the company, and entitled to the profits of the company as such, like any other portion of the capital stock. The second, upon the ground that the bonds issued showed the amount of the loan. The third, upon the ground that such an exchange of bonds must be considered as a loan to the company.27

12. The powers of municipal corporations to make special assessments upon abutters for the purpose of improving the streets, where such estates are peculiarly and specially benefited, and where the burden is professedly apportioned according to benefit, is most unquestionable.28

13. This question has been a good deal discussed in the different states within the last few years. The principal point of difference has been to determine where taxation ends, and the tenure of the right of eminent domain begins. Since the decision of the case of The People v. The Mayor of Brooklyn,29 the courts seem very composedly to have sunk down into the quiet conviction that it is nothing but taxation, and that where the munici pal authorities assess the land to its full value for the purpose of assumed improvements, more or less remote from the land, and without regard to the extent of the ratio of equalization, it is still nothing but taxation.30

14. The question is very carefully considered by Sawyer, J., in the last case, and the authorities carefully collected and arranged. As the full discussion of the question hardly comports with our plan, we must content ourselves with a mere reference to some of the leading cases upon the point.31

27

People v. Michigan Southern & Northern Indiana R., 4 Mich. R. 398. 28 Hill v. Higdon, 5 Ohio St. 243.

30

court.

Emery v. San Francisco Gas Co., 28 Cal. R. 345, and cases cited by the

31 The doctrine above stated is more or less directly affirmed in Brewster v. Syracuse, 19 N. Y. R. 116, 118; N. I. Railw. Co. v. Connelly, 10 Ohio St. 162; Municipality No. 2 v. White, 9 Lou. Ann. 452; Mayor of Baltimore v. Green Mount Cemetery Co., 7 Md. R. 536; Nichols v. Bridgeport, 23 Conn. R. 206; State v. City of Newark, 3 Dutcher, 191. And in the case of Dorgan v. City of Boston, 12 Allen, not yet reported, the court seem to have considered that an express constitutional provision that all taxes and assessments shall be equal and proportional, will not operate to limit the power of the legislature in regard to assessments of this character.

The truth seems to be, however unwelcome it may sound, in a distinct an

SECTION II.

Legislative Exemption from Taxation.

1. General nature of such exemptions stated. | 10. Qualified exemptions held valid and in 2. General exemption from taxation includes

stock.

3. Qualifications of the general rule.

4. Exemption of the capital stock includes all

11.

property of the company necessary to its 12.
business.

violable.

Exemptions from taxation should be held

temporary, where they will bear that construction.

Land taken by right of eminent domain exempt.

5. Exemption, with exception, includes all | 13. The distinction between public and private modes of taxation but that one.

business corporations.

6. Union of companies where some are ex- 14. The distinction between structures within empted from taxation and some not.

7. Construction of a qualified exemption from

and without the road-grant clearly invalid.

Public corporations, as to property used for public purposes, exempt from taxa

tion.

they cannot be taxed directly also.

§ 229. 1. The grounds of exemption from taxation in regard to property seem to be of three kinds, more or less identical, perhaps, in principle. 1st. Where property is conveyed directly by the state, upon the express condition that it shall be forever afterwards exempt from all taxation. In this case the exemption tends directly to enhance the price of the thing, and there is a most obvious equity in maintaining the perpetual obligation and nouncement, that the love of improvement and the consequent necessity of taxation, have outgrown the power and control of the courts in the country, except, perhaps, in regard to the national stocks, which have a kind of charmed exemption by reason of the popular sacredness of the cause in which they originated, and, in consequence of such result, nothing remains but to find the best reasons we can for unlimited and absolutely destructive taxation, since that is a necessity which no human power can resist, provided only that it be imposed with reasonable wisdom and discretion.

It is not a little painful to reflect upon the possible results of such an overgrown and imperious power of taxation. But it rests upon the same foundation that all power now rests upon, an unreasoning public opinion that will brook no contradiction or delay, and which, as it was never reasoned up, cannot of course be reasoned down. We trust a time may come when this fever will abate, but we can scarcely expect it in the present generation.

inviolability of the condition. Of this character was the exemption claimed and sustained in the case of The State of New Jersey v. Wilson,1 and distinctly recognized in many subsequent cases, which * more properly apply to other general divisions of the subject. 2d. It is held in a considerable number of cases in the United States Supreme Court,2 that where a corporation is chartered by the state legislature, not only its property but its capital in the hands of shareholders may by an express grant be perpetually exempted from taxation. 1. When a distinct bonus or price is paid to the state for the charter, including the exemption; and 2. Even when no such specific price is paid, the exemption may be sustained upon the mere ground of the company assuming to perform certain public duties. This doctrine is distinctly held in Gordon v. The Appeal Tax Court, and in The State Bank v. Knoop, and in the Ohio Life Ins. Co. v. Debolt.2 The cases in the several states where this rule is recognized are numerous, but as the binding force and inviolability of this exemption depends upon the applicability of that provision in the United States Constitution prohibiting the state legislatures from passing any law impairing the obligation of contracts, the only authoritative exposition of the subject must be sought in the ultimate decision of the national tribunals. For unless we adopt this view there is of course no path open to anything approaching uniformity of decision upon a subject of such vital importance. We shall, therefore, only refer to such decisions of the state courts as propose to limit or qualify the doctrine.

