An institution in the City of New Orleans for the relief of
destitute females and helpless children of all religious
denominations was incorporated April 20, 1853, by an act of the
General Assembly of the State of Louisiana, which declares that
from and after its passage, all the property, real and personal,
belonging to the institution "is hereby exempted from all taxation
either by the state, parish, or city in which it is situated, any
law to the contrary notwithstanding." By means of donations, the
institution erected an asylum, and has always fulfilled the objects
for which it was established. In the year 1874, certain property --
a cotton press -- was devised to it, the revenues of which have
been faithfully applied to enable it to carry on its work. Under a
statute enacted in pursuance of article 118 of the state
constitution of 1868 (
infra, p.
105 U. S.
364), the city in 1876 imposed upon that property a tax
the validity of which was sustained by the court below.
Held:
1. That imposing the tax without granting any compensation or
indemnity was not a legitimate exercise of the power of dissolving
corporations which is reserved in a provision of the Code of
Louisiana.
2. That the statute and the provision, as they were construed
and applied to the circumstances of this case, are in violation of
the tenth section of the first article of the Constitution of the
United States.
The facts are stated in the opinion of the Court.
Page 105 U. S. 363
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This case comes before us for the purpose of reviewing the
judgment of the Supreme Court of the State of Louisiana, which
sustained the validity of a certain tax imposed by the authorities
of the City of New Orleans upon the property of the plaintiff in
error, the "St. Anna's Asylum for the relief of destitute females
and helpless children of all religious denominations," a charitable
institution which was incorporated by an act of the Legislature of
Louisiana approved April 29, 1853, for the purposes indicated by
its name. The charter gave it perpetual succession and power to
take, purchase, possess, and enjoy all kinds of property whatever,
real or personal, by gift, grant, sale, bequest, exchange, or by
any other mode of conveyance or transfer whatsoever, and the same
to sell, convey, or dispose of under the restrictions therein
provided, and directed that it should administer the same for the
furtherance of the object of the incorporation and in accordance
with the conditions of the charter, with a provision that all
acceptances of immovable property and all alienations of immovable
property and stocks should be signed by the president and
treasurer, after the declared will of a majority of the board of
directors had been duly inscribed on the minutes of the
corporation. It appointed a first board of directors and provided
for annual elections thereafter and for the appointment of a
president and other officers, and declared that the president and
directors should superintend, manage, and control the affairs and
interests of the corporation.
The sixth section declared as follows:
"SEC. 6.
Be it further enacted, &c., that the said
corporation shall enjoy the same exemption from taxation as was
enacted in favor of the 'Orphan Boys' Asylum of New Orleans' by the
Act approved March 12, 1836, entitled, 'An Act for the relief of
the Orphan Boys' Asylum of New Orleans.'"
The act relating to the "Orphan Boys' Asylum of New Orleans,"
referred to in this section, declared as follows:
Page 105 U. S. 364
"That from and after the passage of this act, all the property,
real and personal, belonging to the Orphan Boys' Asylum of New
Orleans be and the same is hereby exempted from all taxation either
by the state, parish, or city in which it is situated, any law to
the contrary notwithstanding."
The proofs show that under the charter thus granted, the
corporation was duly organized and, by means of donations, erected
an asylum, and has always fulfilled the objects of its
organization. The property on which the tax in question was imposed
was procured in 1874, and was assessed in the tax list at $90,000.
The following admission with regard to it appears in the
record:
"Now therefore it is admitted (as was done in the lower court)
that the defendant acquired said cotton press mentioned in the tax
bill and answer filed by defendant, after 1874, by devise, bequest,
and legacy, from Dr. W. N. Mercer, and that they were the owners of
the same when said assessment of $1,350 of city taxes was made by
the city. That no inmates of the asylum are kept upon the premises,
and that the revenues of the cotton press on which said assessment
is made are applied to the keeping and maintaining the objects of
charity mentioned in the defendant's act of incorporation,
viz., to the support and maintenance and relief of
destitute females and helpless children of all religious
denominations, as intended by the charter, and that said asylum is,
and has been since its organization, in active and efficient
operation (as shown by the evidence) in the City of New
Orleans."
The proofs further show that the corporation largely relies on
the rents of this property for enabling it to carry on its
benevolent work.
