Source: https://supreme.justia.com/cases/federal/us/191/379/
Timestamp: 2019-04-24 12:27:59+00:00

Document:
A provision in a general tax law that railroads thereafter building and operating a road north of a certain parallel shall be exempted from the tax for ten years unless the gross earnings shall exceed a certain sum is not addressed as a covenant to such railroads, and does not constitute a contract with them, the obligations of which cannot be impaired consistently with the Constitution of the United States.
This is an appeal from a decree of the United States circuit court, dismissing the plaintiff's bill on demurrer. The bill seeks to enjoin the Auditor General of the State of Michigan from collecting a tax, on the ground that the law imposing the tax is contrary to the Constitution of the United States as impairing the obligation of contracts and interfering with interstate commerce.
"that the rate of taxation fixed by this act or any other law of this state shall not apply to any railway company hereafter building and operating a line of railroad within this state north of parallel forty-four of latitude until the same has been operated for the full period of ten years, unless the gross earnings shall equal four thousand dollars per mile, except,"
interstate business as the length of the road over which said interstate business is carried in this state bears to the entire length of the road over which said interstate business is carried."
This is the law which the plaintiff says is unconstitutional for the reasons above set forth.
The demurrer to the bill was sustained on the ground that the act of 1893 made no valid contract of exemption from taxation, and that the act of 1897, repealing the exemption granted in 1893, was a constitutional law.
The plaintiff makes a supplemental alternative argument that the later statute should not be construed to repeal the act of 1893 with regard to roads in the plaintiff's position. If that were so, the plaintiff would have no standing in this Court. But the repeal is plain from the express words at the end of the section quoted from the act of 1897, repealing all acts or parts of acts contravening the provisions of that section, from the fact that it is an amendment of the section quoted from the act of 1893, and from the case of Manistee & Northeastern Railroad Co. v. Commissioner of Railroads, 118 Mich. 349, 350. See also Welch v. Cook, 97 U. S. 541. On that question, we follow the state court. Northern Central Railway Co. v. Maryland, 187 U. S. 258, 187 U. S. 267.
v. New Orleans, 166 U. S. 143. But, whatever the ground, thus far, attempts like the present to make a contract out of the clauses in a scheme of taxation which happen to benefit certain parties have failed. See further, Welch v. Cook, 97 U. S. 541, and Manistee & Northeastern Railroad Co. v. Commissioner of Railroads, 118 Mich. 349, in which the state court deals with this very act.
It may be that a state, by sufficient words, might bind itself without consideration, as a private individual may bind himself by recognizance or by affixing a seal. A state might abolish the requirement of consideration altogether for simple contracts by private persons, and it may be that it equally might dispense with the requirement for itself. But the presence or absence of consideration is an aid to construction in doubtful cases -- a circumstance to take into account in determining whether the state has purported to bind itself irrevocably, or merely has used words of prophecy, encouragement, or bounty, holding out a hope but not amounting to a covenant.
of an actual intent on the part of the state to set change of position against promise before we hold that it has parted with a great attribute of sovereignty beyond the right of change. See Vicksburg, Shreveport & Pacific Railroad v. Dennis, 116 U. S. 665, 116 U. S. 668. Looking at the case in this way, then, we find no such adequate expression. No doubt the state expected to encourage railroad building, and the railroad builders expected the encouragement; but the two things are not set against each other in terms of bargain. See Covington v. Kentucky, 173 U. S. 231, 173 U. S. 238-239.
But this is a somewhat narrow and technical mode of discussion for the decision of an alleged constitutional right. The broad ground in a case like this is that, in view of the subject matter, the legislature is not making promises, but framing a scheme of public revenue and public improvement. In announcing its policy and providing for carrying it out, it may open a chance for benefits to those who comply with its conditions, but it does not address them, and therefor it makes no promise to them. It simply indicates a course of conduct to be pursued until circumstances or its views of policy change. It would be quite intolerable if parties not expressly addressed were to be allowed to set up a contract on the strength of their interest in, and action on the faith of, a statute, merely because their interest was obvious and their action likely on the face of the law. What we have said is enough to show that in our opinion the plaintiff never had a contract, and therefore makes it unnecessary to consider the usual power to alter, amend, or repeal charters, etc., contained in the Constitution of Michigan, Tomlinson v. Jessup, 15 Wall. 454; Covington v. Kentucky, 173 U. S. 231; Citizens' Savings Bank v. Owensboro, 173 U. S. 636, or a similar power in the general railroad or a similar power in the general railroad law of 1873, of which the above acts of 1893 and 1897 were amendments through intervening amending acts.
of such railroad corporation operated within the state," computed upon certain percentages of gross income. The prima facie measure of the plaintiff's gross income is substantially that which was approved in Maine v. Grand Trunk Railway Co., 142 U. S. 217, 142 U. S. 228. See also Western Union Telegraph Co. v. Taggart, 163 U. S. 1.
MR. JUSTICE WHITE, not having heard the arguments, took no part in the decision.

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