82 Ky. 645 | Ky. Ct. App. | 1885
Lead Opinion
delivered the opinion oe the court.
On tile fifteenth of March, 1862, the Louisville^ Board of Trade was incorporated. ■ The act of incorporation contains these provisions: The corporation may hold real estate, by purchase or otherwise, not to exceed in value at any time $300,000, and may make such regulations “as may advance the commercial character of Louisville, fix and determine just rules and customs among its business community, acquire and disseminate useful business information and avoid and adjust, as far as practicable, the controversies and misunderstandings which may arise between individuals engaged in trade.” The act further provides that the company may authorize subscription of stock in shares not exceeding $100; that-the company shall engage in ho traffic, and that the Legislature reserves the power to alter or amend the charter at pleasure.
On the twenty-third of April, 1873, the charter was-amended as follows : “Any real estate held by the Louisville Board of Trade in the city of Louisville, by purchase in fee-simple, not exceeding one hundred by two hundred feet in area, and any improvements thereon, shall be, and are hereby, exempted from all State taxes, so long as said property shall be occupied by said Board of Trade for the purposes-contemplated in its organization. And the general council of the city of Louisville is authorized to-exempt such property so held and occupied from all taxes to be levied by said general council of said city of Louisville.”
There was no organization under the original char
The question presented on the appeal is whether the property of the Board of Trade is exempt from State taxation by reason of the act of 1873, quoted. This involves the inquiry as to whether that act is constitutional.
An act of the Legislature may be unconstitutional because impliedly forbidden by the Constitution, or because expressly thereby forbidden. An act is, by implication, unconstitutional when not legislative in its nature; such as an act taking the property of one citizen and giving it to another, or an act making one a judge in his own case. Such attempted legislation. is arbitrary and despotic, not in its nature legislative, the legislative department of the government being limited by its nature as the executive and judicial, their respective powers being circumscribed by the rules of Magna Charta and of the ■common law, constitutions generally not undertaking to define the duties and powers of either of these branches of the government. When the legislation is in terms forbidden, we need look no fur
The power of taxation grows out of the necessity to preserve the government by laying a common burden upon every citizen enjoying its protection of life, liberty and property, and is limited in its nature to objects that are public, as distinguished from those that are personal or private in their character.
Taxation immediately for the benefit of an individual is a contradiction in terms. The right of the Legislature to contract away this attribute of sovereignty, when not forbidden by the Constitution, has •been held in many of the States to exist, and has been so repeatedly held by the Supreme Court of the United States, but never by a concurrence of the entire court except where the purpose was clearly a .public one.
But as the Supreme Court has the final jurisdiction to determine whether such legislation is contrary to the Constitution of the United States, which forbids a State to pass any law impairing the obligation of a contract, and have held that it is, we must .aquiesce unless we find that the Constitution of this .State in terms forbids such legislation. Of this we will now inquire.
The first section of the thirteenth article of the
A construction of this provision in a case of taxation has never arisen in this State; but it has been considered in other cases between individuals where separate or special privileges had been granted by the Legislature. The first case in which the meaning of this provision arose and was decided, without division, was that of Gordon, &c., v. Winchester Building Association, 12 Bush, 110. At the time of the passage of the charter of the association, the general law forbade, under penalty of the forfeiture of all the interest, the charging of interest at a greater rate than ten per centum per annum. The charter-authorized the association to charge more than ten per centum, and this court declared the act unconstitutional because it granted to the' association an exclusive privilege without the consideration of public services on the part of the association. In the case of Smith v. Warden, decided January 20, 1883 (80 Ky., 609), it was held that a special act, giving a clerk a longer time in which to collect his fees than was allowed by the general law as to other clerks, was unconstitutional. In the latter case, no-provision of the Constitution is referred to, but it is expressed in the opinion that the legislation was unequal and unjust, and therefore unconstitutional. It is insisted that some of the legislative acts declared, to have been unconstitutional were so declared be
Whatever difference of opinion there may be as to whether the first section of the thirteenth article of the Constitution applies in restraint of the grant of privileges as directly presented between individuals, there can be no doubt that this provision is a restriction upon the exercise of the taxing power. It is certainly a “public privilege” to be exempt from taxation. The exercise of such power is purely an act of sovereignty. Independently of any constitutional provision, the surrender of such an element of sovereignty is never to be presumed. Every intendment is against it so strongly that a reasonable doubt of the legislative intention to surrender or limit must be solved against such intention. Uniformity and equality of taxation is of the essence of the power, and an exception in one case is the increase of the-burden of taxation upon others not thus favored.
