text:
Louisiana v. Pilsbury

ERROR to the Supreme Court of the State of Louisiana.

This was a petition of the State of Louisiana, on the relation of the Southern Bank, a corporation created under its laws and doing business in New Orleans, to one of its District Courts, for a mandamus to compel the municipal authorities of that city to levy a special tax to pay certain coupons on outstanding bonds issued under an act of the State in 1852, and to purchase the bonds with any surplus remaining of the moneys collected. The history of the issue of the bonds is as follows: The city of New Orleans was originally incorporated by an act of the legislature in 1805, and its charter continued in force until the 8th of March, 1836. An act was then passed which divided the city into three municipalities, each of which was created a distinct corporation, with 'such rights, powers, and capacities as are commonly incident' to municipal bodies. This division continued until Feb. 23, 1852, when, by an act known as act No. 71 of that year, and entitled 'An Act to consolidate the city of New Orleans and to provide for the government and administration of its affairs,' the three municipalities were again united into one. The act of 1836 provided that a proportionate part of the debt of the city should be paid by each municipality, the quota being fixed upon the basis of the amount of taxes and other revenue accruing to it. The separate municipalities subsequently created debts; and the act of Feb. 23, 1852, provided for the issue of bonds for the payment of those debts, and also for the debt of the old city. The thirty-seventh section, which dealt with this subject, is as follows:--

'SECT. 37. Be it enacted, &c., that the debt of the general sinking fund, commonly called the old city debt, and the debts of the three municipalities, whether in the form of bonds, notes, interest coupons, cash warrants, or other species of obligation whatever, shall be assumed and paid by the city of New Orleans, and said city is hereby declared liable therefor. The mayor, comptroller, and treasurer, and chairmen of the finance committees of the two boards of the common council, shall constitute a commission, to be called the commissioners of the consolidated debt of New Orleans; and they shall have power to issue bonds of the city of New Orleans, having not more than forty years to run, with interest payable at such place as may be agreed on between said commissioners and the parties to whom the bonds are issued, in semi-annual coupons, in exchange for any bonds, obligations, or debts of the old corporation, or of any of the old municipalities, whether matured or not, or to sell the new bonds and apply the proceeds to the payment of the matured debts of the old corporation or of the municipalities, but to no other purpose. The bonds thus issued shall form a stock to be called the consolidated debt of New Orleans. At the time this act goes into operation, an exact and detailed statement of the indebtedness of the old corporation and of each municipality shall be filed in the office of the comptroller, by the secretary of the board of liquidators and the municipal comptrollers respectively, when the commissioners of the consolidated debt shall proceed to divide the debt of the old corporation between the several municipalities, in proportion to the assessed value of real estate within the limits of each, according to the State assessment roll for 1851. The amount thus apportioned to each, together with its individual indebtedness at the time this act goes into operation, shall constitute the separate debt of each municipality, and shall be known as the debt of municipality No. one, No. two, No. three. The common council shall, annually, in the month of January, pass an ordinance to raise the sum of six hundred thousand dollars, by a special tax, on real estate and slaves, to be called the consolidated loan tax, and the rate per cent of said tax, in each municipality, shall be in proportion to the indebtedness of each. All ordinances, resolutions, or other acts passed by said council, after the first day of January in each year, shall be null and void, unless the ordinance imposing the consolidation loan tax shall have been previously passed. At the end of each and every year, any surplus of the consolidated loan tax remaining in the treasury, after the payment of all the interest and the expenses of the management of said debt, shall be applied to the purchase, from the lowest bidder, of such bonds issued under this act, as have the shortest period to run; and the common council shall have the right of rejecting all bids demanding more than the face of the bonds; for which purpose, public notice shall be given by the comptroller in the official gazette for thirty days, inviting proposals from bondholders for the sale, to the city, of the bonds herein described. From and after the passage of this act no obligation or evidence of debt of any description whatever, except those herein authorized, shall be issued by the city of New Orleans or under its authority; nor shall any loan be contracted, unless the same be authorized by a vote of a majority of the qualified voters of said city, which shall be taken in the manner prescribed by the city council, after ten days proclamation by the mayor, in the newspaper chosen by the common council; and no ordinance creating a debt or loan shall be valid, unless such ordinance shall prescribe ways and means for the punctual discharge at maturity of the capital borrowed or debt incurred; and such ordinances shall not be repealed until principal and interest of the capital borrowed or the debt incurred are fully paid and discharged.'

By a supplementary act approved on the same day, known as No. 72 of the year, the adjacent city of Lafayette was added to the city of New Orleans, and provision was made for the assumption and payment of its debt. The fifth section of the act is as follows:--

'SECT. 5. Be it further enacted, &c., that the debt of the city of Lafayette shall be assumed and paid by the city of New Orleans, and the said city of New Orleans is hereby declared liable therefor; and the amount of said debt shall be ascertained, and its payment provided for and made in the same manner as the debt of each municipality of New Orleans is ascertained and provided for in the act to which this act is a supplement; and in raising annually the consolidation loan tax for the payment of the debt of New Orleans, an additional sum of fifty thousand dollars shall be raised for the purpose of providing for the debt of the city of Lafayette, now added to that of New Orleans, so that the whole amount of the annual levy of taxes for the payment of the debt of New Orleans shall be six hundred and fifty thousand dollars.'

Under these acts, No. 71 and No. 72, the commissioners of the consolidated debt issued bonds of the city of New Orleans, known as consolidated bonds, to the amount of ten million dollars, in exchange for the bonds, obligations, and debts of the old city, of the three municipalities, and of the city of Lafayette. Of this amount bonds exceeding five million dollars have been paid by funds received under the tax levied pursuant to the provisions of the thirty-seventh section of act No. 71 and of the fifth section of act No. 72, beyond what was necessary to meet the annual interest. There remain outstanding bonds for more than four million dollars, with interest since 1876. Of these bonds, with unpaid coupons, the relator owns upward of six hundred, each for the sum of one thousand dollars.

The petition refers to the acts No. 71 and No. 72 of 1852, and cites at length the sections mentioned. It also alleges that the bonds issued under them were negotiable secutrities; that by reason of the law providing for the payment of the interest and the gradual reduction of their number through a sinking fund, they were negotiated at their par value or above it, and distributed in the markets of Europe and of the United States in the due course of business as a secure, permanent, and trustworthy investment; that the free banks of the State were compelled to invest in them to secure the circulation of their bills, and that individuals and corporations did likewise with confidence in the provisions of sect. 37 of act No. 71, and sect. 5 of act No. 72, for the maintenance and enforcement of which the public faith of the State of Louisiana and of the city of New Orleans was inviolably pledged.

The petition then alleges that, in violation of the provisions of law mentioned, which constitute a contract with the bondholders, binding both upon the State of Louisiana and the city of New Orleans, the legislature of the State, on the 12th of March, 1874, passed an act entitled 'An Act to postpone the levy and collection by the city of New Orleans of a tax for a sinking fund for the purchase of its bonds, to authorize the administrators of the city to modify the last budget and tax levy, and to repeal conflicting laws and penalties,' the object of which was to relieve the authorities of the city until December, 1876, from the duty of estimating, levying, and collecting any tax for a sinking fund for the purpose of purchasing any of the bonds issued under the acts mentioned.

The petition also alleges that, in further violation of the provisions of the act of 1852, and of the contract with the holders of the bonds, the legislature, on the 6th of March, 1876, passed another act, designed, as stated in its title, to adjust, requlate, and provide for the bonded debt of the city of New Orleans, and authorize the exchange of its bonds for other bonds to be issued on the plan known as the premium bond plan, the avowed object of which was to impair, if possible, the obligation of the contract between the bondholders and the city, and divest the rights acquired by them under it, by prohibiting the city authorities from levying a tax in any year under the provisions of the acts of 1852, by shackling the judicial tribunals in the issue of process, and by repealing the provisions of that act. The seventh section is as follows:--

'SECT. 7. Be it further enacted, &c., that no tax for the payment of bonds of interest on bonds other than that authorized by the preceding sections [the premium bonds], shall be levied either for the year 1876, or any year of years thereafter, by the city of New Orleans, and that all existing laws requiring or authorizing the city council to levy any tax whatsoever for bonds or interest on bonds, other than said premium bonds, be and the same are hereby repealed; and it shall be hereafter incompetent for any court to mandamus the officers of said city to levy and collect any interest tax other than that provided in this act, or in case of such mandamus, by a receiver or otherwise, to direct the levy and collection of any such tax.'

