1. This Court concurs in opinion with the Supreme Court of
Illinois that sec. 6 of art. 9 of the constitution of that state of
1848 (
infra, p.
103 U. S. 257)
imposes a limitation on the power of the legislature to authorize
taxation by the municipal corporations or the political
subdivisions of the state.
2. A congressional township is by the laws of Illinois merely a
corporation for school purposes. It cannot, therefore, subscribe
for stock in a railroad company and issue its bonds in payment nor
levy a tax upon persons and property within its jurisdiction to aid
in building railroads.
The facts are stated in the opinion of the Court.
Page 103 U. S. 257
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
By the Constitution of Illinois adopted in 1848, counties were
recognized as existing political subdivisions of the state, and the
general assembly was authorized to provide by a general law for a
township organization, under which any county might come whenever a
majority of the voters should, at any general election, so
determine. If a county did adopt a township organization, the
management of its fiscal affairs by the county court might be
dispensed with and the business of the county transacted in such
manner as the general assembly should provide. Art. 7, sec. 6.
Under the authority of this provision of the constitution, an act
was passed by the general assembly authorizing such an
organization, by which townships could be established and made
bodies corporate, with certain defined governmental powers. Gross,
Stat. 1869, p. 741.
By another statute, each congressional township in the state was
"established a township for school purposes."
Id., p. 691.
The business of such a township was to be done by three trustees,
to be elected from time to time by the legal voters of the
township, and who were made "a body politic and corporate, by the
name and style of
trustees of schools of township ___, range
___,' according to the number." The powers of these trustees
related exclusively to the business of the public schools in the
township. They had authority to lay off the township into school
districts and apportion the school funds, and were charged with
certain other duties connected with school affairs and school lands
within their jurisdiction. They had no power to levy taxes. That
was to be done by the directors of the several school districts
which should be created.
Art. 9, sec. 5, of the Constitution of 1848 is as follows:
"The corporate authorities of counties, townships, school
districts, cities, towns, and villages may be vested with power to
assess and collect taxes for corporate purposes, such taxes to be
uniform in respect to persons and property within the jurisdiction
of the body imposing the same. And the general assembly shall
require that all the property within the limits of municipal
corporations, belonging to individuals, shall be taxed for the
payment of debts contracted under authority of law. "
Page 103 U. S. 258
The Illinois Farmers' Railroad Company was incorporated Feb. 28,
1867, and by an amendment to its charter, passed April 15, 1869,
the following provisions were made:
"SEC. 2. It shall be lawful for the corporate authorities of the
towns, townships, cities, and counties through which said road
shall pass to take stock in the said company, and shall also be
empowered to make assessments, levy taxes, and collect the same in
the manner in which the said several towns, townships, cities, and
counties assess and collect taxes for the purpose of paying the
said assessments on the subscriptions to the said stock or the
interest accruing thereon, and the said towns, townships, cities,
and counties may issue bonds, bearing interest, at any point they
may designate, either within or without the state of Illinois, at a
rate not exceeding ten percent per annum, payable annually or
semiannually, as they may elect,
provided that the said
townships or towns shall not subscribe to the stock of the said
company without submitting the said proposed subscription to a vote
of the legal voters of their respective towns, townships, or
cities, thirty days' notice of which shall be given, elections held
and returns made as provided by the general election laws of this
state,
and provided further that no such bonds shall
issue, nor shall any interest be payable thereon or accrue, until
said road is completed through the said town, township, city, or
county,
and provided further that the subscriptions on the
part of the said counties shall not be for a sum exceeding two
thousand dollars per mile of the line of the said road in the said
counties."
"SEC. 3. In counties not under township organization, it shall
be lawful for the trustees of schools to make subscriptions for
their respective townships, and issue bonds as provided in the
preceding section, and for the purpose of paying the said
subscriptions or bonds or the interest thereon, shall levy a tax
not exceeding the rate of one percent per annum upon the taxable
property of their respective townships, and shall, through their
treasurer, certify the said assessment to the clerk of the county
court of their respective counties, and it shall be the duty of the
said clerk of the county court to carry out the tax so assessed
upon the collector's book, and the amount so raised by taxation
shall remain in the hands of the treasurer of the proper county and
shall be employed by him in paying, first, the interest due on the
said bonds, and then the principal if any funds shall remain in his
hands, and for no other purpose. "
Page 103 U. S. 259
The County of Morgan, through which the road of this company
passed, was not under township organization, and on the 1st of
February, 1870, at an election called, the voters of congressional
township No. 14 N., of range 9 W. of the third principal meridian,
within that county, voted to subscribe to the stock of the company
in accordance with the provisions of sec. 3 of the amended charter.
