East Saginaw Manufacturing Company v. City of East Saginaw.

terms, it does not thereby bind its hands against such an exercise of the right of eminent domain as may annihilate the franchise for the benefit of another which the terms of the first would exclude. West River Bridge Co. v. Dix, 16 Vt. 446; Same Case in Error, 6 How 507; Enfield Toll Bridge Co. v. Hartford and N. H. R. R. Co., 17 Conn. 40, 454; Matter of Kerr, 42 Barb. 119. We refer also to the cases in which the right to exercise the police power has been asserted, notwithstanding grants inconsistent therewith. Brick Church v. Mayor, etc., of N. Y., 5 Cow. 538; Vanderbilt v. Adams, 7 id. 349; Thorpe v. R. & B. R. R. Co., 27 Vt. 149; Indianapolis, etc., R. R. Co. v. Kercheval, 16 Ind. 84; Ohio, etc., R. R. Co. v. McClel land, 25 Ill. 140; State v. Noyes, 47 Me. 189; Hirn v. State, 1 Ohic (N. S.), 15; Calder v. Kurby, 5 Gray, 597; Adams v. Hacket, 7 Fost. 294.

It is said, however, that the doctrine of some of these cases is opposed to that declared by the supreme court of the United States, which, upon all questions arising under the constitution of the United States, must be the final and authoritative arbiter. Some of the cases decided by that court are specially referred to as having finally and in the most conclusive manner settled the questions before us in the case at bar. We have looked into those cases, however, without finding in any of them any thing to weaken the posi tions we have already assumed. It is not very clear that the supreme court of the United States has ever, at any time, expressly declared the right of a state to grant away the sovereign power of taxation. The leading case of New Jersey v. Wilson, 7 Cranch, 164, may well be referred to as an exercise of the treaty-making power, and therefore rests upon different considerations from those which surround the ordinary exercise of legislative authority. There are indeed several cases in which it has been held that a state may irrevocably limit itself to a particular rate of taxation only. Gordon v. Appeal Tax Court, 3 How. 133; Piqua Bank v. Knoop, 16 id. 369; Ohio L. & T. Company v. Debolt, id. 416; Dodge v. Woolsey, 18 id. 331; M. & T. Bank v. Debolt, id. 380; M. & T. Bank v. Thomas, id. 384. It is to be observed of all these cases, however, that the exemption which the court sustained did not rest upon any mere implication to be derived from an ordinary act of legislation, but was express in its terms, and was embodied in charter contracts so as to be supposed irrevocable under the principles announced in the Dartmouth College case. The counsel for this complainant has expressly disclaimed

East Saginaw Manufacturing Company v. City of East Saginaw.

the suggestion that the act of 1859 can be regarded as an amendment of complainant's charter, or that the rights of complainant rest upon any other or different basis from those of any individual who may have commenced the manufacture of salt before the bounty law was amended. There is, therefore, no question of the inviolability of charter contracts before us. Moreover, in considering the bank-tax cases above referred to, it must be borne in mind that the stipulations there involved were not for complete exemption from taxation, but for restriction to a particular mode and rate only. It is easy to perceive that there may be a difference in principle between a complete exemption from a necessary burden of government, and an agreement that the burden shall be laid and borne in a particular manner only. Mr. Justice MCLEAN has hinted at this distinction in Piqua Bank v. Knoop, 16 How. 389. Referring to the argument that the state cannot barter away any part of its sovereignty, he says: "No one ever contended that it could. A state, in granting privileges to a bank, with a view of affording a sound currency, or of advancing any policy connected with the public interest, exercises its sovereignty, and for a public purpose, of which it is the exclusive judge. Under such circumstances a contract made for a specific tax, as in the case before us, is binding. This tax continues, although all other banks should be exempted from taxation. Having the power to make the contract, and rights becoming vested under it, it can no more be disregarded nor set aside by a subsequent legislature than a grant for land. This act, so far from parting with any portion of sovereignty, is an exercise of it. Can any one deny this power to the legislature? Has it not a right to select the objects. of taxation, and determine the amount? To deny either of these is to take away state sovereignty."

It might not be improper to refer to still more significant remarks by the dissenting judges in the case last referred to, but that we desire to preclude the possibility of our opinion being thought to imply the impugning in any degree the correctness of the views of the majority of the court in the bank-tax cases in 16th and 18th Howard. The case before us does not bring them into controversy, and if it did, we should of course accept them as conclusive. The present case stands upon a different footing altogether. There is no charter contract involved here, and no stipulation by way of com. aiutation for a tax. The case, nakedly stated, is one where an offered bounty is sought to be raised by the force of mere implica

East Saginaw Manufacturing Company v. City of East Saginaw.

tions to the dignity of an irrevocable contract. When the courts are asked to enforce the offer as a contract, they are asked to give to the legislative act a meaning and a purpose which was never within the contemplation of the men who passed it. We cannot make contracts for persons or for states who never contemplated them themselves. If a state legislature possesses the power to implant the seeds of dissolution in the body politic, by granting away the right of taxation by way of bounties, we are not to be astute in discovering an intent to do so in the general language employed in what appears to be an ordinary act of legislation. On this subject we refer further to Herrick v. Randolph, 13 Vt. 531; Commonwealth v. Bird, 12 Mass. 443, and Dale v. The Governor, 3 Stew. 387, in all of which an exemption from a public burden, in general terms like the present, was held not to be perpetual, but during the pleasure of the legislature only. We also refer to what is said in Charles River Bridge v. Warren Bridge, 11 Pet. 544.

