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decisions of the Supreme Court of the United States, which, of course, are controlling and must be followed by the state courts. According to these decisions, in the absence of a constitutional prohibition, the legislature of a state has the power, for a consideration, to grant to a private corporation an exemption from taxation, either for a limited time or forever, or to agree to tax it to a certain extent only; and, if it does so, it cannot afterwards revoke the exemption or impose taxes in violation of the agreement, unless it has reserved the right to do so. In such a case the grant of exemption from taxation is a contract between the state and the corporation, within the meaning of the provision in the Federal Constitution prohibiting any state from passing laws impairing the obligation of contracts.89 But,

sity v. Rouse, 8 Wall. (U. S.) 439, 19 L. Ed. 498. And in the state courts, see East Saginaw Mfg. Co. v. East Saginaw, 19 Mich. 259, 2 Am. Rep. 82; Brewster v. Hough, 10 N. H. 138; Raleigh & G. R. Co. v. Reid, 64 N. C. 155 (reversed in 13 Wall. [U. S.] 269, 20 L. Ed. 570); Mechanics' & Traders' Branch of State Bank v. Debolt, 1 Ohio St. 591 (reversed in 18 How. [U. S.] 280, 15 L. Ed. 458); Mott v. Pennsylvania R. Co., 30 Pa. St. 9, 72 Am. Dec. 664; West Wisconsin Ry. Co. v. Trempealeau County Sup'rs, 35 Wis. 257.

89 United States. Mobile & O. R. Co. v. Tennessee, 153 U. S. 486, 38 L. Ed. 793; Wilmington & W. R. Co. v. Alsbrook, 146 U. S. 279, 39 L. Ed. 972; New Orleans v. Houston, 119 U. S. 265, 30 L. Ed. 411; St. Anna's Asylum v. New Orleans, 105 U. S. 362, 26 L. Ed. 1128; Northwestern University v. People, 99 U. S. 309, 25 L. Ed. 387; Farrington v. Tennessee, 95 U. S. 679, 24 L. Ed. 558; New Jersey v. Yard, 95 U. S. 104, 24 L. Ed. 352; Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. Ed. 568; Washington University v. Rouse, 8 Wall. 439, 18 L. Ed. 498; Home of the Friendless v. Rouse, 8 Wall. 430, 19 L. Ed. 495; Jefferson Branch Bank v. Skelly, 1 Black 436, 17 L. Ed. 173;

VII Priv. Corp.-56

Dodge v. Woolsey, 18 How. 331, 15 L. Ed. 401.

And in the state courts see, among many other cases which might be cited:

Alabama. Mobile & S. H. R. Co. v. Kennerly, 74 Ala. 566.

Arkansas. Oliver v. Memphis & L. R. R. Co., 30 Ark. 128.

Florida. Atlantic & G. R. Co. v. Allen, 15 Fla. 637.

Georgia. Western & A. R. Co. v. State, 54 Ga. 428.

Illinois. Neustadt v. Illinois Cent. R. Co., 31 Ill. 484; Illinois Cent. R. Co. v. McLean County, 17 Ill. 291.

Kentucky. Franklin County Court v. Deposit Bank of Frankfort, 87 Ky. 370, 9 S. W. 212.

Maryland. State v. Baltimore & O. R. Co., 48 Md. 49.

Mississippi. Mobile & O. R. Co. v. Moseley, 52 Miss. 127; O'Donnell v. Bailey, 24 Miss. 386.

Missouri. Mechanics' Bank v. Kansas City, 73 Mo. 555; Livingston County v. Hannibal & St. J. R. Co., 60 Mo. 516.

New Jersey. Singer Mfg. Co. v. Heppenheimer, 58 N. J. L. 633, 32 L. R. A. 643, 34 Atl. 1061; State Board of Assessors v. Morris & E. R. Co., 49 N. J. L. 193, 7 Atl. 826.

Pennsylvania. Iron City Bank v. Pittsburgh, 37 Pa. St. 340.

even conceding all of this, exemptions are not pampered favorites of the courts, and, according to the Federal Supreme Court than which no court has more pertinaciously guarded the integrity of such exemptions as wear the habilaments of contract, "it is not too much. to say that courts are astute to seize upon evidence tending to show either that exemptions were not originally intended, or that they have become inoperative by changes in the original constitution of the companies." 90

§ 4633. When constitutional prohibition exists. In some states the constitution expressly provides that the legislature shall not grant an exemption from taxation, or limits its power in this respect to particular corporations, as religious, educational, or charitable corporations, or to particular property, or property used for a particular purpose. Of course, a grant of exemption to a corporation in violation of such a prohibition is absolutely void.91 Nor is it only

Tennessee. State v. Bank of Commerce, 95 Tenn. 221, 31 S. W. 993; Memphis v. Memphis City Bank, 91 Tenn. 574, 19 S. W. 1045; University of the South v. Skidmore, 87 Tenn. 155, 9 S. W. 892; State v. Butler, 86 Tenn. 614, 8 S. W. 586; Bank of Commerce v. McGowan, 6 Lea 703.

Vermont. Rutland Sav. Bank V. Town of Rutland, 52 Vt. 463.