2. The cases in the United States Supreme Court regard a general exemption of the property of a corporation from taxation as exempting its stock in the hands of the stockholders.3

3. But some of the state courts have construed such general exemption as not extending to property of the corporation, which was a mere convenience in the conduct of their business, but not essential. And it has been held in some cases that a general

4

1 7 Cranch, 164. See also Fletcher v. Peck, 6 Cranch, 87.

2 3 Howard, 133; 16 Howard, 386; Id. 416; Jefferson, &c., Bank v. Skelley, 1 Black (U. S.), 436.

3 Gordon v. The Appeal Tax Court, 3 Howard, 133.

* State v. Mansfield, 3 New Jersey R. 510; Gardner v. State, 1 Id. 557; Worcester v. Western Railw., 4 Met. 564; Meeting-House Society in Lowell v.

*

exemption of a railway from taxation does not extend to the holder of their bonds.5 And where a corporation is made liable to a specific tax whenever their net profits shall reach a certain point, and exempted from all other taxes, this is a present exemption from all other modes of taxation except that specified, and that only attaches when the condition occurs. A general exemption of the property of a corporation from taxation, but making the stock liable to taxation in the hands of stockholders, will exempt its surplus funds and its real estate from taxation.7 4. Exemption of the capital stock has been held to exempt property of the company necessary to carry on the business.8

5. In State v. Berry, it is held, that where the charter of a railway was subjected in terms to certain specified taxation, with a general exemption "from all further or other tax or imposts," that this exempted the company perpetually from all other taxation, and this is the doctrine laid down by the majority of the United States Supreme Court, in State Bank v. Knoop.10

6. And where a corporation, enjoying an exemption from taxation, is united with other corporations not having such exemption by a legislative act of consolidation; this does not extend the exemption beyond the first corporation, and the property of the other corporations, being the road of a railway, is still liable to taxation.11

Lowell, 1 Met. 538; Lehigh Co. v. Northampton, 8 W. & S. 334; Rome Railway v. Rome, 14 Ga. R. 275; Railway v. Berks Co., 6 Barr, 70; Carbon Iron Co. v. Carbon County, 39 Penn. St. 251; Lackawanna Iron Co. v. Luzerne County, 42 Penn. St. 424. But see Neustadt v. Illinois Central Railw., 31 Illinois R. 484, where the principle of exemption is carried further than the state courts have generally been willing to extend it, though not probably further than the case required.

5 State v. Branin, 3 Zab. 484. But see State v. Ross, Id. 517.

• State v. Minton, 3 Zab. 529.

'State v. Tunis, 3 Zab. 546.

9

8 The Rome Railw. v. Rome, 14 Ga. R. 275.

• 2 Harrison, 80; New York & Erie Railw. v. Sabin, 26 Penn. St. 242, where the exemption is implied from the company being subjected to taxes in a specific mode. And the same point is maintained in the subsequent case of Iron City Bank v. Pittsburgh, 37 Penn. St. 340.

10 16 Howard, 386.

" Philadelphia & Wil. Railw. v. The State of Maryland, 10 How. 376. See also Baltimore v. Bal. & Ohio Railw., 6 Gill, 288.

66

7. And where a statute provided that the shares of the capital stock of a certain railway should be exempt from taxation, except that portion of the permanent and fixed works of the company within the state of Maryland," and that, in regard to that section, no greater tax should be at any time levied than in proportion to the general taxes throughout the state at the same. time; it was held, that such portion of the fixed works of the company as was within the state of Maryland remained subject to general taxation for state and county taxes.

12

8. In a very recent and important case, Pennsylvania Canal Commissioners v. The Pennsylvania Railway Company,13 where *the cases are very extensively and thoroughly examined by Lewis, Ch. J., the following propositions are maintained in the decision:

1. A state legislature, in the absence of any express constitutional authority, has no power to sell, surrender, alienate, or abridge any of the rights of sovereignty, such as the right of taxation, so as to bind future legislatures; and any contract to that effect is void.

2. So much of the act of the legislature of Pennsylvania, authorizing the sale of the Main Line of the Public Improvements of that state, as provides, that if the Pennsylvania Railway Company shall become the purchaser, they shall pay, in addition to the purchase-money at which the Main Line may be struck down, the sum of $1,500,000, in consideration whereof the said railway company and the Harrisburg Railway Company shall be discharged by the Commonwealth "forever from the payment of all tonnage taxes, and all other taxes whatever," cept for school, city, county, borough, and township taxes," is 12 Philadelphia, Wilm., & Balt. Railw. v. Bayless, 2 Gill, 355.

99 66 ex

13 5 Law Reg. 623, decided in June, 1857. The cases chiefly relied upon by the court, in this case, as having established a similar doctrine in other states, are those in Ohio, which were reversed by the Supreme Court of the United States. They are the following: State Bank v. Knoop, 16 How. 386; Ohio Life Ins. Co. v. Debolt, 16 How. 426; s. c. 1 Ohio St. 563. The same principle is maintained in Bank of Toledo v. City of Toledo, 1 Ohio St. 623, and in Mechanics' & Traders' Bank v. Debolt, Id. 591; s. c. reversed in U. S. Supreme Court, in error, 18 How. 380. Same v. Thomas, Id. 386; The Milan & Rut. Plank-Road Co. v. Husted, 3 Ohio St. 578; Norwalk Plank-Road v. Same, Id. 586; Dodge v. Woolsey, 18 How. 331.