The petition then avers that these acts of the legislature of Louisiana are in conflict with the Constitution of the United States, in that they impair the obligation of the contract between the bondholders and the city; that nevertheless the authorities of the city, its mayor and administrators, in disregard of the provisions of the acts of 1852, and in contempt of their duties and of the right of the relator and other bondholders similarly situated, have refused to perform the duty imposed upon them by those acts for the years 1874, 1875, 1876, and 1877, to levy a special tax for the payment of the matured coupons and the purchase of bonds; that they have levied upon the property subject to the levy of such special tax for the payment of the consolidated bonds, other taxes to meet other bonds issued by the city in disregard of the prohibitory clauses of sect. 37 of the act of 1852, and the moneys collected have been applied to the payment of those bonds, and other illegal purposes; that the authorities of the city have been notified to levy the special tax required for the years mentioned, but they have refused to discharge their duty in that particular, and, in place thereof, have sought by all sorts of frivolous and unfounded technicalities to contest the validity and integrity of the consolidated bonds; that the relator has demanded payment of the matured coupons held by it, which was refused, the city authorities answering that there were no funds out of which they could be paid; and that the city and the taxable real estate within its limits are liable for the payment of the matured coupons and for the purchase of said bonds to the extent of $650,000 per annum, for the years 1874, 1875, 1876, and 1877, less couponds paid for 1874 and 1875.

The petitioner, therefore, prays for a mandamus and an injunction; the former, commanding the city authorities to levy the special tax of $650,000 for the years named; and the latter, enjoining them from levying any other tax on real estate within the limits of the city which is subject to the special tax for the consolidated debt, until the special tax has been levied.

Upon the petition, an alternative writ of mandamus was issued, requiring the city authorities to show cause why they should not comply with its prayer.

The authorities appeared on the return-day and excepted to the jurisdiction of the court to grant the writ, on the following grounds:--

1st, That by the provisions of the acts of the legislature No. 5 of the extra session of 1870, and No. 31 of 1876-the courts of the State were prohibited from issuing a writ of mandamus to compel the respondents to pay any debt not liquidated by judgment, or to levy and collect any interest tax other than that provided in act No. 31 of 1876 (the premium bond act).

2d, That the duty of the respondents, by the city charter and the sixth section of the act No. 31 of 1876, was limited to the levy and collection of a tax on the assessed value of all property subject to texation within the city, at a rate not exceeding one and one-half per cent on the dollar, to meet all expenses of the city government, and to pay the interest on its bonded debt.

3d, That the respondents are expressly forbidden, by said act No. 31 of 1876, from levying the tax demanded for the year 1876, or for any year afterwards.

4th, That the legislature, by act No. 53 of 1874, had suspended the levy and collection of any tax for the sinking fund under the act of 1872 until December, 1876, which, the respondents charge, was passed with the assent of the Southern Bank.

And if the exceptions should be overruled, the respondents, reiterating and pleading the matters contained in them as part of their answer, further add:--

5th, That the provisions of the thirty-seventh section of act No. 71 of 1852 are unconstitutional and void, because their object is not expressed in the title of the act, as required by art. 118 of the Constitution of 1845, in force at the time.

6th, That the tax provided by the section mentioned is unconstitutional and void, and in violation of sect. 127 of the Constitution of 1845, and art. 123 of the Constitution of 1852; because, first, it is to be assessed on real estate and slaves, and not on personal property; and, secondly, because the rate per cent of the tax in each municipality is to be in propertion to the indebtedness of each.

By a supplementary answer the respondents reiterated the same objections to the with in more ample terms.

Various parties, including the State of Louisiana, holders of premium bonds, owners of real estate in the city, and taxpayers, were allowed to intervene under the practice which obtains in Louisiana, and various exhibits produced by them were made part of the case.

In March, 1878, the District Court gave judgment granting a peremptory writ of mandamus as prayed, and denying the injunction. On appear to the Supreme Court of the State this judgment was reversed, and judgment entered that the demand of the relator be dismissed, with costs, in both courts. To review this judgment the case is brought to this court.

Mr. John A. Campbell and Mr. Edward Bermudez, with whom was Mr. Daniel H. Chamberlain and Mr. William B. Hornblower, for the plaintiff in error.

Mr. Benjamin F. Jonas and Mr. Henry C. Miller for the defendant in error.

MR. JUSTICE FIELD, after stating the case, delivered the opinion of the court.

title: Louisiana v. Pilsbury


text: Talk:Louisiana v. Pilsbury

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title: Talk:Louisiana v. Pilsbury


text:
Louisiana v. Pilsbury/Opinion of the Court

As will be seen by the statement of the case, the petition for the mandamus proceeds upon the theory that the transaction, authorized by the thirty-seventh section of the act of 1852, and the fifth section of the supplementary act of the same day, when consummated by the issue of the bonds of the city of New Orleans, and their exchange for the obligations of the old city, of the three municipalities, and of the city of Lafayette, constituted a contract between the city and the bondholders, and obligations of which could not be subsequently impaired by State legislation; and that the provision pledging the levy and collection of an annual tax of $600,000, increased by the supplementary act to $650,000, for the payment of the interest on the bonds, and their gradual retirement, was an essential part of that contract.

On the other hand, the city authorities, the respondents here, deny the validity of the act of 1852, on two grounds: 1st, that its object is not sufficiently expressed in its title, under the Constitution of 1845; and, 2d, that in providing for a tax to be levied upon real estate and slaves, to the exclusion of personal property, and in proportion to the indebtedness of each municipality, it violates the Constitution of 1845, which requires equality and uniformity of taxation throughout the State. And they also invoke against the issue of the writ the subsequent legislation of the State limiting the taxes which shall be levied upon property in the city, prescribing the purposes to which they shall be applied, prohibiting the levy and collection of any other tax, and depriving the courts of the State of the power to issue a mandamus to compel them to pay any debt not liquidated by judgment, or to levy and collect any interest tax other than that provided by the premium bond act of 1876.

Assuming for the present that the act of 1852 is not invalid, for the reasons stated, the first inquiry is as to the character of the transaction authorized by it and the supplementary act. Did it, when consummated, amount to a contract between the city and parties subsequently taking the bonds; and did the pledge to levy the annual tax named form a part of the contract? Unless both of these questions can be answered in the affirmative, it will be to no purpose to inquire into the subsequent legislation of the State respecting the tax, as no inhibition would rest upon its power over the subject.

The acts of 1852 consolidated the three previously existing municipalities within the limits of New Orleans into one, and added to it the adjacent city of Lafayette. The new corporation took all the property and interests of the municipalities, and of Lafayette, and consequently became subject to their obligations. The advantages which accrued from the possession of their property were accompanied with the burdens of their debts. This liability was not, however, left to rest upon any general principles of corporate liability in such cases. The legislature recognized its existence, and in consolidating the municipalities and the corporation of Lafayette, declared that the debts of the old corporation, of the municipalities, and of that city, should be assumed and paid by the city of New Orleans, which was declared to be liable therefor. The first of the acts appointed commissioners of the debt thus consolidated, and authorized them to issue new bonds of the city having forty years to run, with interest coupons payable semiannually, in exchange for the obligations and debts of the old corporation, and of the municipalities, to which the debts of Lafayette were subsequently added by the supplementary act. To meet the interest it provided that the common council of the city should annually, in month of January, pass an ordinance to raise the sum of $600,000, increased to $650,000 by the supplementary act, by a special tax on real estate and slaves, to be called the consolidated loan tax. It also provided that any surplus remaining at the end of each year, after payment of the interest on these bonds, and the expenses of managing the debt, should be applied to the purchase of such of the bonds as might have the shortest period to run. These provisions, until the bonds were accepted, were in the nature of proposals to the creditors of the old city, of the municipalities, and of Lafayette. The State in effect said to them: The city will give these bonds, running for the period designated, and drawing interest, in exchange for your demands; and as security for the payment of interest, and the gradual redemption of the principal, the city shall annually, in January, levy a special tax for that purpose to the amount of $650,000. The provisions were designed to give value to the proposed bonds in the markets of the country, and necessarily operated as an inducement to the creditors to take them. When the bonds were issued and taken by the creditors, a contract was consummated between them and the city as fully as if all the provisions had been embodied as express stipulations in the most formal instrument signed by the parties. On the one hand, the creditors surrendered their debts against the former municipalities; and, on the other hand, in consideration of the surrender, the city gave to them its bonds, which carried the pledge of an annual tax of a specified amount for the payment of the interest on them, and ultimately of the principal. The annual tax was the security offered to the creditors; and it could not be afterwards severed from the contract without violating its stipulations, any more than a mortgage executed as security for a note given for a loan could be subsequently repudiated as forming no part of the transaction. Nearly all legislative contracts are made in a similar way. The law authorizes certain bonds to be issued, or certain work to be done upon specified conditions. When these are accepted, a contract is entered into imposing the duties and creating the liabilities of the most carefully drawn instrument embodying the provisions. Von Hoffman v. City of Quincy, 4 Wall. 535; Hartwan v. Greenhow, 102 U.S. 672;People v. Bond, 10 Cal. 563; Brooklyn Park Company v. Armstrong, 45 N. Y. 235.

There were other provisions in the act of 1852 besides those stated, which, though not essential to the obligatory form of the contract, were designed to inspire the creditors with confidence in the punctual payment of the interest and principal. It declared that all ordinances, resolutions, or other acts passed by the council after the first day of January of each year should be null and void, unless the ordinance imposing the consolidated loan tax should have been previously passed. It also declared that after its passage no obligation or evidence of debt of any description whatever, except those therein authorized, should be issued by the city or under its authority. Whatever legal force may be ascribed to them, they were intended as solemn asseverations that the pledge of the annual tax should never be violated.