When any department of the government is constituted the sole judge of its own powers, there is .no longer a constitutional limitation of powers.
It will be seen from the charter of appellee, already ■quoted, that no public duties or services are prescribed ■ as a consideration for the grant of exemption from taxation. The only limitation upon the exemption is that it shall cease when the company no longer uses the property for the purposes provided in the charter. The Constitution provides that the grant of an exclusive or separate privilege must be supported by the “consideration of public service.” That consideration must be either past, present or future. There is no pretense of a past or present consideration. If it is future, it must be prescribed in the act of incorporation. We find no duties prescribed there that could ¡support a contract. The powers granted are mere
The company makes its own rules, which appear to-be primarily for its benefit. Its own members divide-the profits and enjoy the privileges and benefits resulting directly from the association. To the public there is only an incidental advantage, that would necessarily flow from such an enterprise instituted without legislative aid. By an amendment to the charter of this company in May, 1880, they were given the power to define the duties of the Louisville flour inspectors, and to fix their fees. This amendment imposes no duty upon appellee, it is a mere grant of a privilege that may or may not be exercised, and even if exercised, would not be the performance of a public service. Appellee may perform a service that is directly beneficial to the local public of the city of Louisville, but the existence of such benefit would not authorize a tax upon all the people of the Commonwealth to foster such an enterprise. The exemption of this corporation from State taxation is a tax, to that extent, upon every citizen of the Commonwealth, as every other citizen must help to bear the burden thus lifted from the corporation.
As a general rule, the test of the right to exempt
Every citizen is entitled to equal rights and equal privileges with every other citizen. In entering into the social compact called government, he stipulates-to bear only his proportion of the common burden of taxation, and when more is imposed upon him, his property is taken against his consent and with■out -consideration, it is spoliation. The exemp
We are of the opinion that the act of exemption is unconstitutional, and the judgment is reversed and cause remanded with directions to dismiss the petition and dissolve the injunction.
Dissenting Opinion
delivered the following dissenting opinion:
The appellant, John D. Barbour, as sheriff of the county of Jefferson, reported to George H. Webb, clerk of the Jefferson County Court, that the assessor of the county had omitted to assess the real estate and improvements belonging to the Board of Trade, situated on the south-west corner of Third and Main streets, in the city of Louisville, for the years 1880, 1881, 1882 and 1883. The property was then assessed, as provided by the statute, for those years, the amount of taxes being $1,860, and thereupon the sheriff undertook, after tendering to the president of the Board a receipt for the taxes, to levy on the chairs, desks and tables of the corporation to satisfy the claim of the State.
An injunction was obtained by the corporation against any action by the sheriff .on the ground that
A demurrer was entered by the defense, and a motion made to dissolve the injunction on the face of the petition. The facts, therefore, alleged in the petition must be regarded as true.
The Chancellor overruled the demurrer and also the motion to dissolve the injunction, and, upon the failure of the defense to plead to the action, a judgment was entered perpetuating the injunction. On the hearing of this case, counsel for the corporation insisted that the manner of the assessment was illegal, and, therefore, the judgment below was proper but without considering that branch of the case, I will proceed to determine the real question raised by the State through its collecting officer, and that is as to the constitutionality of the exemption.
It is 'maintained by counsel for the sheriff that the Legislature had no power, admitting the facts-alleged in the petition for an injunction to be true, to grant to the corporation immunity from taxation.