Virginia. Whiting v. Town of West Point, 88 Va. 905, 15 L. R. A. 860, 29 Am. St. Rep. 750, 14 S. E. 698; Petersburg v. Petersburg Benev. Mechanies' Ass'n, 78 Va. 431.

West Virginia. Chesapeake & O. R. Co. v. Miller, 19 W. Va. 408.

Wisconsin. Milwaukee Elec. Railway & Light Co. v. Milwaukee, 95 Wis. 42, 69 N. W. 796.

"That a state has power to make a contract which will bind it in future, is so universally held by the courts of the United States and of the states, that a general citation of the authorities is unnecessary on the subject." Piqua Branch of State Bank v. Knoop, 16 How. (U. S.) 369, 14 L. Ed. 977. 90 Yazoo & M. Val. R. Co. v. Adams, 180 U. S. 1, 45 L. Ed. 395.

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exemptions which are expressly granted that are void under such a

& M. Val. R. Co., 75 Miss. 275, 22 So. 824.

It has been held that such a provision should not be construed as prohibiting the granting of exemptions to quasi public corporations, like railroad companies. Yazoo & M. Val. R. Co. v. Board of Levee Commissioners, 37 Fed. 24.

Under a constitutional provision that the legislature "shall provide by law for uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes as may be specially exempted by law," the legislature has no power to exempt any property not used for the purposes specified. Hibernian Benev. Society v. Kelly, 28 Ore. 173, 30 L. R. A. 167, 52 Am. St. Rep. 769, 42 Pac. 3; Hogg v. Mackay, 23 Ore. 339, 19 L. R. A. 77, 37 Am. St. Rep. 682, 31 Pac. 779.

According to the weight of authority, a constitutional provision exempting or authorizing the legislature to exempt certain property or certain corporations from taxation impliedly prohibits any other exemptions than those specified. See:

Arkansas. Fletcher v. Oliver, 25 Ark. 289.

Illinois. People's Loan & Homestead Ass'n v. Keith, 153 Ill. 609, 28 L. R. A. 65, 39 N. E. 1072; Chicago v. Baptist Theological Union, 115 Ill. 245, 2 N. E. 254; Northwestern University v. People, 80 Ill. 333, 22 Am. Pep. 187.

Indiana. Deniston v. Terry, 141 Ind. 677, 41 N. E. 143; State v. Indianapolis, 69 Ind. 375, 35 Am. Rep. 223.

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Co. v. New Orleans, 31 La. Ann. 440; New Orleans v. People's Ins. Co., 27 La. Ann. 519.

Nebraska. Union Pac. R. Co. v. Saunders County Com'rs, 7 Neb. 228. North Carolina. Charlotte Building & Loan Ass'n v. Commissioners of Mecklenburg County, 115 N. C. 410, 20 S. E. 526.

Pennsylvania. Donohugh's Appeal, 86 Pa. St. 306. Tennessee. Memphis v. Memphis City Bank, 91 Tenn. 574, 19 S. W. 1045; Nashville & K. R. Co. v. Wilson County, 89 Tenn. 597, 15 S. W. 446.

Utah. State v. Armstrong, 17 Utah 166, 41 L. R. A. 407, 53 Pac. 981. West Virginia. Chesapeake & O. R. Co. v. Miller, 19 W. Va. 408.

Contra, Williamson v. Massey, 33 Gratt. (Va.) 237. And see Francis v. Atchison, T. & S. F. R. Co., 19 Kan. 303; Ottawa County Com'rs v. Nelson, 19 Kan. 234, 27 Am. Rep. 101.

Where the constitution of a state expressly provides that a particular class of property shall be taxed, the legislature cannot exempt it. Mackay v. City & County of San Francisco, 113 Cal. 392, 45 Pac. 696.

Where the constitution prohibits exemption of the property of corporations from taxation except where it is actually used for church, school or charitable purposes, the legislature cannot exempt property used only in part for such purposes. New Orleans v. New Orleans Water Works Co., 36 La. Ann. 432.

A constitutional provision allowing the legislature to exempt from taxation the buildings of "institutions of purely public charity," only applies to buildings owned and exclusively used by such institutions, and it does not apply, therefore, to a building which is owned by a Masonic order, but a part of which is leased by it for

prohibition. On the other hand, a law which indirectly produces a prohibited exemption will be inoperative equally with one which, expressly grants such an exemption.92 So where a corporation is in fact of such a class as to fall within a constitutional provision imposing a tax, the legislature cannot exempt it from the tax by declaring it to be of a class excepted by the constitution.93 Likewise, where the constitution forbids the exemption of the property of railroad companies, a statute which, in requiring such companies to file schedules of their property, provides that the "schedule shall not include nor value embankments, tunnels, cuts, ties, trestles, or bridges" creates a pro tanto exemption and is to that extent invalid.94 Moreover, a constitutional prohibition against exemptions applies to the renewal, after its adoption, of an exemption previously granted, although it does not affect an exemption previously granted and which has not expired.95 And it has been held that an exemption of a

purposes not connected with its objects, though the rent received is applied by it to its general objects. Morris v. Lone Star Chapter No. 6, Royal Arch Masons, 68 Tex. 698, 5 S. W. 519.