The question then arises, Was the act of 1852 valid? Its invalidity is asserted, as stated above, on two grounds; the first of which is that its object is not expressed in its title, as required by article 118 of the Constitution of 1845. The title of the act is 'An Act to consolidate the city of New Orleans, and to provide for the government and administration of its affairs.' The article of the Constitution declares that 'every law enacted by the legislature shall embrace but one object, and that shall be expressed in the title.' A similar provision is found in several State Constitutions. Its object is to prevent the practice, common in all legislative bodies where no such provision exists, of embracing in the same bill incongruous matters, having no relation to each other, or to the subject specified in the title, by which measures are often adopted without attracting attention, which, if noticed, would have been resisted and defeated. It thus serves to prevent surprise in legislation. But it was not intended to forbid the union of several different provisions in the same bill, if they are germane to the general subject indicated by its title. A bill to incorporate a city and provide for its government may, without conflicting with the constitutional clause, contain provisions relating to the various subjects upon which municipal legislation may be required for the preservation of peach, good order, and health within its limits, the promotion of its growth and prosperity, and the raising of revenue for its government. So here, under the title of the act in question, provisions might be enacted, not merely relating to the union of the different municipalities and the government of the city, but to all the varied details into which the general administation of its affairs might lead. The municipalities were in debt at the consolidation, and this was well known to the legislature. A change in their government, and in the administration of their affairs, required some disposition to be made of their debts. Whatever interests were possessed by them were the proper subjects of legislation in the act which took them out of existence as separate municipalities and created a new corporation in their place, with power to deal with their affairs. We hold, therefore, that the act of 1852 was not invalid, on the ground that its object is not sufficiently expressed in its title.

The second ground of objection to the validity of the act of 1852 is, that the tax prescribed is to be levied upon real estate and slaves to the exclusion of personal property, and in each municipality in proportion to its indebtedness; which, as contended, violated the rule of equality and uniformity required by the Constitution of 1845. The language of the act is, that 'The common council shall annually, in the month of January, pass an ordinance to raise the sum of $600,000, by a special tax on real estate and slaves, to be called the consolidated loan tax, and the rate per cent of said tax in each municipality shall be in proportion to the indebtedness of each.' This amount, as already stated, was, upon the annexation of the city of Lafayette, increased to $650,000. On the passage of this act,-Feb. 23, 1852, the Constitution of 1845 was in force. The Constitution of 1852 was not adopted until July of that year. Article 127 of the Constitution of 1845 is as follows: 'Taxation shall be equal and uniform throughout the State. After the year 1848, all property on which taxes may be levied in this State shall be taxed in proportion to its value, to be ascertained as directed by law. No one species of property shall be taxed higher than another species of property of equal value on which taxes shall be levied; the legislature shall have power to lavy an income tax, and to tax all persons pursuing any occupation, trade, or profession.'

This article has been frequently before the Supreme Court of the State for construction, and until the decision of the present case the requirement of equality and uniformity in the tax has been held to apply only to taxes levied for State, and not to those levied for municipal, purposes. The first case was Second Municipality of New Orleans v. Duncan, 2 La. Ann. 182. That municipality had passed an ordinance imposing a special tax of one per cent on all real estate within its limites, for the purpose of paying its debts and providing for the support of schools; and objection was taken to its constitutionality on two grounds: 1st, that the power of taxation was vested exclusively in the legislature, and could not be delegated to the municipality; and, 2d, that the taxation authorized impinged upon the rule that no one species of property should be unduly assessed. Both grounds were supposed to derive support from the article of the Constitution in question,-the first, because, as contended, the equality and uniformity required throughout the State were only obtainable by confining the exercise of the power of taxation to the legislature, whose authority was coextensive with the territorial limits of the State; and the second, from the inhibition against taxing one species of property higher than another. But the court replied, speaking through its Chief Justice: 'The article by its terms applies to State, and not to municipal, taxes. It provides for equality and uniformity of taxation throughout the State. . . . The framers of the Constitution had before them the condition of the municipalities of New Orleans, with their debts, their abuses, and their wants; and their corporate existence is recognized and continued, as to certain public rights, by an express provision. The jurisprudence under which the present system of taxation had grown up was before them, and the power of remedying the evils of misgovernment was left in statu quo, with the legislature; and the convention confined itself to providing for the State government, leaving the municipal bodies, as it is believed sound policy justified, under legislative control.' And referring to the admission made in the record that there was no special ordinance of the municipality assessing taxes on personal property, the court added: 'We know of no reason imperative on the municipality to impose their taxes in any particular form, or to include any other species of property in an ordinance imposing a tax on real estate. It constitutes no objection, under any view of the subject, to the validity of this tax, that personal property was not also taxed by special ordinance.'

This case was decided in 1847, and it is objected that it arose before that part of the article went into effect, which declares that 'no one species of property shall be taxed higher than another species of property of equal value on which taxes shall be levied.' It is doubtful whether this objection be correct in point of fact, but assuming it to be so, the requirement of equality and uniformity was in force; and the part cited does not require that taxation shall be universal. It simply requires that when different kinds of property are taxed, the rate of taxation shall be the same on all. The construction given was afterwards affirmed by the same court in City of Lafayette v. Cummins (3 La. Ann. 673), decided in 1848. There the question was as to the validity of a municipal tax on the trade and occupation of the defendant as a butcher, levied under an ordinance of the city passed in 1847. There were other trades and occupations not embraced in the ordinance, and, consequently, not taxed. It was, therefore, contended that the imposition of the tax was contrary to that clause of the article of the Constitution which provides for the equality and uniformity of taxation throughout the State. But the court replied that 'in the case of Duncan v. Second Municipality, this question, after very thorough argument, was determined by this court, and the article was held applicable only to State, and not to municipal, taxes.' It is said in answer to this decision that the language of the court was a mere dictum. We do not so regard it. The point of contention in the case was whether the equality and uniformity applied to taxation on occupations and trades as well as on property. The answer which met the objection to the taxation on real property exclusively was held to meet the objection to taxation on certain occupations to the exclusion of others.

The Constitution of 1852 contained a similar clause, identical in language, omitting the words 'after the year 1848,' and with one exception, subsequently reversed, it has received a similar construction from the Supreme Court of the State. The case referred to was that of Municipality No. 2 v. White and Others, which arose in 1854. 9 La. Ann. 446. The municipality had imposed a tax on the owners of property contiguous to a newly opened street, to pay the expenses of opening it, under a law which authorized the apportionment of the cost in such cases upon the owners of adjacent property, according to the benefit derived from the improvement. The court was of opinion that the law was liable to the objection that the tax was not equal and uniform, as required by the clause in question, and held it to be unconstitutional. The decision was in conflict with that in Duncan's case, but it was rendered by a divided court; and in Yeatman v. Crandall, which arose in 1856, it was overruled. In the latter case, the plaintiff sought to enjoin the collection of a levee tax, which was imposed on certain alluvial lands, on the ground that the statute authorizing it was unconstitutional, in that it violated the rule of equality and uniformity prescribed by the article in question. But the court said: 'This article refers to State taxation, in its proper sense, for general or State purposes. When it says that taxation shall be equal and uniform throughout the State, it points directly to its object, which is to regulate the mode of filling the State treasury. It does not take away the power of making local assessments for local improvements, upon the equitable principle that he who reaps the benefit must bear the burden. . . . It is notorious that an acre of land pays twice as great a tax for local purposes in one parish as an acre of equal value pays in another parish. Yet no one thinks the Constitution infringed by such a state of things.' 11 La. Ann. 220.

By this decision the doctrine of the earlier cases, upon the clause in the Constitution of 1845, was re-established; and one of the judges, who had concurred in the decision in the White case, stated that he had been led to reconsider his opinion, and that he yielded his former impressions on this point the more readily, because the Supreme Court which sat under the Constitution of 1845, and five of the seven judges with whom he had sat upon the bench, had concurred in holding that the article in question was not intended to apply to municipal or local taxation for local improvements.

The doctrine of this case was affirmed the same year in Surgi v. Snetchman (11 La. Ann. 387), and again in 1859 in Wallace v. Shelton, 14 Id. 498. In its opinion, in the latter case, the court said that the questions in the Yeatman case were decided upon full consideration, after having the aid of the arguments of learned counsel in that case, and also in another case then under consideration on a rehearing, and were subsequently affirmed in the two cases mentioned; and added that, 'after these decisions, which were in conformity with those under the Constitution of 1845, we had hoped the question would be considered as at rest.'

The objection to the want of equality and uniformity in the taxation authorized by the act of 1852, in that it was to be levied on the property of the different municipalities in proportion to the indebtedness of each, does not strike us as possessing much force. The debts created by the municipalities were separate and different in amounts, and before the consolidation the taxes upon the property in them must necessarily have been assessed at different rates. There was no obligation upon the legislature to relieve either of them from the unequal burdens consequent upon the different amounts of their indebtedness. The subject was one resting in its discretion. Nor was it an unreasonable provision, when authorizing the city to issue its bonds for the indebtedness of them all, to require that taxation to raise the funds for their payment should be thus apportioned.

