Act No. 225 of the Legislature of Louisiana of March 15, 1855,
exempting the hall of the Grand Lodge from state and parish
taxation, "so long as it is occupied as a Grand Lodge of the F.
& A. Masons," did not constitute a contract between the state
and the complainant, but was a mere continuing gratuity which the
legislature was at liberty to terminate or withdraw at any
time.
If such a law be a mere offer of bounty, it may be withdrawn at
any time, although the recipients may have incurred expense on the
faith of the offer.
This was a petition originally filed in the Civil District Court
for the Parish of Orleans by the Grand Lodge of the F. & A.
Masons of the State of Louisiana to enjoin the City of New Orleans
from proceeding to sell, for the taxes of 1888, 1889, and 1890,
certain property owned by the petitioner and claimed to be exempt
from taxation.
The petition set forth that the grand lodge was incorporated by
a perpetual charter granted by the legislature in 1816; that
petitioner was the owner of a lot of ground, with buildings and
improvements thereon at the corner of St. Charles and Perdido
Streets, known as the hall of the grand lodge, etc., which property
it had purchased in 1853 by a notarial act, in which was
incorporated a resolution of the grand lodge which, in substance,
devoted the entire net revenues of such property "to the relief of
worthy distressed members of the order, their wives, children, and
families, and as a permanent charitable fund;" that such resolution
was in strict accord with the objects of the institution, of which
the grand lodge is the superintending body or organization, "the
principles of which are charity and universal benevolence," and "to
the end thereof, that charitable institutions
Page 166 U. S. 144
may be promoted," the act of incorporation was enacted; that
further to promote this object, the legislature, by an Act approved
March 15, 1855, exempted said hall from city and parish taxation so
long as it was occupied by the Grand Lodge of F. & A. Masons,
which exemption was claimed to have become a contract between the
state and the grand lodge so long as the property was owned and
occupied by it. The petitioner alleged that the principles and
objects of Free Masonry are still unchanged, and that the net
revenues arising from the property have not been diverted; that the
city now claims that the property is subject to taxation, and
threatens to enforce the collection of the taxes.
The answer of the city was simply a general denial.
Upon the trial, it appeared that the grand lodge was
incorporated by Act of March 18, 1816, with full power and
authority to take, hold, and enjoy real and personal property,
etc.; that the hall was erected in the year 1845 for a commercial
exchange, and was purchased by the grand lodge for a hall in 1853;
that on March 15, 1855, the General Assembly enacted that the
building, whose location and name were given in the act, should be
exempt from state and parish taxation so long as it was occupied as
the Grand Lodge of F. & A. Masons. It further appeared that the
objects proposed by the institution were charity and universal
benevolence; that contributions were exacted from each member of
the order for the ordinary expenses of the lodge and as a fund for
the purposes of charity, to be distributed as occasion required,
and that from 1853 to the present time, the whole of the revenue,
except that used for insurance, repairs, and current expenses, has
been exclusively devoted to charitable purposes, as stated in the
charter and act of sale. These revenues averaged over $3,000 per
year.
It further appeared that in 1879 a new Constitution was adopted
by the state, of which article 207 was as follows:
"The following property shall be exempt from taxation, and no
other,
viz.: all public property, places of religious
worship or burial, all charitable institutions; . . . provided,
the
Page 166 U. S. 145
property so exempted be not used or leased for purposes of
private or corporate profit or income."
Upon the hearing in the district, court the property was held to
be exempt from taxation, and an injunction granted. The city
appealed to the supreme court, which reversed the decree of the
district court and dissolved the injunction. Upon a rehearing, the
decree was amended by recognizing the exemption of that part of the
property occupied by the grand and subordinate lodges of Masons,
and in other respects the demand was rejected and the case remanded
to the court below with directions to hear evidence and ascertain
what property was thus occupied, and what property was rented or
used for private or corporate profit or income, and to pass upon
and decide the relative values of that part of the property thus
occupied by said Masons to that leased or used as aforesaid -- that
is, "from the assessed value of the property,
viz.,
$60,000, must be deducted the value of the property exempted
aforesaid."
