1. A claim of exemption from county and municipal taxation
cannot be supported, any more than a claim from state taxation,
except upon language so strong as that, fairly interpreted, no room
is left for controversy. No presumption can be made in favor of the
exemption, and if there be reasonable doubt, the doubt is to be
solved in favor of the state.
2. The fact that in an act amending the charter of a railroad
corporation, special provision is made for ascertaining the taxes
to become due by the corporation to the state (nothing being stiid
about the manner of ascertaining other taxes), is not of itself
enough to work an exemption of the property of the corporation from
all taxation not levied for state purposes. Silence in regard to
such other taxes cannot be construed as a waiver of the right of
the state to levy them. There must be something said affirmatively
and which is explicit enough to show clearly that the legislature
intended to relieve the corporation from this part of the burdens
borne by other real and personal property before such an act shall
amount to a contract not to levy them.
3. A provision in such an act prescribing a mode for
ascertaining the tax due the state, by which provision the
president of the company is required to furnish to the auditor of
the state a statement under oath of the actual cash value of the
property to be taxed, on which the company is directed to pay the
tax due the state, within a certain time, to the treasurer under
penalties does not amount to a contract that the state will not
pass any law to assess the property of the company for taxation for
state purposes in a different manner.
Page 89 U. S. 216
4. But if a particular mode has been prescribed for assessing
the property of a particular company, that mode should be followed
until in some way a different mode is prescribed.
5. Whether or not an act prescribing such particular mode has
been impliedly repealed by a general revenue act not in terms
repealing it is a matter peculiarly within the province of the
highest courts of the state, whose acts are the subjects of the
question, to decide. And when such courts have decided the
question, their decision is controlling.
Bailey and others, foreign stockholders, in the Pacific Railroad
Company, a corporation existing and organized under different
special acts of the State of Missouri, filed a bill in the court
below against a certain Magwire, collector of state, county,
school, and city taxes for the county and city of St. Louis,
Missouri, to enjoin his collection of such taxes assessed for the
year 1869, on the said railroad company under the general tax law
of the state, the ground of the application being that by acts of
the Missouri Legislature governing the said railroad company, and
which acts, as the company asserted, made a contract with it, the
company:
1st. Was not liable for any county, school, or city taxes at
all.
2d. Was not liable for state taxes under the act in virtue of
which they had been assessed, but was liable for them only under
another act -- a special act relating to itself and prescribing a
manner for assessment &c., different from the manner which had
here been followed.
The case was thus:
The charter of the Pacific Railroad Company was granted in 1849,
and counties, cities, and towns along its line were authorized to
subscribe to it, but it contained no provision exempting its
property from taxation. [
Footnote
1]
By an act of 1851, amendatory of the charter, [
Footnote 2] it was enacted that the capital
stock, together with all their works
Page 89 U. S. 217
and other property, and all profits which should arise from the
same should be vested in the respective shareholders of the company
forever, in proportion to their respective shares, and that the
same should be deemed personal estate and be exempt from
all
public charge or tax whatsoever, for the term of five years
from the passage of the act. This exemption, of course, would have
expired in 1856.
At the time of the passage of this act, as before and since,
there existed in Missouri, under its public statutes, a general
scheme of taxation of all property in the state; this scheme
embracing all property of corporations over and above their capital
stock, as well as the property of citizens in the counties where it
was situated.
In this state of things, the exemption given by the Act of 1851
not having yet expired, the Legislature of Missouri, on the 25th of
December, 1852, passed another act amendatory of the charter. This
act lent its credit to the company by issuing to it state bonds to
the amount of $1,000,000, to be used after the expenditure of a
like sum raised from other sources, and it gave to the company a
large body of lands which Congress had given to the state.
By a twelfth section, it made the following enactment as to
taxation:
"SECTION 12. The said Pacific Railroad shall be exempt from
taxation until the same shall be completed, opened, and in
operation, and shall declare a dividend, when the roadbed,
buildings, machinery, engines, cars, and other property of such
completed road, at the actual cash value thereof, shall be
subject to taxation at the rate assessed by the state on other
real and personal property of like value."
"And for the purpose of ascertaining the value of the same, it
shall be the duty of the president of said company, on the first
day of February in each year after such road is completed, opened,
and put in operation and declares a dividend, to furnish to the
auditor of the state a statement under his oath, of the actual
value of the roadbed, buildings, machinery, engines, cars, and
other property appertaining to such completed road, and from said
statement, the auditor shall charge said company with
Page 89 U. S. 218
the amount appearing to be due to the state, according to the
statement furnished by the president of the company."