The tax in question was imposed in 1876 under the supposed
authority of the Constitution of 1868 and legislation adopted in
pursuance thereof. Article 118 of that constitution declared as
follows:
"Taxation shall be equal and uniform throughout the state. All
property shall be taxed in proportion to its value, to be
ascertained as directed by law. The General Assembly shall have
power to exempt from taxation property actually used for church,
school, or charitable purposes. "
Page 105 U. S. 365
In conformity with this provision, the Legislature of Louisiana
in 1871 passed a law declaring that all taxes levied by the City of
New Orleans shall be assessed equally upon every description of
property, both real and personal, but by another act passed at the
same session it was declared that public hospitals, asylums, poor
houses, and all other charitable institutions for the relief of
indigent and afflicted persons, and the lots of ground appurtenant
thereto and used therewith, and all their furniture and equipments,
so long as the same shall be used for that purpose only, shall be
exempt from taxation.
The corporation resisted the payment of the tax, and the usual
proceedings for its collection were instituted in the Third
District Court for the Parish of Orleans. The corporation filed an
answer setting up the exemption from taxes contained in its
charter, and claiming that it was a contract, and contended that
the Constitution of 1868, and the statute passed in pursuance
thereof, impaired the obligation of said contract in violation of
the tenth section of the first article of the Constitution of the
United states. The court below gave judgment in favor of the city,
and an appeal was taken to the Supreme Court of Louisiana, and the
judgment was affirmed. We are now called upon to review this
decision.
The language of the exemption is so explicit and so broad, and
comes in after so many allusions to property which it is supposed
the corporation might acquire, other than that which would be
directly used for food and shelter to the destitute and helpless
persons under its care, that no doubt can be entertained as to its
literal application to all the property of the society which it
would be lawful and proper for it to possess. The funds on which it
relies for carrying on its work, however invested, whether in
stocks, real estate, or otherwise, no less than the asylum building
itself, are clearly embraced in the terms of the exemption, and to
exclude them from its operation would require the insertion or
addition of words which the legislature did not see fit to express.
Undoubtedly if the corporation should acquire property not needed
or used for carrying on the institution, it would be an act outside
of the objects and purposes of the charter, and
Page 105 U. S. 366
ultra vires, and as to such property it could not, in
its own wrong, justly claim the benefit of the exemption. But the
property in question is not obnoxious to this objection; it
directly contributes to the support of the institution, and is held
for that purpose alone.
Indeed, it is not on any assumption that the language of the
exemption does not extend to the property taxed that the Supreme
Court of Louisiana bases its judgment. The main ground upon which
it relies is that the charter was granted and accepted under a
standing law of the state, by which the legislature was authorized
to abrogate the charter of any corporation, and it was argued that
the power to abrogate included the lesser power to alter and amend.
This law is contained in article 438 of the Civil Code, adopted in
1825, being a modification of a similar article in the Code of
1808, book i. tit. 10, c. 3. In the Code of 1825 it reads as
follows:
"Chapter III.
Of the dissolution of corporations. (Art.
438) A corporation legally established may be dissolved: 1. By an
act of the legislature, if they deem it necessary or convenient to
the public interest; provided that when an act of incorporation
imports a contract, on the faith of which individuals have advanced
money or engaged their property, it cannot be repealed without
providing for the reimbursement of the advances made, or making
full indemnity to such individuals; 2. By the forfeiture of their
charter, when the corporations abuse their privileges, or refuse to
accomplish the conditions on which such privileges were
granted,"
&c.
The counsel for the plaintiff in error contends that this
article has reference only to the absolute dissolution of a
corporation and not to a mere alteration of its charter, and, from
its correlation to other parts of the title, this seems to be a
very probable view of its office. But if it be construed in the
large sense contended for by the counsel of the city, the
qualification with which it is accompanied in the proviso is very
important and not to be ignored. This qualification requires
reimbursement or indemnity to those who have made advances upon the
faith of the charter of incorporation. Nothing of the kind has been
attempted in this case. As the corporation has not been dissolved,
but is continued in existence, and still
Page 105 U. S. 367
represents those who contributed to its establishment, the
corporation itself is the only proper party to receive indemnity,
and no indemnity short of the amount of the tax imposed would be
adequate. The indemnity and the tax would mutually balance or
neutralize each other. In other words, proper indemnity would
require a revocation or nullity of the tax.
