Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Taxation For other cases involving limitation and enlargement of taxing power, see Seibert v. Lewis, 122 U. S. 284. U. S. v. Thoman, 156 U. S. 353. Louisiana v. New Orleans, 215 U. S. 170. Arkansas Sou. R. Co. v. Louisiana, etc., R. Co., 218 U. S. 431. Scotland County v. U. S., 140 U. S. 41. Payment of taxes condition precedent to recovery on contract.— State statute providing that in a suit upon any debt or contract it should not be lawful for plaintiff to have judgment unless all legal taxes had been paid, and declaring it to be a condition precedent to the recovering that the debt had been regularly given in for taxes and the taxes paid, was held void as impairing the obligation of such contract. Walker v. Whitehead, 16 Wall. 316. State bonds.-A statute appropriating certain taxes for the purpose of paying bonds issued under a statute creates a contract with the bondholders which is impaired by an amendment of the State constitution transferring such taxes to defray the expenses of the State government. Louisiana v. Jumel, 107 U. S. 711. See also McCullough v. Virginia, 172 U. S. 109, as to requiring evidence of genuineness of tax-receivable bonds. In re Brown, 135 U. S. 707, as to limitation of time of presenting coupons. Hartman v. Greenhow, 102 U. S. 674, as to tax on bonds deducted from separated coupons. Vashon v. Greenhow, 135 U. S. 713, as to tendering tax-receivable coupons in payment of school taxes. Same v. Same, 121 U. S. 102, as to payment of license taxes with tax-receivable coupons. Sands v. Edmunds, 116 U. S. 585, as to license to engage in business of wholesale grocers. Poindexter v. Greenhow, 114 U. S. 270; White v. Greenhow, 114 U. S. 307; Chaffin v. Taylor, 114 U. S. 309; Allen v. Baltimore, etc., R. Co., 114 U. S. 311; and Smith v. Greenhow, 109 U. S. 669, as to denying action of trespass for illegal levy. Although the right to have tax-receivable coupons received in payment of taxes is founded on a contract with the State, and that right is protected by this section, the only mode of redress in case of any disturbance or dispossesion of property or for other legal rights based on such violation of the contract is to have a judicial determination in a suit between individuals on the invalidity of the law under color of which the wrong has 12703°-S. Doc. 157, 68-1-24 Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Taxation been committed. No direct action will lie for the denial of the rights secured by the contract. Carter v. Greenhow, 114 U. S. 317. The contract arising from State statutes authorizing a foreign. railroad company to construct and operate its road within the State and its acting thereon is impaired by a subsequent statute requiring the company to collect a tax on its bonds held by residents of the State by deducting the tax from the interest on the bonds, they having previously issued under authority of the State by which the company was created and the interest being payable in that State only. New York, etc., R. Co. v. Pennsylvania, 153 U. S. 628. Contractual nature of charter provisions.-A provision in a general banking law that each bank should pay 6 per cent on profits in lieu of all taxes held to be a contract which was impaired by a law providing a new rate and manner of taxing banks. State Bank of Ohio v. Knoop, 16 How. 378. See also Gordon v. Appeal Tax Court, 3 How. 133. Dodge v. Woolsey, 18 How. 331. Jefferson Branch Bank v. Skelly, 1 Black 436. Franklin Branch Bank v. Ohio, 1 Black 474. Wright v. Sill, 2 Black 544. Farrington v. Tennessee, 95 U. S. 679. Mobile, etc., R. Co. v. Tennessee, 153 U. S. 486. Pacific R. Co. v. Maguire, 20 Wall. 36. Stearns v. Minnesota, 179 U. S. 223. A provision in an act amending the charter of a railroad, prescribing a mode for ascertaining the tax due the State, does not amount to a contract that the State will not pass any law to assess the property of the company for taxation for State purposes in a different manner. Bailey v. Magwire, 22 Wall. 215. See also Ohio Life Ins. etc.. Co. v. Debolt, 16 How. 416. Railway, etc., Co. v. Philadelphia, 101 U. S. 528. New Orleans, etc., R. Co. v. New Orleans, 143 U. S. 192. Bank of Commerce v. Tennessee, 163 U. S. 416. Delaware Railroad Tax, 18 Wall. 206 Hubert v. New Orleans, 215 U. S. 170. U. S. v. Memphis, 97 U. S. 290. Arkansas Sou. R. Co. v. Louisiana, etc., R. Co., 218 U. S. 431. Sec. 10.-Powers Denied to States Louisiana v. Pilsbury, 105 U. S. 278. Galena v. Amy, 5 Wall. 705. Butz v. Muscatine, 8 Wall. 584. Douglass v. Pike County, 101 U. S. 687. Mobile v. Watson, 116 U. S. 305. Cl. 1.-Contracts-Taxation Rast v. Van Deman, etc., Co., 240 U. S. 342. Tanner v. Little, 240 U. S. 369. Pitney v. Washington, 240 U. S. 387. State v. Stoll, 17 Wall. 435. Curtis v. Whitney, 13 Wall, 70. Barrett v. Holmes, 102 U. S. 651. Wheeler v. Jackson, 137 U. S. 245. Schurz v. Cook, 148 U. S. 397. Louisiana v. St. Martin's Parish, 111 U. S. 716. New Orleans v. Morris, 105 U. S. 600. Succession or inheritance taxes.1-When a power of appointment was granted by deed, a transfer tax on the property upon the exercise of the power by will does not impair the obligation of any contract. Chanler v. Kelsey, 205 U. S. 466. A transfer or succession tax, not being a direct tax upon property but a charge upon a privilege exercised or enjoyed under the law of the State, does not, when imposed in cases where the property passing consists of securities exempt by statute, impair the obligation