trine that a State is bound by its contracts, and a legislature of a State, as to all matters within the purview of legislative power, may make contracts which are protected by this provision of the federal Constitution. But it is claimed that the power of taxation is one of the sovereign powers of the State, necessary to its continued existence, and that it was never contemplated, when the people through their constitutions delegated to their representatives in the legislature assembled the power to make laws for the good of the people of the State, that this grant of legislative power carried with it the right to barter away with private corporations one of the essential prerogatives of the government, the very life blood of the State.1 This case was really the first authoritative decision on this subject; the case of New Jersey v. Wilson did not discuss the important principle that taxation was one of the powers of sovereignty that could not be alienated. The case from Ohio was decided at the December term, 1853; of the nine judges on the bench, three, Catron, Daniel, and Campbell, dissented, and Taney, C. J., while concurring in the judgment rendered, did not assent to the principles or reasoning contained in the opinion of the court as delivered by McLean, J. At the same term of the court a case was decided from the same State, in which the court held that the legislation of the State did not amount to a contract, and in that case Judge Taney gave his views upon the principle under discussion thus: "The powers of sovereignty confided to the legislative body of a State are undoubtedly a trust committed to them to be executed to the best of their judgment for the public good; and no one legislature can, by its own act, disarm its successors of any of the powers or rights of sovereignty confided by the people to the legislative body, unless they are authorized to do so by the Constitution under which they are elected. They cannot, therefore, by contract deprive a future legislature of the power of imposing any tax it may deem necessary for the public service; or of exercising any other act of sovereignty confided to the legislative body, unless the power to make such a contract is conferred upon them by the Constitution of the State. And in every controversy on this subject, the question must depend on the Constitution of the State and the extent of power thereby conferred on the legislative body." He then examines the Constitution of Ohio, and arrives at the conclusion that under the Constitution of 1802, and the decisions of the courts of that State, 1 State Bank of Ohio v. Knoop, 16 How. 406 (Cond. U. S. 219), the able dissenting opinion of Campbell, J. 7 Cranch, 164 (Cond. U. S. 498). 316 How. 393 (Cond. U. S. 207). such power was given to the legislature of Ohio.1 In the first case, Judge Taney refers to his opinion in the latter case for the reasons of his concurrence in the opinion of the majority of the court. Judge Grier concurred entirely in these views of Judge Taney. From this examination of the views of Judge Taney, it is evident that he did not yield his assent to the proposition that a general grant of legislative power authorized one legislature to alien the power of taxation so as to bind a subsequent legislature. He only claimed that the people, in their sovereign capacity, speaking through their organic law, could delegate to the legislature such power. The subject was before the court in 1861, the case involving the construction of the same statute of Ohio just considered, and the ruling was the same. At the December term, 1869, it was again under consideration, the majority adhering to the ruling in 16 Howard, Judges Miller and Field and C. J. Chase dissenting. Miller, J., says: "We do not believe that any legislative body, sitting under a State Constitution of the usual character, has a right to sell, to give, or to bargain away forever the taxing power of the State. This is a power which, in modern political societies, is absolutely necessary to the continued existence of every such society. While under such forms of government, the ancient chiefs or heads of the government might carry it on by revenues owned by them personally, and by the exaction of personal service from their subjects, no civilized government has ever existed that did not depend upon taxation in some form for the continuance of that existence. To hold, then, that any one of the annual legislatures can, by contract, deprive the State forever of the power of taxation, is to hold that they can destroy the government they are appointed to serve, and that their action in that regard is strictly lawful. The