5 Ohio St. 361 | Ohio | 1856
Dissenting Opinion
dissenting:
The intrinsic importance of the principle involved in the decision just announced, and its effect upon the law as settled by-repeated adjudications of this court, from an early period after its organization, forbid that I should withhold a full and explicit statement of my solemn convictions touching the grounds of my dissent, with the reasons upon which they are based. The de
The question of the policy of the State to foster institutions of learning, and to encourage the cause of education, is not in controversy. That is a matter about which we would not probably differ.
It is contended on the part of the plaintiff, that the provision of the tax law of 1852, imposing a State tax on the lands of the Ohio University at Athens, is unconstitutional and void, so far as it affects the provision of a prior statute exempting the lands of the university from thé payment of any State tax, by virtue of the prohibitory clause of the 10th section of the first article of the constitution of the United States, which declares that “no State shall pass any law impairing the obligations of contracts.” I propose to consider the question in two points of view.
I. I maintain that the circumstances of the case presented by the plaintiffs, do not constitute a contract within the operation of this prohibitory clause of the constitution.
II. If it be conceded, even for the sake of the argument, that such a contract does exist, the provision of the tax law does not violate its terms or impair its obligations.
I will consider these in their order.
I. That which is set up as constituting the contract, the obligation of which is alleged to have been interfered with, consists of a statutory provision exempting the lands of the university from the payment of any State tax. The circumstances connected with the legislative exemption are as follows : In the year 1792, the United States, in the grant of the lands pur
“ Provided, always, that the said corporation shall have power to demand a further yearly rent on said lands and tenements, not-exceeding the amount of the tax imposed on property of like description by the State.”
It was also further provided, in the same act, “ that the lands in the two townships appropriated and vested as aforesaid, with the buildings which are or may be erected thereon, shall forever be exempted from all State taxes.”
Now, the suit before us is brought, not by the university, to enforce any contract-arrangement between the corporation and . the State, but by the plaintiff, in behalf of himself and others, as the lessees of the university lands. And it is not pretended by the plaintiff, that the lease or instrument executed between the corporation and the lessee, as evidence of the lease-hold estate, contains any express condition or stipulation that the land shall be exempt from State taxes. But it is claimed that the legislative exemption, just recited from the act of 1804, constitutes a contract on the part of the State, that the lands donated to the
A law is a rule of action prescribed by the supreme power of the State, enacted in view of the overruling considerations of the public interests. A contract is an engagement entered into between two competent parties, in relation to something which is a competent subject matter of contract, upon a mutual legal consideration, and with a mutuality of obligation. If this provision of the law be a contract, who are the parties to it ? The provision is an immunity conferred on the university, with a view to its benefit. The corporation is the beneficiary of the donation. The relation of donor and donee was between the United States and the university. The State legislature was used as an instrumentality in vesting the donation in the university. The legal title to the land was vested in the corporation, and the authority of disposing of the land by lease belonged to the corporation alone. The contract creating the relation of lessor and lessee, was a contract to which the corporation and the lessee were the parties. The State was not a party to the lease. The lessee obtained his lease by an express written contract with the university, and not by any contract or negotiation with the State, or any grant made by the State to him. There was no privity of contract between the State and the lessee. He neither paid, nor agreed to pay, anything to the State. The consideration for the lease was the obligation of the lessee to pay to the corporation the specified rent. If, by the legislative act, a proposition on the part of the State was made to any person, it was to the corporators or corporation, and not to the lessees. The grant of the corporate franchise was to the corporators, and that of the donation of the lands was to the corporation. The corpora-tors accepted the franchise, and the corporation accepted the lands on the terms of the donation. It was the corporation, and
True it is, the contract between the corporation and the lessee was made in view of the provisions of the law authorizing the contract, and in one sense may be said to comprehend its terms. All contracts are held to be made in contemplation of the existing laws relating to their subject matter. And the proposition that whenever the State has, by legislative enactment, made regulations in relation to any particular subject matter, that the State, by means thereof, becomes a party to every contract between individuals, or private persons, in regard to such subject matter, would hardly be seriously claimed by any one.
If the exemption of the lands from taxation constituted a condition or stipulation on the part of the corporation, in the contract on which the lease was taken, and as a consideration, or part consideration for the undertaking of the lessee, it would be binding on the corporation as such, and for any breach of it, the corporation would be responsible to the lessee. As such, it would have the effect of a stipulation on the part of the corporation to keep the lessee clear of any assessment of State taxes upon the lands leased, and in case of the repeal of the exemption, and the assessment of the tax, the lessee might enforce the contract against the corporation by way of indemnity, and require a pro tanto reduction on the annual rent, which the corporation had a right, under the contract, to collect. The obligations of the contracts, therefore, between the corporation and the lessees, would not have been impaired, for they might have been enforced by the lessees against the corporation.
With all proper deference for the opinion of the majority of the court, therefore, I must be permitted to say, that, by the plain interpretation of the law, its true intent is, to my mind, so manifest as to be without doubt or difficulty. As the federal government had made this liberal donation of lands, to aid the cause of
But it is said that the plaintiff, and the others on whose behalf he sues, are' “poor, laborious, and unlearned,” and weight is given to this circumstance in giving an interpretation of the statute. It is not averred in the petition, nor does it appear in the proof, that the lessees are such. If, however, from the relation of lessor and lessee, the court is bound to act on the assumption that the lessees are not only “ poor and laborious,” but also “ unlearned ” men, does it follow that the great maxim of the law, matured and sanctioned by the wisdom of ages — “ Ignorantia juris, quod quisque scire tenetur, neminem excusat,” is to be set aside •? Is the determination of a grave legal question, in the court of dernier resort, to be affected by the consideration of a party’s condition in life, habits of industry, or degree of intelligence ? By what standard shall the degree of a man’s poverty,
I humbly conceive, that there is but little actual necessity for invoking the aid of sympathy in behalf of the lessees of the Ohio University lands, in the interpretation of a statute ; for the tendency of the legislation of the State brought under review in this cáse, is to show the fact that the lessees have been special objects of legislative favor. Besides the statute of 1826 in relation to the surrender of leases, and numerous other acts passed for the benefit of the lessees ; when an attempt was made in 1841 to in-force the re-valuation provision in the contract of the leases, it was resisted by the lessees on the alleged ground that the condition of re-valuation had been abrogated by implication, in the amendatory statute of 1805, relating to this institution. The Supreme Court, however, otherwise determined in the case of McVey v. The Ohio University, 11 Ohio Rep. 134. After this, on the application of the lessees to the legislature, the statute of 1843 was enacted, releasing the lessees from the condition of revaluation, without the consent, and against the interest of the university.
The real question, however, in this case, and that which is mainly urged by the learned counsel on behalf of the plaintiff, is, whether the law incorporating the university and including the exemption from taxation, constitutes a contract between the State and the incorporation, within the operation of the tenth section of the first article of the constitution of the United States. And this question, narrowed down to the limits of this case, and stripped of all disguises in modes and forms of expression, is nothing more nor less than this: whether the sovereign power of taxation inherent in the people of the State, can be, and was in this instance abridged, or to any extent surrendered, by the legislative exemption from taxation in the charter of the university ; so as to be beyond not only the authority of the legislature to resume it at any future session, but also beyond the power of resumption or change in the people of the State themselves, in the exercise of their original authority of remodeling, reforming and recon
In the legal opinion, which has passed current as law taken for granted in this country, for a number of years, there has been a very loose and indefinite conception of the real scope and effect of the doctrine, that the charter of a corporation is a contract. What is the true import of this doctrine ? It is not claimed, that the contract consists in the investments in the stock of the corporation. These arise out of contracts between the stockholders and the corporation, to which, it is not pretended, that the State is in anywise a party. Neither is it pretended, that the contract arises out of the dealings of the corporation in the course of its business with persons other than the stockholders. On the contrary, the claim is, that the franchise of the corporation is the subject matter of the contract; and that the contract is between the State on the one part, and either the corporators or the corporation on the other part. (See opinions of Judges Story and Washington, in Dartmouth College v. Woodward, 4 Wheat.)
It is not even pretended, that the question is affected by rights acquired by investments in the stock of the corporation, or by contracts made in the course of its business. In Mumma v. The Potomac Company, 8 Pet. Rep., Mr. Justice Story has explained this subject, in the opinion of the court, to the effect that as a corporation, by the very terms and nature of its political existence, is liable to dissolution in various ways, and upon various grounds, every person who deals with the corporation must be presumed to contract in contemplation of the nature and incidents of such a body politic ; that the dissolution of the corporation connot, in any just sense, be considered an impairing of the obligations of the contracts of the company with other persons,
It is well settled, that a State law cannot be declared void under this prohibitory clause of the constitution of the United States, on the ground that it divests antecedent vested rights of property. In the case of the Charles River Bridge v. Warren Bridge, 11 Pet. Rep. 539, Chief Justice Taney, delivering the opinion of the court, said :
“It is -well settled by the decisions of this court, that a State law may be retrospective in its character, and may divest vested rights, and yet not violate the constitution of the United States, unless it also impairs the obligations of a contract. In 2 Peters 413, Satterlee v. Mathewson, this couz’t, in speaking of the State law then before them, and interpreting the article in the constitution of the United States, which forbids the States to pass laws impairing the obligations of contracts, uses ,the following language : ‘It (the State law) is said to be retrospective ; be it so. But retrospective laws that do not impair the obligation of contracts, or partake of the character of ex post facto laws, are not condemned or forbidden by any part of that instrument,’ (the constitution of the United States.) And in another passage in the same case, the court say: “ The objection, however, most pressed upon the court, and relied upon by counsel for the plaintiff in error, was, that the effect of this act, was to divest rights which were vested by law in Sattei-lee. There is certainly no part of the constitution of the United States which applies to a State law of this description; nor are we aware of the decision of this, or any circuit court, which has condemned such a law, upon this ground, provided its effect be not to impair the obligation of a contract.’ The same principles were re-affirmed in this court in the last case of Watson et al. v. Mercer, decided in 1834, 8 Pet. 110; as to the first point, (say the court) it is clear that this court has no right to pronounce an act of the State legislature void, as contrary to the constitution of the United States from the mere fact that it divests antecedent vested rights of property.”
