Source: https://caselaw.findlaw.com/us-supreme-court/210/266.html
Timestamp: 2019-04-18 15:29:58+00:00

Document:
[210 U.S. 266, 269] Mr. Henry S. Priest for appellees.
These cases were submitted together and involve the effect of certain ordinances of the city of St. Louis, which are alleged to be binding contracts, protected by the Federal Constitution.
A bill was filed in the circuit court of the United States for the eastern district of Missouri by the United Railways Company of St. Louis and the St. Louis Transit Company, the former being the lessor and the latter the lessee of a large system of street railways in the city of St. Louis. The bill seeks to enjoin the enforcement of a certain ordinance, No. 21,087, in the city of St. Louis, passed March 25, 1903, alleging violation of the contract clause of the Constitution and of rights secured by the 14th Amendment. The case was tried upon the bill, answer, replication, and an agreed statement of facts. [210 U.S. 266, 270] The complainants are the owners of certain rights granted by ordinances to a number of street railway companies in the city of St. Louis, the assignors of the complainants. These ordinances are set out in the record and are quite numerous. Some of them cover quite extended terms, running as long as forty and fifty years. They purport on their face to grant to the railway companies named in the ordinances, their licensees, successors, and assigns, rights in certain streets 'to operate, maintain, and construct,'-'to lay down, construct, operate, and maintain,'-'to reconstruct its tracks and maintain and operate its railway thereon.' The grants in these ordinances are in consideration of certain undertakings and obligations stated therein on behalf of the railway companies, which are thus epitomized, in the opinion of the learned judge in the case in the circuit court: (1) To commence and complete the work of laying down the tracks and installing the road within certain specified periods. (2) To grade the streets from curb to curb. (3) To construct and keep in repair that portion of the street lying between the tracks and 12 inches outside thereof. (4) To cause cars to be run day and night at certain intervals named in the ordinances. (5) To pay certain stipulated sums of money, or certain percentages of the gross earnings of the several companies, to the city each year during the continuance of the privileges specified in the contract.
The city charter of St. Louis contains, among others, the following provisions: [210 U.S. 266, 271] Article 10.
Sec. 1. Authority of municipal assembly in reference to street railroads; may sell franchises or impose a per capita tax or a tax on gross receipts.-The municipal assembly shall have power by ordinance to determine all questions arising with reference to street railroads, in the corporate limits of the city, whether such questions may involve the construction of such street railroads, granting the right of way, or regulating and controlling them after their completion; and also shall have power to sell the franchise or right of way for such street railroads to the highest bidder, or, as a consideration therefor, to impose a per capita tax on the passengers transported, or an annual tax on the gross receipts of such railroad, or on each car, and no street railroad shall hereafter be incorporated or built in the city of St. Louis except according to the above and other conditions of this charter, and in such manner and to such extent as may be provided by ordinance.
The 5th subdivision of 26 of article 3, clause 5, confers upon the mayor and assembly the power to license, tax, and regulate certain occupations and kinds of business, vehicles, conveyances, etc., among others, street railway cars. As appears from the agreed statement of facts, at the time the ordinances granting rights to the street railways were passed there were sections of the municipal code of St. Louis (2134 et seq .) in force, requiring the street railway companies to pay to the city collector an annual license fee of $25 for each and every car used by them in transporting passengers for hire in the city. These sections were passed under the power conferred to license, tax, and regulate occupations, vehicles, and street railway cars.
The ordinance which is the subject-matter of this controversy is No. 21,087, purporting to impose a tax equal to one mill for each pay passenger on each car, and purporting to be an amendment of the sections of the municipal code fixing the license tax at $25 per car. It is stipulated in the agreed statement of facts that all the railway companies named in the complaint, including the United Railways Company and the St. Louis Transit Company, paid the annual license of $25 per car until the going into effect of ordinance 21,087.
This case was decided by the learned judge of the circuit court upon the theory that the power of the city to give its consent to the use of the streets for the purpose of constructing and operating railroads, and the power to license street railway cars, were both exercised in the special ordinances in question, and that, in fixing the compensation to be paid by the railway companies, an irrevocable contract was made which prevented the city, during the terms of the ordinances, from imposing any license fee or tax for the operation of the cars; for, says the learned judge: [210 U.S. 266, 273] 'There is neither statutory command nor any perceptible reason why both these powers should not be exercised in one and the same ordinance, and such, in my opinion, is the obvious purpose of the original ordinances granted to complainants' assignors.
