that acquired in the exercise of powers within classification (1) is held for public purposes under the provisions of section 171 of our Constitution, prescribing that “taxes shall be levied and collected for public purposes only,” and which is upon the theory that any action undertaken and accomplished for any of the purposes in classification (2) is for a public purpose the same as if it was for a strictly governmental purpose undertaken xaiid performed in execution of the powers included in classification (1).

Illustrations of a strictly municipal purpose, as distinguished from a governmental purpose, are the construction and operation of municipal waterworks, and the providing for the lighting of streets and, incidentally, the furnishing of lights to private individuals, and also provisions for the sprinkling of streets for sanitary purposes. Many others could be mentioned, but which we deem unnecessary to do. As an illustration of the conflict in opinions to which we have hereinbefore referred we may cite the case of City of Louisville v. Commonwealth, 1 Duv. 295, 85 Am. Dec. 624, in which it was held by this court that under the then prevailing provisions of law for the exemption of property from taxation, all property held by the city of Louisville and not “necessary or useful to the administration of the government and devoted to that use” was subject to assessment for state taxation, and which included property that was so liable to be taxed, “market houses, fire engines, and the like. ’ ’

In the later case of City of Owensboro v. Commonwealth, 105 Ky. 344, 49 S. W. 320, 20 Ky. Law Rep. 1281, 44 L. R. A. 202, the conclusion reached in the Duvall case was criticized and in effect overruled, and which was principally upon the theory that the charter of the city of ¡Owensboro, under consideration in the later case authorized the city to acquire the fire extinguishing property sought to be taxed therein, whereas there seems to have been no such authority in the Duvall case. After the city of Owensboro had acquired such property, and which was done under the powers in classification (2), supra, it was adjudged, in the 105 Kentucky case that it became “public property used for public purposes” within the tax exemption provisions of section 170 of our Constitution. Many other cases following the City of Owensboro case have, without exception, adopted the principle therein announced, and it is now the settled law in this jurisdiction that property of a municipality acquired and necessary to the discharge of strictly local municipal purposes under classification (2), supra, for which authority is conferred by the municipal charter, is held by it for a public purpose and is exempt from taxation. That being true, it would appear to necessarily follow that the same property would likewise be exempt from appropriation to the satisfaction of the debts of the/ municipality.

Coming now to the question involved in this case, we find the law to be that all property of a municipal corporation acquired for and devoted to any of the public uses for the carrying out of which it may levy and collect taxes and included in either classifications (1) or (2), supra, is exempt from levy and sale under execution in satisfaction of the debts of the municipality, but the authorities likewise hold that “strictly private” property of a municipal corporation may be appropriated by judieial process to the satisfaction of its debts. 19 R. C. L. 1050, par. 339, and cases cited in notes 14 and 15 to the text. See, also, 1 Dillon on Municipal Corporations (3d Ed.) p. 572; Beadles v. Fry, 15 Okl. 428, 82 P. 1041, 2 L. R. A. (N. S.) 857.

An almost endless list of eases and treatises on municipal corporations could be cited in support of the above statement, and in which the reasons therefor are stated but which we deem unnecessary to incorporate- in this opinion. So, the further concrete question is: Whether the attached house and lot in this case, and the proceeds arising from the rental of the opera house owned by the city, may either of them, under the law as above stated, be appropriated by plaintiff to the satisfaction of his judgment? It was alleged in the answer and admitted by the demurrer thereto that the house and lot had long since been acquired by the city in its strictly governmental capacity and was now being used as a place of storage for tools and implements necessary in maintaining and repairing the public streets of the city. It was clearly not subject to seizure and sale for the satisfaction of plaintiff’s judgment under any sort of judicial process, and the court did not err in so exempting it.

With reference to the opera house, the rentals from which the court did appropriate under the attachment to the'satisfaction of plaintiff’s debt, it was alleged that it was a part of a city building erected by it in 1882 with funds collected by taxation and for the purpose of providing offices, rooms, and apartments for incumbents of the various departments of the city government, including a legislative hall. It is shown' that the lot was not unreasonably large for that purpose, but, nevertheless, there was more space than was absolutely required at the time for such purposes, and the excess was inclosed by the walls and the roof of the single building and converted into a public hall for the meeting and coming tog ether of the people hi conventions and assemblies, and which was equipped so that public entertainments in the way of theatrical performances or lectures could be given therein; it being also alleged that prior to that time there was no such building in the city, especially one of sufficient capacity, either public or private, if it was competent for the city to so equip the space of its public building devoted to such purposes, then it necessarily follows that neither it nor the income therefrom may be appropriated by plaintiff to the satisfaction of his judgment.

