# New Jersey v. Yard

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United States Supreme Court
95 U.S. 104
New Jersey v. Yard
ERROR to the Court of Errors and Appeals in and for the State of New Jersey.
The Morris and Essex Railroad Company was, by an act of the legislature of New Jersey, passed Jan. 29, 1835, created a corporation.
The fifteenth section of the charter enacted, that, as soon as the net proceeds of said railroad amounted to seven per cent on its costs, the corporation should pay to the treasurer of the State a tax of one-half of one per cent on the cost of said road, to be paid annually thereafter on the first Monday of January of each year; provided, that no other tax or impost should be levied or assess d upon the corporation.
The twentieth section reserved to the legislature the right to alter, amend, or repeal the act, whenever it should think proper.
A supplement to the charter, passed March 2, 1836, gave power to build a branch and lateral roads, and repealed the twentieth section of the original charter; but reserved the right of the legislature to alter or amend the supplement, or the act to which it is a supplement, whenever the public good may require it.
On the 14th of February, 1846, a general act relating to corporations was approved, which enacted that the charter of every corporation which should thereafter be granted by the legislature should be subject to alteration, suspension, and repeal, in the discretion of the legislature.
On March 28, 1862, a general tax act was approved, the eighth section of which enacts that all private corporations of the State, except those which, by virtue of any irrepealable contract in their charters or other contracts with the State, are expressly exempted from taxation, should be and were thereby required to be respectively assessed and taxed at the full amount of their capital stock paid in, and accumulated surplus.
Sect. 13 enacts that the real estate of private corporations situate within the State shall be assessed against said corporation in the township or ward in which it is located, in the same manner as the real estate of individuals; and the amount of such assessment shall be deducted from the amount of the capital stock, &c.
The twenty-first section repeals all acts and parts of acts, whether special or local, or otherwise, inconsistent with the provisions of the act.
Another supplement was approved on the 23d of March, 1865. It authorizes a branch road through Boonton and to Paterson; and for that purpose empowers the company to exercise all the powers and franchises given by the original act and supplements, subject, however, to all the restrictions, limitations, and conditions of said original act and supplements which may be applicable to the powers and franchises conferred by this supplement.
The third section enacts that the tax of one-half of one per cent, provided by the said original act of incorporation to be paid by said company to the State whenever the net earnings of the company amounted to seven per cent upon the cost of the road, shall be paid at the expiration of one year from the time when the road of the company shall be open nd in use to Phillipsburgh, and annually thereafter; which tax shall be in lieu and satisfaction of all other taxation or imposition whatsoever by or under the authority of the State, or any law thereof: provided, that the section shall not go into effect or be binding upon the company until it, by an instrument duly executed under its corporate seal and filed in the office of the secretary of State, shall have signified its assent hereto, which assent shall be signified within sixty days after the passage of the act, or the act shall be void.
The fifth section enacts that the act shall take effect immediately.
In due time, the company filed a paper under its seal, bearing date April 24, 1865, reciting said third section, and setting forth that the company had received a copy of the act, and had considered it. It then declares that, in consideration of the terms and conditions of the said supplement, and more especially of the third section thereof, the company has assented, and does thereby assent, to the said act; and has agreed, and does thereby agree, to be subject to the provisions of the said act, and to pay the tax therein named, as therein specified.
On the 5th of March, 1867, another supplement to the charter was approved, which, after reciting that the company had lately extended its railroad from Hackettstown to Phillipsburgh, gives power to increase its stock and straighten its road, and declares that the company for this purpose shall be invested with all the powers conferred by the charter and supplements, subject to the duties and liabilities hereby imposed. It enacts that no tax by or under the authority of the State shall be imposed upon any property purchased, held, or used by said company for the purposes of its charter, or any of the supplements thereto; except the tax of one-half of one per cent on the cost of its road, which, by the said charter and the supplement thereto approved on the twenty-third day of March, 1865, was required to be paid by said company in lieu of all other taxes, any act to the contrary notwithstanding.
No formal acceptance of this act was provided for or given.
On the 2d of April, 1873, an act, entitled 'An Act to establish just rules for the taxation of railroad corporations, and to induce their acceptance and uniform adoption,' was passed. The preamble recites as follows:--
'Whereas, for the encouragement of railroad enterprise, laws creating and regulating railways in this State usually provide for the payment by them, in consideration of their chartered privileges, of a fixed rate upon the capital stock, or the cost of their works, in lieu of all other public impositions whatever; that it is nevertheless contended that the property of such corporations, being largely acquired for or through the growth and extension of their prosperity, should contribute to the charges and expenses essential for municipal and county purposes; that it is desirable, in order to the avoidance of litigation and future dissatisfaction, that such municipal and county taxation shall be authorized, and that the same shall be permanently fixed and regulated.'
Sect. 1 then enacts that all taxation upon all railroad companies occupying and using railroads in the State, whether as lessees or otherwise, shall hereafter be made as follows: First, Such companies shall pay upon the cost, equipment, and appendages of said railroads, respectively, a State tax after such rate of taxation as may have heretofore been fixed by law upon such companies, or, in default thereof, after the rate of one-half of one per cent upon such cost. Second, A tax of one per cent on the value of the corporations' real estate (except the track, roadbed and ten acres at the termini), for the benefit of the counties and municipalities in which it lies.
The ninth section makes the corporation liable for city improvements beneficial to such property, for the purposes for which it is used, except that made subject to State tax, but provides that the laws relating in other respects to such city improvements be not thereby altered.
The act then recites that 'whereas certain railroad corporations, owning or occupying railroads in this State, claim exemption from all taxation, whether State, county, or municipal, further than is provided for by their charters, or by special laws for their benefit now existing, which claims, even if legal, subject said corporations to public ill-will, and make it their interest to forego the same and agree to the scheme of taxation hereby established.'