The theory, then, upon which the bill was framed and this case decided, was that the city, having once fixed a price for the use of its streets, which the railway companies had agreed to pay, there was no right to impose a license tax upon the railway companies under the ordinance of March 25, 1903, amending the municipal code in the manner already referred to. These sections of the municipal code, requiring the payment of the license fee, impose a tax, as the main purpose of their enactment is the raising of revenue. St. Louis v. Spiegel, 75 Mo. 145, 146.
The principles involved in this case have been the subject of frequent consideration in this court, and while it can be no longer doubted that a state or municipal corporation, acting under its authority, may deprive itself by contract of the power to exercise a right conferred by law to collect taxes or [210 U.S. 266, 274] license fees, at the same time the principle has been established that such deprivation can only follow when the state or city has concluded itself by the use of clear and unequivocal terms. The existence of doubt in the interpretation of the alleged contract is fatal to the claim of exemption. The section of the Missouri Constitution, and the laws to which we have referred, clearly show that while the franchise of the corporation essential to its existence is derived from the state, the city retains the control of its streets, and the use of them must be acquired from the municipal authorities upon terms and conditions which they shall fix. Blair v. Chicago, 201 U.S. 400 , 50 L. ed 801, 26 Sup. Ct. Rep. 427.
An examination of the cases in this court shows that it is not sufficient that a street railway company has agreed to pay for the privilege of using the streets for a given term, either in a lump sum, or by payments in instalments, or percentages of the receipts, to thereby conclude the municipality from exercising a statutory authority to impose license fees or taxes. This right still exists unless there is a distinct agreement, clearly expressed, that the sums to be paid are in lieu of all such exactions.
A leading case is New Orleans City & Lake R. Co. v. New Orleans, 143 U.S. 192 , 36 L. ed. 121, 12 Sup. Ct. Rep. 406. In that case the city of New Orleans, on October 2, 1879, sold to the New, Orleans City Railroad Company, assignor of the plaintiff in error, for the price of $630,000, the right of way and franchises for running certain lines of railroad for carrying passengers within the city, for the term of twenty-five years, and the company agreed to construct its railroad, to keep the streets in repair, to comply with the regulations as to the style and running of cars, rates of fare, and motive power, and to annually pay into the city treasury, upon the assessed value of the road and fixtures, the annual tax levied upon the real estate, the value of the road and fixtures to be assessed by the usual mode of assessment; and the city bound itself not to grant, during the period for which the franchises were sold, a right of way to any other [210 U.S. 266, 275] railroad company upon the streets where their right of way was sold, unless by mutual agreement between the city and the purchaser or purchasers of the franchises.
Afterwards, in the year 1887, under authority of a legislative act, the city imposed a license tax upon the business of carrying on, operating, and running a horse or steam road for the transportation of passengers within the limits of the city, payable annually, and based on the annual gross receipts; when the same exceeded $500,000, the amount to be $2,500. The railroad company admitted its receipts exceeded that sum, and claimed the protection of the Constitution of the United States for its franchise contract extending to January 1, 1906, as above set forth.
This would seem to be as strong a case for the exemption from the license tax as could be made, short of a specific agreement binding the city not to exercise its power in that direction.
'Exemption from taxation is never to be presumed. The legislature itself cannot be held to have intended to surrender the taxing power, unless its intention to do so has been declared in clear and unmistakable words. Vicksburg, S. & P. R. Co. v. Dennis, 116 U.S. 665, 668 , 29 S. L. ed. 770, 771, 6 Sup. Ct. Rep. 625, and cases cited. Assuming, without deciding, that the city of New Orleans was authorized to exempt the New Orleans City Railroad Company from taxation under general laws of the state, the contract between them affords no evidence of an intention to do so. The franchise to build and run a street railway was as much subject to taxation as any other property.
Many state authorities have reached the same conclusion. We will refer to some of them: Springfiled v. Smith, 138 Mo. 645, 37 L.R.A. 446, 60 Am. St. Rep. 569, 40 S. W. 757; Wyandotte v. Corrigan, 35 Kan. 21, 10 Pac. 99; State ex rel. Cream City R. Co. v. Hilbert, 72 Wis. 184, 39 N. W. 326; Newport News & O. P. & Electric Co. v. Newport News, 100 Va. 157, 40 S. E. 645; New Orleans v. Orleans R. Co. 42 La. Ann. 4, 21 Am. St. Rep. 365, 7 So. 59; New Orleans v. New Orleans City & Lake R. Co. 40 La. Ann. 587, 4 So. 512; San Jos e v. San Jos e & S. C. R. Co. 53 Cal. 475, 481; State v. Herod, 29 Iowa, 123.