result of such a principle, under the growing tendency to special and partial legislation, would be to exempt the rich from taxation, and cast all the burden of the support of government, and the payment of its debts, on those who are too poor or too honest to purchase such immunity." At the December term, 1871, the subject was again before the court, and the question was treated as res adjudicata, and so again at the December term, 1872, it was treated in the same manner. This examination shows that the principle claimed to be decided, and which has governed the later cases, has really never received the assent of this tribunal. In New Jersey v. Wilson it was 3 1 Ohio Life Insurance & Trust Co. v. Debolt, 16 How. 431 (Cond. U. S. 234). 2 Washington University v. Rouse, 8 Wall. 433, 434. * Wilmington Railroad v. Reid, 13 Wall. 264. Humphrey v. Pegues, 16 Wall. 244. not even discussed; in State Bank of Ohio v. Knoop, three of the nine judges dissented entirely from the opinion of the court, and two others, Taney and Grier (a host within themselves), dissented from the reasoning of the court, and based their opinions of concurrence in the result of the opinion, upon a different principle, and fully agreed with the dissenting judges as to the principle that a general grant of legislative power did not authorize one legislature to alien the taxing power so as to bind subsequent legislatures. In their opinion such a power might be granted by the Constitution of the State, and was granted by the Constitution of Ohio. Dissenting Views of State Courts.-A number of cases were decided at the January term, 1853, of the Supreme Court of Ohio, arising upon the 60th section of the banking act of 1852, in which the view is taken and argued with great force, that a charter of incorporation is not a contract. The view of Burke as to the charter of the East India Company, that it was a "charter to establish monopoly and create power," and not entitled to the protection of the various charters of English liberty, is approved; and the charters of incorporation granted by the State were thought in a similar manner not to be entitled to the protection of the provision of the Constitution prohibiting the impairing the obligation of contracts.1 The question was before the Supreme Court of Ohio in Sandusky Bank v. Wilbor,2 when they adhered to their former opinion, claiming that, although precedent was against them, the cases did not convince their judgment, and ought not to be followed. The courts of Maryland, Michigan, New Jersey, New Hampshire, Vermont, Pennsylvania, Connecticut, and North Carolina, have taken views similar to those of the courts of Ohio. Beasley, Ch. J., in commenting on the proposition that a charter of incorporation is a contract, says: "The entire contract on the part of the State, implied in such cases, is the supposed legislative agreement not to alter or recall the privilege granted. No other stipulation on the part of the State was ever suggested to exist, and it was the imagined existence of such stipulation alone which converted what else, in all its essential qualities, as well as in its form, was an act of legislation, into a contract on the part of the community 1 Knoop v. The Piqua Bank, 1 Ohio, N. S. 603; Toledo Bank v. Bond, Id. 697; Debolt v. Ohio Life Ins. & Trust Co. Id. 563. These cases were reversed by the Supreme Court of the United States in 16 How. 27 Ohio, N. S. 481. 3 Mayor of Baltimore v. Balt. & Ohio Railroad Co. 8 Gill, 289; East Saginaw Manuf. Co. v. City of East Saginaw, 19 Mich. 259; State v. Mayor of Jersey City, 31 N. J. L. (2 Vroom), 575; Brewster v. Hough, 10 N. H. 143; Thorpe v. R. & B. Railroad Co. 27 Vt. 140; Mott v. Pennsylvania Railroad Co. 30 Penn. St. 9; Brainard v. Colchester, 31 Conn. 410; Raleigh Railroad Co. v. Reid, 64 N. C. 155. with the corporators. Without some such stipulation, having an obligatory force, I am wholly unable to conceive the ground of difference. between the charter of a corporation and any other act of legislation. If a statute lay no obligation on the State to do, or to refrain from doing, a particular thing, or one or more particular things, such enact-ment seems to me to be a pure act of legislation, and in no sense a contract." 1 And Cooley, J., in reviewing the cases in the Supreme Court of the United States, from New Jersey v. Wilson to McGee v. Mathias, says: "It is not very clear that the Supreme Court of the United States has ever, at any time, expressly declared the right of a State to grant away the sovereign power of taxation." The court in Pennsylvania say: "Revenue is as essential to government as food to individuals; to sell it is to commit suicide." 