North Missouri R. R. Co. v. Maguire.

the unanimous judgment of the court, said: "The question thus presented is, we think, of great importance, but not of much difliculty. * * * The constitution was ordained and established by the people of the United States for themselves, for their own government, and not for the government of the individual States. Each State established a constitution for itself, and in that constitution, provided such limitations and restrictions on the powers of its particular government as its judgment dictated. The people of the United States framed such a government for the United States as they supposed best adapted to their situation, and best calculated to promote their interests. The powers they conferred on this government were to be exercised by itself, and the limitations on power, if expressed in general terms, are naturally, and we think necessarily, applicable to the government created by the instrument. They are limitations of power granted in the instrument itself, not of distinct governments framed by different persons and for different purposes." And, in conclusion, after a thorough examination of the several amendments which had then (1833) been adopted, he observes: "These amendments contain no expression indicating an intention to apply them to State governments. This court cannot so apply them."

That the amendments were not designed as limits upon the State governments in reference to their own citizens," but "exclusively as restrictions upon federal power," was declared in Fox v. Ohio, 5 How. 434, to be "the only rational and intelligible interpretation which these amendments can have." And language equally decisive may be found in Smith v. State of Maryland, 18 How. 76, and Withers v. Buckley et al., 20 id. 90. The same doctrine is confirmed in the recent case of Twitchell v. The Commonwealth, 7 Wall. 321, where it is said, "the scope and application of those amendments are no longer subjects of discussion."

But the main question is, whether the ordinance violates or impairs any contract entered into between the State and the company, antecedent to its adoption. It is conceded that there was no law prohibiting the State from taxing the company, provided the right was not waived by the enactment which will now be referred to.

The plaintiff here, the North Missouri Railroad Company, made default in the payment of the interest on the bonds guaranteed ine State, and by the provisions of an act of the legislature, approved February 16, 1865, entitled "An act to provide for the completion

North Missouri R. R. Co. v. Maguire.

of the North Missouri Railroad and its west branch, and for the construction of a bridge over the Missouri river," the mortgage or first lien of the State was released for $4,350,000 (the amount which the State had guaranteed for the company), and made a second lien, in order that $6,000,000 of the first mortgage bonds might be placed upon the road to complete it and build the bridge. The act also provided for the appointment by the governor of a fund commissioner for the company, to receive all moneys belonging to the company, and to disburse the same as follows:

1. To said corporation the amounts required from day to day for the actual current expenditure in operating said railroad, and carrying on the ordinary business of said corporation.

2. The amount of his salary as such fund commissioner in monthly installments.

3. The interest upon said first mortgage as the same should fall due.

4. The cost of construction and equipment of the said railroad. 5. The accruing dividends on preferred stock, not exceeding six per cent per annum thereon, in accordance with the provisions of the act in relation thereto.

6. The interest due on the outstanding bonds of the State of Missouri, previously loaned to the company.

7. The payment of the principal of the first mortgage bonds, or, if none should have become due, then the payment of the principal of the bonds of the State; and,

Lastly. The balance to be paid to the corporation.

The ordinance was adopted by the people in June, 1865, after the passage of the legislative enactment, and after its acceptance by the company. It is now claimed by the plaintiff that the act of February, 1865, was a contract between the State of Missouri and the North Missouri Railroad Company, and that the ordinance, levying a tax on the gross receipts of the railroad company, was in direct violation of the contract, because the State's lien was postponed to the lien of the first mortgage authorized by that act, and it was expressly provided that the interest on the first mortgage bonds so created be paid to the fund commissioner, out of the earnings of the road, in the third class of disbursements, and the interest on the lien of the State in the sixth class of disbursements; that the ordinance requiring a tax of ten per cent on the gross earnings to be paid to the State was in violation of the distribution of the earnings provided for by law,

North Missouri R. R. Co. v. Maguire.

and an attempt on the part of the State to make itself a distributee in the first class.

It is readily admitted that the law of 1865 was a contract, and within the protection of the constitution of the United States, and that the State, after the acceptance of that law by the corporation, could not by an act, except the extinguishment of the mortgage thereby authorized, resume the position of first mortgagee. But is there any thing in the act to prevent the State from exercising the sovereign power of taxation? The act does not pretend to grant exemption from taxation in express terms, and the courts will never presume or infer that the State intends to abandon or surrender the important right of taxation. Whatever restrictions may have been imposed by the adjudications of the national tribunals on the sovereign rights of the States to exercise this vital power of taxation untrammeled, in cases where the State had parted with the right for a valuable consideration, yet all the courts proclaim that the abandonment of the right can never be presumed; that the intention to abandon must appear in the most clear and unequivocal terms. Nor can there be any doubt of the power of the State, by reason of its sovereignty over the whole subject of taxation, to impose taxes on property previously exempt, or to raise the rates, unless there has been some express contract in limitation of the power upon a consideration deemed to be a part of the value of the grant or the charter. Providence Bank v. Billings, 4 Pet. 562; Gordon v. Appeal Tax Court, 3 How. 133; Christ Church v. County of Philadelphia, 24 id. 300; Philadelphia & Wilmington R. R. v. Maryland, 10 id. 376; Jefferson Branch Bank v. Skelly, 1 Blackf. 447; Ohio Life Ins. and Trust Co. v. Debolt, 16 How. 416; Washington University v. Rowse, 42 Mo. 325; St. Joseph v. Hann. & St. Jo. R. R., 39 id. 476; Lionberger v. Rowse, 43 id. 67; City of St. Louis v. Boatmen's Ins. and Trust Co., 47 id. 150; Pacific R. R. v. Dulle et al., 48 id. 282. In the case of The City of St. Louis v. Boatmen's Ins. and Trust Co., supra, there was a clause in the charter which withdrew it from the operation of the general law relating to corporations, contained in the Revised Code of 1855, and it was thence contended that the corporation would not be liable to be taxed. But we decided that that provision simply guaranteed the charter against alteration and repeal, and in no wise granted an immunity from taxation. The act of incorporation was silent on the subject of taxation; and. where that was the case, unless there was some contract to be imVOL. VIII.-19

