7 Mich. 84 | Mich. | 1859
' Two questions are presented for our consideration. 1st, whether the provisions ’of the act of the Legislature supplementary to an act to provide for the construction of a ship canal around the falls of St. Mary’s, providing for the remission of taxes to the contractors is constitutional; and 2d, if such be the case, whether the contract of the contractors with John Kerswell for the sale of a portion of their lands, is a sale within the purview of such act.
Upon the first question we are agreed that the provision of the act referred to, so far as it authorizes the contract for the remission of the taxes, is constitutional. The Congress of the United States by an act approved August 26th, 1852, (10 U. S. Stats., at Large, 35) entitled “An act granting to the state of Michigan the right of way, and a donation of public lands, for the construction of a Ship Canal around the Falls of St. Mary’s, in saidj State,” granted to the state the right to construct said canal upon its lands, and also 750,000 acres of land for the purpose of aiding the state in constructing! and completing the same. The act provided that the land so granted should be applied to no other use, and that if the canal should not be commenced within three and completed within ten years, the proceeds of the sales of such lands should be paid by this state to the United States, and that accounts should be kept and rendered annually of costs, expense, &c., and until the state is fully reimbursed it may charge a toll for the use of
It is evident from a consideration of these acts that the land was never a part of the public domain of Michigan, either by grant from Congress, or by sale to a purchaser, before the passage of the act in question, so that the right of taxation had accrued to the state. It was granted to the state for the specific purpose of being applied, either by sale or appropriation, to the purposes of the construction of the canal. As such, it assumed the character of a fund, to be expended under the direction of the state; and so the Legislature evidently regarded it, and that the state held such land only as trustee for the accomplishment of that purpose.
But the objection that the act violates this provision of the Constitution, has reference more especially, if not altogether, -to the portion of the act directing the disposition and appropriation of the remitted taxes by the Auditor General, and not to that authorizing the contract of remission. Now the ■one may be constitutional and the* other not, and if the right to make the contract with the company be established, the subsequent provisions of the act by which the amount of such remitted taxes are to be charged to the general 'fund, whether constitutional or unconstitutional, can have no influence or effect in determining the constitutionality of the law authorizing the remission of the taxes, or the validity of the contract made under it. The company has no concern with the legislation of the state with respect to such taxes after they are remitted — -nor can the state refuse to execute its legal contracts because of unconstitutional legislation respecting the subject of the contract, when the contract itself is not involved. Now the contract between the state and the canal company had no reference to the disposition of the remitted taxes. That subject concerns the state alone, and does, not affect the contract, nor its validity, in any degree; and whether the second section be or be not unconstitutional we are not required to determine, except so far as it was thought to involve the contract.
But, secondly: Was the land contracted1 to Kerswell ■sold within the purview of the act?
The contract between the state and the contractors contained the following provision: ' “And the parties of the second part (the People of the state of Michigan), further covenant and agree, that all taxes assessed upon any lands •to be located as aforesaid, within five years after the time
The acts of the legislature respecting this subject were also attached and made a part of the contract.
Now, what was the object intended to be secured by the Legislature, and that intended to be secured by the contractors ? •
That of the Legislature was the construction of the canal: That of the contractors, to secure the value of their services; and — as the land alone was not considered adequate — to secure those exemptions from burthens resjDecting it, which would not only enhance its value in their hands, but protect them from such burthens until it could be sold, or ample opportunity for sale afforded them.
Under the act and the contract, the contractors were entitled to claim this remission of taxes for five years-, unless the lands were sooner sold. But it is contended that a contract for a sale is a sale within the meaning of this act and contract. This is to ignore all distinctions between executory and executed contracts. A sale is a transmutation of property; but so long as the property is only agreed to be transmuted, upon the performance of the promise to pay, there is no sale, but only a contract for one. Now the object which the contractors sought to secure was the protection of their title from the burthen of taxation, and the risk of forfeiture for non-payment of taxes. To hold that upon a contract to sell, when the title was withheld until payment of the purchase money, the right of taxation accrues against the land, debars the contractors of a right which every citizen possesses, unless such right be asserted at the expense of the exemption before secured to them. Every citizen has a right to contract his land in this manner, but he remains liable for taxes, and,
The argument ab inoonvenienti urged in behalf of the state is of no value. There is no right which may not be abused. The Legislature had power to, throw around this privilege such qualifications and protections as were deemed proper. The language of the act, in any event, •must receive a construction consistent with the ordinary import of the words employed; unless a different one is obviously contemplated. Now, as has already been observed, the word sale has a fixed .legal signification, viz: the transmutation of property from one person to another, for a con■sideration — and this is also its primary and ordinary meaning.