"And in case said company shall fail to pay into the state
treasury, within thirty days after the first day of December in
each year, the amount charged against said company as aforesaid,
said company shall forfeit and pay to the State of Missouri, in
addition to the sum with which said company may stand charged by
the auditor, ten percent per month, after the expiration of said
thirty days, on the amount charged to said company, which sum
charged against said company, together with the ten percent per
month hereinbefore specified, may be recovered in the name of the
State of Missouri by civil action in any court of competent
jurisdiction, and should the president of said company fail to make
out and furnish to the auditor of the state a statement as herein
required, said company shall forfeit and pay to the state $10,000
for such failure, which may be recovered in the name of the State
of Missouri in any court of competent jurisdiction."
"
Provided that if said company shall fail for the
period of two years after said roads respectively shall be
completed and put in operation to declare a dividend, then the said
company shall no longer be exempt from the payment of the said tax,
nor from the forfeitures and penalties in this section
imposed."
This act of 1852 was accepted by the company, and the rights
given by the Act of 1851 were thus surrendered.
The road was completed in April, 1866, and after April, 1868,
and in each year since that time -- the company not having yet made
any dividend -- the president of the company made returns of its
taxable property in the manner required by the twelfth section of
the Act of 1852, but not in any other manner.
At the time when the road was completed, $3,614,500 of stock had
been subscribed, of which $2,500,000 had been subscribed by the
counties and towns along the line of it.
In 1866, the Legislature of Missouri passed an act relating to
the collection of revenue generally throughout the state. The mode
prescribed for ascertaining the value of property of corporations
generally was different from that prescribed by the twelfth section
of the Act of 1852 for ascertaining
Page 89 U. S. 219
the value of the property of the Pacific Railroad. But the Act
of 1866 did not in terms nor by any plain implication repeal the
twelfth section of the Act of 1852. Whether it did so by any kind
of implication was a question that came before the Supreme Court of
Missouri, A.D. 1873, in
Pacific Railroad Company v. Cass
County, [
Footnote 3] in
which case the court decided that the Act of 1866 did not repeal
the said twelfth section in any way.
In August, 1871, this decision not then having been made by the
said supreme court, the assessors for St. Louis County,
acting
under the provisions of the Act of 1866, assessed a tax for
state, county, school, and city purposes on the property of the
Pacific Railroad Company, and seized upon its property, advertising
it for sale. Thereupon the present bill was filed, by which various
foreign stockholders in the company -- the company itself declining
to act, and remaining passive -- sought to enjoin the collection of
the tax.
Its positions, of course, were:
1st. That the twelfth section of the Act of 1852, respecting the
taxation of the road, was and remained a contract between the State
of Missouri and the railroad company; that it specifically provided
for the
whole subject of the taxation of the road, and
that in virtue of it, the general revenue laws of the state were
not intended to and did not apply to this particular company.
2d. That the said section accordingly exempted the company from
taxation for county, school, and all other purposes except those
mentioned in it.
3d. That if this were not all so, thus broadly stated, and if
the section were not a contract as to all taxes, and did not, as
such contract, furnish the only authority and rule by which this
particular company was to be taxed, yet that, until repealed, it
was the law governing the subject of taxation for state purposes;
that, as was shown by the decision in
Pacific Railroad Company
v. Cass County, it had never yet been repealed, and therefore
that certainly, as
Page 89 U. S. 220
to the taxes for state purposes, the collector was to be
enjoined.
The positions of the collector, on the other hand, were:
1st. That after the time limited in the twelfth section -- that
is to say, as things turned out, after April, 1868 -- the property
of the railroad company became subject to taxation, as any other
property in the state, to state, county, municipal, and school
taxation, and through any mode which the legislature of the state
might see fit to prescribe.
2d. That the provisions of the said twelfth section constituted
no contract in favor of the company as against the right of the
state (after the time had elapsed during which the company was to
be exempt from taxation) to provide by law for the taxation of the
property of the company in any manner it should see fit, and for
the general purposes for which any other property in the state was
subjected to taxation, and finally,
3d. That in point of fact the said twelfth section had been
repealed, impliedly, by the general purpose of the Act of 1866, so
that even as to taxation for state purposes, it no longer
applied.
The court below sustained the defendant in everything excepting
as to
city taxes (which, for reasons not necessary here to
be stated, it deemed illegally laid), decreeing, of course, that
the defendant might lawfully collect not only the county and school
taxes, as he proposed to do, but also, in the same way, the state
taxes. The bill to enjoin him from so doing was accordingly
dismissed, and from the decree dismissing it this appeal was
taken.
It may be well enough to mention that in a case which was in
effect one between these same parties, and lately before this
Court, it had been decided that the twelfth section of the Act of
1852 created a
contract between the parties exempting the
railroad from taxation until it was completed and for two years
afterwards if it did not pay a dividend before the expiration of
these two years. [
Footnote
4]
Page 89 U. S. 225
MR. JUSTICE DAVIS delivered the opinion of the Court.