North Missouri R. R. Co. v. Maguire.

paired where there was a consideration given, it would never be presumed that the legislature had divested itself of the high attribute of sovereignty, the power to tax. The surrender of such an important prerogative was not to be deduced by implication.

In the present case I have failed to find any thing whatever to show that the rate or manner of taxation of the corporation, its franchises or property, formed any part of the contract contained in the act of 1865. Nothing is said about taxation, and it does not seem to have entered into the contract between the parties, but was obviously left where the law had placed it before. No specific provision was made for the fund commissioner's paying the taxes, but he was authorized in the first class of disbursements to pay the current expenditures for carrying on the ordinary business of the corporation, and the payment of taxes would certainly fall within this class.

It is also argued that the tax is unequal, and is therefore opposed to the clause in the constitution which enjoins a uniform rule as to the imposition of taxes on all property. But it must be observed that the ordinance we are considering is a part of the constitution itself, expressly made so by its provisions on its adoption by the people. It is, therefore, a part of the fundamental law of the land. Of course, it must stand as well as any other part of the constitution, and cannot be nullified by the more general provisions of the same instrument, concerning the powers of the legislature, in reference to the general subject of taxation.

We have thus far assumed that the assessment provided for in the ordinance came within the scope and character of taxation. But the point is taken and advanced by the plaintiff that it is not a tax, that it amounts to a sequestration of property for the purpose of paying a debt, and has none of the criteria or elements of a tax. The question then arises, is the burden thus imposed by the people on these corporations a tax within the proper meaning of that term, as legally defined ? "Taxation," says Chief Justice MARSHALL, "is said to be an absolute power which acknowledges no other limits than those expressly prescribed in the constitution, and, like sovereign power of every description, is trusted to the discretion of those who use it." McCulloch v. Maryland, 4 Wheat. 429. In the case of Glasgow v. Rowse, 43 Mo. 489, it was said: "Taxes are burdens or charges imposed by the legislative power upon persons or property, to raise money for public purposes, or to defray the necessary expenses in administering the government." A tax differs

North Missouri R. R. Co v. Maguire.

materially and essentially from a debt. The one is founded on contract; the other is not. A law which specifically appropriated the property of the citizen, and took it from one person and transferred it to another, would not be an exercise of the taxing power, no matter by what name it was called. To settle and fix the exact line of demarcation is a matter of great and perplexing difficulty; but mere oppressiveness in tax laws is no ground for setting them aside or arresting their operation. Glasgow v. Rowse, supra.

The power of the sovereign authority to tax is unlimited, and is a power to destroy. The only restraint is in the responsibility of those in whom the power is intrusted. Thus, in The People ex rel. Griffin v. The Mayor of New York, 4 N. Y. 419, 423, it was held that the two clauses of the constitution which declare that no person shall be deprived of his property without due process of law, and that private property shall not be taken for public use without just compensation, have no application to the taxing power. It was also decided in that case that the power to tax implies a power to apportion the tax as the legislature shall see fit, and that the power of apportionment has no limit where there is no constitutional restriction.

These views are affirmed in the case of Brewster et al. v. The City of Syracuse, 19 N. Y. 116, and also in the case of The Town of Guilford v. Board of Supervisors of Chenango County, 13 id. 143. It was held, in the former of these cases, that the legislature had the power to authorize the levy of a tax for the purpose of paying to one who had constructed a municipal improvement, in addition to the contract price, which the corporation by its charter was forbidden to pay. The case of The Town of Guilford v. The Supervisors of Chenango Co. holds that the legislature has the power to levy a tax upon the taxable property of the town to meet a claim made against the town, although there is no legal obligation on the part of the town to pay such claim; and in a suit against the town it had been legally determined that the town was not liable to pay such claim. In the case of Thomas v. Leland et al., 24 Wend. 65, it was held that an act of the legislature, imposing a tax upon a local district of the State, in reference to a public improvement, is valid, notwithstanding that previous to the passage of the act a number of individuals of such district had entered into a bond to the State, by which they bound themselves to pay the whole expense of the improvement. These principles were re-affirmed in the case of Litchfield v. Vernon,