It may be proper in this connection to notice one other case which is pressed upon us as analogous to the present. In McGee v. Mathis, 4 Wal. 143, it appeared that swamp lands had been granted by the United States to the state of Arkansas, the proceeds of which, by the terms of the grant, were to be applied to the drainage of the lands. The state, in order to promote their drainage and sale, passed an act, by way of encouraging purchasers, that the lands should be exempt from taxation for the term of ten years, and issued transferable scrip receivable in payment for them. A repeal of the act, so as to affect either the land sold or the scrip previously issued, was held unconstitutional. We do not doubt, in the least, the correctness of this decision. The legislative act was a step in performance of the condition attached to the congressional grant, and the lands had never become a part of the taxable property of the state except subject to the performance of the condition. To hold that the state could take the lands, sell them as a means of performing the condition, and then claim an indefeasible right to tax them under such circumstances as would amount to a repudiation of the condition, would be to take broader positions than any which have been advanced in any of the cases we have cited. We discover no analogy between that case and the one before us.

We do not deem it necessary for us to go beyond the decisions of the supreme court of the United States to find authority for sus. taining this tax. The case of Christ Church v. Philadelphia, 24

East Saginaw Manufacturing Company v. City of East Saginaw. How. 300, is, in our opinion, entirely analogous in its legal bearings to the present case. It there appeared that the legislature of Pennsylvania, in 1833, had provided by special act that "The real property, including ground rents, now belonging and payable to Christ church hospital in the city of Philadelphia, so long as the same shall continue to belong to the said hospital, shall be and remain free from taxes." The inducement to this legislation was stated in the same act to be, the corporation "having for many years afforded an asylum to numerous poor and distressed widows, who would probably else have become a public charge;" and it being represented that "in consequence of the decay of the buildings of the hospital estate and the increasing burden of taxes, its means are curtailed and its usefulness limited." Notwithstanding the words of perpetuity employed in the act, the legislature, some eighteen years afterward, took away the exemption as to some portion of the property, and were sustained by the supreme court of the state in so doing. On error to the supreme court of the United States, the judgment was affirmed. Mr. Justice CAMPBELL, delivering the opinion of the court, says: "The inducements that moved the legislature to concede the favor contained in the act of 1833 are special, and were probably temporary in their operation. The usc fulness of the corporation had been curtailed in consequence of the decay of their buildings and the burden of taxes. It may be supposed that in eighteen years the buildings would be renovated, and that the corporation would be able afterward to sustain some share of the taxation of the state. The act of 1851 embodies the sense of the legislature to that effect. It is in the nature of such a privilege as the act of 1833 confers, that it exists from bene placitum, and may be revoked at the pleasure of the sovereign."

Now, although in that case the purpose of the act was not distinctly declared to be to induce the corporation to expend moneys in the way of improvements, yet it is evident that such expenditure was not only within the contemplation of the legislature, but it was also expected that the public would in the future receive a benefit from the improvements, as it had already from the buildings which had gone to decay. The purpose of the act was, therefore, to encourage an expenditure for a public purpose, which is all that can be urged in favor of the inviolability of the act now in question. We say here, in the language of Mr. Justice CAMPBELL, above quoted, that the inducements to the act of 1859 were special and

Williams v. The Albany City Insurance Company.

temporary in their operation; and it may well be supposed that at the expiration of the time limited by the act of 1861, the persons engaged in the manufacture of salt would have surmounted the difficulties attending the establishment of a new business, and become able to sustain some share cf the taxation of the state. The act of 1861 embodies the sense of the legislature to this effect.

This review leads us irresistibly to the conclusion that there is nothing in principle and nothing in the adjudged cases which requires us to hold that the act of 1859 constituted a contract between the state and those who, before its amendment, accepted the bounty it offered. We are also satisfied, that to form such a contract was never the legislative intention. And upon formal grounds, also, we think the complainant must fail, because the bill does not affirmatively show that the property upon which the tax was levied belonged to complainant, and was employed in the manufacture of salt before the promise of bounty was recalled. It is consistent with all its allegations that the corporation may have become the owner of this property, not only after the act of 1861 was passed, but after the five years specified in that act had expired. And if such were the case, it would be idle to pretend that th investment was made in reliance upon the act of 1859.

The decree of the court of chancery, we think, was erroneous, and must be reversed, and the bill dismissed, with costs of both courts. *

Reversed.

WILLIAMS V. THE ALBANY CITY INSURANCE COMPANY.

(19 Mich. 451.)

Fire Insurance - Condition in Policy - Non-Payment of premium note

A policy, the premium for which had been paid by note, contained a provision that in case the note should not be paid at maturity, the full amount of the premium should be considered as earned, and the policy become void while said past due notes remained over-due and unpaid; a loss occurred after the maturity of the note and before it was paid. Held, that the company was not liable for any loss which occurred during the continu ance of the default, but that, on the subsequent payment of the note, the policy revived and was in force from the date of such payment.

See the very able and elaborate opinion of Judge PORTER, in People v. Roper, 35 N. Y. 629.