Under the provisions of section 192 of our Constitution, no private corporation is permitted to acquire and hold title to real estate, “except such as may be proper and necessary for carrying on its legitimate business, for a longer period than five years.” Section 567 of our present Statutes is in practically the same language. In .construing the constitutional and statutory provisions Ave have uniformly held that, notwithstanding the plain language employed in both of them, a private corporation could legally acquire title to real estate and hold it in opposition thereto if it was reasonably certain that the corporation would, at not too remote a period, need it in the carrying on of its legitimate business in the future, although it might not need it at the immediate time of its acquisition. See Commonwealth v. Mengel Box Co., 352 Ky. 287, 153 S. W. 771, and Commonwealth v. Louisville Property Co., 139 Ky. 689, 121 S. W. 399, 132 S. W. 413. Also, see Commonwealth v. Mehler, etc., 183 Ky. 11, 208 S. W. 13. Other cases are cited under both of the sections referred to. We have also held that- banking institutions and other private corporations might enlarge their necessary buildings beyond the needs for their immediate purposes and rent the excess space or spaces for the carrying on of a private business, an illustration of which is the construction of office buildings by such corporations. See Commonwealth v. Clark County National Bank, 187 Ky. 151, 219 S. W. 175.

If it is competent in the indicated circumstances and under the stated conditions for a strictly private corporation to acquire and so improve real estate to- an extent beyond its immediate needs, it is difficult to see why a public municipal corporation might not under the same circumstances and conditions be permitted to do the same without transgressing the judicially declared law with reference to the amount of and purposes for which it may acquire and hold real estate in performing and executing any of .its strictly governmental functions in classification (1), supra, or any of its strictly municipal powers under classification (2), supra. Indeed, there appears to be greater reason for strict enforcement of the constitutional and statutory limitations, supra, with respect to private corporations than for the strict enforcement of the judicially declared policy on the same subject relative to municipal corporations. The public policy behind the one was to prevent the acquisition of title to real estate by private corporations beyond their reasonable needs in prosecuting the purpose for which they were incorporated, and to thereby render it less difficult for the individual citizen to acquire a home for himself and family. It requires but little reflection to see that there would be less danger to such a policy in the acquisition of real estate by municipal corporations than by private ones, and the conclusion seems to be inevitable that if the defendant, City of Frankfort in this case, erected and equipped the opera house, the rents from which are sought to be appropriated to the satisfaction of plaintiff’s judgment, in the circumstances and under the conditions permitting private corporations to do likewise, then it was not unlawfully acquired, and neither it nor the income therefrom may be classed as “strictly private” property, which may be subjected to the satisfaction of plaintiff’s judgment. But we are not without precedent from this court for so holding.

In the recent ease of Keith v. Richards, Mayor, etc., 220 Ky. 201, 294 S. W. 1057, we expressly approved the right of Christian county and the city of Hopkinsville, which is a city of the third class the same as Frankfort and operating under the same charter, to construct and equip, in utilizing excess spaces in the erection of a joint public building, and renting them for private purposes and using the proceeds in payment of the cost of the building. That opinion, as will be seen from reading it, was rendered in a declaratory judgment proceeding filed for the express purpose of ascertaining whether or not it would be lawful for such municipalities (either the county of Christian or the city of Hopkinsville) to do and perform precisely similar acts to that which the city of Frankfort did when it inclosed and equipped its opera house, and which the two municipalities involved in that case only contemplated doing, but which the city of Frankfort actually did in the construction of its opera house, and under the precise circumstances and conditions that received the approval of this court with respect to similar acts on the part of private corporations in the opinions supra.

If the city of Frankfort in erecting its opera house in question did not exceed its corporate power and authority, then the space of its public building so occupied became a part thereof, and which it had the right to construct or acquire in discharge of its purely governmental functions within classification (1), supra, and'which it is. everywhere declared may not be sequestered and appropriated in satisfaction of judgments or other obligations of the city. The same would also be true if the public building of which the opera house was a part had been acquired for the purpose of performing strictly municipal functions within classification (2), supra.

Furthermore, it is alleged and not denied that the rent sought to be appropriated in this case is put into the general fund of the city and is taken into account by it in estimating the revenue to be raised by taxation of its citizens. But, whether that fact alone would be sufficient to exempt it, or the real estate from which it issued, if such real estate was strictly privately owned by the municipality, is a question we need not determine. Tf the opera house had been constructed on ground wholly disconnected from and forming no part of any necessary public building of the city; or if the city had embarked in a purely mercantile or other private business having 3io connection whatever with the dioharge of any of its governmental or municipal function's, plaintiff could reach the property or its proceeds, on the ground that the venture was one of strictly private business, we likewise need not determine, since no such case is presented, although possibly it might be true that it could be appropriated in the manner here undertaken, upon the ground that it was strictly private property of the municipality and subject to the satisfaction, of its debts under the principles of law hereinbefore stated.

But however that may be, we are clearly convinced that the proceeds from the rental of the opera house in this ease under the admitted facts are not subject to seizure in satisfaction of plaintiff’s judgment or in satisfaction of any other .debt of the city, and which conclusion, we repeat, is bottomed upon the fact that the city had the right under the circumstances to inclose the space of its public building now occupied by the opera house and to equip it in sucia a manner as that it might reap an income therefrom until it became necessary to occupy it in the discharge of some of its municipal functions coming within either classifications (1) or (2), supra.

We therefore conclude that the court properly refused to appropriate the lot levied on under the attachment in satisfaction of plaintiff’s judgment and erroneously sustained the attachment as to the rent from the opera house, and the judgment is reversed on the original appeal and affirmed on the cross-appeal, and for such proceedings as are not inconsistent with this opinion. Whole court sitting.  