It is not the impairing or divesting of vested rights of property which is the subject of complaint, and protection from which is sought, but the impairing or destroying the obligations of contracts. This distinction is important to an accurate understanding of the subject. By the repeal of the charter of a corporation,
The question under consideration is in no wise affected by the principle, which prevails in case of rights acquired by ordinary contracts with, or conveyances of property by the State, under and pursuant to the authority of a law. In such cases, the simple repeal of the law leaves the contracts already made in full force, and does not divest rights thus already vested. See Toledo Bank v. Bond, 1 Ohio St. Rep. 641. But the doctrine, that the charter of a private corporation is a contract, rests upon the idea, not of a contract distinct from the Jaw, nor of a contract made under the authority of a law, but that the law itself conferring the corporate franchise constitutes a contract, the terms of which are not only expressed and embodied, but also inherent in the provisions of the law itself, and therefore impaired by its alteration or repeal. The claim is, that the corporate fran
That the public relation created by the franchise of a corporation imposes obligations on the State, is readily conceded ; and the term contract, in its most extended signification, might be construed as comprehending this, and many of the other public relations between the citizens and the government, arising out of the civil institutions of the State. But it is manifest that the term contract, in the prohibitory clause of the tenth section of the first article of the constitution of the United States, is to be taken in a more restricted sense, and not as applying to the public relations created by the civil institutions of the State. I adopt, to the full extent, the interpretation of this provision of the constitution, given by Chief Justice Marshall, in delivering the opinion ,of the court in the case of the Dartmouth College v. Woodward, 4 Wheat. 627, which is in the following words :
“ It has been argued, that the word ‘ contract,’ in its broadest sense, would comprehend the political relations between the government and its citizens ; would extend to offices held within a State for State purposes, and .to many of thpse laws concerning civil institutions, which must change with circumstances, and be modified by ordinary legislation; which deeply concerned the public, and which, to preserve good government, the public judgment must control. That even marriage is a contract, and its obligations are effected by the laws respecting divorces. That the clause in the constitution, if construed in its greatest latitude, would prohibit these laws. Taken in its broad, unlimited sense, the clause would be an unprofitable and vexatious interference with the internal concerns of a State, would unnecessarily and unwisely embarrass its legislation, and render immutable those civil institutions which are established for purposes of internal government, and which, to subserve those purposes, ought to vary with varying circumstances. That as the framers of the constitution could never have intended to insert in that instrument a provision so unnecessary, so mischievous, and so repugnant to its general spirit, the term ‘ contract,’ must be understood in a more limited sense. That it must be understood as intended to guard against a power of at least doubtful utility, the abuse of which had been extensively felt; and to restrain the legislature in future from violating the right to property. That anterior to the formation of the constitution, a course of legislation had prevailed in many, if not in all of the States, which weakened the confidence of man in man, and embarrassed all transactions between individuals, by dispensing with a faithful perform*389 anee of engagements. To correct this mischief, by restraining the power which produced it, the State legislatures were forbidden to pass any laws impairing the obligations of contracts,’ that is, of contracts respecting property, under which some individual could claim a right to something beneficial to himself; and that since the clause in the constitution must, in construction, receive some limitation, it may be confined, and ought to be confined, to cases of this description; to cases within the mischief it was intended to remedy. •
“ The general correctness of these observations cannot be controverted. That the framers of the constitution did not intend to restrain the States in the regulation of their civil institutions, adopted for internal government; and that the instrument they have given us is not to be so construed, may be admitted.”
Again: Chief Justice Marshall adds, in reference to the rights claimed in behalf of the corporation, on page 644, of same opinion:
“It is more than possible, that the preservation of rights of this description was not particularly in the views of the framers of the constitution when the clause under consideration was introduced into that instrument. It is probable, that interferences of more frequent occurrence, to which the temptation was stronger, and of which the mischief was more extensive, constituted the great motive for imposing this restriction on the State legislatures.”
This is the explanation of the constitutional provision in question, given by Chief Justice Marshall, at an early day. And it should not be perverted by the prevalent misapprehension of the true ground of the decision, by the majority of the court, in the Dartmouth College Case. In that case, the effect of the State law was to take extensive donations of private property from the hands of one corporation, in which it had been vested by the contract of the donors, and transfer it to the possession and con- - trol of another corporation, under different regulations. And Chief Justice Marshall does not, by any language whatsoever, place the decision on the ground that the mere charter and civil immunities of the corporation constituted a contract. (See Toledo Bank v. Bond, 1 Ohio St. Rep. 670.)
From this interpretation of the constitution of the United States, by Chief Justice Marshall, it appears:
1st. That the evil intended to be provided against by this constitutional restraint, was a course of legislation which had pre
2d. That the term ‘ contract,’ as used in the constitution, does hot comprehend the political relations between the government and its citizens, nor extend to the laws concerning.the civil institutions of the State; on the contrary, that the framers of the constitution did not intend by this provision to restrain the States in the regulation of their civil institutions.
We have here, in clear and explicit language, the sense in which the framers of the. constitution employed the term “contract,” in this provision ; the circumstances under which-it was inserted in the constitution ; the mischief designed to be guarded against, and the opinion of the Supreme Court of the United States, by Chief Justice Marshall, that the provision was never intended by the framers of the constitution, to extend to grants of civil authority, and privileges, or to restrict the legislation of the States in regard to their civil institutions, established from motives of public policy. And it is fair to conclude, that if the framers of the constitution had intended this restraint to extend to the civil institutions of the States, and grants of civil authority or special immunities, that language would have been employed, which, in its ordinary signification, would have been clearly understood to express it.
Now, as a corporation, established as it is by the authority of law, and from considerations of public policy, is undeniably a civil institution of the State, this interpretation of the constitution, by one of its most illustrious expounders, would seem to be conclusive, that the charter of a corporation is not a contract within the operation of this constitutional restriction.
There are numerous other relations arising from the civil regulations and institutions of the State, creating obligations bearing fully as strong, and some of them, a much stronger resemblance to a contract in its ordinary sense, than the charter of a corpora
Marriage, which is a civil institution, deriving its legal efficacy from the laws of the State, is in one sense a contract, often involving in its incidents extensive rights of property, and important obligations for the support of the wife, and the protection, maintenance, and education of children ; yet it is admitted not to be a contract within the meaning of. this clause of the constitution.
A license granted under the authority of law, to keep a tavern or house of public entertainment, or to retail spirituous liquors ; (until lately, very common in this State) a license to keep a ferry; a license to exercise the business of an auctioneer ; or a license to a traveling merchant or pedler, to exercise certain special privileges forbidden to the community at large, in the sale of merchandise within the State ; — each and all of these, and many others of a similar character, are special and exclusive rights and privileges granted under the authority of law, for fixed sums of money, and usually for specified periods of time. They are franchises, and partake much of the nature of contracts; yet the constitutional authority of the legislature to control them, by amendment or repeal of the law regulating them, or by absolutely revoking or annulling them, with a view to the overruling considerations of the public interests, is unquestionable.
A law granting a pension to a person in consideration of public services, is in the nature of a contract, but it is undeniable that such a grant may be changed, suspended, or abolished by the amendment or repeal of the law.
A law providing peculiar advantages to foster and encouragev any particular branch of business, is undeniably subject to amendment or repeal, at any time, although large investments in property may have been made under its inducements.
A law locating the seat of justice of a newly organized county at a particular village, on a proposition of the citizens of the village, in case of such location, to raise means by private contributions to construct the public buildings for the county, is in the nature of a contract. Yet it cannot be denied but that after the citizens of the village have complied on their part, and even con
When a common informer sues for a penalty, or a revenue officer makes a seizure, under a promise that on conviction the recovery shall be shared, the State may discharge the forfeiture, or prevent the recovery by a repeal of the law, and yet violate thereby no vested right, nor impair the obligation of any contract. 5 Cranch Rep. 281; 10 Wheat. 246 ; 6 Pet. 404.
A public office, conferring, as it usually does, a special privilege and authority to exercise a public employment, and a right to the emoluments and profits belonging thereto, for a specified term, bears a close analogy to a franchise, and presents the elements of an ordinary contract more strongly than does the charter of a corporation; yet it is well settled, that even an officer, who has abandoned his private business, and changed his residence to the injury of his private interests, to perform the duties of his public employment, and for the faithful discharge of which, during his term of office, he may be bound with sureties in a bond under a heavy penalty, may be divested of his rights, privileges, and emoluments, by a repeal of the law creating and authorizing the office. Butler v. The State of Penn., 10 How. Rep. 402; The Com. v. Bacon, 6 Serg. & R. 322; The Com. v. Mann, 5 Watts & Serg. 418; Barker v. The City of Pitts., 4 Penn. St. Rep. 51; The Com. v. Clarke, 7 Watts & Serg. 127; Conner v. The City of New York, 2 Sandf. Rep. 355.
That the corporation of “ The President and Trustees of the Ohio University,” although in the technical classification of corporations it falls under the denomination of a private corporation, is a civil institution of the State, established with a view to internal government, will hardly be seriously questioned by any one. The constitution of the State under which it was established, expressly required that “ schools and the means of in
It is essential to the binding obligation of every contract, (using that word in its ordinary signification,) that it have a competent subject matter about which the parties may legally stipulate, and which is not against public policy. There are many things, which are not^ in their nature competent subjects of private contract; and there are many things, which cannot be made the subject matter of barter or sale, without contravening some rule of law or principle of public policy. It must be conceded that neither the public relations between the government and the citizens, with the obligations and duties incident thereto, nor the grants of civil authority to public officers or agents, nor the ordinary regulations concerning the civil institutions of the State, can be made competent subjects of private contract. The right of suffrage in the citizen cannot be parted with by contract; nor can the duty of the government to afford to the citizen protection in his rights, be relinquished by contract. Where the subject matter of a contract is something which is to pass from one party to another, it must be a matter' which is private property, either corporeal or incorporeal. The,constitution having provided that “property and effects of every description whatever shall be made subject to taxation, this court, in the case of The Exchange Bank of Columbus v. Hines, 3 Ohio St. Rep. 7, said, on the question
“ Does a corporate franchise, in sober truth and. reality, possess the essential qualities of property? It is said that the corporate franchise of a bank, conferring a peculiar legal capacity, and the high function of making and circulating paper money, is valuable — indeed, a thing of great value. But value is not the distinguishing attribute oí property, in its ordinary sense. The right of suffrage is esteemed valuable; a public office, with its emoluments, is valuable; a license to keep a tavern, as formerly granted in this State, or a license to carry on any special business which is prohibited without a special grant of authority from the government, may be valuable; and a right to either of these things may be asserted and maintained in a court of justice, yet neither of them, possess the essential qualities which constitute property. Our right to the free use and enjoyment of things which are in common, such as air, light, water, etc., is valuable ; and our right to the free use of the public highways, and to many of the privileges and advantages derived from the government, may be valuable, and may be maintained by legal process. Yet none of these things come within the denomination of property. Those things which constitute the subject matter of private property, are such as the owner may exercise exclusive dominion over, in the use, enjoyment, and disposal of them, without any control or diminution, save only by the laws of the land. 1 Wend. Blackstone 138. It is a fundamental principle, that property, considered as an exclusive right to things, contains not only a right to use those things, but a right to dispose of them, either by exchanging them for other things, or by giving them away to any other person without any valuable consideration in return, or even of throwing them away, which is usually called relinquishing them. Butherforth’s Ins. 20 ; Puffendorf, ch. 9, b. 7.
“ It is said that capability of alienation or disposal, either by sale, devise, or abandonment, is an essential incident to property. 2 Kent’s Com. 317.
“A corporate franchise, therefore, being a mere privilege, or grant of authority by the government, is not property of any description, and consequently not subject to taxation under the requirement of the constitution of the State.
That which is relied on as the subject of the alleged contract between the State and the university, in the case before us, is the franchise of the corporation, which, according to the doctrine insisted on, amounts to a relinquishment both of the legislative power of amending and repealing the law conferring it, and also, of the power of taxation over the university lands. And the question is presented, whether a relinquishment or surrender of & portion of the legislative power, including also & portion of the taxing power, can be made a legitimate subject matter of private contract. And the same question arises in either branch of
The legislative or law-making power is the highest attribute of sovereignty in every government; and the power of altering and repealing laws, is an essential and indispensable part of this legislative power. The right of taxation is also one of the high attributes of the supreme power in every government, essential to its continued existence, and indispensable as an instrumentality in the hands of the legislative power.
