This was a case instituted in the Louisville chancery court by the Louisville & Nashville Railroad Company against the city of Louisville by the filing of an agreed case under the following provisions of the Civil Code of Practice of the State of Kentucky:
The agreed case commenced as follows: 'The Louisville & Nashville Railroad Company and the city of Louisville hereby state to the court the facts hereinafter presented, and submit to the court for decision the question hereinafter stated.' Then followed a statement of facts, and the stipulation thus proceeded:
The case was heard, and the chancellor entered the following judgment: [166 U.S. 709, 711] 'This agreed case having been submitted in chief, and the court, being sufficiently advised, delivered a written opinion, which is now filed; and, in accordance therewith, it is considered by the court that plaintiff, the Louisville & Nashville Railroad Company, had no right to any discount on its tax bill when it paid or tendered payment of same, as shown in said agreed case, and that this said action be, and it is therefore, dismissed, and that defendant recover of plaintiff its costs herein expended.'
The plaintiff excepted and carried the case by appeal to the superior court of Kentucky, and the judgment of the chancellor was affirmed.
Opinions were delivered by the chancellor, and by the superior court.
After the judgment of affirmance, the railroad company 'moved the court to set aside the submission and judgment, and transfer this case to the court of appeals, or to grant an appeal to the court of appeals,' on these grounds:
The superior court overruled the motion to set aside the judgment and submission, and transfer the cause, but granted the appeal to the court of appeals, which being duly prosecuted, the judgment was again affirmed. 29 S. W. 865.
A writ of error was allowed from this court by the chief justice of the court of appeals. [166 U.S. 709, 712] The assignment of errors in the brief of counsel is as follows:
Helm Bruce, for plaintiff in error.
Henry L. Stone, for defendant in error.
Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.
By the terms of the agreed case, the only questions submitted to the chancery court of Louisville were whether the railroad company was entitled to a discount on certain tax bills, and, if so, what discount; and it was stipulated that, if the court should be of opinion that the company was not entitled to any [166 U.S. 709, 713] discount, then judgment should be entered dismissing the case, with costs. The chancellor, in his opinion, pointed out that the act of the general assembly of Kentucky entitled 'An act to revise and amend the tax laws of the city of Louisville,' approved May 12, 1884, provided for a discount of 3 per cent. on taxes paid in January, of 2 per cent. on those paid in February, and of 1 per cent. on those paid in March; but that the assessments for taxation, to which the act related, did not in terms include railroad property, the assessment of which was provided for by chapter 92 of the General Statutes of Kentucky. This chapter provided for the assessment of railroad property by state authority for state, county, city, and town purposes, for enforcement of payment by penalties on its chief officer, and required payment by a named day; but it nowhere, in terms or by implication, allowed any deduction for prompt payment of state, county, city, or town taxes; and it forbade assessments or collections of such taxes in any mode other than that therein designated.
The chancellor held that such a deduction was pro tanto in the nature of an exemption, and that exemptions were not allowable except where express authority affirmatively appeared therefor, and that no such authority appeared here, and he then said: 'The ground of inequality in taxation, so much relied on by plaintiff's counsel, is not entitled to much weight, for the principle, if such there be, is misapplied. Taxes are imposed in this state on corporations by classes. No member of a class can complain if he is treated like all in the same class. If it be wrong not to allow deductions to banks, railroads, gas companies, etc., for prompt payment of taxes, then the legislature can remedy the wrong. In the present condition of the statute the courts cannot.'
And the court, being of opinion that the company was not entitled to any discount, entered judgment strictly in accordance with the stipulation of the parties. There was no intimation in the agreed case that any constitutional question was submitted for determination, and no such question was propounded. The matter was one of construction merely.
The superior court had no appellate jurisdiction of an [166 U.S. 709, 714] appeal involving the validity of a statute (Ky. Codes 1895, p. 472), as was conceded at the bar, and yet plaintiff in error prosecuted its appeal to that court. After the superior court had gone to judgment the railroad company made its motion to set the judgment aside, and transfer the case to the court of appeals, on the ground that it believed the statutes, 'as construed by the court in its opinion lately delivered herein, to be invalid, and to be in violation of the constitutions of the state of Kentucky and of the United States.' Even then the company did not indicate in any way in what particulars the statutes were in contravention of either of those instruments. This motion was overruled, and an appeal allowed to the court of appeals. The court of appeals arrived at the same conclusion as the other courts, and rejected the claim for a discount as not permitted by the statute. The court closed its opinion thus:
The record does not disclose that any federal question was specifically raised in the court of appeals, and the sole reference in the opinion to constitutional objection is in the language above quoted. Doubtless, that reference was by way of answer to the contention that the statute might fail altogether unless construed to include railroad companies.
In Powell v. Brunswick Co., 150 U.S. 433, 439 , 14 S. Sup. Ct. 166, 168, we said: 'As many times reiterated, it is essential to the maintenance [166 U.S. 709, 715] of jurisdiction upon the ground of erroneous decision as to the validity of a state statute, or a right under the constitution of the United States, that it should appear from the record that the validity of such statute was drawn in question as repugnant to the constitution, and that the decision sustained its validity, or that the right was specially set up or claimed and denied. If it appear from the record by clear and necessary intendment that the federal question must have been directly involved, so that the state court could not have given judgment without deciding it, that will be sufficient; but resort cannot be had to the expedient of importing into the record the legislation of the state as judicially known to its courts, and holding the validity of such legislation to have been drawn in question, and a decision necessarily rendered thereon, in arriving at conclusions upon the matters actually presented and considered. A definite issue as to the validity of the statute or the possession of the right must be distinctly deducible from the record before the state court can be held to have disposed of such a federal question by its decision.'
And see Oxley Stave Co. v. Butler Co., 17 Sup. Ct. 709, in which this subject is largely considered, and the authorities cited.
The agreed case presented no issue as to the validity of the statute, but simply the question of its construction. The company did not sue to recover back the taxes it had paid on the ground of the invalidity of the laws under which they were levied, but to recover the discount allowed to taxpayers by a particular statute. The chancery court was shut up by the agreement to determine whether the company was or was not entitled to that discount. The construction by the chancery court was concurred in by the superior court and by the court of appeals, and the judgment of the chancery court, rendered as stipulated, was affirmed. It is now said that, as the proper construction of the statute was definitively settled by the court of appeals, this court can take jurisdiction at that stage of the case, because, as thus construed, the statute impaired the obligation of a contract created by the charter of the company (which was not mentioned in the agreed [166 U.S. 709, 716] case), and because it denied the equal protection of the laws in contravention of the fourteenth amendment, although no definite issue in either respect was tendered throughout the proceedings, unless the mention of the constitution of the United States on the motion to set aside may be so regarded. We do not think that was sufficient.
Writ of error dismissed.