'Said Lindell Railway Company shall, in lieu of all payments now required of it under any and all previous ordinances, and such as are now, or may hereafter by ordinance passed be required of any railroad company whose tracks it is hereby authorized to acquire, etc., on the first day of ( various months) pay to the city of St. Louis, etc. (various sums), which several sums said Lindell Railway Company, its successors and assigns, in consideration of the rights and privileges granted by this ordinance, hereby agrees to pay to the city of St. Louis, at the times, . . .' etc.
The stipulation as to the payments to be in lieu of all other payments under previous ordinances, and such as are now or may, by ordinance, be hereafter passed, etc., in this ordinance, may well be referred to the special ordinances passed under the right to grant the use of the streets 'in consideration of the rights and privileges' therein granted, and are not designed to repeal pro tanto the section of the municipal code then in effect, imposing a license fee on railway cars operated in the city.
No ordinance contains any express relinquishment of the right to exact a license fee or tax. It is true that the city, in granting the right to use the streets by special ordinance, and in exercising by general ordinance the right conferred in the charter to impose a license tax upon cars, is dealing with rights and privileges somewhat similar, but, nevertheless, essentially separate and distinct. In the special ordinances the city is making an arrangement with the railway company to confer the right to use the streets in consideration of certain things the company is to do by way of operation and otherwise, including, it may be, payment of fixed sums or a proportion of receipts in consideration of the rights and privileges conferred. [210 U.S. 266, 279] The city does this by virtue of its power to grant rights and privileges and control their exercise in the streets of the city,-power expressly conferred in the charter of the city.
In the fixing of a license tax upon all companies alike for the privilege of using cars in the city, it is exerting other charter powers. It makes provision uniformly applicable to all persons or companies using street cars. It is a revenue measure equally applicable to all coming within its terms. We do not perceive that the exercise of the power to grant privileges in the streets in making terms with companies seeking such rights, in the absence of plain and unequivocal terms to that effect, excludes the city's right to impose the license tax under the power conferred for that purpose.
How, then, stands the case? Is it true that because the city has required and the company has agreed to pay certain sums fixed in amount, or based on the receipts, for the use of the streets, that it has thereby deprived itself of the power to exercise the authority existing at the time the ordinances were passed to license street railway cars, and, in the exercise of that power, to charge a license fee or tax? At the time when the several special ordinances were passed the city of St. Louis had the right, under its charter, to grant the use of the streets for the use of the company, upon the terms which are named in such ordinances. It also had authority under another provision of its charter to require a license fee on certain vehicles, including street railway cars. There was in force a section of the municipal code assessing this license charge at $25 per annum for each car. (This is the code which has been amended by No. 21,087, in controversy.) It is stipulated that, until the passage of the last- named ordinance, the railway companies paid the license fees without objection. It is said in the opinion of the learned judge below that the tax, equal to one mill for each paid passenger, amounts to a tax of 2 per cent on the gross receipts, and is, therefore, an increase on what the company had theretofore agreed to pay. But the tax is not levied on the gross receipts as such, and any license tax, in [210 U.S. 266, 280] whatever sum imposed, would take something from the gross receipts of the company.
It seems to us that this case is virtually decided by the rule laid down in New Orleans City & Lake R. Co. v. New Orleans, 143 U.S. 192 , 36 L. ed. 121, 12 Sup. Ct. Rep. 406, which holds that because a street railway company has agreed to pay for the use of the streets of the city for a given period, it does not thereby create an inviolable contract which will prevent the exaction of a license tax under an acknowledged power of the city, unless this right has been specifically surrendered in terms which admit of no other reasonable interpretation.
We are of the opinion that an application of settled principles, derived from the decisions of this court, shows that these ordinances do not contain any clearly-expressed obligation on the part of the city surrendering its right to impose further license fees or taxes upon street railway cars, and we are of the opinion that the learned circuit court erred in reaching the contrary conclusion, and in granting a decree perpetually enjoining the enforcement of the ordinance in controversy.
We have discussed this case on the record and briefs filed in No. 193. It was said by the learned counsel in the argument at bar that cases Nos. 194, 195 involved identical questions. For the reasons stated the decrees in the three cases are reversed.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.