According to the theory of our institutions, all civil power originates with the people as a community, for whose benefit solely the government is established; and all powers not delegated to the government, are, by express declaration, reserved to the people. Civil society is said to be founded on a surrender, by the people, of a part of their original and natural rights, with a view to the protection of the balance, or the general welfare of the whole community. It follows from this, that the powers which the people have conferred on their government, are high trusts of civil authority, delegated solely and alone with a view to the common protection and general interests of the community at large. In the exercise of the functions of sovereignty thus delegated, individual rights have to yield to the paramount and overruling consideration of the public interests. This principle lies at the foundation of the right of eminent domain, and the right of taxation, by which private property is made subservient to the public use. And the penalties imposed in the administration of criminal justice, by which not only the property, but the liberty, and even the lives of individuals, are taken, rest upon no higher principle.
. Can the legislature abridge or surrender these functions of the supreme power, by contract 1 Or can a relinquishment of any portion of them be made the subject matter of contract, or, (which is the same thing), of private property ? Can these sacred trusts of the supreme civil power be made the subject matter of barter and sale ? The ordinary rights of persons and property have to yield, and be made subservient to the over-ruling demands of the
The original power of taxation extends to every thing which is the subject of private property within the State, and may impose its tribute thereon for the support of the government. That the legislature of 1802 could select its subjects for taxation, and exempt certain kinds of property from the burden, does not affect the question. A mere legislative exemption, subject to alteration or repeal in the discretion of the legislature, does not affect the power of taxation in the government. The question here is, whether a mere legislative exemption of certain kinds of property from taxation, can, by contract, be made an absolute surrender of the power of the State to tax that property, at any period in future. If the legislature has the right thus to surrender the power of the State to tax two townships of land, it must be conceded that, by the exercise of the same power, the right of taxation over all the lands in the State may be surrendered. Suppose, for example, that the legislature, at one session, deeply impressed with the great public advantages of agricultural and horticultural pursuits, and the necessity and expediency of encouraging those branches of industry, had provided by this kind of contract, that all the cultivated soil or lands in Ohio should be forever exempt from taxation; and suppose also, that the legislature, at a subsequent session, from clear views of public policy, should have, in the same manner, forever exempted all investments in manufacturing and mechanical pursuits, from all taxation; and, also, at another session, the commercial interests being found in a state of great depression, and requiring encouragement, a similar exemption from taxation had been provided for all investments in trade of every kind. On any attempt afterwards to repeal these exemptions, the persons engaged in business in each of these
But this is not all. It is claimed that the power of altering or repealing existing laws, which is an essential and inherent part of the law-making power, has been abridged, or in part surrendered by contract; and that it is not in the power of any future legislature to resume it, or of the people themselves, by the formation of a new constitution, to authorize a new legislature to resume this part of the legislative power, so far as to be able to supervise or control the statute of 1804, above mentioned, by amendment or repeal. Now, if the legislature can, in the enactment of a law, provide by contract against its alteration or repeal in an instance of this kind, the samq thing can, of course, be done in all instances where special privileges and advantages are conferred on individuals or corporations in any other branch of business. And if the legislature can, at one session, in the enactment of laws, thus by contract limit or abridge the legislative power vested in this body, at any subsequent session, it can give a permanency and stability to its laws superior to the constitution itself. For the constitution is at all times subject to alteration by the people themselves, acting in their original capacity; but it is claimed, that this surrender of the legislative power by contract, places it beyond the power of resumption by the people themselves, even in case of revolution and re-construction of the State government.
Suppose the legislature should, at one session, provide by law that, in consideration that the banks of each county of the State should agree to bind themselves to receive on deposit and safely
If the power of taxation, and the power of amending and repealing laws, can be thus surrendered, I cannot conceive what other important function of the supreme power of the State might not be surrendered in the same way. Suppose that the legislature, in order to encourage the products of a particular branch of agriculture, should provide that all lands used or cultivated for the purposes of such products, should be forever exempt from the exercise of the right of eminent domain. According to this doctrine, would not this high function of sovereignty be, pro tanto, surrendered, beyond the possibility of resumption or redemption by the people of the State ? Where is the distinction between a surrender of this and these other functions of the civil power ? The right of eminent domain is no more important, or sacred, or essential to the existence of the government than the right of taxation, or the right of altering and repealing laws. If a surrender of the latter may be made the subject matter of contract, the surrender of the former may be so also.
The power of imposing penalties in the administration of criminal justice, is one of the functions of the supreme power of the State. Suppose that the legislature, acting from supposed elevated views of public policy, and to encourage men to engage in the highly useful business of corporations generally, should have provided that all persons who should engage in the service of corporations, or become stockholders therein, should be forever exempt from all penalties or punishment for crime. Here would be the semblance of a contract with all who should engage in the
The general scope and tendency of this doctrine is forcibly exposed by Mr. Justice Campbell, in his very able dissenting opinion in the case of Dodge v. Wolsey, 18 How. Rep. 372, recently decided in the Supreme Court of the United States, the following extract from which I deem appropriate, and worthy of the most serious consideration:
“ The proposition of this confederacy of some fifty banking corporations, having one fortieth of the property of the State, is, that by the law of their organization for the whole term of their corporate being, there exists no power in the government nor people of Ohio to impair the concessions contained in the act of 1815, particularly that determining the amount of their contribution to the public revenue. This proposition does not depend for its truth upon the limitation of time imposed upon the corporate existence of the banks. It would not affect the proposition if the charters were for a century, or in perpetuity. Nor does the proposition derive strength from the fact that the statute applies only to banking corporations, or corporations confined to a single form of commercial dealing. The proposition would have had the same degree of accuracy, if the act had been universal, applicable to all private corporations, whether for manufacturers, trade, intercourse, education, morals or religion. It is said by a competent authority, that in the State of Massachusetts, there are near twenty-five hundred trading corporations, and that more than seven-tenths of the real and personal properly of that State is held by corporations. The proportion between the property of corporations and individuals, is greater there than in other States, but the property held by corporations in other States is large enough to awaken the most earnest attention. A corrupt legislature, for a term or in perpetuity, would impair in many States their resources to an alarming extent.
“ Writers upon the condition of the Turkish empire, say that three-fourths of the landed property of the empire is held in mortmain, as vakuf by mosques or charitable institutions, for their own use, or in trust for their owners. This*400 properly ceases to contribute to the public resources, except in a specific form of certain objectionable taxes on produce, and is inalienable. If held in trust, it is exempt from forced sales and confiscations, and on the death of the owner without children, passes to the mosque or other charitable trustee. In that empire, the ecclesiastical and. judicial is the dominant interest, for the ulemas are both priests and lawyers, just as the corporate moneyed interest is dominant in Ohio, and in either country that interest claims exemption from the usual burdens, and ordinary legislation of the State. The judgment of this court would establish the permanent existence of such an incubus upon the resources and growth of that country, if that interest should have taken their privileges in the form of a contract, and had such a constitution as ours. Yet the first step for the regeneration of Turkey, according to the wisest statesmanship, is to abolish the vakuf.
“ Bentham, treating upon constitutional provisions in favor of contracts, says: ‘If all contracts were to be observed, all misdeeds would be to be committed, for there is no misdeed, the committal of which may not be made the subject of a contract; and to establish in favor of themselves, or of any other person or persons, an absolute despotism, a set of legislators would have no more to do than to enter into any engagement' — say with a foreign despot, say with a member of their own community — for this purpose.’ And were this to happen, should it be that a State of this Union had become the victim of vicious legislation, its property alienated, its powers of taxation renounced in favor of chartered associations, and the resources of the body politic cut off, what remedy has the people against the misgovernment ? Under the doctrines of this court none is to be found in the government, and none exists in the inherent powers of the people, if the wrong has taken the form of a contract. The most deliberate and solemn acts of the people would not serve to redress the injustice, and the overreaching speculator upon the facility or corruption of their legislature, would be protected by the powers of this court in the profits of his bargain. Where would the people find a remedy ? Let the case before us form an illustration. Congress cannot limit the term nor abolish the privileges of these corporations; they are corporations of Ohio, and beyond her limits they have no legal existence; they live in the contemplation of her laws, and dwell in the place of their creation. (13 Pet. 512; 16 How. 314.) Nor can congress enlarge the subjects for State taxation, nor interfere in the support of the State government. They could not empower the State to collect taxes from these corporations. Were the resources of the State oppressed with the burden of a Turkish vakuf, congress could not afford relief.
“ The faculties of the judicial department are even more fatal to the State than the impotence of congress. The courts cannot look to the corruption, the blindness, nor mischievous effects of State legislation, to determine its binding operation. (Fletcher v. Peck, 6 Cr. 87.) The court, therefore, becomes the patron of such legislation, by furnishing motives of incalculable power to the corporations to stimulate it, and affording stability and security to the successful effort. Where, then, is the remedy for the people ? They have none in their State government, nor in themselves, and the federal government is enlisted by their adversary. It may be that an amendment of the*401 constitution of the United States, by the proposal of two-thirds of congress and the ratification of the legislatures of three-fourths of the States, might enable the people of Ohio to assess taxes for the support of their government upon terms of equality among her citizens.
“ The first observation to be made upon this is, that these extraordinary pretensions of corporations are not unfamiliar to an inquirer into their nature and history. The steady aim of the most thoroughly organized and powerful of the corporate establishments of Europe has ever been to place themselves under the protection of an external authority, superior to the government and people where they dwell — an authority sufficiently powerful to shield them from responsibility, and to secure their privileges from question. * * * *
“ The sagacious and far-sighted members of the ecclesiastical interests, fortified themselves with concordats, and these concordats were affirmed to be ‘contracts,’ and, like these, ‘ entail obligations ;’ and ‘if the bond of a bargain is to be respected in private life,’ so they declared, ‘ it is sacred and inviolable in the life of States.’ A slight change of expression will demonstrate that the principle of corporate policy, the dictate of corporate ambition which has predominated in the contests of Europe, leading to desolating wars, is the same which this court is required to sanction in favor of corporations in the United States.”
And in the same opinion, on page 373, the learned Judge further said:
“ The allowance of this plea interposes this court between these corporations and the government and people of Ohio, to which they owe their existence, and by whose laws they derive all their faculties. It will establish on the soil of every Slate a caste made up of combinations of men for' the most part under the most favorable conditions in society, who will habitually look beyond the institutions and the authorities of the State to the central government for the strength and support necessary to maintain them in the enjoyment of their special privileges and exemptions.”
The misapplication of the civil power, and prostitution of it to the purposes of mere personal aggrandizement, has been one of the greatest evils, and perhaps the greatest source of abuse, in civil government, in all ages of the world. And with all proper deference for the opinion of the majority of the court to the contrary, I must be permitted to say, that I regard the doctrine that the charter of a corporation is a contract, and that the high functions of the supreme power of the State may be surrendered by such legislative contract, as a subtle device resorted to in this country, to pervert the civil power from the high purpose of its delegation, and to use it for the advancement of special and favored private interests. And, as I humbly conceive, the doc
It is argued, however, “ that a State may surrender a portion of her sovereignty ;” that “ the whole line of history is dotted with examples of such surrender;” that “ Great Britain surrendered her sovereignty over this vast empire; France over Louisiana ; and Mexico over California.” Now, with all due deference, I must say that I am unable to perceive any bearing whatever, that this argument can have on the question under consideration. What has been, and what may be done, by treaty or compact, between independent nations, in the change or transfer of dominion or civil power from one set of authorities to another, or the hands of one set of men to another, has, as I humbly conceive, no analogy to the subject matter of private contract. When
The maxim salus populi suprema lex, embodies an all-controlling principle founded upon the implied assent of every member
Again, it is argued that the power to make contracts is one of the sovereign powers < f the State; that the most that can be said of this surrender of the functions of sovereignty by contract, is, that it is an abuse of authority ; and that the non-existence of a power cannot be shown by its abuse, or liability to abuse. No one questions the capacity of the State to make contracts of the ordinary kind. Although not among the express grants of power in the constitution, it is one of the incidental powers of the government — a necessary instrumentality or means in the execution of the civil authority of the State. I do not deem it necessary to inquire, whether a contract obtained by an abuse or perversion of civil authority, and in derogation of the high and sacred purposes for which sovereign power was delegated, would be void on the ground of being against public policy. Where a power, vested in one of the departments of the government, has left a discretion as to its exercise in that department, and that discretion is unwisely and improvidently exercised, a mere abuse of the discretion may not be an abuse of the power. But where the power is abused, and perverted from the purpose of its delegation, and prostituted to purposes inconsistent therewith, the act of the department, upon ordinary principles, would be declared void.
