Daily globe., 1881-09-11

STOCK OF DanKS incorporated under the laws
of the State, should be taxed for the same pur-
poses and to the same extent that personal
property was or might be required. to be
taxed in the place where such banks might be
located. The effect of this was to increase
the amount of tax upon this bank. II was urged |
in the supreme court of the Cuited States in |
support OF the right to change the mode and |
rate of taxation, that the power to tax is
sovereign power and that State cannot bar |
ter away any part of its sovereign power. |
But the court held that the exemptiag OF Ger. |
tain property from taxation is not relin- |
quishment of sovereign power and said: " he |
taxing power may select its object OF taxa |
ton, and this is generally regulated |
by the amount necessary to answer
The purposes of the State. Now the
exemption of property from taxation is a oues-
tion of policy and not of power" and, "The
vague and underlined and undefnable notion,
that every exemption, or specific tax, which
withdraws certain objects from the general
ildefensible. :" The court held State may by
contract bind itself in particular case not to
tax, or to do it in particular way, and upon
the binding force of contract by the State
qnOted with appreciation the language of the
court in Woodward VS.. Dartmouth college,
that, "a contract between State and individ-
uals is as obligatory as any other contract"
The court therefore held that the act of 1S45
constituted a contract between the State and
the banks which organized under it to tax him
only in the manner and to the extent therein
expressed, and that the State could not re-
woke it.
Dodge vs.. Woolsey, Is How -, 331, was of a
similar character, except that it presented q
case where constitution adopted subsequent
ly to the incorporation Of the bank under the act
OF lS45 prescribed a rule Of taxation upon such
bank different from that agreed upon in that
act. The doctrine of the case in is How was
reaffirmed and it was held thata constitution
al provision was equally Intellectual with an
act OF the legislature te effect prior contracts
OF the State. McGee vs.. Mathis Wall. 143.
The United States granted in 1850 to the State
OF Arkansas swamps and overhowed govern
ment lands on condition that the lands or the
proceeds OF them should be applied in reclaim
ing the lands for cultivation by means of
levees and drains. The State accepted the
grant and it's legislature ia 1851 passed an act
providing that the lands should be exempt
from taxation Sfor ten ye ars or until they
should be reclaimed, and for the sale of them
by the issue of transferable scrip receivable
for any of the lands, not previously taken up,
selected by the holder. After the issue of
scrip pursuant to the act, another act was
passed, in 1855, repeating the section in the
act OF 1851, which exempted the lands from
taxation, and making provision for taxing
those sold or to be sold precisely as othsr
lands, and also in 1857 another act was passed
authorizing special tax upon the
lands. 1t was held that the act of
1851 constituted contract between
the State and holders of the scrip issued uuder
it. that the lands should not be taxed for ten
years, or until the lands should be reclaimed,
and the State cOnld not impair the contract
by subsequent legislation, and the repeal of
~ nxyE TO-
other cases in the reports of the decisions In
the supreme court OF the United States in
volving the same question, and in all of them
the rules laid down in the cases We have speci-
fcally referred to were followed. Although
some of the judges have expressed doubts on
the power of the legislature by virtue merely
of its general Legislative authority to make an
irreyocable contract binding the State not to
exercise, or limiting its exercise of the taxing
power, tnat the State can make such contract,
and that when made it is irrevocable by act of
the State alone, is the accepted doctrine of that
court. We have conferred our references
mainly to the decisions of the supreme court
OF the United States on this point and on others
involved in the general question Of the valid
ity or invalidity of the constitutional amend
ment of 1860, because the decisions of State
courts, while they may be valuable, for the
reasons given in support of them,
arc nOL OI auy authoritative OF DluQlnS 10rce
upon this court But the supreme court of
the United States is the final arbiter of the
question whether State law is repugnant to
the constitution of the United States, and on
all such questions we are bound to follow its
decisions.
The proposition that State may, by con-
tract with an individual, obligate itself beyond
its power of revocation, to abstain from use
OF it's taxing power, would seem to require
the converse, that it may likewise so obligate
itself to use that power.
There is no case that we are aware of where
the question arose whether the State, as an
entirety, in its organized capacity as a body
polite, may be so bound. Those which come
nearest to it are the cases of municipal corpo-
rations. These bodies are subdivisions or in
strumentalities of the State government,
established for the administration OF the gov
ernment in matters of local concern, and
vested with portion Of the sovereignty of
the State, to be exercised in such matters.
In respect to these subdivisions of the State,
where they have the power of taxation to meet
the demands OF contracts, they may, by enter
ing into such contracts, not only bind them
selves to exercise the power but bind the State,
so that it cannot withdraw the power till the
contracts are satisfied.
In the case of Won Hoffman VS.. The City of
Quincy, Wall, 535, the legislature of Illi-
uOlS dutuOTlZtu Cuc Slty VI Qulucy " ISSUE It's
bonds bearing interest and to levy and collect
special annual tax upon the property within
the city sufficient to pay the annual interest
upon the bonds which should be issued. The
tax was to be applied to payment of the inter-
est and to no other purpose whatsoever. The
bonds were issued and subsequently in 1868 the
legislature passed an act which repealed all
former laws touching the levy or collection of
taxes on property within the city except those
regulating the collection and as to taxes relat-
ing to streets and alleys, and which prescribed
the purposes for which taxes might be levied
and limited the amount for each purpose The
rate authorized to be levied to pay the debts
and meet the general expenses of the city was
go low, that the amount which could be real
lied would not be sufficient to pay the debts
and the current expenses of the city, and so
the interest on the bonds could not be paid.
The court held the repeating act of the legs-
lature void as to the bonds as impairing the
obligation of the contract and said, sit is well
settled that State may disable itself by con-
tract from exercising its taxing power in par
ticular cases." 1t is equally clear that where
State has authorized a municipal corporation
to contract and to exercise the power of local
taxation to the extent necessary to meet it's
engagements the power then given cannot be
withdrawn until the contract is satisfied.
The State and the corporation are in such
cases equally bound, the power given becomes
trust which the donor cannot annul, and
which the donee is bound to execute and
neither the State nor the corporation can any
more impair the obligation of the contract in
this way than any other. The laws requir-
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