-If all words shall be construed and understood accord
But whether the transaction between the state and the purchaser in such cases be called a sale or not, it is evident that the incidents of a sale do not accompany it. The right of disposition of the land is not in the vendee, nor can it be taxed as his property, nor held subject to his debts, nor for his taxes. This the Legislature well understood, and, consequently, in all the acts providing for-the sale of the public lands, provision is made that the-land may be taxed, and the holder of the certificate shall be liable for such tax; and this becomes a part of the contract. Without such law, the taxation of the land would be a taxation against the state, precisely as it is in case of contracts of sale by individuals; and the state
That the state, however, in case of its contracts, does not regard the transaction as a sale, or anything more than a contract, is evident from the fact that the statute provides for the assessment and taxation of the vendee’s interest as personal property — a provision wholly inconsistent with the idea of a sale of real property — and provides for a forfeiture of the contract and the land to the state in case of non-payment, instead of a sale at public auction, as in cases of tax sales generally — (See Comp. !• §§'192, 936, 939). In providing for the assessment of the lands as personal property, the language is as follows: “Any person holding a certificate of purchase of University or primary school lands, shall be liable to be assessed therefor, as if he were the actual owner thereof,” &c.— language clearly indicating that it was never contemplated that the ownership was elsewhere than in the state.
Nothing, therefore, can be inferred against the relators, from the fact that the word “ sold ” is used by our statutes, in these instances, to indicate merely an executory contract for sale; nor should any inference be deduced which will manifestly defeat tlie intent of the contracting parties. Now the evident intention of the state and of its commissioners, in the making of these acts, and of this contract for the construction of the canal, was to place the lands which were to be paid as the consideration for the contract, and the ¡nice of the work, in such a position as to exempt the company from all liability to taxation, on account of its lands, and the land from all imposition of taxes, for the period mentioned in the act, if the title should remain so long in the contractors; and this was equally the intention and understanding of the
I think, therefore, the lands were not “sold” to Kerswell by the relators, so as to authorize their taxation; and that the motion should be granted.
By the supplementary act, the commissioners were authorized, in their discretion, to contract for the remission of the taxes for a period not exceeding five years, “ provided that when any of the land should be sold by the contractors to any other person, they should, thereafter, be subject to taxation as in other cases.” This act, it is insisted, is unconstitutional, and that the state, therefore, is not bound by the contract of the commissioners remitting the taxes.
There is nothing in the Constitution in express terms inhibiting the enactment of the law by the Legislature. It is supposed, however, to be an infraction of section 11, article xiv, of the constitution, which is as follows: “The Legis. lature shall provide a uniform rule of taxation, except on property paying specific taxes; and taxes shall be levied on all such property as shall be prescribed by law.” By t he next section, “All assessments hereafter authorized, shall
It is supposed the remission of the taxes in question falls within this principle. Such would undoubtedly be the case, if the Constitution subjected all Mnds and descriptions of property to taxation, and it was not in the power of the Legislature to designate the property to be taxed. The lands of the relators are subject to taxation; they are regularly assessed, and a tax is levied on them from year to year in pursuance of law. The question is whether the Legislature can remit a tax regularly levied in pursuance of law. It can not do indirectly what it has not power to do directly. It can not, as we have stated, impose a tax of one mill on a part of the state, and of two mills on the rest of the state. Can it effect the same object, by levying two mills on the whole state and then remitting one mill in one or. more counties? It seems to me the remission of the tax in such a case would be unconstitutional, as it would impose on the rest of the state more than its proportion of the expenses of government,- which the Constitution most clearly intended to prohibit. The principle is the same when applied to individuals. Does the remission .of the taxes in question come within it? I think not. In the case supposed, the tax is remitted as a favor. In the case at bar, it is remitted in pursuance of a contract between the state and relators. In the first, the state receives nothing in ex,
Under the act of Congress donating the land, the state, I think, will have a right to be reimbursed i by the General Government, or from the tolls of the canal, the taxes remitted. It was probably with a view to this, that the authority was given to remit the taxes instead of exempting the lands from taxation, as the former would give a right to future reimbursment, which the latter, in all probability, would not.
It was competent for the Legislature to have exempted the lands from taxation for the five years. But instead of doing this, for the reason stated or some other equally good reason, they authorized a remission of the taxes only; and what they might have done directly, I see no constitutional objection to their doing in the way they did.