It is argued, however, that the people of the State themselves could, by contract, surrender, or yield up, any portion of their incidental right of taxation, or other function of their sovereign power ; and that they have, by the grant of legislative authority in general terms, conferred that power on the general assembly. There are two answers to this, either of which is perfectly conclusive. In the first place, sovereignty can be legitimately delegated by the people only for the purposes of civil government. According to the theory of our institutions, government can be rightfully established only for the benefit of the governed, or the common interests of the people as an organized community ; and the use of civil power, for the mere advancement of personal or private interests, is a usurpation and perversion of public authority from the true and legitimate object of its delegation. Government is a necessary burden, the true design and end of which is security and protection to the common rights and interests of the people. The prerogative of civil authority, therefore, which originates in the necessities of the people, ends with the accomplishment of its only legitimate purpose. Founded upon any other principle than the delegation of power for the common benefit of society, government becomes an assumption of power for the aggrandizement of itself, or of favored private interests, by the oppression of the great body of the community. The proposition, therefore, that the people, in the exercise of their original powers as an organized community, may unalterably surrender, or yield up their powers of sovereignty, by contract, for the advancement of personal or private interests, places civil authority upon a false foundation, and concedes a right in the people to make slaves of themselves. The prerogative of sovereignty, therefore, in the hands of the people, in their original capacity as an organized community, is a mere instrumentality of civil government, and can only be exercised pursuant thereto, and cannot be made the subject matter of private contract.
That the people, in the ^formation of the constitution of the State, may define the delegated powers, prescribe limits and regu
In the second place, the question at issue, however, is not what the people might have done, but what they actually did do, in the formation of the constitution of 1802, under which this act of 1804 was passed. The taxing power, which is included in the legislative authority of the State, was by that constitution vested in the general assembly, in general terms, with no limitation, except the prohibition of the levy of a poll tax, for county or State purposes. The power of taxation, in the language of Chief Justice Marshall, in McCulloch v. Maryland, 4 Wheat. R. 316, “ is an incident of sovereignty, and coextensive with that to w'hich it is an incident. All subjects over which the sovereign power of the State extends, are objects of taxation.” The authority conferred, therefore, gave the legislature the right to exercise the power of taxation over all property within the State, whenever necessary to accomplish the lawful purposes for which the government was established. This authority was vested in the legislature as a continuing body; and it consisted in the right to tese or exercise the power for the high purposes of its delegation, and not the right to abridge, surrender, or dispose of the power itself. That the legislature, under the constitution of 1802, had the right to exercise a discretion as to the kind of property which should be taxed, and to exempt certain kinds of property from taxation, is not questioned, and does not affect the question under consideration. For, while the right of amending and repealing laws remained in full force, whatever error might be committed by the legislature at one session, could be corrected at the next; so that the power conferred on the legislature, whether exercised to its full extent or not, remained the same. A mere legislative exemption from taxation is a very different thing from a surrender of the power of taxation. If the legislature had the authority to surrender, abridge, or dispose of the functions of sovereignty delegated by the constitution, it had the
The same public exigency which required the exercise of the taxing power, as a means, when the constitution was formed, has continued with even increased demands, and will continue as long as the government endures. The power was granted as a mere delegation of authority, to be exercised when and as the public necessities might require; and not as property subject to disposition or sale upon contract. The power consisted in the mere right to use or exercise the authority for the purposes of the gov-
It is argued, further, that all civil power is liable to abuse ; that the power of taxation itself may be abused; and that “final reliance must be placed on the instincts of self-interest and self-preservation, and the provident intelligence of the peopleIs, then, a perversion or prostitution of the functions of the sovereign power of the State, to be made perpetual and unalterable, because of the liability of all civil power to abuse ? This argument only proves the foresight of the wise men, who have gone before us, in their expenditure of time and treasure, in the formation of written constitutions, defining with great precision the delegated powers of the government, and providing checks, safeguards and remedies against the abuse of power. And the most important primary remedy and safeguard provided against all abuses of the legislative authority, is to be found in the power of amending and repealing laws, which is, of necessity, coextensive with the power of enacting laws, and remaining in full force in the legislature at every session, as a continuing body. By this means one legislature can correct and reform the abuses and mistakes of another. Thus, if the power of taxation be abused by one legislature, the people have the power to correct it by the next. And as a remedy of dernier resort, in case the powers of the government become impaired, and its energies broken down, beyond the reach of adequate recuperation by the exercise of the legislative power, the radical mode of regenerating the government, by the action of the people in their original capacity, in the resumption of their powers of sovereignty, and the formation of a new constitution, is not only recognized, but expressly prescribed. But according to the doctrine of the ma
It is said that the question, whether the recent legislation of the State impairs the obligations of the alleged contract, admits of but one answer: and of this legislation, which is characterized as “ a seeming manifestation of Carthaginian faith,” it is said, that, although it would be “ gladly presumed to be the result of oversight,” if it could be ; yet that the “ language is too explicit and direct to admit of so charitable a presumption.” Now, if this court had the power of impeachment, and the members of
The constitution of the State provides, in imperative language, Art. 12, sec. 2 : “ Laws shall be passed, -taxing, by a uniform rule, all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise ; and also, all real and personal property, according to its true value in money.” Leasehold estates of real property, held under the authority of any college or university of learning, are not among the constitutional exceptions to this rule of taxation. If this constitutional provision was obligatory, the legislature had no discretion; for the words “ all real and personal property” in the State, manifestly included these university lands. And the general assembly, in carrying out this imperative provision of the constitution, in the tax law complained of, did not specify these particular lands, but provided for taxing all real and personal property, in almost the identical words of the constitution. If there be any wrong about this tax, therefore, it originated in the constitution itself, which one member of this court assisted to frame, and which was ratified by an overwhelming majority of the people of the State. Now, while the majority of this court are entitled to be respected in their claim to act, in the decision of this case, from a high sense of the obligation of the judicial oath to support the constitution of the United States, itdoes not require, in my humble opinion, the exercise of charity to presume, that the members of that general assembly, in the enactment of this law, may have acted from a sense of the obligation of their official oath to support the constitution of the State. „
An observance of the imperative behest of the constitution by
Much has been said about the power of the legislature to make contracts, in the enactment of laws. Whether the making of a contract on the part of the State, be the exercise of an executive duty or a legislative power, I do not deem it important to stop to inquire. A law is defined by standard authority as a rule of civil conduct or legislative mandate, prescribed by the supreme power of the State. But whether it be in the nature of this rule of action to assume the form of a contract, I will not take time now to discuss. It may be remarked, however, that in the enactment of laws, few, if any of the members of the legislature, ever understood that they were engaged in the business of driving a bargain, or settling the terms of a contract. And those persons who have petitioned the legislature of Ohio for the passage of laws conferring special privileges and exemptions, have, in truth, asked for legislative favors, and not proposed to purchase the. enactment of laws, or pay for the advantages asked. If t.ie special privileges and exemptions conferred on corporations generally be the subject matter of contract, why should they not be sold or disposed of to the best advantage, with a view to raising a revenue thereby for the State ?
If the charter of a corporation be a contract, it must be founded on a mutuality of consideration, and create a mutuality of obligation. For -these áre essential ingredients in every contract. Can a law incorporating a company be the foundation of a proceeding in equity, to compel the specific performance of a con
Where there is no mutuality of obligation there can be no contract. Those who form associations, and engage in the business of private corporations of the ordinary kind, do it voluntarily, and solely from considerations of personal and private interests. No obligation is imposed on them to engage in the business, in order to advance the public interests. They pay the State no bonus or compensation for their privileges. After the charter is granted, they are not bound to organize and commence business. And at any time after they do organize, they are at liberty to discontinue the business, withdraw their stock, and dissolve
In what does the obligation on the part of the State, in this alleged contract, consist ? The law incorporating the Ohio University was passed from views of public policy, and not on account of any bonus or compensation paid to the State. What is it that became obligatory on -the State, by the grant of important privileges and immunities to the corporation ? It is said that the State became bound not to alter or repeal the law. The alleged contract-obligation on the part of the State, therefore, consists in a stipulation not to alter or repeal the law conferring the franchise and immunities on the corporation; and this im
I have thus far considered the subject, with a view of showing from the intrinsic circumstances, and nature of the subject matter, and the constitutional powers of the legislature, that no contract existed within the true intent and meaning of the restrictive clause of the constitution of the United States. There is yet another point of view, arising out of the interpretation of the statute, which appears to me to be, also, very clear and conclusive against the existence of any such contract.
Conceding, for the sake of argument, that such a contract were possible, consistently with the nature of the subject matter, and within the scope of the legislative power, where is the evidence of its existence in this case ? It is incumbent on the party averring the existence of a contract, to show it affirmatively. The important stipulation of the alleged contract, the obligation of which, it is said, has been impaired by recent legislation, is, that the State shall not alter or repeal the provisions of the statute of 1804, incorporating the Ohio University, and exempt
Now, the statute of 1804, incorporating the Ohio University, contains no provision whatever surrendering the power, or in any form expressly stipulating against the exercise of the power of altering or repealing the laws. So that if this important stipulation in the alleged contract cannot be derived from implication or construction, it must be conceded that it does not exist. In saying this, I am not forgetful of the language of the 17th section of the law, to the effect that the exemption from taxation, “ shall he forever.” Had this exemption been inserted in the constitution of the State, as one of the regulations or terms on which the taxing power was delegated, it would have operated as a constitutional limitation on the exercise of the legislative power. But, as it is, it amounts to nothing more than a mere legislative exemption, which is operative, it is true, until altered by the subsequent exercise of the legislative power. The fact that it contains the words shall he forever,” cannot change the nature of the enactment, and give it a permanency equal to, or (according to the doctrine asserted by the majority of the court) superior to that of a constitutional limitation, on the exercise of the taxing power. A large proportion of the laws enacted by the legislature, are designed to be permanent, and language of perpetuity is not at all unusual in legislative provisions of various kinds. Suppose the enactment of a law providing that all cultivated lands should he forever exempt from all taxation ; or providing that the salary of the Governor of the State should he forever five thousand dollars a year ; or in cases where the tenure
If there be anything well settled in regard to corporations, it is that laws conferring their privileges and immunities, must be strictly construed. Bank of Chillicothe v. Swayne, 8 Ohio Rep. 286 ; Ohio v. Granville Alexandrian Society, 11 Ohio Rep. 12. Any ambiguity in the terms of the charter of a corporation, must operate against the corporators and in favor of the public ;
And, in the case of Providence Bank v. Billings, 4 Pet. Rep. 561, Chief Justice Marshall, delivering the unanimous opinion of the court, said: “ Any privileges which may exempt it [the corporation] from the burthens common to individuals, do not flow
Let these well settled rules of construction be applied to the question under consideration. . No special privilege or immunity can be claimed for a corporation by inference, implication or construction; if not conferred by express words in the charter, it cannot be exercised. The statute of 1804 contains no provision importing an express surrender of .the taxing power, or expressly prohibiting the exercise of the power of amendment and repeal by any subsequent legislature. And such surrender of delegated authority is not to be derived from implication or construction. A mere legislative exemption, which would be at all times subject to alteration, cannot be construed into a surrender of the power of taxation in future, without enlarging the meaning of the language of the statute, so as to resolve, at least, all doubts and difficulties of construction in favor of the corporation, and against the public. Every surrender of the right to tax particular property, not only tends to paralyze the government, but involves a direct invasion of the rights of property of the balance of the community, by the necessary requirement of larger contributions from them to make up the deficiency. That a legislature, representing the whole people, and all interests, has deliberately attempted, without one dollar of compensation to the State, to surrender or relinquish a part of its functions of delegated sovereignty, in order to perpetuate inequality in the public burdens beyond the power of remedy, is not to be believed without clear and indubitable evidence. A legislative enactment, to show such want of fidelity to the public interests, and gross violation of public duty, if not usurpation of authority on the part of the legislature, must be such as to admit of no other rational interpretation.