Sect. 10 then enacts that any such railroad corporation may, within six months from the approval of the act, make and execute, under its common seal and the signature of its president, and file in the office of the secretary of State, a declaration, in writing, surrendering all claim to exemption from taxation by it heretofore had or made, and accepting the provisions of this act in lieu thereof.
Sect. 11 repeals all acts and parts of acts inconsistent with said act, and declares that the act shall take effect immediately.
Yard, the tax commissioner provided for in the act, made the statement and valuation required by it with respect to the Morris and Essex Railroad Company's real estate. By this it appears that its real estate, to the amount of $2,089,520, is subject to a tax of one per cent for the years 1873, 1874, and 1875, for the benefit of the counties and municipalities where it is situate.
This valuation was removed to the Supreme Court of New Jersey by certiorari; and the reasons assigned for setting it aside were four: 1st, The commis ioner had no power to make the valuation. 2d, The act of 1873 does not apply to the Morris and Essex Railroad Company. 3d, If it does apply, it impairs a contract between the State and the company. 4th, General illegality and violation of vested rights.
The contract was, it is alleged, created by the company's acceptance under its seal of the said third section of the supplement to its charter, approved March 23, 1865.
The Supreme Court rendered a judgment sustaining the assessment.
That judgment having been affirmed by the Court of Errors and Appeals, the State of New Jersey, on the prosecution of the company, brought the case here.
Mr. Frederick T. Frelinghuysen and Mr. J. G. Shipman for the plaintiff in error.
The supplements of 1865 and 1867, and the acceptance by the Morris and Essex Railroad Company, constitute an irrepealable contract between it and the State. State v. Miller, 30 N. J. L. 368; 2 Kent, Com. 306; Gordon v. Appeal Tax Court, 3 How. 333; Commonwealth v. Essex Company, 13 Gray (Mass.), 239; Miller v. The State, 15 Wall. 478; State v. James, 4 Mo. 570; Millin v. New York & Erie Railroad Co., 21 Barb. (N. Y.) 513; Commonwealth v. Canal Company, 66 Pa. 41; Zabriski v. Hackensack Railroad Co., 18 N. J. Eq. 178; Railroad v. Teazie, 39 Me. 587; City of Erie v. Erie Canal Co., 59 Pa. 174; Story v. Jersey & Bergen Point Railroad Co., 16 N. J. Eq. 13; State v. Person, 32 N. J. L. 134; Tomlinson v. Jessup, 15 Wall. 454; Fletcher v. Peck, 6 Cranch, 87; State v. Jersey City, 31 N. J. L. 576; The Home of the Friendless v. Rouse, 8 Wall. 430; Humphrey v. Pegues, 16 id. 244; McGee v. Mathias, 4 id. 156; Jefferson Branch Bank v. Skelly, 1 Black, 439; New Jersey v. Wilson, 7 Cranch, 164; State Bank of Ohio v. Knoop, 16 How. 369; Cooley, Const. Lim. 279-281; McGavisk v. The State, 34 N. J. L. 509.
If the contract be repealable, the legislature did not, by the act of 1873, in fact, repeal it; nor did it so intend. Erie Railway Co. v. The State, 31 N. J. L. 531; Constitution of New Jersey, art. 4, sect. 7; State v. Minton, 3 Zab. (N. J.) 529; State v. Brannin, 2 id. 485; Mechanics' & Traders' Bank v. Bridge and Boyer, 30 N. J. L. 113; State v. Miller, supra, and 31 N. J. L. 529; State v. Jersey City, supra.
Mr. Robert Gilchrist, contra.
The act of April 2, 1873, subjects to the new taxes the Morris and Essex Railroad Company, unless it has an irrepealable contract with the State. Proprietors of Bridges v. Hoboken Company, 2 Beas. 98; State v. Miller, 30 N. J. L. 368; 31 id. 529.
The act of 1865 and its acceptance do not create an irrepealable contract as to taxation; nor does that of 1867. The original act incorporating the company, and the subsequent amendments and supplements, are to be treated as one act of legislation; and the act of March 2, 1836, granting a supplement to the charter, which the company accepted, expressly reserved the right of amendment or repeal. Story and Washington, JJ., in 4 Wheat. 684; State v. Mayor, 31 N. J. L. 580; Newark City Bank v. The Assessor, 30 id 22; State v. Bergen, 34 id. 439; State v. Douglass, id. 84; State v. Person, 32 id. 134; Morris Canal v. State, 4 Zab. (N. J.) 70; Delaware & Raritan Canal and Camden & Amboy R. & T. Co. v. Raritan & Delaware Bay Railroad Co., 16 N. J. Eq. 321; Bank of Utica v. Magher, 18 Johns. (N. Y.) 344; Oleson v. Green Bay Company, 36 Wis. 389; Tomlinson v. Jessup, 15 Wall. 454; Tomlinson v. Branch, id. 460; Humphreys v. Peques, 16 id. 244; Walker v. Whitehead, id. 314; Trask v. Maguire, 18 id. 391; North Missouri Railroad v. Maguire, 20 id. 46; United States v. Herron, id. 251; Tucker v. Ferguson, 22 id. 527; Iron Bank v. Pittsburgh, 37 Pa. 349; Morgan v. Louisiana, 93 U.S. 217; West Wisconsin Railway Co. v. Supervisors, id. 595; Att'y-Gen. v. Lupton Board, 2 Jur. N. S. 180; Cooley, Const. Lim. 281.
Mr. JUSTICE MILLER delivered the opinion of the court.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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