This Court must satisfy itself whether or not the party claiming
the benefit of a contract which it claims was impaired by
subsequent legislation had acquired rights under the original
contract and therefore has jurisdiction.
This Court follows the state court in determining the extent of
a special immunity from taxation granted by the constitution of the
state. A subordinate body of the state, in the absence of the state
distinctly limiting its control thereover, contracts subject, and
not paramount, to the power of the state.
A state, by authorizing a municipality to levy taxes in the
future on taxable property within its jurisdiction, does not
thereby limit its own power to determine what property shall be
taxable when the levy shall be made.
Page 218 U. S. 432
Even if the vote by a parish acting under a state statute in
Louisiana to aid a railroad company by an annual tax constituted a
contract and the company became entitled to its benefit, a
provision in a subsequently enacted constitution exempting certain
property then taxable from all taxation does not impair the
obligation of the original contract, and the special tax cannot be
imposed on the property so exempted.
121 La. 997 affirmed.
The facts, which involve the validity of certain taxation on
property claimed to be exempt under provisions of the constitution
of the State of Louisiana, are stated in the opinion.
Page 218 U. S. 435
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a writ of error to reverse a decision of the Supreme
Court of Louisiana granting an injunction to the plaintiff, the
Louisiana & Arkansas Railway Company, the defendant in error,
against the collection from it of
Page 218 U. S. 436
a special tax in favor of the Arkansas Southern Railway Company,
the plaintiff in error. 121 La. 997. The agreed facts are these: by
Art. 230 of the state constitution of 1898, any railroad thereafter
constructed before January 1, 1904, was to be exempt from taxation
for ten years from completion, upon certain conditions. The
plaintiff built its road through the Parish of Winn and gained the
right to the exemption. The defendant, plaintiff in error, claims
its rights under a vote of the same parish on February 1, 1898,
granting a tax of five mills to a predecessor to whose rights the
defendant has succeeded. This vote was valid, and effective against
all taxable property in the parish.
James v. Arkansas Southern
Railway Co., 110 La. 145. Act 35, § 6, 1886. Const. 1879, Art
242. By its terms, the grant was for ten years from the completion
of the road, the police jury adding a condition that the railroad
should be completed into Winnfield within three years from the date
of the vote. Afterwards, the police jury extended the time to May
1, 1901, on or before which date, and before the acquisition of its
right of way and ground by the plaintiff, the road was finished. It
was accepted by the police jury, and taxes have been levied and
paid in accordance with the vote, beginning with the year 1901. The
defendant was proceeding to levy on the property of the plaintiff
in the parish, and says that, if the Constitution of 1898 is
construed to confer an exemption from this tax upon the plaintiff,
it impairs the obligation of contracts, contrary to Art. I, § 10,
of the Constitution of the United States.
The plaintiff says that there is no constitutional question
before this Court, because the Supreme Court of Louisiana put its
decision partly upon the ground that the defendant had not acquired
all of its contract rights before the adoption of the Constitution
of 1898. Of course, this Court must satisfy itself upon that point,
and therefore has jurisdiction.
Sullivan v. Texas,
207 U. S. 416,
Page 218 U. S. 437
207 U. S. 423.
On the other hand, the defendant asks us to review the construction
given to the state constitution as extending the immunity granted
by the above-mentioned Art. 230 to special taxes like this. Upon
that point, equally, of course, we follow the state court.
Louisville & Nashville R. Co. v. Kentucky,
183 U. S. 503,
183 U. S. 508;
Missouri v. Dockery, 191 U. S. 165,
191 U. S. 171.
Leaving these preliminaries behind, we come to the point of the
case.
We shall not consider whether the vote is to be regarded as
having been simply an offer at the time of its passage, in
consideration of acts to be done thereafter, and as having become a
contract only when the road was finished -- that is to say, after
the Constitution of 1898 went into effect.
See Wadsworth v. Eau
Claire County, 102 U. S. 534,
102 U. S. 538.
We shall assume, without deciding, that it became binding at once,
by statutory authority, after the analogy of a covenant,
see
Wisconsin & Michigan Ry. Co. v. Powers, 191 U.
S. 379,
191 U. S. 386,
although liable to be defeated by the nonperformance of the
condition attached. We assume also that the condition was satisfied
and the right to the tax earned, and that, when earned, it had the
same validity and force as if it had been gained before the
Constitution was adopted. It appears further from what we have
stated that, when the right to the tax accrued, the land now in the
hands of the plaintiff's road was liable to taxation. But these
facts and assumptions are not enough to make out the defendant's
case.
No doubt a state might limit its control over the power of a
municipal body to tax by authorizing it to make contracts on the
faith of its existing powers,
Wolff v. New Orleans,
103 U. S. 358;
Hubert v. New Orleans, 215 U. S. 170,
although, unless it did limit itself with a certain distinctness of
implication, a subordinate body would contract subject, not
paramount, to the power of the state.
Manigault v.
Springs, 199 U. S. 473,
199 U. S. 480;
Knoxville
Water
Page 218 U. S. 438
Co. v. Knoxville, 189 U. S. 434,
189 U. S. 438.
But there is no such limitation by the state, and no contract by
the parish that implies it. An authority given by the state to
promise and levy a tax in future years on the taxable property in
the parish does not purport to limit the power of the state to say
what property shall be taxable when the time comes -- at least, by
general regulations not aimed at aiding an evasion of the promise
it has allowed. A vote by a parish to pay five mills on all the
taxable property within its boundaries refers on its face to a
determination by the sovereign as to what that property shall be.
See Arkansas Southern R. Co. v. Wilson, 118 La. 395, 401.
The notion that the statute and the vote, separately or together,
precluded the state from erecting a jail that should be free from
such claims is untenable on its face. The same reasoning allows the
state to go farther, as it has done. We agree with the Supreme
Court that it did not transgress the Constitution of the United
States.
Decree affirmed.