The supreme court of Pennsylvania said, with great force, “ that, if acts of incorporation are to be so construed as to make them imply grants of privileges, immunities, and exemptions, which are not expressly given, every company of adventurers may carry what they wish, without letting the legislature know their designs. Charters would be framed in doubtful or ambigú
II. My second position is, that, even conceding, for the salce of the argument, not simply the possibility, but the actual existence of a contract, embodied in the provisions of the law conferring the franchise and special immunities on the corporation, the recent legislation imposing a tax on the university lands, did not violate its conditions, or impair its obligations.
It has already been shown that every law, by its own inherent nature, is subject to alteration or repeal by the exercise of the legislative power of the State. This is one of the inseparable incidents or inherent conditions of every statutory enactment; and it results necessarily from the fact that the right of control over existing laws, by amendment or repeal, is an inherent and inseparable function of the legislative power, which is vested in the general assembly as a continuing body, and must remain in full force at every session. It is not within the competency of the legislature at one session, to surrender or abridge the authority which that body shall exercise at a subsequent session. If one legislature could, in the enactment of laws, provide, either by contract or the insertion of prohibitory clauses, against the alteration or repeal of its enactments by any future legislature, it could give a permanency to its laws equal to that of the constitution itself. The repeal of a law repeals, also, all its restraining and prohibitory provisions. 1 Wend. Black. 90 ; Broom’s Legal Maxims 26; Fletcher v. Peck, 6 Cranch Rep. 87.
Besides this, it is worthy of remark, that this statute of 1804, conferring the franchise upon the corporation, not only contains no clause providing against its -alteration or repeal by any subsequent legislature, but it does not prescribe any limit to the term or duration of the franchise. And, upon no established rule of interpretation, can a perpetuity in the special privileges and im
Now, if the charter of this corporation be a contract, according to the doctrine asserted, embracing the terms of the law, and comprehended within its provisions, it must, by its own inherent terms and conditions, be subject to alteration and repeal. The doctrine asserted is, not that the law authorizes a contract to be made, but that the law itself, conferring the franchise and immunities on the corporation, constitutes the contract. Where property is transferred, or private rights are acquired, by contract, made under the authority of a law, the private rights which attach as incidents to the property transferred, or the contract entered into, are unaffected by the subsequent repeal of the law authorizing them. But it cannot be maintained that a law conferring a franchise or immunity, or creating a public office, can be repealed, without abrogating the franchise, immunity, or office. Eor all that class of derivative rights unquestionably depend upon the continuance of the law for their existence. If this were not the case, the repeal or amendment of the law could not impair the obligations of the alleged contract; and there would be no pretense for the interposition of the power of the federal government, to declare the repealing law void on that account. But the whole doctrine that the charter of a corporation is a contract, hangs upon the point that the law conferring the franchise and immunities, contains the inherent terms of a contract on the part of the State, the obligations of which are impaired by an alteration or repeal of the law. If, therefore, the law conferring the franchise and immunities constitutes a contract, the inherent liability of the law to alteration or repeal, whenever the legislature
In the case of The West River Bridge Co. v. Dix et al., 6 How. Rep., in which it was held by the Supreme Court of the United States, that the exercise of the right of eminent domain in no wise interferes with the inviolability of contracts, or of the right of private property, Mr. Justice Daniel, delivering the opinion of the court, said :
“ Into all contracts, whether made between States and individuals, or between individuals only, there enter conditions which arise not out of the literal terms of the contract itself; they are superinduced by the pre-existing and higher authority of the laws of nature, of nations, or of the community to which the parties belong; they are always presumed, and must be presumed to be known and recognized by all, are binding upon all, and need never, therefore, be carried into express stipulation, for this could add nothing to their force. Every contract is made in subordination to them, and must yield to their control, as conditions inherent and paramount, wherever a necessity for their execution shall occur. Such a condition is the right of eminent domain. This right does not operate to impair the contract affected by it, but recognizes its obligation in the fullest extent, claiming only the fulfillment of an.essential and inseparable condition. Thus, in claiming the resumption or qualification of an investiture, it insists merely on the true nature and character of the right invested. The impairing of contracts inhibited by the constitution can scarcely by the greatest violence of construction, be made applicable to the enforcing of the terms, or necessary import of a contract; the language and meaning of the inhibition were designed to embrace proceedings attempting the interpolation of some now term or condition foreign to the original agreement, and, therefore, inconsistent with, and violative thereof.”
The Supreme Court of the United States, in the case from which this extract is taken, held that the franchise of a corporation was
Upon this ground Mr. Justice Catron well remarks, in State Bank of Ohio v. Knoop, 16 How. Rep. 400: “ If the West River Bridge case be sound constitutional law (as I think it is), then it must be true, that the Supreme Court of ’Ohio is right in holding that the legislature of 1845 could not deprive the legislature of 1851 of its sovereign powers, or of any part of them.”
It is said, however, that this argument is grounded on a subtlety, and heretofore unknown or unheard of in our courts. With all due deference, I inquire, is the early maxim of the law, leges posteriores priores contrarias abrogant, unknown in our courts ? It was said by one of the sages of the common law, “ Non est
“ Acts of parliament derogatory from the power of subsequent parliaments, bind not. Because the legislature being, in truth, the sovereign power, is always of equal, always of absolute authority; it acknowledges no superior on earth, which the prior legislature must have been, if its ordinances could bind a subsequent parliament. And upon the same principle, Cicero, in his letter’s to Atticus, treats with a proper contempt those restraining clauses which endeavored to tie up the hands of succeeding legislatures. “ When you, repeal the law itself,” says he, “ you at the same time, repeal the prohibitory clause which guards against such repeal.” 1 Wend. Black. 90.
In Fletcher v. Peck, 6 Cranch Rep. 87, Chief Justice Marshall adverted to this subject in the following words:
“ The principle asserted is, that one legislature is competent to repeal any act which a former legislature was competent to pass; and that one legislature cannot abridge the powers of a succeeding legislature. The correctness of this principle, so far as it respects general legislation, can never be controverted.”
We learn from the selection of legal maxims, by Broom, p. 24 :
“ The legislature, which possesses the supreme power in the State, possesses,' as incidental to that power, the right of changing, modifying, and abrogating the existing laws. To assert that any one parliament can bind a subsequent parliament by its ordinances, would in fact be to contradict the above plain proposition; if, therefore, an act of parliament contains a clause, ‘ that it shall not be lawful for the King, by authority of parliament, during the space of seven years, to repeal and determine the same act,’ such a clause, which is technically termed clausula derogatoria, will be simply void, and the act may, nevertheless, be repealed within the seven years, for non impedii clausula derogatoria quo minus ah eadem,protestate res dissolvantwr a quibus constituentur. And again, perpetua lex est mullam legem, humanam ac posiiivam peipetuam esse, et clausula quae abrogationem excludii ab initio non valet., The principle thus set forth seems to be of universal application.”
If, then, according to the maxims of the early sages of the law, even a statute which contains an express prohibition against
It has been said that, as the new constitution prohibits future grants of these perpetuities in exemptions from the sovereign authority of the State, the question in this case is comparatively unimportant. Is this a case for the application of the rule, de minimis non curat lex ? It involves the question of a perpetuity in the exemption of two townships of land from all burden of taxation. And the same principle is applied to the leasehold estates in the extensive lands of the Miami University. And to what extent other lands, as well as personal property, may be claimed to be subject to similar exemptions, it is impossible to anticipate. The benefit of the perpetuity will doubtless be claimed to extend not only to millions, but hundreds of millions of dollars worth of property. And the principle asserted, gives immutability to all the other privileges and immunities of the innumerable corporations authorized under the former constitution of the State. And among the political changes going on, whether the friends of cor porate supremacy may not be able to restore the provision of the former constitution, in this regard, cannot be foreseen. It is sufficient to say, that a microscopic view of the interest involved, is entitled to no consideration in the determination of a question involving a principle subversive of the very foundations of civil authority, and in derogation of the sovereign power of the State.
As to the alleged necessity for these perpetuities, in -order to encourage enterprise, aid public improvements, and advance institutions of learning, experience in Ohio since 1851, in New Tort since 1824, and in other States of the union, as well as in England, where the franchises of corporations have ever been subject to the control of the legislative power, proves that it is wholly ideal.
Pressed by the force of argument and the light of truth, which
Has the doctrine that the charter of a corporation is a contract, and that the legislature is competent to surrender the power of taxation, or the power of altering or repealing laws, been universally understood, acquiesced in, and acted on by all the departments of the government, as claimed ? It is an undeniable fact, that a part of the members of the legal profession in
The case of The State of Ohio v. The Commercial Bank of Cincinnati, 7 Ohio Rep. 125, has been referred to as sustaining
“ It is insisted, that the ease of The State of Ohio v. The Commercial Bank of Cincinnati, 7 Ohio Rep., has held otherwise. This is clearly a mistake. The State, in that ease, raised no question as to the right of one legislature to cede the sovereign power to a emporation, and tie up the hands of ail subsequent legislatures; no such constitutional question entered into the decision ; nor is any allusion made to it in the opinion of the court. It merely construed the acts of assembly, and held that a contract did exist on the ground that, by the charter, the bank was taxed four per cent, on its profits; and, therefore, the charter must be enforced, as this rate of taxation adhered to the charter, and excluded a higher imposition.
"It would he most unfortunate for any court, and especially for this one, to hold that a decision affecting a great constitutional consideration, involving the harmony of the Onion, (as this case obviously does,) should be concluded by a decision in a case where the constitutional question was not raised by counsel; and so far from bang considered by the court, was never thought of; such a doctrine is altogether inadmissible.”