The importance of the question involved necessitates an inquiry into the character and business of this corporation, and the consideration influencing the Legislature to exempt its property from the payment of State taxes. Before, however, proceeding to such an inquiry, it is proper to determine the extent of the power of the Legislature, under the. Constitution, to make such exemptions. The right of the State to exempt from taxation the property of charitable, religious and educational institutions
This court has in effect adjudged that the consideration requisite to maintain such a contract between the-corporation or the citizen on the one hand and the State on the other, for the surrender of the exercise of this sovereign right, is the consideration of public service, or that character of service conducive to the public good. It was so held in the case of Sutton’s Heirs v. The City of Louisville, 5 Dana, and in the case of The City of Lexington v. McQuillan’s Heirs, 9 Dana. Was there such a consideration for the grant in this case is the only question involved.
Where there is a common burden to be borne by common contribution in the way of taxation, it is the universal doctrine that each and every citizen must bear his share of that burden, and payment may be coerced by the seizure and sale of his property, except in cases where there is a valid statutory exemption. This corporation, known as the Board of Trade, was created by an act of the Legislature, approved March 16, 1862, and by the terms of its charter it was
It is alleged in the petition, and appears from the .'face of the charter, that the prime object of the association is “to make such rules, regulations and bylaws as will advance the commercial character of the ■city of Louisville, fix and determine the rules and «customs among the business community, acquire and disseminate business information, and avoid and adjust, as far as practicable, the controversies that might .arise between those engaged in trade.”
Those who desired to promote the objects of the organization were authorized to do so by becoming stockholders or the owners of shares in the enterprise. It is also provided that this Board of Trade “ shall not engage in. traffic of any Tcind or exercise any banicing privileges, and the Legislature shall have power to repeal, alter or amend this charier at any time.” It is further alleged, that as the corporation was prohibited from engaging in any business, and having no income to pay taxes and other expenses, that efforts to procure stock proved unavailing until they applied to the Legislature of the State in 1873, asking exemption from taxation to enable them to succeed in this public enterprise. An act of the Legislature was then passed, to the effect “that any real estate held by the Board of Trade in the city of Louisville, by purchase in fee-simple, not exceeding one hundred by two hundred feet in area, and any improvements thereon, shall be, and are hereby, exempt from all State taxes so long as said property shall be occupied by said Board of Trade for the purposes con
It has in its employ a large number of clerks and employes, whose business it is to prepare, in tabulated form, and furnish daily for publication throughout the country, the statistics of over one hundred and sixty classes of produce; and that this information is the principal basis of the mercantile and trade calculations with respect to that produce in the United States. •
It also appears that since its organization (the fact being alleged) and the act of exemption by an act of the Legislature, it has the supervision of and is made the inspector and register of all grain that passes through the public warehouses of the city. It is also made the inspector of flour and other produce, and furnished for public information the statistics of all the movement of freights on the railroads
While the Legislature has neither the unlimited power to tax or the unlimited power to exempt property from taxation, that department of the State government is the sole judge of that which is necessary for the public good, and the courts should not attempt to control it.
It is insisted that by the terms of the charter there
It was held in the case of Williams v. Cammack, 27 Mississippi, that a similar clause in the Constitution of that State was “directed against superiority of personal and political rights, and a denial of all title to individual privileges, honors and distinctions from the community, but for public services.”
This court has differed as to the meaning of this provision of the Bill of Rights, in determining the constitutionality of State legislation; but we will doubtless concur that sound policy requires uniformity and equality in taxation as near as may be practicable, and that those desiring the protectioh to person and property from the State government must bear their proportion of the burden. This doctrine is fundamental. as has been held by the courts of every State in the Union.
The purposes of this corporation are clearly set forth in its charter, and the exemption based on the consideration that the object in view will be obtained, “and so long as the property is occupied by the Board of Trade for the purposes contemplated in its organization, the property is exempt from State taxation.” It is distinctly alleged that those public duties have been performed, and were being discharged when this levy was made upon the corporate property.