The unconstitutionality of an exemption clause in a tax statute will not render the entire statute void when the excision of such clause will not interfere with the enforcement of the remaining parts of the statute. Franklin v. Nashville, C. & St. L. Ry., 12 Lea (Tenn.) 521.

92 Little Rock & F. S. R. Co. v. Worthen, 120 U. S. 97, 30 L. Ed. 588.

A statute which attempts, by commutation, to relieve a railroad company from the payment of any taxes on its property for a certain period, in consideration of its agreement to carry the troops and munitions of war of the state free of charge, is in violation of a constitutional provision that all taxation shall be equal and uniform, and that a just valuation of all property shall be made for the purpose of taxation. Hogg v. Mackay, 23 Ore. 339, 37 Am. St. Rep. 682. "The legislature," said the court in this case, "cannot do indirectly what it is prohibited from doing directly. The right

to commute is simply an incident of the right to exempt, and the denial of the power to exempt must necessarily preclude the existence of the power to commute." See also Louisiana Cotton Mfg. Co. v. New Orleans, 31 La. Ann. 440.

93 State v. McGrath, 95 Mo. 193, 8

S. W. 425.

94 Little Rock & F. S. R. Co. v. Worthen, 120 U. S. 97, 30 L. Ed. 588. Said the court: "The assessment of property, that is, the appraisement and estimate of its value, is the basis upon which the amount of the tax is fixed. A law, therefore, omitting from assessment portions of any particular property, thus lessening the estimate of its value, has the effect of exempt. ing it to that extent from taxation. That result cannot be accomplished, as well observed by the Supreme Court of the state, under the guise of regu lating the duties of assessors.''

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95 St. Louis, I. M. & S. R. Co. V. Berry, 113 U. S. 465, 28 L. Ed. 1055; Louisville & N. R. Co. v. Palmes, U. S. 244, 27 L. Ed. 922; Trask V Maguire, 18 Wall. (U. S.) 391, 21 L

Ed. 938; Boody v. Watson, 63 N. H. 320. Compare Citizens' Bank of Lou

corporation does not continue where, after the adoption of a constitutional prohibition against exemptions from taxation, it accepts an act amending its charter so as to make it a corporation of a different character or for a different purpose.96 And when the state constitution, adopted after the grant of a corporate charter, prohibits the granting of exemptions, the grant of an exemption cannot be

isiana v. Board of Assessors of New Orleans, 54 Fed. 73. See St. Paul v. St. Paul & S. C. R. Co., 23 Minn. 469.

If a state acquires the property of a corporation which is exempt from taxation, and grants the same to a new corporation, after the adoption of a constitutional prohibition against the grant of an exemption from taxation, the exemption does not and cannot pass to the new company. Trask v. Maguire, 18 Wall. (U. S.) 391, 21 L. Ed. 938.

Nor can the legislature, after the adoption of such a constitutional prohibition, allow a corporation to transfer its exemption from taxation to another corporation, or provide for its transfer to a purchaser under fore closure of a mortgage. Louisville & N. R. Co. v. Palmes, 109 U. S. 244, 27 L. Ed. 922.

Nor, where corporations are consolidated after the adoption of such a constitutional prohibition, can the new corporation be given an exemption from taxation enjoyed by one or all of the old corporations. Chesapeake & O. Ry. Co. v. Miller, 114 U. S. 176, 29 L. Ed. 121; St. Louis, I. M. & S. Ry. Co. v. Berry, 113 U. S. 465, 28 L. Ed. 1055; Memphis & L. R. R. Co. v. Railroad Commissioners, 112 U. S. 609, 28 L. Ed. 837.

An exemption of the stock of a railroad company from taxation does not apply to stock issued by it for the construction of branch roads under authority conferred by a statute passed after the adoption of a constitutional prohibition against exemptions from taxation. Chicago, B. & K.

C. R. Co. v. Guffey, 120 U. S. 569, 30 L. Ed. 732.

Where the state constitution prohibited the legislature from extending or renewing existing charters, or passing any general or special law for the benefit of a corporation, except on condition that the corporation should thereafter hold its charter subject to the provisions of the constitution, one of which prohibited exemptions, and the legislature passed an act for the benefit of a corporation, providing that it should not take effect unless accepted under the provisions of the constitution,-it was held that acceptance of the act by the corporation waived an exemption from taxation granted by its charter, if the legisla ture had power to impose the condition. Citizens' Bank of Louisiana v. Board of Assessors of New Orleans, 54 Fed. 73.

An exemption presupposes a person capable in law of accepting and exercising it, and "the [constitutional] prohibition which forbids the legislature from exempting the property of railroad corporations from taxation, makes it impossible for the legislature to create such a corporation capable in law of acquiring and holding property free from liability to taxation [under a former valid exemption]."' Louisville & N. R. Co. v. Palmes, 109 U. S. 244, 27 L. Ed. 922.

96 Memphis City Bank v. Tennessee, 161 U. S. 186, 40 L. Ed. 664, where the charter of an insurance company was amended so as to change it into a banking corporation.

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