The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-04-26


and taking back the amount OF the tax Win
stfe other Rut to- tiIfst l1e answer tsz thatto
comply trIls. with the rule the tax must be
anon aff The money of tie community, not
mon Che IIasticuiar portion oil lit which is
Maid to the public creditors. and u ought to
Be SO regnlnSM as not to incl ude llenhpon
the fund. The creditor should be no .oeher-
wise acted iiron than as any. ether possessor
of MONEYS, and consequently the money he
receives from the public can thus only be a
fit subject OF taxation when IL is entirely
separated y from the contract .'and thrown
undistinguished into the common mass:
"a Hamilton Works, 514 ct seq.) 4Ihus only.
can contracts with the State be allowed TO
have the same meaning as NIL other similar
contracts have.
such limitations OF the power Of State
taxation we have heretofore recognized e.
We have held property in one stage OF its
ownership not to be taxable, and in sue
cpedinr stage to be taxable. Those deci-
sions are not without some analogy to the
rule we have mentioned. Thus, in Brown
us. MARYLAND, II Wheaton, 410-441, where
it was held that State tax could not be
levied by the requisition Of license upon
importers of merchandise by the bale or
package, or upon other persons selling the
goods imported by the bale or package, Mar
shall, G.. j., considering both the prohibition
upon States against taxing imports and their
general power to tax persons and properly,
said: "Where the importer has so acted
upon the thing imported that it has become
INCORPORATED and mixed up with the mass
of property in the country it has, perhaps,
lost its distinctive character as an import
and has become subject to the taxing power
of the State."- Vide, also, Woodruff Us.
Parham, Wall, 1872; State Tax on Rail-
way Gross Receipts, Is Wall, 295. tax
on income derived from contracts, II it does
not prevent the receipt OF the income. can
not be said to vary Or lessen the debtors OBJ
legation imposed by the contracts.
In opposition to the conclusion we have
reached we are referred to the Champaign
County Bank Us. Smith, 7 Ohio State, ~,
and People Us. Home Insurance Company,
80 Cal, 533, in which it is said the power of
State TO tax its own bonds was sustained.
We do not, however, regard those cases rs
in conflict with the opinion we now hold !;
and ii they were they would not control
our Judgment when we are called upon 10
determine the meaning and extent OF the
Federal Constitution. In the former 1t APP
peared that the tax collected was in virtue
OF an assessment of state bonds belonging
to the bank but deposited with the Auditor
of State as security for the circulating notes
ofrthe company. The tax thus assessed
having been carried into the duplicate, the
collector seized and appropriated the oank
notes and money OF the bank, and suit was
brought to recover the amount so taken.
In sustaining a demurrer to the petition
the Court held, it is true, that q State has
power to tax its own bonds equally with
other property, and that the exercise OF such
bower involves no violation of a contract.
But il was not held that the State could COL
lect the tax by withholding from the credi-
tor any part OF what the State had assumed
TO nav, The tax was laid, not upon the
debt, but upon the creditor; and it was col
lected, not out OF what the State owed, but
out OF the general property OF the bank.
Neither by the assessment nor In the collec-
ton was there any interference with the
contract In The People rs. The Home In
surance Company the question was whether
bonds Of the State Of California belonging
to New York insurance company, but de-
posted and kept in the State, as required by
an act to tax and regulate foreign insurance
companies doing business in the State, were
assessabIe for taxation there. 1t was ruled
that they were. This case, no more than
the former, meets the question we have be-
fore us. 1t certainly does not bold that
State or city, by virtue OF its taxing
power, can convert its undertaking to pay
debt bearing six per cent. interest into one
bearing only four.
These are the only cases cited to us as di-
rectly sustaining the Judgment we have
now in view. How far short OF sustaining
it thew are must be apparent. And we
30 fhnt
seems incredible that there can be any, for,
as we said in State Tax Us. Pennsylvania,
Is Wall, $40. "the law which requires the
treasurer of the company Gndebted) to re-
tain five per cent. Of the interest due to the
nonresident bondholder is not a
legitimate exercise Of the taxing power. 1t
is law which interfereS between the COM
pany and the bondholder, and under the
pretence OF levyng tax commands the
company to withhold a portion OF the stiD-
n!ated interest and pay it over to the State.
Tt is a law which thus impairs the oblga-
ton Of the contract between the parties.
The obligation Of contract depends upon
its terms and the means which the law in
existence at the time affords for its enforce
mcnt \ law which alters the terms OF 4
contract by imposing new conditions or dis
rensing with those expressed is law
which impairs its obligation, for such a
law - relieves the parties from the
moral duty OF performing the original stipu-
latons OF the contract, and it prevents their
legal enforcement" What was thus said,
1t is true, was in case where the question
was whether tax thus imposed upon a
nonresident holder of bonds issued by a
company chartered by the State was war
ranted by the Constitution. But so lar as
it speaks Of what constitutes impairng con-
tract obligation it is applicable in its fullest
extent to all legislation affecting contracts,
no matter who may be the parties.
1t is enough for the present case that we
hold, as we do, that no municipality OF a
State can by its own ordinances, under the
guise Of taxation, relieve itself from per-
forming to the letter all that it has expressly
promised to its creditors.
There is no more important provision in
the Federal Constitution than the one
which prohibits States from passing laws
impairing the obligations OF contracts, and
it Is one Of the highest duties Of this Court
to take care the prohibition shall neither be
cvaded nor frittered away. Complete effect
must be given to it in all its spirit. The
inyiolability Of contracts and the duty OF
performing them, as made, are foundations
Of all Well-ordered society, and to prevent
the removal or disturbance Of these 1oun-
dations was one OF the great ohlecls lof
which the Constitution was framed.
The Judgment Of tie Supreme Court OF
South Carolina is reversed, and the record
is RENTED with instructions TO proceed in
accordance with this opinion.
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CINCINNATI SOUTHERN.-The Legislature