So far as the federal Constitution is concerned, a state may
defray the entire expense of creating, developing, and improving a
political subdivision from state funds raised by general taxation
-- or it may apportion the burden among the municipalities in which
the improvements are made -- or it may create tax districts to meet
authorized outlays.
The state may, so far as the federal Constitution is concerned,
create
Page 239 U. S. 255
tax districts for special improvements directly by the
legislature, or may delegate their institution through court
proceedings, and the propriety of such delegation is a matter for
the state alone, not reviewable by this Court.
A state may by statute directly, or by appropriate legal
proceeding, fix the basis of taxation or assessment for a proper
governmental outlay, and, unless palpably arbitrary, such action
does not violate the due process provision of the Fourteenth
Amendment.
The power of taxation is not to be confused with that of eminent
domain; it is not necessary to show special benefits in order to
lay a tax, which is an enforced contribution for the payment of
public expenses.
A state may, in its discretion, lay assessments for public work
in proportion either to position, frontage, area, market value, or
estimated benefits, and, unless the exaction is a flagrant abuse of
power, it does not amount to deprivation of property without due
process of law.
An initial fixed tax per acre laid by a statute of Missouri on a
tax district properly organized under the state law for preliminary
expenses of starting a public work, such as drainage of the
district, does not deprive the owners of property therein of their
property without due process of law, there being manifestly in this
case nothing arbitrary in the prescribed rate, and it not being
necessary to base such a tax upon special benefits.
The statute of Missouri authorizing the imposition of the tax
being in force prior to the formation of the taxing district, the
tax cannot be considered as retrospective and violative of the due
process clause of the Fourteenth Amendment on that ground.
The state court having held that a charter of a taxing district
as a public corporation did not constitute a contract that the laws
it was created to administer would not be changed, this Court sees
no reason to disturb the decision.
248 Mo 373 affirmed.
The facts, which involve the constitutionality under the
Fourteenth Amendment of the Drainage District Act of Missouri, and
of a tax levied thereunder, are stated in the opinion.
Page 239 U. S. 259
MR. JUSTICE HUGHES delivered the opinion of the Court.
The plaintiffs in error, owners of several thousand acres
embraced within the Little River Drainage District, of Missouri,
brought this suit to restrain the collection of a tax of
twenty-five cents per acre levied generally upon the lands within
the district for the purpose of paying its preliminary expenses.
The district was organized in 1907 under the provisions of Article
3, Chapter 122, Revised Statutes of Missouri, 1899, as amended by
the Act of April 8, 1905. Its board of supervisors appointed
engineers, who made surveys and recommended a plan of drainage.
Upon the adoption of this plan, in November, 1909, commissioners
were appointed for the purpose of viewing the tracts within the
district and assessing benefits and damages. Pending the
proceedings of these commissioners, the tax in question was levied
under the Act of June 1, 1909, now § 5538 of the Revised Statutes
of Missouri, 1909, which provides as follows:
"Sec. 5538. Levy of 25 cents per acre may be made for
preliminary work. -- As soon as any drainage district shall have
been organized under order of the circuit court, and a board of
supervisors are elected and qualified, such board of supervisors
shall have the power
Page 239 U. S. 260
and authority to levy upon each acre of land in the district,
not to exceed twenty-five cents per acre, as a level rate, to be
used for purpose of paying expenses of organization, for
topographical and other surveys, for plans of drainage, for
expenses of assessing benefits and damages and other incidental
expenses which may be necessary, before entering upon the main work
of drainage. Any district which may have proceeded without such
levy may, if in the opinion of its board of supervisors it be
desirable to do so, make such level assessment for such purpose,
and if such items of expense have already been paid in whole or in
part from other sources, the surplus shall be paid into the general
fund of the district, and such levy may be made although the work
proposed may have failed or have been found impractical."