The next question is as to the meaning of the word “sold” as used in the proviso of the supplementary act— the relators having made contracts to sell a part of the lands. The meaning of the word “sold” is not always the same. It is used, in common parlance, to designate executory as well as executed I contracts for the sale of property. It is used both ways in our statutes. The cases are numerous in which it is used to designate contracts or agreements for a title to real estate, and not the title itself. On a sale of real estate on execution, the sheriff is required to give to the purchaser a certificate, stating the time when such ^ sale will become absolute. {Comp. X. p. 932). When real estate is sold by an executor or an administrator, the Judge of Probate is to make an order confirming such sale, and directing a conveyance to be made. {Comp. X. p. 91V). A certificate is to be given for University and school lands, at the time of the sale {Comp. X. p. VV8). The Commissioner of the land office is to make
The relators were to receive between seven and eight hundred thousand acres of government land, which would have to be sold in small parcels, to settlers, for agricultural or other purposes, before they could realize anything for their services in constructing the canal. It was to give them time to do this in, that the taxes were remitted. Five years were to be allowed them for this purpose, during which time the taxes were to be remitted on such of the lands as were not sold by them. Instead of selling for cash, they sell on time, requiring one quarter of the purchase money down, and the remainder in three equal annual installments; and enter into a contract with the purchaser to give him a deed on the payment of the last installment. By selling on time they receive more for their lands than they would if they sold for cash only. And by giving a contract for a deed, instead of deeding them at the time and taking back a mortgage, the unpaid purchase money is equally well secured, with greater facilities to cause payment. In this they have followed the policy of the state in selling its University and school lands, which are subject to taxation in the hands of the purchasers. It is not unusual, but quite common, for large land-holders to dispose of their lands in this way, and I am of opinion the Legislature intended to include this mode of selling lands, as well as a sale by deed.
I agree with my brethren in the result at which they have arrived, as to the constitutionality of the law.
As to the lands for which the contracts of sale have been made by the company, I agree with the Chief Justice, that these lands are not taken out of the act, or the contract of the state, nor rendered liable to taxation, by the contracts in question.
These contracts of the conrpany are merely conditional contracts of sale; the title remains substantially, as well as formally, in the conqpany; they have the right to hold this title, and the other party has no right to call for it, until the price shall be paid; it depends therefore upon contingency whether these contracts will ever result in a sale. Should the lands be taxed before the expiration of the period, and be sold for non-payment, or a lien created by the tax, the risk falls upon the company, while the sale is yet contingent, if the proposed purchaser make default — -and the title which the company holds is lessened in value.
If the state had taken the same care not to endanger the title of these lands by taxation, in consequence of any default of the proposed purchaser, that it takes to avoid the like danger to its own title from a similar, default of persons taking similar contracts, then it might be reasonably supposed the Legislature had used the term “sold” in the same sense in the two cases.
Had the company received full payment for these lands, or should an attempt be made to cloak a substantial sale under the form of an executory contract, the lands, I fully admit, would be liable to taxation as if the title had passed, but in the present cases there is no pretence of any want of good faith.
The whole of the legal, and most of the equitable, titles are in the company. I think, therefore, a mandamus should issue, as well in respect to the contracted lands as to those not contracted.
I agree with my brethren that there is no constitutional objection to the act under which the lands of the relators are exempted from taxation.
I think, however, with my brother Manning, that the contracted lands are not exempt. The contracts are equivalent to sales in the ordinary acceptation. The holder has a right to a conveyance whenever he performs his covenants, and the company can not vary or deny his claims. Nothing but a failure to perform, enables the company to forfeit the rights of their vendee, and the contract is not then forfeited until they so declare it. The purchaser is bound in any event. The ¡object of the state was, I think, merely to abstain from taxation so long as the company could not, within the specified period of five years, dispose of the property by sale, so as to make it in some degree productive. But to apply the term sale to nothing but a completely performed contract, would be to adopt a narrower rule than the state has applied to its own lands, which are sold upon similar terms to those in the contract before us, but which are made to bear their full burden of taxation as soon as contracted, although but partially paid for. It is true that on state lands taxes are levied as on personalty of the owner, but this is merely to prevent tax titles accruing against the public domain. But the amount of taxation is the same as if the lands were fully paid for. The term “ sold” may be satisfied by different meanings, but I think the law fairly includes such contracts as those returned. I think a mandamus should issue for the remission of taxes on all except the contracted lands, but as to those it should not issue.
Ordered, that a peremptory mandamus issue, commanding the Auditor .General to remit the taxes on all that portion of the lands not sold or contracted to be sold.