From the extended reference to the adjudications of the Supreme Court of Louisiana, upon the Constitution of 1845, requiring uniformity and equality in taxation, there can be no serious question as to the validity of the act of 1852, so far as the consolidated bonds of the city of New Orleans are concerned, and the provisions made by it and the supplementary act for the annual levy of a tax of $650,000 to pay the interest and reduce the principal. The decisions upon the clause of the Constitution of 1852 are corroborative of the correctness of the construction originally placed upon the clause of the Constitution of 1845. Whether such a construction was a sound one is not an open question in considering the validity of the bonds. The exposition given by the highest tribunal of the State must be taken as correct so far as contracts made under the act are concerned. Their validity and obligation cannot be impaired by any subsequent decision altering the construction. This doctrine applies as well to the construction of a provision of the organic law, as to the construction of a statute. The construction, so far as contract obligations incurred under it are concerned, constitutes a part of the law as much as if embodied in it. So far does this doctrine extend, that when a statute of two States, expressed in the same terms, is construed differently by the highest courts, they are treated by us as different laws, each embodying the particular construction of its own State, and enforced in accordance with it in all cases arising under it. Christy v. Pridgeon, 4 Wall. 196, and Shelby v. Guy, 11 Wheat. 361. The statute as thus expounded determines the validity of all contracts under it. A subsequent change in its interpretation can affect only subsequent contracts. The doctrine on this subject is aptly and forcibly stated by the Chief Justice in the recent case of Douglass v. County of Pike, 101 U.S. 677, 687. 'The true rule,' he observes, 'is to give a change of judicial construction in respect to a statute the same effect in its operation on contracts and existing contract rights that would be given to a legislative amendment; that is to say, make it prospective, not retroactive. After a statute has been settled by judicial construction, the construction becomes, so far as contract rights acquired under it are concerned, as much a part of the statute as the text itself, and a change of decision is, to all intents and purposes, the same in its effect on contracts as an amendment of the law by means of a legislative enactment.' See also Gelpcke v. City of Dubuque, 1 Wall. 175; Havemeyer v. Iowa County, 3 id. 294; Thomson v. Lee County, id. 327; Lee County v. Rogers, 7 id. 181; Chicago v. Sheldon, 9 id. 50; Olcott v. The Supervisors, 16 id. 678; Fairfield v. County of Gallatin, 100 U.S. 47.

We refer to this doctrine, not from any doubt as to the correctness of the construction of the article of the Constitution of 1845 given by the Supreme Court of the State, but in answer to the objections of counsel and the position of the court below. We are of opinion that the construction given was correct. It is impossible to apply to the varying wants of a municipality the rule invoked with reference to taxation for State purposes on property throughout the State, without producing the very inequality which that rule was designed to prevent. There would often be manifest injustice in subjecting the whole property of a city to taxation for an improvement of a local character. The rule that he who reaps the benefit should bear the burden must in such cases be applied. The same construction of a similar clause in the constitutions of other States has been adopted by their highest courts. The Constitution of Virginia of 1850 prescribed that 'taxation shall be equal and uniform throughout the Commonwealth, and all property, other than slaves, shall be taxed in proportion to its value, which shall be ascertained in such manner as may be prescribed by law;' and the Court of Appeals of the State held that the provision related solely to taxation for purposes of State revenue, and did not apply to taxes by counties and corporations for local purposes. Gilkeson v. The Frederick Justices, 13 Gratt. (Va.) 577. The Constitution of Arkansas of 1836 provided that 'all property subject to taxation shall be taxed according to its value,-that value to be ascertained in such manner as the General Assembly shall direct,-making the same equal and uniform throughout the State;' and the Supreme Court of the State held that the provision was intended to apply to State revenue, and was not applicable to taxes levied for county purposes. Washington v. The State, 13 Ark. 752. See also McGehee v. Mathis, 21 id. 40.

That taxation for State purposes, to be equal and uniform within the meaning of the Constitution of 1845, need not have been universal, is a proposition which calls for no argument. It was only necessary that all property on which taxes were levied-not all property in the State-should be taxed according to its value, and in conformity with some fixed rate or mode. State v. Lathrop, 10 La. Ann. 398; New Orleans v. Commercial Bank, id. 735.

The validity of the consolidated debt of New Orleans, and the obligation of the city to provide for the payment of the interest and the redemption of the principal, were never questioned by the legislative department of the State until 1876, but were repeatedly and in the most emphatic manner recognized and affirmed. In fourteen acts of the legislature passed prior to that year the consolidated bonds are referred to as valid obligations of the city, though in one of them, it is true, a different mode of raising the tax from that specified in the act of 1852 is required, and in another the levy and collection of the tax are postponed for two years. Thus the act passed in 1856 amending the charter provides that the common council shall in each year levy an equal and uniform tax upon all property in the city, real and personal, but that said tax, added to the consolidated loan tax and other taxes designated, shall not in the aggregate be more than one dollar and a half on one hundred dollars of valuation, except in case of invasion, 'provided it be sufficient to pay the interest on the consolidated debt and railroad bonds issued by the city of New Orleans.' In the mode thus prescribed the amount stipulated by the act of 1852 was annually raised and applied until 1874, without objection from the bondholders. Hence it is contended that they waived their right to the special tax mentioned. But no such inference can be justly drawn from their silence. They could not complain so long as the amount prescribed was raised and applied as stipulated. Had the requisite funds been given to the city, and then applied to pay the interest on the bonds, and to purchase with the residue such of them as had the shortest time to run, the bondholders would have been equally without cause of complaint, and would as little have waived by their silence the right to insist upon the special tax if a resort to it should become necessary. Nor is their right in that respect affected by the fact that since 1852 slavery has been abolished, and that there are no longer slaves upon whom taxation can be levied. The obligation of the city to raise the required fund by special tax on real estate still remains. That is no more lessened than it would be by the destruction of any other portion of the taxable property; although the rate of taxation on what is left might be thereby increased.

The act of 1874, which postponed the levy and collection of the tax for a sinking fund for the purchase of bonds of the city until December, 1876, also declared that the act should in no wise be construed to hinder, delay, or affect the prompt payment of the interest on them as they matured. The validity of the consolidation bonds was 'recognized in all its integrity, it being the object of the act to afford temporary relief to the taxpayers of New Orleans in the embarrassed condition of its affairs, and not to detract from or impair the rights of the holders of said bonds.'

But notwithstanding this declaration of the validity of the consolidated debt, and the inviolability of the provisions for its payment, no tax was subsequently raised to pay the interest, or to retire the principal. And before the time arrived to which the postponement of a levy was made, new light respecting the obligations of the city and the rights of the bondholders had dawned upon the city authorities. Although for twenty-two years all departments of the State government had recognized the validity of the bonds, and the annual interest had been regularly paid, and more than half of them retired, it was then for the first time discovered that the act of 1852, authorizing the issue of the bonds, was invalid, that its object was not sufficiently stated in the title, that the tax prescribed was neither equal nor uniform, and therefore was in conflict with the Constitution. The outcome of these new notions was the Premium Bond Act of March 6, 1876, passed by the legislature at the solicitation of the municipal authorities.

This act is a most remarkable piece of legislation. So far as the consolidated bonds are concerned, it amounts to little less than open repudiation of the city's faith. It admits that the debt of the city as established by law is so large as to require for its liquidation taxation on property within its limits at the rate of at least five per cent, and yet authorizes a tax of only one and a half per cent to pay the expenses of the city government, and to meet the obligations which are offered in exchange for those bonds.

It recites in its preamble that the total debt of the city. bonded and floating, exceeds $23,000,000; that the taxable property of the city has become so reduced in value as to require a tax at the rate of at least five per cent per annum to liquidate the debt; that the levying of a tax at so exorbitant a rate will render its collection impossible; that the continuation of a tax beyond the ability of the property to pay would lead to a further destruction of the assessable property of the city and to ultimate practical bankruptcy; and that the council of the city have adopted a plan for the liquidation of its indebtedness, looking to the payment of its creditors in full, 'obtaining thereby the indulgence necessary for the public well-being and the maintenance of the public honor.'

The plan proposed was to exchange all recognized and valid bonds of the city of New Orleans, and of the cities of Jefferson and Carrollton, for bonds to be known as premium bonds of the city; the latter to be of the denomination of twenty dollars, and dated Sept. 1, 1875, each bearing five per cent interest from July 15 of that year, the interest and principal to be paid at the same time and not separately, and that time to be determined by chance in a lottery. One million of these bonds was to be divided into ten thousand series of one hundred bonds each. The ten thousand series were to be placed in a wheel, and, in April and October of each year, as many series were to be drawn as were to be redeemed, according to a certain schedule adopted. The bonds composing the series thus drawn were to be entered for payment three months thereafter, principal and interest, and were to be receivable for all taxes, licenses, and other obligations of the city. At the expiration of the three months the bond numbers of the drawn series were to be placed in a wheel and 1,176 prizes, amounting to $50,000, were to be drawn and distributed. Under this plan the city was to be released from payment of the principal and interest of its debt, except such portion as might be drawn in the lottery each year. Under this arrangement it would depend upon the turn of a wheel and the drawing of a fortunate number whether a creditor would be paid in one year or in fifty years. The plan completely disregards all the conditions upon which the consolidated bonds were issued, and postpones indefinitely the payment of interest and principal, or rather leaves the time of payment within fifty years to be determined by chance.