The case having been remanded and reheard in the district court,
a new judgment was rendered in favor of the city for the city taxes
of 1888 on an assessment of $20,000, of the year 1889 on an
assessment of $10,000, and for the year 1890 on an assessment of
$6,200. The case was then appealed and reheard in the supreme court
and the judgment of the district court affirmed, whereupon
petitioner sued out this writ of error.
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Page 166 U. S. 146
The only question in this case is whether the act of 1855,
exempting the hall of the grand lodge from state and parish
taxation "so long as it is occupied as a Grand Lodge of the F.
& A. Masons," constitutes a contract between the state and the
complainant or was a mere continuing gratuity, which the
legislature was at liberty to terminate or withdraw at any time,
and which the state did subsequently withdraw by the adoption of a
constitution which secured the exemption of the property of "all
charitable institutions; . . . provided, the property so exempted
be not used or leased for the purposes of private or corporate
profit or income." It appeared in this case that during the years
in which the assessments complained of were made, a part of the
ground floor of the exempted property was rented for stores, that
some of the rooms were rented for other like purposes, and that
from these sources a large amount of corporate income had been
realized, although that income was devoted to charitable
purposes.
If the act of 1855 be regarded as a contract within the case of
Dartmouth College v.
Woodward, 4 Wheat. 518, then it is clear that the
exemption from taxation was valid, and beyond the power of the
legislature to abrogate.
State Bank v.
Knoop, 16 How. 369;
New Jersey
v. Wilson, 7 Cranch 164;
Gordon v.
Appeals Tax Court, 3 How. 133;
Dodge v.
Woolsey, 18 How. 331;
Bank v.
Skelly, 1 Black 436;
McGee v.
Mathis, 4 Wall. 143;
Wilmington
Railroad v. Reid, 13 Wall. 264;
Humphrey
v. Pegues, 16 Wall. 244;
Farrington v.
Tennessee, 95 U. S. 679;
New Jersey v. Yard, 95 U. S. 104.
To make such a contract, however, there is the same necessity
for a consideration that there would be if it were a contract
between private parties. If the law be a mere offer of a bounty, it
may be withdrawn at any time, notwithstanding the recipients of
such bounty may have incurred expense upon the faith of such offer.
Thus, the Legislature of the State of Michigan, desiring to
encourage the manufacture of salt, which had been recently
discovered in the Saginaw Valley, in 1859 offered exemption from
taxation and a bounty of ten cents per bushel to all individuals,
companies, or corporations formed
Page 166 U. S. 147
for the purpose of boring for and manufacturing salt. It was
held in
Salt Company v. East
Saginaw, 13 Wall. 373, that if the salt company
plaintiff had been incorporated by a special charter containing the
provision that its property should be exempt from taxation, and
that charter had been accepted and acted upon, it would have
constituted a contract; but that this was a bounty offered to
all corporations and individuals who should manufacture
salt, and there was no pledge that it should not be repealed at any
time; that as long as it remained a law, every individual or
corporation was at liberty to avail himself or itself of its
advantages by complying with its terms and doing the things which
it promised to reward, but was also at liberty at any time to
abandon such a course; that it was a matter purely voluntary upon
both sides -- giving to one party the power to abandon the
manufacture of salt and to the other to repeal the exemption from
taxation and the bounty of ten cents per bushel. The consequence of
a different decision in this case might easily have become
disastrous, since the arguments which were urged upon this Court at
that time would have been equally forceful at any time thereafter,
and the state might have found itself bound by a perpetual pledge
to pay ten cents upon every bushel of salt thereafter manufactured
by the companies which had embarked in the enterprise under the
encouragement of the bounty. A like ruling was made in
Welch v.
Cook, 97 U. S. 541, in
which an act of the Legislature of the District of Columbia,
exempting from general taxation for ten years such real and
personal property as might be employed within the District for
manufacturing purposes did not create an irrepealable contract with
the owners of such property, but merely conferred a bounty, liable
at any time to be withdrawn.
Complainant, while admitting the soundness of this proposition,
claims that the requisite consideration existed in the deed by
which the property was acquired, wherein the grand lodge solemnly
declared and proclaimed said purchase to be made for the purpose
and object of creating a fund for charitable purposes, in the
relief of worthy distressed members of
Page 166 U. S. 148
the order, their wives, children, and families, and solemnly
pledged itself that as soon as the said property should be paid
for, the whole of the revenue which might be derived from it, after
deducting necessary and unavoidable expenses on its account, should
be devoted to those objects.
