Salt Company v. East Saginaw - 80 U.S. 373 (1871)
U.S. Supreme Court
Salt Company v. East Saginaw, 80 U.S. 13 Wall. 373 373 (1871)
Salt Company v. East Saginaw
80 U.S. (13 Wall.) 373
1. A law offering to all persons and to corporations to be formed for the purpose a bounty of 10 cents for every bushel of salt manufactured in a state from water obtained by boring in the state, and exemption from taxation of the property used for the purpose, is not a contract in such a sense that it cannot be repealed.
2. Such a law is nothing but a bounty law, and in its nature a general law regulative of the internal economy of the state, dependent for its continuance upon the dictates of public policy and the voluntary good faith of the legislature.
3. General encouragements held out to all persons indiscriminately to engage in a particular trade or manufacture, whether in the shape of bounties, drawbacks, or other advantage, are always under the legislative control, and may at any time be discontinued.
The East Saginaw Salt Manufacturing Company filed a bill in the court below against the City of East Saginaw, in Michigan, to restrain the city from levying and enforcing any tax on certain real estate owned in the said city by it and for a decree establishing the exemption claimed. The company founded its exemption on an act passed by the Legislature of Michigan on the 15th of February, 1859, for encouraging the manufacture of salt. The act was as follows:
"SECTION 1. The people of the state of Michigan enact that
all companies or corporations formed or that may be formed for the purpose of boring for and manufacturing salt in this state, and any and all individuals engaged or to be engaged in such manufacture, shall be entitled to the benefits of the provisions of this act."
"SECTION 2. All property, real and personal, used for the purpose mentioned in the first section of this act shall be exempt from taxation for any purpose."
"SECTION 3. There shall be paid from the treasury of this state, as a bounty, to any individual or company or corporation the sum of 10 cents for each and every bushel of salt manufactured by such individual, company, or corporation, from water obtained by boring in this state, provided that no such bounty shall be paid until such individual, company, or corporation shall have at least 5,000 bushels of salt manufactured."
The bill alleged that in April, 1859, after the passage of the above act, the salt company was organized as a corporation under the general laws of Michigan for the purpose of manufacturing salt from salt water to be obtained in the State of Michigan; that prior to the act, the state had been engaged in experiments and had spent large sums of money to ascertain whether salt could be manufactured as aforesaid, but without any satisfactory results, and that the act was passed to encourage private parties to engage in the same experiments.
The bill proceeded:
"Your orator further shows that the persons associating, as hereinbefore stated, to form the East Saginaw Salt Manufacturing Company were solely induced thereto, as your orator believes, by the encouragement held out in said act, and had not said last mentioned act been passed, no such corporation would have been formed nor any experiment made to determine whether salt could be profitably made in Michigan. Your orator further shows that after spending some time in erecting the necessary buildings and in procuring the requisite machinery therefor, a well was commenced by the said association near the Saginaw River, in the County of Saginaw, in June, 1859, and that drilling continued almost constantly from that time until early in the year 1860, at which time a depth of 669 feet was
reached, where brine was found of sufficient strength and purity to warrant the company in proceeding to the manufacture of salt."
"That, relying in good faith upon the benefits promised in said act of the legislature of 1859, the said company proceeded at once to erect works for the manufacture of salt from the brine found in said well, such manufacture commencing the last of June or the first part of July, 1860, and from that date to 9th March, 1861, there was actually manufactured by said corporation, from salt water obtained in the State of Michigan 6,348 barrels of salt, each containing five bushels. Your orator claims and avers the fact to be that in consequence of the facts hereinbefore stated, the property of your orator used for the purpose of boring for and manufacturing salt in this state is exempt from taxation, and that the right to such exemption from taxation became and was a vested right, which it is not competent for the legislature to take away without your orator's consent."
"Your orator further shows that your orator is still engaged in the manufacture of salt, and has purchased and is using all its property for that purpose, said manufacture continuing at the place where it was first commenced by your orator."
The bill then gave a description of the land owned by the complainant in East Saginaw, declaring that it had been in use by it for the purpose aforesaid, and stated the assessment thereof for taxes by the city authorities, and the threatened collection of the same, and prayed for an injunction and decree as before stated.
To this bill a demurrer was filed.
The court below overruled the demurrer, and sustained the prayer of the bill, but the Supreme Court of Michigan reversed this decree and dismissed the bill. This decree of the supreme court was based upon an act of the Legislature of Michigan, passed on the 15th of March, 1861, by which the act of 1859 was amended as follows: the first section by adding a proviso limiting its benefits to those who should be actually engaged in the manufacture of salt prior to 1st of August, 1861; the second section by limiting the exemption from taxation to five years from the organization of the company or corporation; and the third section (which
granted a bounty of 10 cents per bushel), by limiting the bounty moneys that should be paid to anyone individual, company, or corporation, to the sum of $5,000. The Supreme Court of Michigan stated that it regarded the statute set up for a contract as a bounty law, and nothing more. From this decree the case was now here on error.