The act of 1852, as we have stated, declares that the city council shall, in January of every year, pass an ordinance for the levy and collection of a special tax to be applied to the payment of the interest on the consolidated bonds and to retire the principal. The act of 1876 declares that no tax shall be levied by the city council that year or any year afterwards to pay the principal or interest on those bonds, or on any other than the premium bonds. The act of 1852 declares that all ordinances, resolutions, and acts of the city council of any year shall be null and void, unless the ordinance imposing the special tax designated shall have been previously passed. The act of 1876 declares that all laws requiring or authorizing the city council to levy any tax for bonds or interest on bonds other than premium bonds are repealed; and, as if that was not sufficient evidence of the repudiation of former obligations, it forbids the courts to issue a mandamus to the officers of the city to levy and collect any interest tax other than for those bonds.

To meet the interest on them and for all other purposes of the city, the act further provides that a tax of only one and one-half per cent per annum shall be levied; and this limitation of the taxing power of the corporation is 'declared to be a contract not only with the holder of said premium bonds, but also with all residents and tax-payers of said city, so as to authorize any holder of said premium bonds to legally object to any rate of taxation in excess of the rate herein limited.'

If the provisions of this act nullifying the pledges of the act of 1852 are valied, the consolidated bonds are virtually destroyed; no taxation is allowed to raise funds for them; their payment, therefore, would be so uncertain as to render them practically valueless. The chance with premium bonds offered in their place of a favorable turn of the wheel in a lottery would be a poor substitute for the levy of an annual tax for the payment of interest and principal. We shall not waste words upon the scheme thus developed to evade the just obligations of the city. Notwithstanding the declaration in its preamble, that the act seeks from the creditors the indulgence necessary 'for the public well-being and the maintenance of the public honor,' it is, so far as the consolidation. It says to concerned, tainted with the leprosy of repudiation. It says to the creditors: 'Take these premium bonds, and trust for payment within fifty years to your fortune in the lottery we offer; no other way is left open to obtain a possible payment. No tax can be levied for your benefit. No compulsory writ can issue from the courts. Take these bonds or take nothing.' The primal duty of the city authorities to fulfil punctually their obligations and maintain good faith is thus proclaimed to be no duty at all.

We do not deny that the power of taxation belongs exclusively to the legislative department of the government, that the extent to which it may be delegated to municipal bodies is a matter of discretion, and that in general the power may be revoked at the pleasure of the legislature. But, as we said in the case of Wolff v. New Orleans, decided at the last term, legislation revoking the power is subject to this qualification, which attends all State legislation, that it 'shall not conflict with the prohibitions of the Constitution of the United States, and, among other things, shall not operate directly upon contracts of the corporation, so as to impair their obligation by abrogating or lessening the means of their enforcement. Legislation producing this latter result, not indirectly as a consequence of legitimate measures taken, as will sometimes happen, but directly by operating upon those means, is prohibited by the Constitution, and must be disregarded-treated as if never enacted-by all courts recognizing the Constitution as the paramount law of the land. This doctrine has been repeatedly asserted by this court when attempts have been made to limit the power of taxation of a municipal body, upon the faith of which contracts have been made, and by means of which alone they could be performed. . . . However great the control of the legislature over the corporation while it is in existence, it must be exercised in subordination to the principle which secures the inviolability of contracts.'

The case of Von Hoffman v. City of Quincy, reported in 4th Wallace, is a leading one on this subject. The court there said, 'that when a State has authorized a municipal corporation to contract, and to exercise the power of local taxation to the extent necessary to meet its engagements, the power thus given cannot be withdrawn until the contract is satisfied. The State, and the corporation, in such cases, are equally bound.'

The inhibition upon the courts of the State to issue a mandamus for the levy of a tax for the payment of interest or principal of any bonds except those issued under the premiumbond plan was a clear impairment of the means for the enforcement of the contract with the holders of the consolidated bonds. When the contract was made, the writ was the usual and the only effective means to compel the city authorities to do their duty in the premises, in case of their failure to provide in other ways the required funds. There was no other complete and adequate remedy. The only ground on which a change of remedy existing when a contract was made is permissible without impairment of the contract is, that a new and adequate and efficacious remedy be substituted for that which is superseded. Here no remedy whatever is substituted for that of mandamus. The holders are denied all remedy. Louisiana v. New Orleans, 102 U.S. 203-207.

Legislation of a State thus impairing the obligation of contracts made under its authority is null and void, and the courts in enforcing the contracts will pursue the same course and apply the same remedies as though such invalid legislation had never existed. The act of March, 1876, cannot, therefore, be permitted to restrict the power of the city authorities to levy the tax stipulated by the act of 1852 to pay the interest on the consolidated bonds issued thereunder, and to retire the bonds.

It follows from the views expressed that the judgment of the Supreme Court of the State of Louisiana must be reveresed, and the cause be remanded to that court with instructions to reinstate the same and to remand it to the Third District Court of the Parish of Orleans, or its successor, to carry into effect the provisions of the thirty-seventh section of the act of the legislature approved Feb. 23, 1852, and the fifth section of the supplementary act approved the same day, embraced in Nos. 71 and 72 of the acts of that year, as containing a valid contract between the city of New Orleans and the creditors holding the bonds issued under them; and to direct the District Court to issue a mandamus to the city of New Orleans and its authorities, annually to levy and collect the tax of $650,000 directed by the acts, and to apply the same in the following order: First, to the payment of the current interest of the year; secondly, to the payment of arrearages of interest of former years until all the arrearages are satisfied; and, thirdly, to the purchase of bonds having the shortest period to run.

Judgment to this effect, and that the defendants pay the costs in this court and in the Supreme and District Courts of Louisiana, will be entered.


text: Talk:Louisiana v. Pilsbury/Opinion of the Court


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Bentham's. Though the whole discussion, resulting in a strongly adverse conclusion that is only in words not equally directed against the Christian revelation, has now an antiquated air, it is hardly less subtly thought than vividly expressed; and J. S. Mill (Autobiography, pp. 69, 70) says that the reading 'contributed materially' to his mental development. Of a discourse on magic, recommended by James Mill in 1821 for insertion in the 'Encyclopædia Britannica' as 'truly philosophical' in character, the work of 'a young City banker … a very extraordinary person, in his circumstances, both for knowledge and clear vigorous thinking,' nothing more is known (, James Mill, p.193). Mrs. Grote, in 1823 (Posth. Papers,p. 29), reports fresh purchase of works of Kant, and speaks of him as 'prepared for a furious onset of Kantism,' which is remarkable enough at that time in a follower of James Mill. He does not appear to have been a member of the Utilitarian Society, founded by J. S. Mill in 1822-3; but when this gave place, after two or three years, to a new association for discussion on a basis of systematic readings, he lent the young men a room at the bank for their meetings, and before long joined them on their turning from political economy to logic. They met on two mornings of the week from 8.30 to 10 , before the regular business of the day, and Grote, then living at Stoke Newington (Paradise Place), had to be early astir to get to Threadneedle Street in time. The logical readings were in Aldrich, the Jesuit Du Trieu (whose 'Manuductio ad Logicam' the society reprinted in 1826 at James Mill's instance, in disgust at Aldrich's superficiality), Whately, and Hobbes; the psychology of Hartley was next studied; and, after an interval, meetings were resumed during the winter of 1829-30 for the reading of James Mill's 'Analysis,' then newly published. J. S. Mill, in his 'Autobiography,' testifies to the moulding influence of these readings upon his own works, and they were not less potent in helping to fix Grote's philosophical bent.

These were not, however, Grote's chief doings in the ten years from 1820. It is certain that as early as 1822 he was committed to the project of writing a 'History of Greece;' while from 1826 till 1830 he was one of the most untiring promoters of the new 'London University.' Mrs. Grote's claim (Personal Life, p. 49) to have first suggested the 'History' towards the autumn of 1823 is not borne out by contemporary letters. Some considerable progress had already been made with the writing in the spring of that year (Posth. Papers, p. 24), and the idea had been definitely conceived in 1822 at latest (p. 22). If any external prompting was necessary, there is reason to believe that it came from James Mill. All that Grote wrote in the succeeding years (till 1832) proved in the end to be merely preparatory; but in 1826 he contributed a powerful article on the tory Mitford's 'History of Greece' to the April number of the 'Westminster Review,' which shows that he had already attained his main positions regarding Greek life and thought.