The amended petition averred in substance that, as to the
plaintiffs, all the proceedings had been
in invitum; that
the lands in the district varied in value; that no benefits had
accrued or would accrue to the plaintiffs' lands either from the
expenditure of the moneys sought to be raised by the tax, or from
the carrying out of the proposed plan; that a large portion of the
lands in the district, and those of the plaintiffs in large part,
were to be condemned for a right of way for ditches and catch
basins, and that the tax had been levied against every acre within
the district, as a level tax, without regard either to relative
value or to benefits, or to the fact that portions of the lands
would be damaged and other portions would be taken by condemnation,
or that a large extent of territory, if added to the district, as
had been proposed, would receive the benefit of the tax without
being charged with any part. The levy of the tax, and the act
authorizing it, were assailed as being contrary to the Constitution
of the State of Missouri, and also to the provision of the
Fourteenth Amendment prohibiting deprivation of property without
due process of law.
Page 239 U. S. 261
Upon demurrer to the petition, the parties stipulated that the
sole question to be determined was whether § 5538 (
supra)
was constitutional. The trial court held it to be valid, and
dismissed the petition. After affirmance in the Supreme Court of
Missouri, Division One, the cause was transferred (in view of the
federal question) to the court in banc, where the judgment was
finally affirmed, the opinion of division one being adopted. 248
Mo. 373.
In considering the contention thus presented under the
Fourteenth Amendment, it must be taken to be established that the
district had been organized validly for a public purpose. It had
been incorporated pursuant to the judgment of the circuit court, as
in the act provided, and this judgment had been affirmed upon
appeal.
Little River Drainage District v. Railroad, 236
Mo. 94. In the opinion of the court in that proceeding, the tracts
were described as forming
"a contiguous body of land from one to eleven miles in width,
extending in a southerly direction for a distance of about ninety
miles from Cape Girardeau on the north, to the boundary line
between Missouri and Arkansas. Streams and watercourses heading in
the higher adjacent territory carry their waters to these low
lands, where, because of insufficient channels, the waters overflow
and render much of the land uncultivable and uninhabitable."
Id., p. 103. The district is, indeed, a conspicuous
illustration of the class of enterprises which have been authorized
in order to secure the recognized public advantages which will
accrue from reclaiming and opening to cultivation large areas of
swamp or overflowed lands.
Egyptian Levee Co. v. Hardin,
27 Mo. 495;
Columbia Bottom Levee Co. v. Meier, 39 Mo. 53;
Morrison v. Morey, 146 Mo. 543;
State v. Drainage
District,192 Mo. 517;
Mound City Land & Stock Co. v.
Miller, 170 Mo. 240;
State v. Taylor, 224 Mo. 393;
Squaw Creek Drainage District v. Turney, 235 Mo. 80;
Little River Drainage District v. Railroad, supra. It
Page 239 U. S. 262
was constituted a political subdivision of the state for the
purpose of performing prescribed functions of government.
Mound
City Land & Stock Co. v. Miller, supra; State v. Taylor,
supra. These drainage districts, as the supreme court of the
state has said, exercise the granted powers within their
territorial jurisdiction "as fully, and by the same authority, as
the municipal corporations of the state exercise the powers vested
by their charters." 248 Mo., p. 383.
In view of the nature of this enterprise, it is obvious that, so
far as the federal Constitution is concerned, the state might have
defrayed the entire expense out of state funds raised by general
taxation, or it could have apportioned the burden among the
counties in which the lands were situated and the improvements were
to be made.
Mobile County v. Kimball, 102 U.
S. 691,
102 U. S.
703-704. It was equally within the power of the state to
create tax districts to meet the authorized outlays. The
legislature, unless restricted by the state constitution, can
create such districts directly, or, as in this case, it may provide
for their institution through a proceeding in the courts in which
the parties interested are cited to appear and present their
objections, if any. The propriety of a delegation of this sort was
a question for the state alone. And, with respect to districts thus
formed, whether by the legislature directly or in an appropriate
proceeding under its authority, the legislature may itself fix the
basis of taxation or assessment -- that is, it may define the
apportionment of the burden -- and its action cannot be assailed
under the Fourteenth Amendment unless it is palpably arbitrary and
a plain abuse. These principles have been established by repeated
decisions.
Hagar v. Reclamation District, 111 U.
S. 701,
111 U. S. 709;
Spencer v. Merchant, 125 U. S. 345,
125 U. S.
353-356;
Fallbrook Irrigation District v.
Bradley, 164 U. S. 112,
164 U. S.
167-168;
Bauman v. Ross, 167 U.
