Case Name: Municipality Number One v. Louisiana State Bank
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1850-05
Citations: 5 La. 394
Docket Number: 
Parties: Municipality Number One v. Louisiana State Bank.
Judges: 
Reporter: Louisiana Annual Reports
Volume: 5
Pages: 394–398

Head Matter:
Municipality Number One v. Louisiana State Bank.
Where the charter of a hank exempts the stock and real estate of the bank from any tax laid by the State, parish, or any body politic or corporate, a taximposedby the Municipality Number One on the real estate of the hank is in direct conflict with the charter, and illegal. Such an exemption is not repealed by the art. 127 of the Constitution.
APPEAL from the Second District Court of New Orleans, Lea, J.
R. Preaux, for plaintiff,
contended : The Municipality Number One sues the bank, to recover the taxes due them on the property which they own in the limits of said municipality.
The Louisiana State Bank resists, on the ground, that by the 17th section of their charter, (Moreau’s Digest vol. 1, p. 75,) they have forever been exempted from such taxes.
It has been urged in the court below by the second attorney of the Municipality Number One, who specially attends to such cases, that in comparing the French text of the law with the English text, (see Moreau’s Digest vol. 1, p. Ill, sec. 17, French text,) that the exemption is appliable only to political corporations existing at the time of the adoption of the charter of the bank, and that the Municipality Number One being not yet established at that time, the bank could not oppose the disposition of their charter to the municipality; and I submit this point to the consideration of your honors.
So far as 1 am concerned, the object of this argument is only to show to your honors that, whatever may be the extent of the privilege granted to the bank on the 14th March, 1818, they have no right to claim any exemption of taxes under our present Constitution.
I wish to be well understood that I am not here arguing the constitutionality of a law impairing the obligations of contracts. I know that the charters of private corporations have been viewed in this country by the judiciary as contracts between the State and the individuals in whose favor they have been granted, and I admit that as long as corporations do not violate their charters, it is out of the power of the Legislature to pass any law impairing their privileges.
But the Louisiana State Bank is not in the position of a corporation who have always been faithful to their charter; they have violated it twice; but as they have been relieved by the Legislature, I do not rely upon that in order to show that they are bound to pay the tax.
After these preliminary explanations, I now come to the point. I intend to submit to your honors, that by the article 418, C. C., the law considers a corporation as an intellectual body, and for certain purposes as a natural person. The same definition of a corporation is given in the Code of 1808, c. 2, p. 89.
Then, if a corporation is to be considered for certain purposes as a natural person, that is to say, as regards the privilege granted to them in their charter, I maintain that, witbin the limits of the privilege granted to them, they are subjected to the same rules which govern individuals towards the sovereign.
In the charter of a corporation there may be at the same time privileges and exemptions granted; so far as privileges are concerned, there is no doubt that ns long as corporations do not violate their charter they have the right of enjoying said privileges; but, as to exemptions, corporations as well as individuals are governed by the same rule. To admit a contrary doctrine would be to submit that the sovereign, in remaining still the sovereign, has the right of divesting himself of his sovereignty, which he cannot consistently do, according to Vattel, Bentham.and Grotius.
Has the Legislature granted a privilege or an exemption to the bank ? The very wording of the section shows that it is an exemption : “be exempt from the payment, &c.” Then this being an exemption, and not a privilege, it is governed by the rules applicable to exemptions granted to individuals, whatever they may be, corporations or single individuals.
Now the questions to be examined are these: Is the State of Louisiana sovereign ? Has the State the right of changing and modifying its form of government? The answers are very simple. Yes ! Can a Legislature bind, by their act, a State Convention, in matters of exemptions which can never form part of contracts ? Are not all the individuals, corporations or single individuals bound to support the public charges ? And can a Legislature exempt them for ever from supporting said charges, so as to set limits to the power of a convention that knows no limit to their power? I submit these questions to the court.