5 § 67. Limitations on the Doctrine that Exemption from Taxation in a Charter is a Contract.-The courts which adhere to the doctrine have guarded it with many limitations. While, as a general rule, in the interpretation of a charter the question is: What was the intention of the legislature? when applied to exemptions from taxation, it is said the intention must appear by clear, express and unequivocal words. The relinquishment of the power of taxation will never be presumed. Those who claim that it has been relinquished as to certain property or franchises, must show it by express grant in explicit terms, and not by implication or doubtful intendment. This rule of construction is universally received, and is applied so freely as sometimes almost to do away with the original doctrine. Where a bank was chartered, and its charter was silent as to taxation, the power of the State to impose a tax on the bank after that time was sustained. A railroad was chartered to run through Pennsylvania and other States; it was to pay a bonus to the State of $10,000 annually, and the stock of the company, equal to the cost of construction, to be subject to taxation as other property of the kind in the State. Subsequently a general tax was laid by the State on all transportation companies. It was held the railroad was not exempt from the general 131 N. J. L. (2 Vroom), 580. 27 Cranch, 164. 34 Wall. 143. 19 Mich. 282; s. P. Iron City Bank v. Pittsburgh, 37 Penn. St. 304. 30 Penn. St. 9. Phila, & Wilmington Railroad Co. v. Maryland, 10 How. 393 (Cond. U. S. 427); Jefferson Branch Bank v. Skelly, 1 Black, 447, 448; Gilman v. Sheboygan, 2 Id. 513; Pacific Railroad Co. v. Cass Co. 53 Mo. 17; North. Mo. Railroad et al. v. Maguire, 49 Mo. 490; Biscoe v. Coulter, 18 Ark. 423. 'Providence Bank v. Billings, 4 Pet. 514 (Cond. U. S. 171). tax.1 In the first case, Sharswood, J., said: "It is not pretended that there is any express release of legislative power, but it is contended that, as the company have agreed to pay, and the State to accept, these sums, it is necessarily implied that no more shall be exacted. So it might well be argued if any special taxation was imposed upon this company; for that would be to require an additional price beyond the terms of the contract. But the question, whether they shall be subject to a general tax upon all railroad and transportation companies in the commonwealth, is an entirely different one." The principle is often illustrated by that of a person who buys land from the commonwealth at a fixed price; it is implied that he shall not be called on to pay more, but not that his land shall not be subject to taxation. So of the corporation, it is implied that the bonus paid for the franchise shall not be increased; but there is no implication that the property of the artificial person created by the charter shall not be subject to taxation as other property of the same kind in the State. But where the legislature has exercised the taxing power in a specified manner by a special tax on all the property of a corporation, and has intimated no design to subject it to further burdens, its property will be exempt from taxes imposed by general laws.2 A charter of a corporation contained a guaranty against repeal and alteration, but no grant against immunity from. taxation. It claimed to be exempt from taxation, because it was not subject to taxation at the date of its charter, and a subsequent tax law was an alteration of its charter. It was held liable, the court using this language: "A law which seeks to deprive the legislature of the power to tax must be so clear, explicit and determinate, that there can be neither doubt nor controversy about its terms or the consideration which renders it binding. Every presumption will be made against its surrender, as the power was committed by the people to the government to be exercised, and not to be alienated." The charter of a bank provided that its capital stock or profits should not be taxed by any municipal corporation, without authority first had from the legislature. Afterwards the legislature authorized the town of Chester, in which the bank was, to tax "all stocks of every kind." It was held that the bank was not liable to be taxed by the town, and the statute must be so construed as not to tax twice.4 1 Erie Railroad Co. v. Commonwealth, 66 Penn. St. 84; s. c. Erie Railway Co. v. Pennsylvania, 21 Wall. 493; s. P. Bank of Easton v. Commonwealth, 10 Penn. St. (10 Barr), 442; Wanderer v. Lexington, 15 B. Monr. 258. N. Y. & Erie Railroad Co. v. Sabin, 26 Penn. St. 242. 4 Bank of Chester v. Chester, 10 Rich. (Law), 104. |