And Mr. Justice Campbell, in his dissenting opinion in the same case, 16 How. Rep. 413, correctly speaks of the decision in the Commercial Bank Case, as follows:
“ Nor can I consider the decision in 7 Ohio Rep. 125, of consequence in this discussion. That case was decided upon a form of doctrine, which, after the judgment of this court, before cited, (Providence Bank v. Billings, 4 Ret. 514 ; Charles River Bridge, 11 Pet. 420 ;) had no title to any place in the legal judgment of the country. The ease was decided in advance of the most important and authoritative of those decisions. It is not surprising to hear that the judges who gave the judgment, afterwards renounced its principle, or that another State court has disapproved of it, (7 Harris Penn. Rep. 144,) or. that it has not been followed in kindred cases. 19 Ohio Rep. 110 ; 1 Ohio St. Rep. 563, 604, 626 ; and that the first time when it came up for revision it was overruled.”
Of this case of the Commercial Bank it may be added, it was not a unanimous decision. Of the four judges sitting in the case,
The decision of the Supreme Court of the United States, in Piqua Bank v. Knoop, Treasurer, etc., 16 How. Rep. 380, and several other recent adjudications of that tribunal, in relation to the bank tax in this State, have been referred to and relied on, in behalf of the plaintiff in the ease before us. In regard to those eases, I have only to say: first, that they were made by a divided court; and it must be humiliating to the pride of an American lawyer, who has examined the question involved, and read the dissenting opinions in those cases, to feel the necessity of citing them as authority; and second, that those cases are in direct conflict with one of the clearest and and most unquestionable principles of law ever announced from the bench of the Supreme Court of the United States. If there be any thing well settled by direct adjudication, and repeated continued recognition, in the decisions of the Supreme Court of the United States, it is
“ This court has uniformly professed its disposition, in cases depending on the laws of a particular State, to adopt the construction which the courts of the State have given to those laws. This course is founded on the principle, supposed to be universally recognized, that the judicial department of every government, where such department exists, is the appropriate organ for construing the legislative acts of that government. Thus no court in the universe which pbofesses to be Governed By pmkcipie. would, we presume, undertake to say, that the courts of Groat Britain, or of Prance, or of any other nation, had misunderstood their own statutes, and therefore, erect itself into a tribunal which should correct such misunderstanding. We receive the construction given by the courts of the nation, as the true sense of the law, and feel ourselves no more at liberty to depart from that construction, than to depart from the words of the statute.”
And in the case last cited, 6 Pet. Rep. 291, Mr. Justice McLean said :
“ In a great majority of the causes brought before the federal tribunals, they are called to enforce the laws of the States. The rights of parties are determined under those laws, and it would be a strange perversion of principle, if the judicial exposition of those laws, 'by the State tribunals, should be disregarded. These expositions constitute the law, and fix the rule of property. Rights are acquired under this rule, and it regulates all the transactions which come within its scope. *********
“ Would not a change in the construction of a law of the United States by this tribunal, be obligatory on the State courts ? The statute, as last expounded. would be the law of the Union : and why may not the same effect be given to the last exposition of a local law by the Slate court? The exposition forms a part of the local laws, and is binding on all the people of the Stat». and its inferior judicial tribunals. It is emphatically the law of the State ; which the federal court, while sitting within the State, and this court, when a case is brought before them, are called to enforce. If the rule, as settled, should prove inconvenient or injurious to the public interest, the legislature of the State may modify the law, or repeal it.
*431 “ If the construction of the highest judicial tribunal of a State form a part of its statute laws, as much as an enactment by the legislature, how can this court make a distinction between them? There could be no' hesitation in so modifying our decisions as to conform to any legislative alteration in a statute ; and why should not the same rule apply where the judicial branch of the State government, in the exercise of its acknowledged functions, should, by construction, give a different effect to a statute from what bad at first been given to it? The charge of inconsistency might be made with more force and propriety against the federal tribunals for a disregard of this rule, than by conforming to it. They profess to be bound by the local laws; and yet they reject the exposition of that law, which forms a part of it. It is no answer to this objection that a different exposition was formerly given to the act, which was adopted by the federal court. The inquiry is, what is the settled law of the State at the time the decision is made ?”
Now, the whole question in the case of The Piqua Bank v. Knoop, as determined by the Supreme Court of the United States, was whether the sixtieth section of the bank law of this State, passed in 1845, constituted a contract; and that depended on the construction to be given to this provision of the State statute, and the provisions of the State constitution under which it was enacted. There was no question made as to the construction of the constitution of the United States. The sole question was as to the existence or non-existence of a contract. The tax law of 1851 had imposed a tax upon the property of the banks, equal to that imposed upon the property of individuals. The banks claimed that the sixtieth section of the bank law of 1845, which provided for the payment to the State of six per cent, on their neat profits, in lieu of all taxes, was a contract which exempted them from any change in the law as to the payment of taxes. The provision for the contribution by the banks was not in the ordinary form of a contract, and the law contained no provision expressly exempting it from alteration or repeal. Whether, therefore, the sixtieth section of. this law constituted a contract, and, as such, was exempt from the exercise of the legislative power to alter or repeal it, was a question of judicial interpretation and construction, arising under the constitution and statutes of the State. A contract had to be first found by the construction of the State law, before the question of the operation of the prohibitory clause of the constitution of the United States could
Again, conceding, for the sake of the argument, the competency of the legislature to surrender or abridge,by contract, the sovereign powers delegated to the government, there is yet another view of the subject, which is clearly fatal to the claim that the tax law of 1852 violated the conditions, or impaired the obligations of the supposed contract, on the part of the State.
Nothing in the jurisprudence of this country is better settled, than that every contract, as to its validity, obligations, legal incidents and effects, is to be governed by the law of the place where made, compendiously expressed as the lex loci contractus. Parties are always presumed to contract in contemplation of the laws of the place relative to the subject matter of the contract; and by the operation of those laws, in the language of Mr. Justice Story, in his work on Promissory Notes, sec. 160, “ the obligation may be limited in its operation or duration; or it may be revocable or dissoluble in certain future events, or under peculiar circumstances.” Now, if a law conferring the franchise of a corporation, or an exemption from taxation, be a contract, it must be governed not only by the laws in force in reference thereto, but also by the terms and regulations of the constitution of the State, under the authority of which it was enacted ; so that the
Now, the constitution of 1802, under which the law incorporating the Ohio University was enacted, not only enjoined “ a frequent recurrence to the fundamental principles of civil government, as absolutely necessary to preserve the blessings of liberty,” and declared, as one of “ the natural, inherent, and inalienable rights of the people, that they have at all times a complete power to alter, reform, or abolish their government, whenever they may deem it necessary ;” but also, in section 5 of article 7, provided the mode and conditions for the alteration and amendment of the constitution, in the following words :
“ That after the year 1806, whenever two-thirds of the general assembly shall think it necessary to amend or change this constitution, they shall recommend to the electors, at the next election for members to the general assembly, to vote for or against a convention; and if it shall appear that a majority of the citizens of the State, voting for representatives, have voted for a convention, the general assembly shall, at their, next session, call a convention, to consist of as many members as there be in the general assembly; to be chosen in the same manner, at the same place, and by the same electors that choose the general assembly; who shall meet within three months after the said election, for the purpose of revising, amending, or changing the constitution.”
It appears, therefore, that the right of the people to resume their delegated powers, and to reform and change the fundamental law of the State, was thus expressly declared and provided for ; and this constituted one of the conditions of the obligation of the supposed contract.
In the exercise of the right declared, and in the particular mode prescribed, in the constitution, the people of the State changed their constitution, in 1851, requiring, in the new constitution, “ that laws should be passed, taxing, by a uniform rule, all real and personal property, according to its true value in
I most respectfully insist, therefore, that, if the alleged contract existed, the terms and conditions of its obligation have not been violated. If there was a surrender of the power of taxation, it was upon the terms and conditions expressed and declared in the constitution delegating the power, and under the authority of which alone, the surrender could have been made, if made at all. And by the terms and conditions, and in the mode prescribed by that constitution, the power was resumed.
And even without this express constitutional provision, the right of the people of the State to resume their original powers of sovereignty,'in changing and remodeling their government, being an inherent and inalienable right, it would exist as a necessary and unavoidable condition and incident in such contract, if any such existed.
In Mamma v. The Potomac Company, 8 Pet. Rep. 281, Mr. Justice Story, in delivering the opinion of the Supreme Court of the United States, speaking of the liability of corporations to dissolution, said: “ Every creditor must be presumed to understand the nature and incidents of such a body politic, and to contract with reference to them. And it would be a doctrine new in the law, that the existence of a private contract of a corporation should force upon it a perpetuity of existence, contrary to public policy, and the nature and objects of its charter.”
And the same learned judge, in delivering the opinion of the court, in Terrett v. Taylor, 9 Cranch 43, said: “ Upon a change of government, too, it may be admitted that such exclusive privileges, attached to a private corporation, as are inconsistent with the new government, may be abolished.”
In McCulloch v. Maryland, 4 Wheat. Rep. 404, Chief Justice Marshall said: “ It has been said, that the people had already surrendered all their powers to the State sovereignties, and had nothing more to give. Put, surely, the question whether they may resume and modify the powers granted to government, does not remain to be settled in this country.”
Touching this same subject, as it arose under the British government, although in a form somewhat different, Sir William Davenant, a distinguished writer of the seventeenth century, said:
“ No government or State can divest itself of tlie means of its own preservation ; and if our kings should have had an unlimited power of giving away their whole revenue, and if no authority could have revoked such gifts, every profuse prince, of which we have had many in this kingdom, would have ruined his successor, and the people must have been destroyed with new and repeated taxes; for, by our duty, we are likewise to support the next prince. So that, if no authority could look into this, a nation must be utterly undone, without any way of redressing itself, which is against the nature and essence of any free establishment.” Davenánt’s Works 244
And in regard to tbe stringent precautionary measures which were adopted, and heavy responsibilities imposed for the preservation of the public revenues from spoliation.and waste, in that country, this writer continues:
“ The wickedness of men was either too cunning or too powerful for the wisdom of laws in being. And from time to time, great meq, .ministers, minions, favorites, have broken down the fences contrived and settled in our con*437 stitution. They have made a prey of the common wealth, plumed the prince, and converted to their own use what was intended for the service and preservation of the State. That to obviate this mischief, the legislative authority has interposed with inquiries, accusations, and impeachments, till at last such dangerous heads were reached.” Davenant’s Worts 245.
Similar struggles were made in France, as it appears, to preserve the public revenues from spoliation. And the national assembly in 1790, on this subject, declared, among other things, that: “ All grants of the public rights, and especially those partaking of the nature of taxes, or subsidies, such as fines, confiscations, and stamps, were revoked, because the subject was not alienable.” 8 Merlin Rep., Tit. Dom. Pub.; 1 Prond. Dom. Pub. 62.
If the power to set aside the improvident acts, and revoke the grants of the king, affecting the domain and patrimony of the crown, was reserved to the nation even under the monarchies of Europe, it would be extraordinary, indeed, if in the States of the American Union, where the people have been far more sparing in the delegation of civil power, and where their “ complete power ” to alter, reform, and re-construct their government has been so explicitly declared, mere legislative grants, tending to dilapidate and impoverish the public revenues, cannot be revoked or abi’ogated even by the people themselves, when the public interests require it.
This extended examination of the main question, in this case, is applicable to several other cases decided at the present term, in which the principle here discussed is involved. And I have deemed it proper to discuss the question fully and in almost every point of view, in this case, because of the vast importance of the subject, and what, I have conceived to be, the enormities of the doctrine announced in the decision.
See, at the end of this opinion, the note of the unanimous decision of the supreme court of Pennsylvania, overruling this doctrine.