The exemption claimed by the Louisiana State Bank was granted under the Old Constitution. It is doubtful that, under that instrument, the Legislature had the power to grant such an exemption; but at any rate, they had no power vested in them to extend the exemption beyond the time of the existence of the Old Constitution, and when the Convention that framed the New Constitution revoked the power vested in the Legislature by the Old Constitution, all the exemptions granted by the Legislature were at once revoked.
Agreeably to the art. 127 of the present Constitution, after the year 1848 taxation shall be equal and uniform throughout the State. No one species of property shall be taxed higher than another species of property of equal value. Can it be maintained, that taxation shall bo equal, if the exemption claimed by the State Bank of Lomsiana is granted ? And can it be maintained that, in matters of exemptions which are always left at the pleasure of the sovereign, be bank has the right of claiming a right superior to that a simple individual could claim 1 No! In matter of exemptions, corporations and individuals are placed on an equal footing; and I ask candidly of your honors, that if a similar advantage had been granted to a citizen under the Old Constitution, if he would be able to enjoy it under the New Constitution ? Surely, no. Then if he could not, how can the bank claim it ? Is it not evidence, that the framers of our present Constitution had in view those exemptions, and that they directly revoked them by the art. 127.
The charter of the Poydras Orphan Asylum contains an exemption similar to the one claimed by the Louisiana State Bank ; and although they are a corporation established for purposes of charity, while the Louisiana State Bank is established for the benefit of its stockholders, yet it has been doubted that the Legislature had the power, under the authority of the New Constitution, to renew the exemption which tha.t charitable institution had considered extinguished by that instrument. See the journal .of the House of Representatives of January and February. 1850, and the report of Mr. Larue, the chairman of the Finance Committee.
The same reasoning, applicable £o the State, is equally applicable to a municipal corporation, which is only a delegation of the sovereignty for purposes of public administration. Art. 130 of the New Constitution. On the whole I refer your honors to the following authentic authorities: Providence Bank v. Billings and Pettman, 4 Peter’s Rep. 514. Corporation of the Br>.ck Presbyterian Church v. Mayor, Aldermen and Community of New York, 5 Cowen’s Rep. 538. Stuyvesant v. Mayor, Sfc., of New York, 7 Cowen’s Rep. 605.
Á bill of exception has been taken by the appellee. The counsel of the appellees intended to introduce evidence to prove that the bank had paid no taxes till this time; but the present tax had been demanded because the Legislature of 1847, 1848 and 1849, have adopted acts extending to the municipal corporations of New Orleans the obligation, that taxes be equal and uniform; and this is the reason for the lax which has been imposed on the bank. That institution does not claim an exemption only for their banking house, but they intend to extend it to all the real estate they possess.
Hunton and Bradford, for the defendant,
contended : The Louisiana State Bank was incorporated by an act of the Legislature of Louisiana approved March J4th, 1818, its corporate powers and privileges to terminate with the last day of the year 187Q.
By the 17th section of the act of incoi’poration it was enacted, that in consideration of the privileges and benefits conferred by this act upon the said bank, the president, directors and company thereof shall pay to this State the sum of one hundred thousand dollars, and that the stock of, and real estate belonging to, the said bank shall forever, during the continuance .of its charter, be exempt from the payment of any State tax, and from the payment of any tax laid by any parish or other body politic or corporate, under the authority of this State. See 1 Moreau’s Digest, p. 6.8. Under this act defendants claim to be exempted from taxation.
Since the great case of Dartmouth College v. Woodward, it is too late to doubt that a charter of incorporation such as this, is a contract within the meaning of the Constitution of the United States, and that the rights acquired under such a charter are protected by that instrument.
It is not seriously denied by the counsel of plaintiff that, at the time the Louisiana State Bank was incorporated, the Legislature had tffe right, in consideration of a price paid, to exempt thp bank from taxation thenceforth, or, in other words, to make that contract with the bank evidenced by the act of 1818 referred to ; and since the exemption has been acknowledged an.d acquiesced in during a period of thirty years, we shall assume that the act of incorporation was valid and constitutional. But it is asked: “Had the Lsgislature which chartered the bank the right to bind the Convention which framed the New Constitution in matters of exemption.”