This consideration, however, was not one upon the faith of which
the legislature granted the exemption, since the deed had already
been in existence for two years, and the property had been
purchased under the resolution of the lodge adopted January 27,
1853, to the same effect as the above recital in the deed. While
subscriptions for the purchase of the property may have been
obtained upon the faith of this resolution, it cannot be said to
have constituted a consideration for the exemption. The alleged
contract for exemption was not contained in the charter -- as in
other cases where such exemption has been sustained -- since the
lodge had already pledged its revenues to charitable purposes, and
when the act was passed, it gave no additional pledge and promised
nothing which it had not already promised and was bound in honor to
perform. If additional subscriptions were obtained upon the faith
of the act, the subscribers were bound to take notice of the fact
that the legislature was at liberty to repeal the act at any time,
or that the people might, in the exercise of their sovereign power,
nullify it by an amendment to the Constitution.
In
Home of the Friendless v.
Rouse, 8 Wall. 430, relied upon by the plaintiff in
error, the exemption was contained in the original charter of the
Home of the Friendless, which purported in its preamble to be
granted for the purposes of encouraging the undertaking, and
enabling the parties engaged therein more fully and effectually to
accomplish their laudable purpose. The exemption was offered not in
view of a consideration which had already passed, but for the
purpose of inducing the incorporators to accept the charter and to
carry out the enterprise.
So, in
Asylum v. New Orleans, 105 U.
S. 362, the institution was incorporated under an act of
the General Assembly which declared that all the property belonging
to the institution
Page 166 U. S. 149
should be exempted from all taxation. The question turned upon
the exemption of certain property which was devised to it twenty
years after it was incorporated, the revenues of which were applied
to enable it to carry on its work; but it was held that the
contract applied not only to property in existence when the charter
was granted, nor only to that which was in existence when the
Constitution of 1868 was adopted, but to all which might afterwards
be acquired in the due fulfillment of the purposes of the
institution.
We are of opinion that the act in question in this case was one
which the legislature might properly enact as a matter of public
policy and in aid of a beneficent purpose, but that it was a mere
gratuity or bounty, which it was competent at any time to
terminate, and that this was done by article 207 of the
constitution of 1879. The case is practically upon all fours with
that of
Rector of Christ Church v.
Philadelphia, 24 How. 300, in which the Legislature
of Pennsylvania enacted that
"the real property, including ground rents, now belonging and
payable to Christ Church Hospital, in the City of Philadelphia, so
long as the same shall continue to belong to the said hospital,
shall be and remain free from taxes."
Eighteen years thereafter, the legislature enacted that all
property belonging to any association then exempt from taxation,
other than that in actual use and occupation of such association,
should thereafter be subject to taxation. It was held that this
last law was not in violation of the Constitution of the United
States; that the former act of 1833 was a mere privilege existing
bene placitum, and might be revoked at the pleasure of the
sovereign. It would seem from this case that the hospital had been
incorporated long before the act containing the exemption was
passed, as that act recited that the hospital "had for many years
afforded an asylum for numerous poor and distressed widows," and
that the exemption was granted on account of its means being
curtailed by decay of the buildings, and the increased burden of
taxation. So in
Tucker v.
Ferguson, 22 Wall. 527, and in
West Wisconsin
Railway v. Board of Supervisors, 93 U. S.
595, it was held that an act of the legislature
exempting property of all railroads
Page 166 U. S. 150
from taxation was not a contract to exempt unless there were a
consideration for the act; that the promise of a gratuity,
spontaneously made, may be kept, changed, or recalled at pleasure,
and that this rule applied to the agreements of states, made
without consideration, as well as to those of persons.
See also
Newton v. Commissioners, 100 U. S. 548,
100 U. S. 561,
and
People v. Roper, 35 N.Y. 629, wherein a law providing
that persons who had served seven years in the militia and had been
honorably discharged were entitled to perpetual immunity from
taxation to the extent of $500 each was held to be repealable at
any time by the legislature.
The act of 1855, now in question, clearly falls within the
latter class of gratuities or bounties, which are subject to the
will of the legislature, and may be withdrawn at any time.
The decree of the court below was therefore right, and will
be
Affirmed.