The corporation can’ engage in no business or traffic, and the Legislature seeing, as this court must presume, the public benefits resulting from the organization, has, since, the date of the exemption, by special enactments accepted by the corporation, imposed upon it the discharge of public duties that otherwise belonged to the municipal government of' the city in which this property is located.
The Legislature and the general council of the city of Louisville have each made this exemption in consideration of the public benefits derived from the organization, and while the mere incidental advantage arising to the public from the promotion of' private interests will not authorize this character of legislation, when private property or its use' is devoted to the public in the manner alleged in the petition of the appellee and evidenced by its charter, an exemption from taxation based on such a consideration should be upheld.
Mr. Cooley, in his work on Constitutional Limitation, says “that what is for the public good, and what are public purposes, . and . what does properly constitute a public burden, are questions which the-Legislature must decide in its own judgment, and in.
The cases cited by counsel for the appellants have-but little if any analogy to the case before us. In the case of Lowell v. The City of Boston, 111 Mass., a tax was levied to rebuild the houses of citizens-that had been destroyed by fire, and the court very properly held that the tax was not levied for a public purpose, but was taking, by means of taxation, the-money of A to rebuild the property of B.
In the case of the Brewer Brick Company against Brewer, 62 Maine, the plaintiffs, citizens of the town of Brewer, claimed that its property was exempt from taxation by reason of the by-laws of the town exempting manufacturing establishments from stick, burdens. It was held that neither the town or the Legislature-was vested with such a power. That was a case of the exemption of private property from its share of' the burden, and if the Legislature of this State had exempted from taxation the large business house of' one of the merchants connected with the present corporation by reason of the incidental benefits the city of Louisville received from his individual enterprise,, it would be analogous to the cases cited by counsel, and open to constitutional objection.
In the case of Gordon v. The Winchester Building Association, reported in 12 Bush, the corporation was “ invested with the power to loan its money at a greater
In that case a special privilege was granted the association with no other consideration than its purpose to loan money, and compel the borrower to pay •■a rate of interest that would have been usurious if borrowed from any other corporation or individual. It was a discrimination in favor of one to the exclusion of all others.
Taxation may be imposed for other than mere governmental purposes, and where the sovereign power ■can impose the tax, it certainly has the right by contract based upon a consideration for the public good, to relieve property from a burden for which it would otherwise be liable; and the fact that the contract is with a private corporation can make no difference, and that presumption is always in favor of the validity of the grant. (State Bank of Ohio v. Knoof, 16 Howard.)
Mr. Justice Black, in the case of Sharpless v. The Mayor of Philadelphia, 21 Penna., delivering the opinion of the court, said: “It is a grave error to suppose that the duty of a State stops with the establishment of those institutions which are necessary to the existence of government, such as those for the administration of justice, the preservation of peace and. the protection of the country from foreign enemies. Schools, colleges and institutions for the
We think it can not be doubted (if such was the true test, which I deny) but that the Legislature could have empowered the city of Louisville to have imposed a tax for the purchase of a building to be devoted to the same use, and conducted at the expense of the city.
It was on the faith of the grant that the individual members of this corporation invested their money in the property sought to be taxed, based upon a contract with the State as binding as if made between two of its citizens.
Nor is the State now complaining. The act exempting this property remains 'on the statute book unrepealed, and the tax is now attempted to be coerced' upon no other ground than that, in the opinion of the collecting officer, .the exemption is in violation of the Constitution.
The right to repeal or modify the charter is expressly reserved by the terms of the grant, and still neither .a legislative repeal or a modification of the act of exemption has, so far as' appears from the record, ever been attempted; but, on the contrary, the legislative branch of the State government, instead of repealing this exemption, has been gradually imposing on the corporation the exercise of public duties.
It is not alleged in the pleadings, or maintained in
For these reasons I must dissent from the views expressed in the principal opinion.