The court may have observed, that a large portion of the argument presented by the brief of plaintiif’s counsel in this case, rests upon the distinction between a privilege and an exemption. Now we had always thought that an exemption from the burthen of taxation was but a privilege, and generally that a special exemption from any onerous charge was nothing more nor less than a special privilege. Indeed, the very definition of an exemption, as given by Bouvier and other law dictionary makers, is “a privilege which dispenses,” &c., and we cannot perceive that the distinction attempted to be established really exists.
But, in answer to the question propounded, we say emphatically, yes! The Constitution of the United States declares, that no State shall pass any law impairing the obligation of a contract; and any law of the State of Louisiana, then, made either by the Legislature of the State, or by delegates of the people in convention, which contravenes the provisions of the Constitution of the United States is null and void.
This case, however, presents really no question involving a conflict between the Constitution of the United States and that of Louisiana, and none between the present Constitution and the act of 1818, passed under the Old Constitution.
Art. 142 of the New Constitution secures and continues in force all rights, claims and contracts, as well of individuals as of bodies corporate, which existed previous to its adoption, and which are not inconsistent with it.
The Louisiana State Bank, under the law and Old Constitution, had the right to exercise the corporate powers free of taxation. Is there anything in the New Constitution abrogating that right ? Does art. 127 subject to taxation property not taxable before ? Does it not rather prescribe the rates of taxation upon property which was taxable then and before ? The article, when duly considered, explains itself. It only means, that taxation upon property “on which taxes may be levied” shall be equal and uniform, and not that all property within the State of Louisiana shall be subject to taxation.
But even if the Convention which framed the New Constitution intended, by ait. 127, to subject to taxation property which had been exempted by the State for a number of years, in consideration of a price paid, of a fair equivalent, they intended to transcend their powers, and to do that which the Constitution of the United States forbade them to do. „
The State of Louisiana, as well as the parish of Orleans have, heretofore; scrupulously observed the contract solemnly made with the bank by the Legislature in the year 1818. The State has fully kept its faith, but the Municipality Number One, itself a creation of the State, a corporation deriving its powers of taxation solely from the State, claims for itself the right to annul this contract, and in express violation of the provisions of the charter, demanded from the bank the payment of taxes on the real estate it owns within the limits of said municipality, and this, too, on no more plausible pretext or better reason than is to be found in the imiginary distinction between the said bank’s exercising its corporate powers with the privilege of not paying taxes, and its exercising these powers exempt from taxation.

Opinion:
The judgment of the court was pronounced by
Eustis, C. J.
This is a suit for taxes imposed by the municipality on the property of the Louisiana State Bank. "The bank had judgment in the court of the first instance, and the municipality has appealed.
By the charter of the bank, "in consideration of the privileges and benefits conferred by this act upon the said bank," the bank undertook to pay to the State the sum of one hundred thousand dollars in ten equal annual payments; and in the same section it is provided, that the stock and real estate, belonging to said bank, shall forever be exempt from the payment of any State tax, and from the payment of any tax laid by any parish or other body politic or corporate under the authority of this Stake.
The tax sought to be exacted, we understand to be imposed on real estate, and the authority on the part of the municipality to impose it, to be asserted to be derived from the State. The exaction would be in direct conflict with the charter.
But it is said, this privilege of the corporation, which was granted for a fair equivalent, is repealed by the 127th article of the Constitution, which provides for equality and uniformity of taxation throughout the State.
The repeal would, under the argument presented, rest but upon an implication. Such We do not understand to be the purpose of this Constitution, which provides that no law impairing the obligation of contracts shall be passed, and that vested rights shall not be divested, unless for purposes of public utility, and for adequate compensation previously made. Art. 109. We think the whole sense and tenor of the instrument excludes any such construction as that contended for.
The judgment of the district court is therefore affirmed, with costs.