Classical, joined with philosophical, culture helped to give Grote, still a young man, his great influence in determining the character of the new 'university,' of which Thomas Campbell, James Mill, and Henry Brougham were the first projectors. Grote was joined with them from the first nomination of a regular council at the end of 1825, and was forthwith placed on the committees for finance and education, to which fell the chief burden of organising the great seat of learning in Gower Street that began its public work in October 1828. It is difficult now to imagine the labour and anxiety undergone at that time by the pioneers of a movement that has had the effect of transforming the whole higher instruction of the country. The records of the self-styled 'university' prove the astonishing ardour displayed by the three men, Mill, Grote, and Brougham (Campbell very soon fell out), who took the lead in all that was done, with earnest helpers like Z. Macaulay, H. Warburton, W. Tooke, and others. Mill and Grote especially, in spite of the other claims on their time and energy, gave that unremitting attention to details which is necessary for practical result. Grote's business-experience contributed to the great success in raising money for the undertaking at its first start; while he ably seconded Mill, who led the education-committee, in planning a professoriate of unexampled width of range, and in securing men of real distinction to fill the numerous chairs. One only of the appointments led to a difference between master and disciple. There were to be two philosophical chairs, one of 'moral and political philosophy' and another of 'philosophy of mind and logic,' according to a scheme that bears evident traces of Mill's hand. Hopes of obtaining men of the general standing of Thomas Chalmers, Robert Hall, or Sir J. Mackintosh for morals, and of Whately for logic, were disappointed, The actual candidates, when the chairs were first advertised in the spring of 1827, were men of no mark. Dr. Southwood Smith, a Benthamite, recommended in committee for the chair of morals, was not elected. For the chair of mental philosophy and logic a


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Russell v. Stansell

MOTION to dismiss an appeal from the District Court of the United States for the Northern District of Mississippi.

Mr. H. T. Ellett in support of the motion.

There was no opposing counsel.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Russell v. Stansell


text: Talk:Russell v. Stansell

title: Talk:Russell v. Stansell


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Russell v. Stansell/Opinion of the Court

Stansell, the appellee, obtained a decree in the District Court of the United States for the Northern District of Mississippi, in June, 1879, against the Levee Board of Mississippi, District No. 1, for $71,623.67. This decree being unsatisfied, he instituted summary proceedings in the same court, under the provisions of the statute creating the levee board, to obtain an assessment and collection of the charge which was imposed on the lands in the district for its payment. On the 7th of February, 1880, the court entered an order which resulted in an assessment by commissioners appointed for that purpose. In this order it was provided that any person conceiving himself aggrieved by the action of the commissioners might, by petition to the court, present his grievance and obtain such redress as he should fairly be entitled to. On the 1st of February, 1881, D. M. Russell, W. H. Stovall, and H. P. Reid appeared, and as individuals and members of an executive committee appointed at a mass meeting of the several owners of the lands charged with the payment of the assessment, asked an injunction against the collection of the assessment that had been made, setting forth in their petition why the proceedings were illegal and unjust. The amount with which the petitioners, as individuals, were severally charged was as follows: Russell, $7.58; Stovall, $205.14; and Reid, who was assessed only as an agent or attorney, $229.29. No single individual among all the parties represented by the committee could in any event be made liable for an amount exceeding $2,500. On the presentation of the petition the court granted a preliminary injunction, but on final hearing that injunction was dissolved and the petition dismissed. From the last order this appeal was taken, which the appellee now moves to dismiss because the amount in dispute between him and any one of the several persons charged with the payment of the assessment is less than $5,000.

While the appellants, and those whom they have been chosen to represent, are all interested in the question on which their liability to the appellee depends, they are separately charged with the several amounts assessed against them. There is no joint responsibility resting on them as a body. The proceeding on his part was to require each of the several landowners in the levee district to pay his separate share of the debt that had been established against the district. The recovery was against each owner separately. While the appellants were permitted, for convenience and to save expense, to unite in a petition setting forth the grievances of which complaint was made, their object was to relieve each separate owner from the amount for which he personally, or his property, was found to be accountable. An injunction, if granted, would necessarily be to prevent the appellee from collecting from each owner the amount for which he was separately liable. It is clear that under the rulings in Paving Company v. Mulford (100 U.S. 147), Seaver v. Bigelows (5 Wall. 208), Rich v. Lambert (12 How. 347), Stratton v. Jarvis (8 Pet. 4), and Oliver v. Alexander (6 id. 143), such distinct and separate interests cannot be united for the purpose of making up the amount necessary to give us jurisdiction on appeal. Although the amount due the appellee from the levee district exceeds $5,000, his claim on the several owners of property is only for the sum assessed against them respectively. Any owner can relieve himself and his property from all further liability for the district by paying his part of the assessment.

Appeal dismissed.


text: Talk:Russell v. Stansell/Opinion of the Court


text: Author talk:Katharine Sarah MacQuoid

title: Author talk:Katharine Sarah MacQuoid


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Supervisors v. Stanley

ERROR to the Circuit Court of the United States for the Northern District of New York.

The facts are stated in the opinion of the court.

Mr. Rufus W. Peckham and Mr. Wheeler H. Peckham for the plaintiffs in error.

Mr. George F. Edmunds and Mr. Matthew Hale for the defendant in error.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Supervisors v. Stanley


text: Talk:Supervisors v. Stanley

title: Talk:Supervisors v. Stanley


text:
Supervisors v. Stanley/Opinion of the Court

Stanley recovered a judgment against the Board of Supervisors of the County of Albany, for taxes exacted and paid under legal process on shares of the stock of the National Albany Exchange Bank. A large number of the shareholders of the bank who had paid this tax made an assignment of their claims to him, and the judgment was for the sum of $61,991.20, with interest and costs.

The ground of this recovery was that the statute of New York, under which the shares were assessed, was void, because it did not permit the shareholder to make deduction of the amount of his debts from the valuation of his shares of stock, in ascertaining the amount for which they should be taxed.

The pleadings in the case set out the sums paid by the stockholders and their names, and their assignment to Stanley, the payment under compulsion of legal process, and a demand for the repayment on the Albany County authorities.

The case was submitted to the court on a waiver of trial by jury, and on the finding of facts and conclusions of law thereon by the court, judgment was rendered for plaintiffs. The facts found by the court are thus stated:--

'First, That the allegations of the complaint in regard to the citizenship of the plaintiff, the citizenship and powers and liabilities of the defendant, the organization and capital of the National Albany Exchange Bank, the ownership of the shares of capital stock of the National Albany Exchange Bank, the assessment of the stockholders in said bank, named in said complaint, by the board of assessors of the city of Albany, the names and residences of said stockholders, the collection of taxes from said stockholders, and the payment of the same to the county treasurer of the county of Albany, and the demand made by Chauncey P. Williams, before the commencement of this action of the treasurer of the county of Albany, are true as therein set forth.

'Second, That the amounts collected from the said stockholders and paid to the treasurer of the county of Albany, and the times when the said amounts were so paid to said treasurer, were as follows, to wit:--

$907 90 paid...... August 11,

'Third, That the sums above named were not paid voluntarily by said stockholders, but were forcibly collected by the marshal of the city of Albany, under a warrant issued to such marshal by the receiver of taxes of said city, pursuant to a warrant issued to said receiver of taxes by the board of supervisors of the county of Albany, by levying upon the property of the said stockholders respectively, as alleged in said complaint.

'Fourth, That the said assessments were made and said amounts collected and received by the treasurer of the county of Albany, as above stated, under color of an act of the legislature of the State of New York, entitled 'An Act authorizing the taxation of stockholders of banks, and surplus funds of savings banks,' passed April 23, 1866, being chapter 761 of the laws of 1866, and not otherwise.

'Fifth, That the allegations of the complaint with reference to the assignments by the respective stockholders of said bank of their claims against the county of Albany, by reason of the matters alleged in the said complaint, are true as set forth in said complaint, and that the plaintiff, at the time of the commencement of this action, was the holder and owner of all claims against the county of Albany, or against the defendant, arising out of the matters alleged and set forth in said complaint.

'Sixth, That the said act of the legislature of the State of New York, chapter 761 of the laws of 1866, did not permit the deduction of debts owing by the owners of stock in banks or banking associations, in the assessment thereof for taxation, although such deduction of debts of the owner was, at the time of the assessments alleged in the said complaint, permitted and required by the laws of the State of New York to be made from the value of every kind of personal property and moneyed capital, other than bank stock, in assessing the same for the purpose of taxation.

'Seventh, That the allegations in the fourth count of said complaint, as to the presentation to the said board of assessors by said Chauncey P. Williams of the affidavit of his indebtedness, and the request by him for a reduction of his assessment on his bank stock, and the refusal of said board of assessors to make such reduction, and the application by said Williams to the Supreme Court of the State of New York for a writ of mandamus, and the subsequent legal proceedings thereon, including the decision of the Supreme Court of the United States, are true, as set forth in said fourth count.'

It does not appear by this finding of the court that any shareholder, for whose payment of taxes this suit is brought, made affidavit or other application in regard to his indebtedness, that it might be deducted from his assessment, or that he owed anything to be deducted from the assessed value of his shares, except the seventh finding of facts in regard to C. P. Williams.