S. 548,
167 U. S. 590;
Parsons v. District of Columbia, 170 U. S.
45,
170 U. S. 52;
Williams
Page 239 U. S. 263
v. Eggleston, 170 U. S. 304,
170 U. S. 311;
Norwood v. Baker, 172 U. S. 269,
172 U. S. 278;
French v. Barber Asphalt Paving Co., 181 U.
S. 324,
181 U. S. 343;
Wight v. Davidson, 181 U. S. 371,
181 U. S. 379;
Wagner v. Baltimore, decided this day,
ante, p.
239 U. S. 207.
The legislature, in this instance, fixed the object and
character of the tax and prescribed the maximum rate. The authority
to levy the tax for preliminary expenses was to follow upon the
organization of the district. The plaintiffs in error urge that the
determination at the time the district was organized was merely
preliminary and tentative with respect to the lands to be included,
and that assessments according to ascertained benefits for the
purpose of meeting the cost of works and improvements are reserved
for subsequent proceedings, upon notice, after surveys have been
made and the plan of drainage has been definitely adopted.
See Rev.Stat. (Mo.) §§ 5511 to 5519. It is true that the
elaborate inquiry which is to follow the organization of the
district may show the advisability of bringing in other lands
(
Squaw Creek Drainage District v. Turney, supra), and the
statute undoubtedly does postpone the assessment of the cost of
works and improvements until the plan of drainage has been decided
upon and benefits have been determined accordingly. But
nonetheless, the organization of the district takes effect when it
is duly constituted by the judgment of the court. The owners whose
lands are embraced in the district as proposed, and who have not
signed the articles, are summoned and their objections to the
organization and to the inclusion of their lands are heard. As a
public corporation, with defined membership, the district, when
established, is empowered to go forward with the expert
investigations and surveys which, of necessity, must precede the
adoption of a complete scheme. The outcome of these studies cannot
be absolutely predicted; they may even result in the abandonment of
the project. But probable feasibility has been shown, and the
district, in consequence,
Page 239 U. S. 264
organized. The preliminary work must then be done, and its cost
must be met. It is work undertaken by the district. The owners of
the included lands (with one vote for each acre) elect the district
officers (supervisors), who are to proceed with the surveys, etc.,
in the manner detailed. In the present case, the district was
created upon an adequate showing of basis (236 Mo., p. 138), and it
is not disputed that the plaintiffs in error received the notice to
which they were entitled (Rev.Stats. [Mo.] 1909, § 5497; Laws of
Missouri, 1905, § 8252). They were thus apprised of whatever legal
consequences attached to the formation of the district with their
lands in it. The present question therefore cannot properly be
regarded as one of notice. The imposed burden, if it be in its
nature a lawful one, is an incident to the organization which they
had abundant opportunity to contest. It is apparent that, when the
district was duly organized, it had the same footing as if it had
been created by the legislature directly, and if the legislature
could have established this district by direct act, and then
constitutionally imposed upon the lands within the district the
ratable tax in question to pay the expenses of organization and for
preliminary work, it cannot be doubted that the legislature had
power to impose the same tax upon the district as organized under
the judgment of the court.
The ultimate contention, then, is that the plaintiffs in error
cannot be subjected to this preliminary tax of twenty-five cents an
acre, because their lands, as they insist, will not be benefited by
the plan of drainage. In authorizing the tax, it is said, the
legislature has departed from the principle of benefits, and the
tax is asserted to be
pro tanto an uncompensated taking of
their property for public use. But the power of taxation should not
be confused with the power of eminent domain. Each is governed by
its own principles.
Mobile County v. Kimball, supra; Bauman v.
Ross, supra; Wight v. Davidson,
Page 239 U. S. 265
supra; People v. Brooklyn, 4 N.Y. 419, 424; Cooley on
Taxation, p. 430; Lewis on Eminent Domain, 3d ed., §§ 4, 5. A tax
is an enforced contribution for the payment of public expenses. It
is laid by some rule of apportionment according to which the
persons or property taxed share the public burden, and whether
taxation operates upon all within the state or upon those of a
given class or locality, its essential nature is the same. The
power of segregation for taxing purposes has every-day illustration
in the experiences of local communities, the members of which, by
reason of their membership, or the owners of property within the
bounds of the political subdivision, are compelled to bear the
burdens both of the successes and of the failures of local
administration. When local improvements may be deemed to result in
special benefits, a further classification may be made and special
assessments imposed accordingly, but even in such case there is no
requirement of the federal Constitution that for every payment
there must be an equal benefit. The state, in its discretion, may
lay such assessments in proportion to position, frontage, area,
market value, or to benefits estimated by commissioners.