It is contended on behalf of the appellants that the twelfth
section of the Act of 1852 provides for the whole subject of the
taxation of the road, that it exempts the road from all taxes
except state taxes, and furnishes the only rule and authority by
which these taxes can be ascertained and collected.
Page 89 U. S. 226
It was held by this Court in the case of
Pacific Railroad v.
Magwire [
Footnote 5] that
this section created a contract between the state and the railroad
company, exempting the road from taxation until it was completed
and for two years thereafter if it did not pay a dividend before
the expiration of these two years.
The inquiry is whether this contract goes further and exempts
the road, after it has been completed for two years, from all other
than state taxation, and whether the state is precluded from
providing another mode of valuation for state taxes.
It is manifest that legislation, which it is claimed relieves
any species of property from its due proportion of the general
burdens of government, should be so clear that there can be neither
reasonable doubt nor controversy about its terms. The power to tax
rests upon necessity, and is inherent in every sovereignty, and
there can be no presumption in favor of its relinquishment. While
it were better for the interest of the community that this power
should on no occasion be surrendered, this Court has always held
that the legislature of a state, unrestrained by constitutional
limitation, has full control over the subject, and can make a
contract with a corporation to exempt its property from taxation
either in perpetuity or for a limited period of time. If, however,
on any fair construction of the legislation, there is a reasonable
doubt whether the contract is made out, this doubt must be solved
in favor of the state. In other words, the language used must be of
such a character as, fairly interpreted, leaves no room for
controversy.
The present claim is of perpetual exemption from county and
municipal taxation, quite as essential to the wants of the people
as taxation for state purposes.
It is conceded that this exemption is not granted in express
terms, but it is argued that, taking the whole section together, it
arises by necessary implication. We do not think so. Immunity from
all taxation was given until the
Page 89 U. S. 227
road was built and in operation two years, but after this it is
declared
"That the roadbed, buildings, machinery, engines, cars, and
other property of such completed road, at the actual cash value
thereof, shall be subject to taxation at the rate assessed by the
state on other real and personal property of like value."
This is a declaration that the taxation imposed upon the
property of this company shall not be different from the taxation
imposed upon other similar property, which conforms to the
constitutional requirement "that all property subject to taxation
shall be taxed in proportion to its value." If other property is
charged with the payment of county, school, and municipal taxes,
why not the property of this company? In no other way can the
principle of equality in taxation, so essential to good government,
be secured. If the legislature intended to apply a different rule
in this case, it were easy to have said that the property of this
company shall be subject to taxation "for state purposes." Instead
of this, it is declared to be "subject to taxation." This obviously
means general taxation -- such taxation as other property of like
value is subjected to. No words of limitation are used, and none
can be implied against the interests of the state. It is never for
the interest of the state to surrender the power of taxation, and
an intention to do so will not be imputed to it unless the language
employed leaves no other alternative.
The motive for temporary exemption is apparent enough, because
until the road was able to earn something, taxation might bear
heavily upon it. But with the completion of the road, the reason
for the exemption ceased, and it is difficult to see what
inducement there was for the state to grant perpetual immunity from
local taxation. In the original charter of the company, granted in
1849, there was no exemption from taxation. It is true the
amendment of 1851 altered this so that the road was relieved of any
public charge or tax for the period of five years, but this
privilege expired in 1856, and the provisions of the Act of 1852 on
this subject were more favorable to the company. Besides receiving
under this act a large body of lands, donated by
Page 89 U. S. 228
Congress to the state to aid in the construction of railroads,
it was enabled to complete its entire road and run it for two years
without paying any tax whatever. By this means, it secured immunity
from taxation until 1868, and any further immunity in this
direction, if conceded by the state, would have been a mere
gratuity. In view of all the legislation on this subject, it would
seem quite clear that the General Assembly of Missouri, while
recognizing in behalf of this road the propriety of temporary
exemption from taxation, had no purpose to continue these
exemptions indefinitely.
But it is said the section covers the whole subject of taxation,
and as it provides for state taxes only, it excludes any other. If
in the declaratory part of it the road had been subject to "state
taxation," there would have been plausibility in the argument, to
say the least, that the legislature intended to waive other
taxation. But the provision is that after the temporary exemption
from all taxation ceases by its own limitation, the property of the
road shall be subject "to taxation" at the same rate as other
property in the state. There is no restriction in this language,
nor is there any rule of law by which a word can be imported to
limit its meaning. It is true special provision is only made for
the ascertainment and payment of a state tax, and nothing is said
about the manner of ascertaining and paying other taxes. But this
does not prove an intentional abandonment of all but state taxes.
It proves nothing more than that the legislature thought proper, in
the particular of state taxes, to modify the general revenue law so
far as this corporation is concerned, leaving the provisions of
this general law operative upon local taxation.