Unless, therefore, the other shareholders who paid the tax on the shares of their stock were entitled to recover back the sum paid without any evidence that they had made affidavit of the amount which they would be entitled to deduct from the assessment of their shares, if the same rule had been applied to assessment of bank shares as to other personal property, and without any evidence that they owed anything whatever to be deducted from any assessment of their personal property, including bank shares, the judgment in this case cannot be supported.

The judge who decided the case on the circuit found as a conclusion of law that the assessment of all shares of national banks was void, because the statute of New York, under which the assessments were necessarily made, was void, as being in conflict with the act of Congress on that subject, and he declares, in an opinion delivered in the case of The National Albany Exchange Bank v. Hills, Receiver of Taxes, in a chancery suit, that the assessments in this class of cases are absolutely void, the assessors having acted without any jurisdiction.

If this view of the subject be sound,-if the officers who assessed and collected this tax were utterly without authority to collect any tax whatever, or, if there was no law by which in any case they could assess and collect a tax on shares of national banks,-then it is of no consequence to inquire of anything beyond the fact that plaintiff's assignors did pay such a tax under legal compulsion.

On the other hand, if the law is for any porpose a valid law, and if it can be held to furnish the rule of taxation as to any class of owners of national bank shares, then the onus is on plaintiff to show that his assignors are not of that class.

The question here to be decided arises under two statutes of the State of New York in regard to taxation.

The first of these is the act of 1850, relating to the assessment and collection of taxes in the city of Albany. The sixth section of the act requires the board of assessors to prepare an assessment-roll, in which there shall be set opposite the name of each taxpayer, (1) All his real estate liable to taxation and its value; (2) The full value of all his personal property after deducting the just debts owing by him.

Section 9 of the act is as follows:--

'If any person shall at any time before the assessors shall     have completed their assessments make affidavit that the      value of his real estate does not exceed a certain sum, to be      specified in such affidavit, or that the value of the      personal estate owned by him, after deducting his just debts,      and his property invested in the stock of any corporation or      association liable to be taxed therefor, does not exceed a      certain sum, to be specified in the affidavit, it shall be      the duty of the board of assessors to value such real or      personal estate, or both, as the case may be, at the sum      specified in such affidavit, and no more.'

In 1866 the State enacted a law concerning the taxation of bank shares, which was evidently intended to meet the requirements of the act of Congress in relation to State taxation of the shares of national banks, and the provision of this statute related only to taxing stockholders in banks, and to the capital invested in individual banks. The first section of this act reads as follows, and it contains no other provision for deductions as the basis of taxation, except what is found in this section:--

'No tax shall hereafter be assessed upon the capital of any     bank or banking association organized under the authority of      this State or of the United States, but the stockholders in      such banks and banking associations shall be assessed and      taxed on the value of their shares of stock therein; said      shares shall be included in the valuation of the personal      property of such stockholder in the assessment of taxes at      the place, town, or ward where such bank or banking      association is located, and not elsewhere; whether the said      stockholder reside in said place, town, or ward, or not, but      not at a greater rate than is assessed upon other moneyed      capital in the hands of individuals in this State. And in making such     assessment there shall also be deducted from the value of      such shares such sum as is in the same proportion to such      value as is the assessed value of the real estate of the bank      or banking association, and in which any portion of their      capital is invested in which said shares are held to the      whole amount of the capital stock of said bank or banking      association. And provided further, that nothing herein     contained shall be held or construed to exempt from taxation      the real estate held or owned by such bank or banking      association; but the same shall be subject to State, county,      municipal, and other taxation to the same extent and rate and      in the same manner as other real estate is taxed.'

In the case of People v. Dolan (36 N. Y. 59), the question was whether, taking these two statutes together, an owner of shares of stock in a national bank was entitled to deduct from the assessed value of his shares the just debts owing by him. It was argued that into this act of 1866 for the taxation of bank shares there should enter, as part of it, the provision of the act of 1850 which allowed this deduction as to all personal property, and that nothing in the act of 1866 forbade this or was inconsistent with it. It was also insisted that unless the act of 1866 was so construed it would violate the act of Congress which only permitted the shares of national banks to be taxed at the same rate as other money capital of the citizens of the State.

But the Court of Appeals overruled both propositions, and held that the true meaning of the act of 1866 was that no such deduction should be made, and that as thus construed it was not in conflict with the act of Congress on that subject.

In a subsequent case, Williams, a shareholder in the National Albany Exchange Bank, made the affidavit required by sect. 9 of the act of 1850, and presenting it to the board of assessors of the county, demanded a reduction in accordance with it, from the valuation of his bank shares. On the refusal of the assessors to comply with this request, a proceeding was commenced in the courts of the State, in which the Court of Appeals reaffirmed the principles of the case of People v. Dolan. That case coming into this court by writ of error, it was here held that while we were bound to accept the decision of the highest court of the State in construction of its own statute the act of 1866 as thus construed was in that particular in conflict with the act of Congress, because it did tax shares of the national banks at a higher rate than other moneyed capital in the State. It is reported in 100 U.S. 539, and there are no words which declare the act of 1866 to be void, but the careful language of the decision is, that 'in refusing to plaintiff the same deduction for debts due by him from his shares of national bank stock that it allows to others who have moneyed capital otherwise invested, it is in conflict with the act of Congress.' p. 546.

Accepting, therefore, as we must, the act of 1866, as construed by the Court of Appeals of New York, as not authorizing any deduction for debts by a shareholder of a national bank, is it for that reason absolutely void? This cannot be true in its full sense, for there is no reason why it should not remain the law as to banks or banking associations organized under the laws of the State, or as to private bankers, of which there no doubt exists a large number of both classes.

What is there to render it void as to a shareholder in a national bank, who owes no debts which he can deduct from the assessed value of his shares? The denial of this right does not affect him. He pays the same amount of tax that he would if the law gave him the right of deduction. He would be in no better condition if the law expressly authorized him to make the deduction. What legal interest has he in a question which only affects others? Why should he invoke the protection of the act of Congress in a case where he has no rights to protect? Is a court to sit and decide abstract questions of law in which the parties before it show no interest, and which, if decided either way, affect no right of theirs?

It would seem that if the act remains a valid rule of assessment for shares of State banks, and for individual bankers, it should also remain the rule for shareholders of national banks who have no debts to deduct, and who could not, therefore, deduct anything if the statute conformed to the requirements of the act of Congress.

It is very difficult to conceive why the act of the legislature should be held void any further than when it affects some right conferred by the act of Congress. If no such right exists, the delicate duty of declaring by this court that an act of State legislation is void, is an assumption of authority uncalled for by the merits of the case, and unnecessary to the assertion of the rights of any party to the suit.

The general proposition must be conceded, that in a statute which contains invalid or unconstitutional provisions, that which is unaffected by these provisions, or which can stand without them, must remain. If the valid and invalid are capable of separation, only the latter are to be disregarded.

In Railroad Companies v. Schutte (103 U.S. 118), decided at the last term, this point was pressed upon us with much earnestness, and its decision was necessary to the judgment of the court. 'It is contended,' said the court, 'that as the provision of the act in respect to the execution and exchange of the State bonds is unconstitutional, the one in relation to the statutory lien on the property of the company is also void and must fall. We do not so understand the law.' And yet this was a case in which the scheme of exchanging the bonds of the State for the bonds of the company, in order that the company might get the benefit of the better credit of the State, was accompanied by a mortgage created alone by the statute in favor of the State as her security; and the court, while holding that the exchange of bonds was void, as being in conflict with the Constitution of the State of Florida, held that the mortagage which secured the bonds of the company, and which was only a mortgage by operation of the same statute, was valid.

This court, in the two cases cited in the brief, United States v. Reese (92 id. 214) and Trade-Mark Cases (100 id. 82), concedes the general principle that the whole of a statute is not necessarily void because a part of it may be so. Said the court in the latter case: 'While it may be true that when one part of the statute is valid and constitutional, and another part is unconstitutional and void, the court may enforce the valid part where they are distinctly separable, so that each may stand alone, it is not within the judicial province to give to the words used by Congress a narrower meaning than they are manifestly intended to bear.' The first case also implies that there may be unconstitutional provisions which do not vitiate the whole statute or even a single section, because the argument is to show that in that case there could be no separation of the good from the bad. It is also to be observed that in both these cases it was a statute creating and punishing offences criminally which was to be construed in regard to the limited constitutional power of Congress in criminal matters.