It is suggested, however, by the supreme court in its opinion
that the reserved power contained in the code has no application to
this case, because the property upon which the tax in question was
imposed was acquired by gratuitous donation after the adoption of
the Constitution of 1868, and consequently (as the court infers)
after the repeal of so much of the charter as exempted from
taxation the property not employed within the limits of exemption
allowed by that Constitution. "When a case of prior acquired
property," says the court, "presents itself, it will be time enough
to express our opinion thereon." But this argument presupposes the
existence of a right to repeal the provisions of the charter as to
future acquisitions without qualification or condition. This seems
to us a begging of the question at issue. The contract did not
apply 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 that might afterwards be acquired in
the due fulfillment of the purposes of the institution. If the
present asylum should be destroyed and a new one erected on a
different piece of ground, the argument of the court would be
equally applicable to such newly acquired property as to the
property in question. The constitution itself did not exempt any
property. It only gave the legislature the power (to be exercised,
or not, in its discretion) to exempt property actually used for
church, school, and charitable purposes. The legislature has seen
fit to make this exemption, but it was not obliged by the
constitution to do so. The argument of the supreme court would go
to the extent of declaring that the abrogation of the contract,
effected by the Constitution of 1868, was valid as to all
after-acquired property, whether indemnity was provided or not, and
this amounts to saying that the Legislature or people of
Louisiana
Page 105 U. S. 368
had absolute power to pass a law impairing the obligation of the
contract without any condition or qualification whatsoever.
We cannot concur in this view. We think that the power of
abrogation or alteration was qualified by the duty of providing
indemnity to the full extent of the damage or burden caused by such
change. This conclusion seems to us so obvious as to require no
extended argument in its support.
This opinion might be extended by an examination of authorities.
We might refer to
Home of the Friendless v.
Rouse, 8 Wall. 430, which is almost on all fours
with the present case. We might go back to the case of
Dartmouth College v. Woodward and the cases since decided,
and review all the reasons on which they were grounded; we might
dilate on the legislative reasons for granting immunity from taxes
to such charitable institutions as that of the plaintiff in error,
prominent among which would doubtless be the fact that the support
and maintenance extended to the objects of the charity relieves the
state from a burden which would involve a much larger amount of
taxation than that which it waives by granting the exemption. But
such a review would be but a repetition of what has been said
before, and much of it would be out of place.
It is proper, however, that we should notice one or two cases
which the counsel for the city suppose to be favorable to their
views, and on which they place considerable reliance. These are
Tucker v.
Ferguson, 22 Wall. 527, and
West Wisconsin
Railway Co. v. Board of Supervisors, 93 U. S.
595. We think that they do not apply to the case now
under consideration. In the first place, the Constitutions of
Michigan and Wisconsin, in which states those cases arose, reserved
to their legislatures, respectively, the power to alter, amend, and
repeal charters of incorporation. In the next place, in those
cases, the exemption granted was held to be gratuitous on the part
of the state, no consideration passing therefor from the companies.
It was no part of their charters of incorporation, and therefore
formed no consideration for their acceptance. Whereas, in the
present case, the exemption was expressed in the charter itself,
and was one of the inducements offered for
Page 105 U. S. 369
its acceptance and for making donations for the establishment of
the institution.
It is also said that in order to constitute a contract, the
grant ought to be clear and free from all ambiguity and doubt, and
not susceptible of a different construction. We think it is so in
this case. The contract is not a matter of inference or
presumption. It is distinctly expressed in the act of
incorporation. Indeed, a clearer case could hardly be made. The
addition of a declaration that the exemption given should not be
withdrawn would not have added to its force.
We are well aware of the forcible language which has been used
in previous cases in reference to the importance to the state of
the governmental function of taxation; the caution that ought to be
exercised in maintaining a claimed exemption from taxes; the
clearness and certainty which the grant should exhibit. We concur
in all that has been said by this Court and many state courts on
the subject. But where the language is clear and the intention to
grant the exemption apparent, the Court has never hesitated to give
it force and effect. And as before said, we think it difficult to
conceive a grant more clearly expressed than that in the present
case, and unless we are disposed to reverse the previous decisions
of this Court, we cannot hesitate what judgment we ought to
give.
We are of opinion that the imposition of the tax in question,
contrary to the express terms of the charter, and without any
provision for compensation or indemnity, was not a legitimate
exercise of the power of dissolution reserved in the code, and that
sec. 118 of the Constitution of 1868, and the legislative act by
virtue of which the said tax was imposed, as construed and applied
to the circumstances of this case, are in violation of the tenth
section of Article I of the Constitution of the United states.
Our conclusion is that the judgment of the Supreme Court of
Louisiana must be reversed, and that the cause be remanded with
instructions to reverse the judgment of the Third District Court of
the Parish of Orleans, and to render judgment in conformity with
this opinion.
So ordered.
Page 105 U. S. 370
MR. JUSTICE MILLER, with whom concurred MR. JUSTICE FIELD,
dissenting.
I dissent from this judgment because I understand that no
statute shall be held to grant exemption from taxation unless its
language imperatively requires it.
I do not think that the language of the statute under which the
exemption is claimed in this case requires that all property
acquired by the institution after the passage of the act shall be
exempted, especially in regard to a cotton picking machine, which
can only be of value as it is used in a business operation in
competition with others who must pay heavy taxes.