Davidson v. New Orleans, 96 U. S. 97,
96 U. S. 106;
Walston v. Nevin, 128 U. S. 578,
128 U. S. 582;
Spencer v. Merchant, supra; Bauman v. Ross, supra; French v.
Barber Asphalt Paving Co., supra; Wight v. Davidson, supra.
And, as we have said, unless the exaction is a flagrant abuse, and
by reason of its arbitrary character is mere confiscation of
particular property, it cannot be maintained that the state has
exceeded its taxing power.
Wagner v. Baltimore, ante, p.
239 U. S. 207. We
find no such arbitrary action here. It was not necessary to base
the preliminary tax upon special benefits accruing from a completed
plan. It cannot be denied that the preliminary work had peculiar
relation to the district. The initial inquiry, whatever its result,
was for the purpose of securing the reclamation of the lands of
which the district was
Page 239 U. S. 266
comprised. In this inquiry, all the owners were interested.
Whether the expense of ascertaining the best method of reclamation
should subsequently be reimbursed when final assessments were laid
according to benefits ascertained to result from the execution of
the final plan presents a question of policy, and not of power.
These outlays for organization and preliminary surveys could as
well be considered specially to concern the district, as
constituted, as highways or public buildings or plans for the same
(whether consummated or abandoned) could be said to concern
counties or towns. Further, it would seem to be clear that the
state could appropriately provide for meeting the preliminary
expense when it was incurred, and could determine the manner of
apportionment according to the interests deemed to be affected as
they existed at the time. And, in this view, it is not material to
consider whether the area of the district might subsequently be
extended, or what particular lands within it would be appropriated
for ditches, reservoirs, etc., if a plan of drainage were adopted
and carried out. To say that the tax could not be laid except as a
result of such an inquiry would be to assert in effect that as a
preliminary tax it could not be laid at all. We know of no such
limitation upon the state power. And assuming that the lands within
the district, as organized, could be taxed for the purpose stated,
there was manifestly nothing arbitrary in the fixing of the
prescribed rate per acre.
It is further objected that the levy of the tax amounts to a
deprivation of property without due process of law because of the
retrospective character of the legislation -- the section in
question having been passed after the district was organized. As to
this, it is sufficient to say that the statute which was in force
at the time of the formation of the district contemplated liability
to taxation to defray the preliminary expenses as well as the
ultimate cost of the improvements if made (Laws of Missouri
1905,
Page 239 U. S. 267
§ 8252), and these preliminary outlays must be regarded as
incident to the organization for which the legislature was
competent to provide in the exercise of its taxing power.
Seattle v. Kelleher, 195 U. S. 351,
195 U. S. 359;
Wagner v. Baltimore, ante, p.
239 U. S. 207.
The plaintiffs in error have also urged that § 5538 is invalid
under § 10, Article I, of the federal Constitution upon the ground
that it impairs the obligation of contract. This contention was not
presented by the amended petition and was not deemed by the supreme
court of the state, division one, to be within the stipulation upon
which the case was tried. 248 Mo. 382, 394. Upon the motion to
transfer the case to the court in banc, the question under the
contract clause was raised, but the court in banc simply adopted
the opinion of division one.
Ibid. In that opinion,
however, after referring to the stipulation, the court proceeded to
observe that the charter of the district, as a public corporation,
did not constitute a contract with its members that the laws it was
created to administer would not be changed. If this can be
considered to be a decision of the question, we see no reason to
disturb it.
Laramie County v. Albany County, 92 U. S.
307,
92 U. S. 310;
New Orleans v. New Orleans Water Works Co., 142 U. S.
79,
142 U. S. 89;
Worcester v. Street Railway Co., 196 U.
S. 539,
196 U. S. 551;
Seattle v. Kelleher, supra.
Judgment affirmed.