Lead Opinion
This is a bill in chancery, filed in the court of common pleas of Athens county, to which there is a general demurrer. The demurrer having been overruled, and a decree taken for the complainant in the common pleas, the case was appealed by the defendant to the district court of that county, and by that court reserved for- decision here on the same state of pleading. The case made by the bill is substantially this :
By two several resolutions of the congress of the United States, passed on the 23d and 27th days of July, 1787, the then board of treasury were authorized and empowered to contract with any person or persons for a grant of a tract of land, in the first of
That thereupon the agents of said Company of Associates laid off and appropriated, for the purposes of a university, the whole of the eighth and ninth townships of the fourteenth range of townships in said company’s purchase. That, by authority of an act of congress passed April 21st, 1792, the said tract, including the two townships aforesaid, was, in the same year, patented by the President of the United States to the directors of the Company of Associates, whereby the said two townships of land became and were given and granted perpetually for the purposes of a university.
That the legislature af the State of Ohio, on the 18th day of February, 1804, passed an act, entitled “ an act establishing an university in the town of Athens,” which, among other things, enacts and declares, that “ there shall be an university instituted and established in the town of Athens, in the ninth township of the fourteenth range of townships, within the limits of the tract of land purchased by the Ohio Company of Associates, by the name and style of the ‘ Ohio University,’ for the instruction of youth,” etc., a copy of which act is exhibited with, and made part of the bill of complaint. The said act also provides that there shall be and forever remain in the said university, a body
On the 13th of April, 1852, the legislature of Ohio passed an act, entitled an act for the assessment and taxation of all property in this State, and for levying taxes thereon, according to its true value in money,” which act, among other things, provides that “ property, held under a lease for a term of fourteen years, belonging to the State, or to any religious, scientific, or benevolent society or institution, whether incorporated or unincorporated, and school or ministerial lands, shall be considered, for all purposes of taxation, as the property of the person holding the same, and shall he listed as such by such person, or his agent, as in other cases.” Swan’s Statutes 903. And in the first section of
The first question presented here, is, whether, conceding the claim of the complainant and his associates to exemption from State taxes on their leaseholds to be well founded, they can have relief by injunction in a court of equity ? In The Exchange Bank of Columbus v. Hines, 3 Ohio St. Rep. 1, which was a proceeding to enjoin the collection of a tax alleged to be illegally assessed, it was held by a majority of the court — Ranney, J., dissenting on this point — that relief could not be had in this form, on the ground that a full and adequate remedy was afforded by action at law against the officer who might distrain for the collection of the tax. That, however, was the case of a single party seeking relief for himself alone. And it seems to be well settled, that “ where one person claims or defends a right against many; or where many claim or defend a right against one,” courts of equity will interpose in order to prevent multiplicity of suits. 2 Waterman’s Eden on Injunctions 416, et seq. Holding, then, as we do, that the complainant, and those for whom he sues, aro entitled to a remedy by injunction, if they are entitled to any, we are brought at once to the main questions in the case : does the legislation of our State incorporating the Ohio University, and granting to it the lands originally received from the United States, in trust for the support of such an institution, taken in connection with the lease of such lands at a fixed rent to the complainant and his associates in pursuance of that legislation, constitute a contract ? — and, if so, does the subsequent legislation of the State impair the obligation of that contract ? If it
In the consideration of these questions, from the course of recent decisions in this State, and the reasonings on which they are based, we are met at the threshold by the inquiry, is the legislature of a State capable of contracting ? In so far as the legislature is the representative of the sovereignty of a State, it surely is; for the capacity to contract is one of the essential attributes of sovereignty. When the congress of 1776 declared the independence of the United States, they proclaimed that “ as free and independent States, they had full power to conclude peace, contract alliances,” “ and to do all other acts and things which free and independent States may of right do.” To say authoritatively that a State has not power to contract, is to doom her to the incapacities of perpetual minority, indissoluble coverture, or endless lunacy. But, it is said, the constitution of 1802 nowhere grants to the legislature the power to contract. It does not expressly, neither does it to the executive or judicial, the only remaining departments between which the powers of government are distributed. It will not be contended, we presume, that the executive, under that constitution, had any power to contract, aside from legislative authority, nor that he or any other executive officer of the State would be at liberty to refuse to contract in behalf of the State when thereunto specially enjoined by legislative act, unless restrained by some constitutional prohibition. Indeed, in the case of Plank Road Company v. Husted, 3 Ohio St. Rep. 582-3, which seems to deny to the legislature, under the constitution of 1802, the capacity to contract for the ' exemption of any property within the State from taxation for any greater length of time than until a subsequent legislature shall
But it is said the making of contracts is inconsistent in its nature with the functions of legislation, i. e., law-making. This, we respectfully submit, is sacrificing fact to theory, and the substance of things to metaphysical distinctions. That, as a matter of fact, legislatures have made contracts, and have religiously kept them, is susceptible of proof from familiar history; that they have made them and attempted to break them, the case before us is a deplorable, but by no means a solitary, instance.
The doctrine that legislatures have no capacity to contract, is a novelty in the jurisprudence of Ohio. So far as we know, it was unheard of during the first half century of her existence as a State. Certain it is that the power and legal capacity of the State, through her legislature, to contract, and the binding obligation of contracts thus made, subsequent repugnant legislation to the contrary notwithstanding, was fully recognized and asserted in the year 1835 by the supreme court in bank, in State of Ohio v. Commercial Bank of Cincinnati, 7 Ohio Rep. 125. The same doctrine was recognized and affirmed in Fletcher v. Peck, 6 Cranch 127, in the year 1810; in New Jersey v. Wilson, 7 Cranch 164, in the year 1812 ; and so on in an unbroken current of decisions by the Supreme Court of the United States
“ There are, undoubtedly, fixed and immutable principles of justice, sound policy and public duty, which no State can disregard without serious injury to the community, and to the individual citizens who compose it. And contracts are sometimes incautiously made by States as well as individuals; and franchises, immunities and exemption from public burdens, improvidently granted. But whether such contracts should be made or not, is exclusively for the consideration of'the State. It is the exercise of an undoubted power of sovereignty which has not been surren
“ This power may be indiscreetly and injudiciously exercised. * * * Yet, if the contract was within the scope of the authority conferred by the constitution of the State, it is, like any other contract made by competent authority, binding upon the parties. Nor can the people or their representatives, by any act of theirs afterwards, impair its obligation. When the contract is made, the constitution of the United States acts upon it, and declares that it shall not be impaired, and makes it the duty of this court to carry it into execution.
“ This doctrine was recognized in the case of Billings v. The Providence Bank, and again in the case of The Charles River Bridge Company. In both of these cases the court, in the clearest terms, recognized the power of a State legislature to bind the State by contract; and the cases were decided against the corporations, because, according to the rule of construction in such cases, the privilege or exemption claimed had not been granted. But the power to make the contract was not questioned. And I am not aware of any decision in this court calling into question any of the principles maintained in either of these two leading cases. On the contrary, they have since, in the case of Gordon v. Appeal Tax Court, 3 Howard 133, been directly reaffirmed.”
But, it is argued, if a State can bind herself by contract to an exemption of a portion of the property within her limits, and belonging to her citizens, from taxation, the power of taxation being an attribute of sovereignty, she thereby surrenders a portion of her sovereignty, which, in the nature of things, she can not do. Now, this argument overlooks the fact, that the power
Again, it is said that if the State may, by contract, exempt one species or one amount of property from taxation, it may another, and another, and so on, until it is deprived of resources, and thus rendered inadequate to the performance of its proper functions. That such a catastrophe is, in imagination, supposable, is readily admitted. The power to contract may be abused. But then this very power of taxation, the ethereal inviolability of which is so strenuously contended for, is liable to similar abuse, and to the same ruinous extent. It is a fallacy, therefore, to infer the non-existence of a power merely because its exercise may, by theoretical possibility, be pushed to a suicidal extreme. The sovereign power of taxation, and the sovereign power to contract, are both necessary to the proper discharge of the functions of government; but both are liable to abuse. All governmental
In attempts which have been made to vindicate the recent legislation of the State bearing on the subject of contracts like that we are now considering, it has been assumed that the legislature could not by contract bind the State permanently to exempt any given property from taxation; and it is thence argued' that this incapacity must have been understood by those who at any time may have contracted with the State; that they therefore contracted in full view of this supposed incapacity — in full view of the impliedly reserved right of any subsequent legislature to annul what its predecessors had done; and that thus the reserved right in one of the parties to alter or annul the contract at pleasure, became and was a part and parcel of the contract itself. Now, this argument is grounded on a subtlety which has never been recognized by the legal profession of our country, and was unknown to the jurisprudence of Ohio for the first half century of its existence ; and it seems to us that it would be monstrous to apply it now to those lessees who, from the nature and circumstances of their engagements with the State, it is evident, must have been poor, laborious and unlearned. It would be monstrous to conclude them by holding that they acted in full view of all the contingencies involved in a subtle process of reasoning unknown alike to the profession and courts of the State. Why, look at the argument! It makes words used in stipulations on the part of the State, mean something wholly different from their ordinary acceptation, and wholly different from what the same words mean when employed to express the engagements of the party contracting with the State. In the mouth of the lessee, forever means always. In the mouth of the State it means just so long as I please, and no longer. Indeed, we have no right to go back and suppose that the parties understood something beside that which appears on the face of their contract; it is but
Again, this recent legislation is attempted to be justified by an argument drawn in some way — we confess to us not very intelligible — from the fact that, since the making of the contract set forth in the bill, the State has effected a peaceable revolution; or in other words, changed its constitution, and that the statutes complained of are in conformity to the express requirements of that constitution. Now, granting, for the sake of the argument, that the facts are as claimed; let us inquire : Does a change of constitution annul contracts ? Does a revolution, whether peaceful or violent, justify or excuse repudiation ? Certainly not. Were the United States less bound for the faithful payment of their debts, contracted 'to the government of France and the bankers of Amsterdam during the war of the revolution, on account of the substitution of the present constitution of the United States, for the old articles of confederation ? Has France any more or better right to resume the, power of taxation, or any other sovereign power over Louisiana, in the face of her solemn contract to the contrary, from the fact that her brilliant but volatile people have, since that time, seen proper to change her constitution with every changing moon ? If she were to attempt it, the law of nations — the code of international morality, sanctioned and enforced by the general conscience of Christendom — would denounce the just penalty of war against her. And is the obligation of a contract less sacred, because one of the parties to it is an humble individual, incapable of vindicating himself with a strong hand ? In the case before us, no penalty accrues, no war results ; and yet injustice is allowed. The constitution of the United States inter
To frame a new State constitution is but to “ pass a law ” — a law more formal and solemn in the mode of its enactment, to be sure,, and passing under the more direct supervision of the constituent body, the people — but still a law, and like any other law, subject to the supremacy of the constitution of the United States, and a nullity when in conflict with the provisions of that instrument.
By the constitution of 1802, it is enjoined on the legislature “ forever to encourage by legislative provision, schools and the means of instruction.” No such duty is by that constitution enjoined on the legislature in respect to internal navigation and the facilities of transportation. Yet the legislature under that constitution did inaugurate and prosecute the policy of constructing canals radiating into almost every quarter of the State. In so doing, it contracted an,enormous debt, the burthens of which are now not only known, but felt. Having no other assured resource for the discharge of this debt but that of taxation, it thereby, in effect, virtually bound itself to tax its people perpetually until this debt should be finally paid. This obligation has ever been scrupulously observed. The first dawnings of a desire to repudiate it were at once and forever frowned out of countenance. All recognize — no one disputes — the obligation.