Upon the authority of this vote, the trustees of schools of the
township made the subscription and issued thirty-two bonds of
$1,000 each, bearing date Oct. 1, 1870, to make the required
payment. These bonds were afterwards registered with the auditor of
public accounts, and upon his certificate to the clerk of the
County Court of Morgan County, taxes were levied on the taxable
property in the township to meet the interest as it fell due. In
this way the interest for the years 1871, 1872, 1873, and 1874 was
paid, but in 1875, the taxpayers of the township commenced this
suit in a state court to enjoin any further taxation to meet the
bonds on the ground that there was no authority in law either for
the subscription or the issue of the bonds. That suit was
transferred by the bondholders from the state court to the Circuit
Court of the United States for the Southern District of Illinois,
where on final hearing the prayer of the taxpayers, complainants,
was granted. To reverse that decree, this appeal was taken.
It is clear that art. 9, sec. 5, of the constitution is a
limitation on the power of the legislature to authorize taxation by
public corporations or the political subdivisions of the state. The
supreme court of the state has uniformly so decided.
Johnson v.
Campbell, 49 Ill. 316;
Harward v. St. Clair Drainage
Co., 51
id. 130;
Madison County v. People,
58
id. 456. The same court also decided, in
Trustees,
&c. v. People, 63
id. 299,
People v.
Dupuyt, 71
id. 651, and
People v. Trustees of
Schools, 78
id. 136, that statutes substantially like
the one now under consideration were unconstitutional and
consequently void because the tax required was not for a corporate
purpose. It is conceded that if these decisions are to be followed
the judgment below was right.
The first of these cases was decided at the January Term, 1872,
and the court then took occasion to say it was the first
Page 103 U. S. 260
instance in which the right of the trustees of schools to embark
in railroad enterprises had been brought to their attention. The
law then under consideration, like the one here, was not passed
until 1869, and we infer from this and other circumstances that
such legislation had not been common in the state before that time.
The decisions since on the same question have all been one way, and
this of itself would make it highly improper for us to depart from
them unless they were clearly wrong. As a rule, we treat the
construction which the highest court of a state has given a statute
of the state as part of the statute itself. It is only when, by
giving such construction a retroactive effect, it will invalidate
contracts which in our opinion were lawfully made that we disregard
them. Here, however, we find nothing of the kind. Taxation by
municipal or public corporations must be for a corporate purpose.
It is not always easy to decide whether a certain kind of tax is
within or without this limitation, but we think it may be safely
said that as a general rule, a corporate purpose must be some
purpose which is germane to the general scope of the object for
which the corporation was created. Such we understand to be the
effect of the Illinois decisions which are collected and commented
on in
Hackett v. Ottawa, 99 U. S. 86. A
congressional township is one of the principal subdivisions which
Congress has provided for in the survey of the public lands of the
United States for the purposes of entry and sale. It is not
necessarily a political subdivision of a state or of a county. When
Illinois was admitted into the Union, section numbered sixteen in
every surveyed township, or its equivalent if the section had
before that time been sold or otherwise disposed of, was granted
the state "for the use of the inhabitants of such township for the
use of schools." 3 Stat. 430, c. 67, sec. 6. It was eminently
proper, therefore, that the state should make these donations the
points around which the public school system should be organized.
Hence the congressional or original surveyed townships were made
public corporations for that purpose, and apparently for that
alone. Taxation for school purposes only would be germane to such
corporations, and no one would or could reasonably suppose that
they were created for managing
Page 103 U. S. 261
the general affairs of a political subdivision of the state. As
was very properly said in
People v. Trustees of Schools,
supra, "their creation is purely to aid in the great scheme of
accomplishing universal education." They are preeminently public
school corporations, and in the absence of legislative power under
the constitution can no more tax the people to build railroads than
an ordinary school district or an incorporated academy can use its
funds in that way. A railroad may help the people in a school
district, but it can hardly be said that the construction of a
railroad is a school purpose. The existence of railroads may and
undoubtedly will make schools more necessary and school property
more valuable, but the construction of railroads is not necessary
either to the establishment or maintenance of schools. Railroads
are the effect, rather than the cause, of schools.
Congressional townships under the name of the "trustees of
schools" were incorporated for "school purposes" only. So the act
of incorporation in terms declares. Taxation by the corporate
authorities, therefore, on persons and property within the
jurisdiction of such a township to build railroads is not taxation
for a corporate purpose, and the decree below, which followed the
decisions of the state court, was consequently right.
Decree affirmed.