It would be a hard rule to apply to the legislation of a state
to hold that the circumstance of making in the amendment to a
charter of a railroad corporation special provision for
ascertaining the tax due the state (nothing being said about the
manner of ascertaining other taxes), works an exemption of the
property of the corporation from all taxation not levied for state
purposes. Silence on such a subject
Page 89 U. S. 229
cannot be construed as a waiver of the right of the state in
this regard. There must be something said which is broad enough to
show clearly that the legislature intended to relieve the
corporation from a part of the burdens borne by other real and
personal property. This was not done in this case, and the claim of
exemption from local taxation cannot be sustained.
It is claimed, however, that even if this be so, the state is
inhibited from altering the special provision on the subject of
state taxation. This provision prescribes a mode for ascertaining
the tax due the state. The president of the company is required to
furnish to the auditor a statement, under oath, of the actual cash
value of the property to be taxed, on which the company is directed
to pay the tax due the state, within a certain time, to the
treasurer, under penalties. And the claim is that the state
legislature is prohibited from passing any law to assess the
property of the company for taxation for state purposes in a
different manner. It is not so written in the statute, nor, indeed,
can any proper inference be drawn from what is written that the
legislature intended to contract with the corporation in this
particular. It would be strange indeed if it were so, for the mode
of assessment might not work well and yet, if it formed the subject
of a contract, it could not be changed. The principal thing in
which the state and company were interested was the actual cash
value of the property to be charged. This value was the basis of
taxation, and it could not be a matter of moment how it was fixed,
provided it were done correctly. In this result both the state and
corporation had an equal interest. Both were interested in the
means adopted only so far as they were efficient to secure the
contemplated object. The exigency of the state required the revenue
on the basis of actual value, and this, it is to be presumed, the
corporation was willing to accord. At any rate, it was the duty of
the state, in justice to other property owners, to use the
appropriate means to ascertain this value. The ordinary method of
doing this is by the instrumentality of officers appointed for
Page 89 U. S. 230
the purpose, but the state asked the railroad, through its
president, to make the valuation, to which the corporation
assented. This way of reaching the result was less expensive to the
state, but more expensive to the corporation than the usual mode in
which taxes are assessed. The president of the company could not
make a true valuation without the expenditure of time and labor,
and this repeated year by year as values of property constantly
fluctuate. There is no presumption that he would not do it
conscientiously, according to his best judgment, but still it was a
favor to the state for him to do it at all, and certainly no one
can contend that a state cannot waive at any time a provision for
its own benefit. Apart from this view of the subject, the provision
in question was simply a mode for ascertaining the true value of
the property to be taxed, and if, on trial, it should turn out not
to be the best mode for the purpose, surely the legislature has a
right to change it and adopt another. This no one will question
unless the legislature has surrendered its power over the subject
by contract, which, in our opinion, has not been done in this
case.
But, until the legislature appoints another mode for assessing
and collecting the revenue due the state from this corporation, it
must proceed in conformity with the provisions contained in the Act
of 1852.
The whole subject we have discussed recently came before the
Supreme Court of Missouri in the case of
Pacific Railroad
Company v. Cass County. The assessor of Cass County had levied
taxes for both state and county purposes on the property of the
company in the county, and the question was whether these levies
were authorized. The Court held that the taxes for county purposes
were rightfully assessed, under the general revenue laws, but that
the taxes for state purposes were unauthorized, because section
twelve of the Act of 1852 had not been repealed either by an
express provision of a subsequent law or by necessary implication,
and being in force, state taxes could only be collected in the way
pointed out in that section.
Page 89 U. S. 231
As it is the peculiar province of the highest court of a state
to decide whether or not the method pursued in the assessment and
collection of taxes is in conformity with the law of the state,
this decision is controlling.
It was not made until after this suit was instituted, and
doubtless not promulgated until the rendition of the decree. The
assessors of St. Louis County in this case imposed taxes for state,
county, school, and city purposes. The bill charged that the whole
proceeding was illegal, and sought to restrain the entire levy. On
demurrer, the circuit court held that the city taxes were
wrongfully levied and issued the proper order restraining them and
dismissed the bill so far as it related to state, county, and
school taxes. The court should have included state taxes in the
restraining order. On this account, the decree must be reversed and
cause remanded with directions to enter an order enjoining the
collection of the state tax in the bill mentioned. In all other
respects, the decree is right.
Decree reversed and remanded.
[
Footnote 1]
Session Acts of 1849, p. 219.
[
Footnote 2]
id. 1851, p. 271.
[
Footnote 3]
53 Mo. 26.
[
Footnote 4]
Pacific Railroad v.
Magwire, 20 Wall. 36.
[
Footnote 5]
87 U. S. 20 Wall.
36.