Now, if a State may by contract bind herself to tax for the promotion of a policy not of constitutional obligation, may she not in like manner bind herself not to tax for the promotion of a policy which is of constitutional obligation ?
Here, then, were parties competent to contract; for no one will question the competency in this respect of the complainant and those for whom he sues. Did these parties agree ? did their minds meet ? What are the facts ? The State opens the negotiation, and, speaking through her legislative act, makes her proposition to the complainant and his associates to this effect: If you will lease these lands at a fixed rent, payable to the Ohio University, for ninety-nine years, your lands thus leased shall be perpetually exempt from all State taxes. This is the proposition
Was there a good and valid consideration ? To promote and secure the instruction of her youth, may properly be said to have been the primeval, as it is the fundamental and favorite policy of Ohio. This policy originated with the congress of the old confederation, is indicated in the resolutions of that body authorizing the first sale of lands within the limits of our State to the Ohio Company of Associates, and was provided for in the contract of sale between the board of treasury and the agents of that company, while the State was still in embryo. In the constitution of 1802, the first organic law of the State, it is declared that “ religion, morality, and knowledge, being essentially necessary to good government and the happiness of mankind, schools and the means of instruction shall forever be encouraged by legislative provision, not inconsistent with the rights of conscience.” Our present constitution declares that “ the general assembly shall make such provision, by taxation or otherwise, as * * will secure a thorough and efficient system of common schools throughout the State.” And this very year the State is levying a tax for educational purposes alone, amounting in the aggregate to not less than one million two hundred thousand dollars.
In the payment by these lessees, then, of a larger rent, in faith of the promised exemption, than they otherwise would have been willing to pay, to be paid to the Ohio University, the trustee of the State, and the creature of her legislation, in trust for the promotion of her wise and favorite policy, we find an adequate and
Here, then, we have parties competent to contract; a meeting of minds, and mutual agreements to do and not to do particular things; and finally a good and valid consideration ; and thus there is filled, in every particular, the legal definition of a binding contract.
Contracts stipulating for exemptions of this kind are not favored in law, and will never be presumed. Charles River Bridge v. Warren Bridge, 11 Peters 420 ; Taney, C. J., in Ohio Life Ins. & Trust Co. v. Debolt, 16 How. 435. And, as an individual member of this court, and speaking for myself alone, I am free to say that I am very far from being friendly to the policy of such exemptions, and am gratified that our present constitution has effectually prohibited the grant of them in future. Rut the question of constitutional and legislative policy is one thing, and the questions of law and fact now before us are other and very different things. That here was a contract perfect in all its requisites, is clear ; the language and conduct of the parties is unequivocal, admits of but one interpretation, and leaves no room for presumptions.
Is the recent legislation of the State such as to impair the obligation of this contract ? The question, unfortunately, can have bub one answer. It has attempted to tax lands which it had solemnly contracted never to tax. - Perhaps we ought to presume— and we should certainly be very glad to be able to presume — that this recent legislation complained of was the result of oversight. But — and we feel neither pride nor pleasure in saying it — the language of that legislation seems to be too explicit, and too direct in its application to these lands, to admit of so charitable a presumption. •
An argument has been attempted to be drawn in justification of these acts of seeming repudiation, from supposed analogies between the right of taxation and the right of eminent domain. But there aré no such analogies ; and if there were, they would not apply to the case before us. The right of eminent domain rests on the basis of supposed imperious necessity, and is insepa
In passing upon the grave questions involved in this case, and in the exercise of the high functions to which official duty compels us, we have not been insensible of the delicacy and responsibility of our position. But we have sworn to support the constitution of the United States ; and, so far as depends on us, its guaranties must be upheld and the faith of contracts preserved inviolate.
Decree for complainant, and those for ivhom he sues.
Note by the Chief Justice. — Since the announcement of the decision in this case, I have been favored with a copy of the opinion of the supreme court of Pennsylvania, in the case of Henry S. Mott et al. Canal Commissioners v. The Pennsylvania Railroad Company et al., just decided, in which that court has, by a unanimous decision, fully sustained the doctrine of the foregoing dissenting
“ In general, the State courts have avoided expressing an opinion on this momentous question, where the necessities of the case did not require it. The cases which have arisen, have generally been disposed of by holding that, ‘exemptions are binding until repealed by subsequent legislation;’ that ‘no charter or grant carries with it such exemption unless clearly expressed;’ that ‘the taxing power is of vital importance, and is essential to the existence of government;’ that it is ‘a part of the power of legislation;’ that ‘it resides in a government asa part of itself;’ and that ‘the release of it is never tobe assumed-’ Most of these principles are announced by Chief Justice Marshall in the Providence Bank v. Billings, 4 Pet. 561, 562, 563, and recognized by many decisions in this and other States. 10 Barr. 442; 12 Harris 232; 10 Harris 496. But the question has been distinctly decided against the existence of any such power, five different times, by the unanimous judgment of all the judges Of the Supreme Court of Ohio. Debolt v. The Ohio Life Ins. and Trust Company, 1 Ohio St. Rep. 563; The Toledo Bank v. The City of Toledo, Ib. 623 ; Mechanics’ and Traders’ Branch Bank v. Debolt, Ib. 591; The Milan and Rushland Plank Road Company v. Husted, 3 Ohio St. Rep. 578; The Norwalk Plank Road Company v. Rusted, 3 Ohio St. Rep. 586. In one of these cases, it was declared that the legislature had not the constitutional authority to abridge or in any manner whatever surrender any portion of the right of taxation, and that this question had been settled by solemn adjudication, and is not now an open question in that State. 3 Ohio St. Rep. 581. It is true, that the Supreme Court of the United States has taken a different view of the question, and has, in several cases, reversed the decisions of the Supreme Court of Ohio. Piqua Bank v. Knoop, 16 How. 369 ; Mechanics’ and Traders’ Bank v. Debolt, 18 How. 380; Mechanics’ and Traders’ Bank v. Thomas, Ib. 384; Dodge v. Woolsy, Ib. 331.
“ The decision of the Supreme Court of the United States, on the construction of the constitution or laws of the United States, are binding on the State courts. The decisions of the supreme courts of the several States, on the construction of the constitution and laws of their respective States, are, in like manner, binding on the Supreme Court of the United States. That court has no more right to overrule a judgment of a State court, on a question of State law, than the State court has to overrule the United States court on a question of United States law. All contracts are to be construed and understood according to the law of the place where they are made and to be performed. The laws and constitution of a State are to be construed and understood everywhere according to the judicial construction which they receive in the State where they are made and are to operate. This is the rule of jurisprudence which prevails universally throughout the civilized world. It is the rule which always ought to govern, and which generally does govern the Supreme Court of the United States. Wherever there is a departure from it, the necessary result is to impair public confidence in that exalted tribunal, and to introduce disastrous confusion into the administration of the law. It cannot be expected that the judges of the federal court should be as familiar with the constitution, laws and usages of Ohio, as the supreme judges of that State, who reside within her limits — who have been chosen on account of their acquaintance with her laws, and whose*439 especialhusiness it is to expound them. The decision of the highest j udicial tribunal in a State, on the construction of the State Constitution, or a State law, is authoritative everywhere, when the same question arises, because it is pronounced by the only tribunal having direct and immediate jurisdiction over the question. The decision of the United States court on the same point, where it incidentally arises, is not authority elsewhere, because it has no direct and immediate jurisdiction over the question. Its duty is to receive the State law as it is expounded in the tribunal of the last resort in the State. These views furnish a plain rule for estimating the value of the conflicting decisions which have been cited. We have no hesitation in adopting the decisions of the State courts, on ail questions respecting the meaning of their own State constitutions, and extent of the powers which the people of the States have therein granted to the different departments of their own State governments. It may be added, that the United States court was divided in opinion on this question. Three eminent judges of that court dissenting, while the State court was unanimous. And it is but just to say, that the opinion of the State court is sustained by a course of argument which has never been satisfactorily answered in the United States courts, or elsewhere.”
Concurrence Opinion
I concur with the judgment of the majority of tbe court in this case, but for reasons somewhat different from those stated by Justice Brinkerhoff.
There is nothing in the provisions of the constitution of 1851, nor in the laws passed in accordance with it, which would require any property to be taxed which had been previously exempted by express legislative stipulation or pledge of public faith.
For this reason, I do not think the university lands were liable to taxation.
In regard to the constitutional question made in this case: Inasmuch as the new constitution of Ohio provides against the legislature granting any privileges or immunities which may not be altered or repealed, the question before us has but little practical importance; for our decision can only operate upon legislation before the constitution took effect.
Before the constitution of 1851, and from the first organization of the States of the Union, and their adoption of constitutions, down to the year 1851, the legislatures of different States, and among others the legislature of Ohio, by law, as in the case before us, undertook to exempt certain property, by special statute, from future taxation. These exemptions were generally
Repeated legislation, the solemn adjudications of the courts, and public opinion, all concurred in holding that such exemption was a contract which the State could not violate. Under these circumstances, and with these guaranties of public opinion, legislation, and the decisions of the highest tribunals of the country, and at a time, too, when the subject was not within the vortex of
If there be any cases in which a court should adhere to previous adjudications, it is in my opinion those which have induced the principal department of the government to enact laws under which, and upon the faith of which the people have acted, and vested their property.
The recognition of the power of the legislature to violate the plighted faith of the State, could be of no practical importance whatever, unless the legislature exercised the power. The moral difference between the abstract recognition of a constitutional power, and the exercise of that power, is too obvious to need remark ; and it is perhaps unnecessary to add, that there is no citizen so lost to a sense of State pride and common honesty, as to desire his representative to dishonor him and the State, by a violation of the plighted good faith of the State. Upon this subject, none of the members of this court, or of any other court, could entertain a difference of opinion.
If, however, courts recognize this power in the legislature, they must necessarily sanction its exercise.
Now, as a mere abstract principle and logical deduction growing out of the nature of the legislative power of taxation, it would have accorded with my own views of constitutional law, for courts and legislative bodies to have adopted, originally, as a constitutional rule, the principle that one general assembly could not, by contract or otherwise, exempt property from taxation, so as to restrain a subsequent legislature from making an assessment upon the same property.
If so originally held by courts and legislatures, those who were to be affected by the exercise of legislative violation of pledges and stipulations, would at least have known from the beginning, the hazards upon which they embarked their property, and that they had nothing to rely upon but the good faith of the State.
But it was not so originally held. It was held otherwise, by
I concede the force of these logical deductions ; but they do not justify an alteration of an established constitutional rule, repeatedly declared by courts, settled by the practice and interpretation of legislatures ; and under which, and'upon the belief of its inviolability, citizens have for fifty years vested their property and entered into contracts.
In this view, the decision of this court in Bingham v. Miller, 17 Ohio Rep. 445, is directly applicable. In that case, the court held, that although they were of the opinion that the legislature had no constitutional power to grant a divorce, yet the power had been so long exercised by the legislature, that the court felt constrained to sanction it.
A court which alters settled constitutional rules, is engaged in the appropriate duties of a constitutional convention ; but when, in so doing, the court sanctions and permits the exercise of a new legislative power, whereby public faith may be violated, it may, indeed, improve the constitution ; but it may be also inviting thp legislature to sacrifice a still more important element in the happiness and prosperity of a people — its prablic morals and unsullied public honor.