of a contract under this clause. Orr v. Gilman, 183 U. S. 289. A State may impose a tax on the share of the wife in the community property on the occasion of the cessation by the death of the husband of his dominion and control over the common property, and the consequent complete vesting in enjoyment of such share in the wife. Moffitt v. Kelly, 218 U. S. 400. The fact that two States, dealing each with its own law of succession, both of which a person has to invoke for his rights, have taxed the right which they, respectively, confer, gives no cause for complaint on constitutional grounds. Blackstone v. Miller, 188 U. S. 207. Charter power to do a safe deposit business is not impaired by inheritance tax law prohibiting the removal of the contents of safe deposit boxes after the death of the renter except on notice to the attorney general and State treasurer and the retention of sufficient assets to pay the tax. National Safe Deposit Co. v. Stead, 232 U. S. 58. A fund kept in trust in a foreign State, the creator reserving to himself an absolute control and taking the whole income. See same subject, pp. 368 and 729. Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Taxation may be subjected to an inheritance tax by the domicile State without violating this clause. Bullen v. Wisconsin, 240 U. S. 625. Exemption from Taxation In general. Unless restrained by the State constitution the legislature may contract to exempt property from taxation so as to bind its successors. Such exemption is always a question of policy, never one of power, and a State in granting it relinguishes no part of its sovereign powers. But the State's right to tax can be relinquished only by express stipulation; the intention to grant the exemption must be clear and be indicated by unmistakable words. The power is necessary to the existence of a State and all acts limiting it must be strictly construed, and the question of legislative intent is always open. New Jersey v. Wilson, 7 Cranch 164. State Bank of Ohio v. Knoop, 16 How. 384. Gilman v. Sheboygan, 2 Black 513. Jefferson Branch Bank v. Skelly, 1 Black 447. New Orleans v. Houston, 119 U. S. 278. See also Ohio Life Ins. Co. v. Debolt, 16 How. 428. Philadelphia, etc., R. Co. v. Maryland, 10 How. 393. Railroad Co. v. Gaines, 97 U. S. 708. Dodge v. Woolsey, 18 How. 331. Wilmington R. Co. v. Reid, 13 Wall, 267. Von Hoffman v. Quincy, 4 Wall. 535. Tomlinson v. Jessup, 15 Wall. 454. Pacific R. Co. v. Maguire, 20 Wall. 43. Bailey v. Magwire, 22 Wall, 226. Mobile, etc., R. Co. v. Tennessee, 153 U. S. 500. New Orleans R. Co. v. New Orleans, 143 U. S. 195. New Jersey. Yard, 95 U. S. 115. Orr v. Gilman, 183 U. S. 278. Mechanics' Bank v. Debolt, 18 How. 380. Franklin Bank v. Ohio, 1 Black 474. Wright v. Sill, 2 Black 544. Louisville Water Co. v. Clark, 143 U. S. 1. If the exemption is a mere gratuity, is spontaneous, and no service or duty or other condition is imposed, it may be withdrawn at any time. So a statute exempting the property of a manufacturing corporation from taxation for a period of years is a mere bounty and repealable. The consideration for the exemption must be something as to which there is no legal Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Tax Exemption duty, and the pledge of a grand lodge to give its revenues to charity is insufficient to render the immunity irrepealable where the duty already exists. Rector, etc., v. Philadelphia County, 24 How. 300. Salt Co. v. East Saginaw, 13 Wall. 377. Tucker v. Ferguson, 22 Wall. 574. Grand Lodge v. New Orleans, 166 U. S. 149. The benefits accruing to the community may be a sufficient consideration for the exemption from taxation, and whenever there is a good consideration there is a contract which is protected from repeal or modification. If property be given to a society for certain purposes, under a statute exempting such gifts from taxation, the statute constitutes a contract with the donors, and the property must be exempt so long as it is used for the purposes for which it was granted. Home of the Friendless v. Rouse, 8 Wall. 436. See also Railway Co. v. Philadelphia, 101 U. S. 532. Washington University v. Rouse, 8 Wall. 439. Asylum v. New Orleans, 105 U. S. 368. McGee v. Mathis, 4 Wall. 143. Railroad Co. v. County of Hamblen, 102 U. S. 275. Wilson v. Gaines, 103 U. S. 421. Memphis R. Co. v. Commissioners, 112 U. S. 623. Gulf, etc., R. Co. v. Hewes, 183 U. S. 66. Armstrong v. Athens County, 16 Pet. 281. Given v. Wright, 117 U. S. 648. Planters' Ins. Co. v. Tennessee, 161 U. S. 197. Stearns v. Minnesota, 179 U. S. 223. Duluth, etc., R. Co. v. St. Louis County, 179 U. S. 302. Northern Cent. R. Co. v. Maryland, 187 U. S. 258. Savannah, etc., R. Co. v. Savannah, 198 U. S. 392. In charters of corporations.-The State may exempt particular parcels of property from taxation, either for a specified period or perpetually, or may limit the amount or rate of taxation to which such property shall be subjected. And when such immunity is conferred or such limitation is prescribed by the charter of a corporation, it becomes a part of the contract, and is equally inviolate with its other stipulations. Delaware Railroad Tax, 18 Wall. 225. See also Gordon v. Appeal Tax Court, 3 How. 146. Home of the Friendless v. Rouse, 8 Wall, 438. Humphrey v. Pegues, 16 Wall. 249. Pacific R. Co. v. Maguire, 20 Wall. 43. Erie R. Co. v. Pennsylvania, 21 Wall. 498. Morgan v. Louisiana, 93 U. S. 217. Railroad Cos. v. Gaines, 97 U. S. 711. Railroad Co. v. Commissioners, 103 U. S. 1. |