Case of the State Freight Tax (15 Wall. 232) arose out of a statute of Pennsylvania which attempted to impose a tax on commerce forbidden by the Constitution of the United States. The act imposed a tax upon every ton of freight carried by every railroad company, steamboat company, and canal company doing business within the State. The railroad companies, who contested the tax, presented a statement which separated the freight transported by them between points solely within the State and limited to such destination, and that which was received from or carried beyond those limits. This court held the latter to be void as a tax on inter-state commerce, and did not declare the whole tax or the whole statute void. It said: 'It is not the purpose of the law, but its effect, which we are now considering. Nor is it at all material that the tax is levied upon all freight, as well that which is wholly internal as that embarked in inter-state commerce. . . . The conclusion of the whole is that, in our opinion, the act of the legislature of Pennsylvania of Aug. 25, 1864, so far as it applies to articles carried through the State, or articles taken up in the State and carried out of it, or articles taken up without the State and brought into it, is unconstitutional and void.' The same language is repeated in Erie Railway Co. v. Pennsylvania (id. 282), decided at the same time. Both cases were remanded to the State court for further proceedings in conformity with the opinion, which could only mean to enforce the tax on transportation limited to the State and not on inter-state commerce.

This is a clear case of distinguishing between the articles protected by the Constitution of the United States and those which were not, though nothing in the language of the statute authorized any such distinction.

But in a review of the cases in this court on this subject, Austin v. The Aldermen (7 Wall. 694) will be found most nearly to resemble the one before us. It related to the same matter of the invalidity of a statute of a State taxing shares of the national banks as being in conflict with the act of Congress. That act said that such taxes might be assessed at the place where said bank was located, and not elsewhere.

The statute directed the assessment and taxation of the shares at the place where the owner resided. Austin, having contested the tax on his shares in the courts of the State unsuccessfully, brought the case here by writ of error. This court declined to enter upon the question of the validity of the statute, because the case did not show that he was taxed on his shares in any other place than that where he bank was located.

The argument of counsel in the case before us is that any tax, or a tax on any person on account of his bank shares, is void because the whole of the New York statute is void. If the argument is sound, it was equally applicable to Austin's case, in which the statute, which made no limitation of taxation to the place where he bank was located, must have been held void under any principle which would wholly invalidate the statute of New York, because the latter did not allow the deduction of the owner's indebtedness from his shares. And if in that case the Massachusetts statute was utterly void as to national bank shares, then the tax on Austin's shares in Boston was void, and he had a right to be protected against the unconstitutional statute. The court evidently went upon the principle that the statute was only void as against the act of Congress, in cases where some one was injured by the particular matter in which there was such conflict. The case seems to us directly in point.

To the same effect are the cases of People v. Cassity, 46 N. Y. 46; Gordon v. Cornes, 47 id. 608; In the Matter, &c., Village of Middleton, 82 id. 196.

If we examine the statute before us on principle, we shall find but little reason to hold it to be wholly void as regards bank shares. If the statute stood alone, there is nothing in it in conflict with the act of Congress. It is only when we look to the other statute, which permits the deduction of debts from the entire value of personal property, that we discern the discrimination against bank shares. The act declares that bank shares shall be taxed according to their value, after deducting the real estate and other property on which the bank itself pays tax. This is eminently just. It provides for a mode of ascertaining their value, the officers who shall do it, and how the tax shall be collected. In all this the law is valid, except that it does not authorize a deduction for debts of the shareholder. This is a distinct and separable principle. When the shareholder has no debts to deduct, the law provides a mode of assessment for him, which is not in conflict with the act of Congress, and the law in that case can be held valid. Under the decision in Austin v. The Aldermen, it is valid as to him.

If he has debts to be deducted, the case of People v. Weaver (100 U.S. 539) shows that in taking the steps which this court has held he may take, he can secure that deduction, and when secured the rest of the law remains valid. In other words, in such a case, so much of the law as conflicts with the act of Congress in the given case is held invalid, and that part of the State law which is in accord with the act of Congress is held to be the measure of his liability. There is no difficulty here in drawing the line between those cases to which the statute does not apply and to those to which it does, between the cases in which it violates the act of Congress and those in which it does not. There is, therefore, no necessity of holding the statute void as to all taxation of national bank shares, when the cases in which it is invalid can be readily ascertained on presentation of the facts.

It follows that the assessors were not without authority to assess national bank shares; that where no debts of the owners existed to be deducted the assessment was valid, and the tax paid under it a valid tax. That in cases where there did exist such indebtedness, which ought to be deducted, the assessment was voidable but not void. The assessing officers acted within their authority in such cases until they were notified in some proper manner that the shareholder owed just debts which he was entitled to have deducted.

If they then proceeded in disregard of the act of Congress, the assessment was erroneous, and the case of People v. Weaver (supra) shows how that error could be corrected.

The case before us shows no error in any case but that of Williams, and in that case he has obtained the judicial decision of this court, that the tax he paid was illegally exacted from him. Nor do the facts of his case raise the question whether in a case where the debts of the shareholder do not equal the assessors' value of his shares, the tax is wholly erroneous, or only so much as represent the assessment of his indebtedness that should have been deducted, for his affidavit was that his debts equalled the value of his bank shares. Nor do the findings of fact raise the question whether, without making affidavit and demand on the assessors, a suit can be maintained to recover, when such indebtedness actually existed; for he did make affidavit and demand, and no other taxpayer has shown any such notice or demand, or that he had any indebtedness to be deducted. There is neither finding of fact nor averment in the pleadings on either point as to any other assignors of plaintiff than Williams. It results from these considerations that the judgment of the Circuit Court will be reversed, and that on the finding of facts judgment will be rendered for the plaintiff on the fourth count for the amount of the tax paid by Williams, with interest, and on all the other counts for defendants.

It is so ordered.

MR. JUSTICE BRADLEY dissented.

MR. JUSTICE MILLER delivered, at a subsequent day of the term, the further opinion of the court.

Since the opinion in this case was delivered a suggestion has been made to modify the order of the court for judgment so far as to permit a trial in the Circuit Court on issues not decided by that court in the former trial.

The conclusions of law found by the Circuit Court, if sound, disposed of the whole case, and the facts found were sufficient to meet that view. As our opinion differed in one important point from that on which the Circuit Court acted, it became a question whether the facts found were still sufficient to dispose of the whole case.

In a bill of exceptions, signed by the judge and found in the record, it is said: 'There was evidence given in the case upon the subject of other allegations contained in the complaint, but the court did not pass upon such allegations, as the following admission and the decision of the court herein duly show.' Then follows a stipulation, signed by counsel or each party, that the case was decided solely upon the invalidity of the New York statute, and that other allegations contained in the complaint had not been passed on.

Under these circumstances we should have little difficulty in directing the court below to grant a new hearing as to such issues, if we could find in the record any material issue in regard to which the court made no finding.

Attention has been called to the following language, which is a part of each count in the complaint:--

'And the plaintiff also says, upon information and belief, that the assessment of said shares of stock in said banking association by said board of assessors was at a greater rate than was assessed by said board of assessors upon shares of stock in a bank organized under the laws of the State of New York, located in said sixth ward, and was at a greater rate than was assessed by said board upon other moneyed capital in the hands of individual citizens of the State of New York, and that for these reasons said assessment of said shares of stock, and the levy of tax thereunder, were illegal and void.'

If this is a sufficient allegation of a distinct ground of recovery, it seems just that the plaintiff should have a hearing on it, as the defendant took issue on it and it has not been disposed of.

We have, however, much difficulty in finding a solid ground of recovery in this statement. It is divisible into two parts: 1. That the shares of the national bank were assessed at a greater rate than was assessed on shares of a bank organized under the laws of the State of New York, located in said sixth ward.

We are quite clear that the shares of the plaintiff are not relieved from taxation because a single bank of the State has been favored by mistake or by intention.

For errors of this kind the statutes of New York provide the correction, which should be taken in time, and we should be very reluctant to hold that, when it has been shown that a single bank or a single individual has been taxed less than he should be, all other taxes, however just, are thereby invalidated.

That the assessment of the shares of the Exchange Bank 'was at a greater rate than was assessed upon other moneyed capital in the hands of individual citizens of the State of New York.'

If by this it is supposed that a few individual instances may be shown of partial assessments favoring citizens as compared with the national banks, we think it is erroneous. But if it is intended to allege that apart from the question of the right of the shareholder to deduct for his debts-a question which, in this case, was disposed of and was in issue-it can be proved that the assessors habitually and intentionally, or by some rule prescribed by themselves, or by some one whom they were bound to obey, assessed the shares of the national banks higher in proportion to their actual value than other moneyed capital generally, then there is ground for recovery, and a hearing as to that should be granted.

As we have said, it may be well doubted if plaintiff intended to allege this, or to rely on proving it.

But as it is a question of pleading under the New York code, and as no injustice can occur by leaving the matter to the court below, the judgment will be so far modified as to permit the court below, in its discretion, to hear evidence on that point, and, if necessary, to allow an amendment of the pleading to present it properly; and it is

So ordered.


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Hills v. Exchange Bank

APPEAL from the Circuit Court of the United States for the Northern District of New York.

The facts are stated in the opinion of the court.

Mr. Rufus W. Peckham and Mr. Wheeler H. Peckham for the appellants.

Mr. Wager Swayne and Mr. Julien T. Davies for the appellee.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Hills v. Exchange Bank


text: Talk:Hills v. Exchange Bank

title: Talk:Hills v. Exchange Bank


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