that is, to legislative grants. The court said that while one legislature is competent to repeal any act of general legislation which a former legislature was competent to pass, yet if an act is done under a law, a succeeding legislature cannot undo it. "It will be strange if a contract to convey was secured by the Constitution, while an absolute conveyance remained unprotected."

§ 40. Grant of exemption held a contract.

Soon after, the same principle was applied by the court 1 to the act of the legislature of New Jersey enacted in 1758, providing that lands purchased from the Delaware Indians, and set apart for their use, in consideration of a release by them of other lands, should not thereafter be subject to any taxation, any law or usage or custom to the contrary notwithstanding, and further restraining the Indians from making any lease or sale. Subsequently, the legislature, having, at the petition of the Indians, authorized a sale by an act making no reference to the exemption from taxation, the land in 1803 was sold. After the sale the legislature, in 1804, passed an act repealing the exemption from taxation. It was held by the court in an opinion by Chief Justice Marshall, reversing the New Jersey court, that this was a valid contract protected by the Constitution, and that the privilege, though for the benefit of the Indians, was annexed by the terms of the act to the land and not to the persons.2

1 New Jersey v. Wilson, 7 Cranch, 164.

2 Certain of the lands held exempt in this case had been leased out under an act of 1796, which was not brought to the attention of the court in the Wilson case, and subsequently for about sixty years taxes were regularly assessed upon these lands and paid. It was held by the Supreme Court in Given v. Wright, 117 U. S. 648, that this probably would not have affected that decision, which had, at all events, been referred to and relied on in so many cases from the date of its rendition that it would cause a shock to our jurisprudence to disturb it, and added

§ 41. Contracts of exemption not implied.

After the decision in the Dartmouth College case, that the clause of the Constitution under consideration applied to corporate charters, the claim was made that an act of the Rhode Island legislature imposing a tax on every bank in the State except the Bank of the United States, on the capital stock actually paid in, impaired the obligation of the contract created by the charter granted by Rhode Island to Providence Bank. The court held, in an opinion by Chief Justice Marshall, that as the charter contained no stipulation promising exemption from taxation, the State had made no express contract, and hence no contractual obligation had been impaired.

It was argued that the power to tax involved the power to destroy all the profits of the franchise, and therefore was inconsistent with the grant. But the court replied that the relinquishment of the power of taxation was never to be presumed, and that the argument logically pursued would apply with equal force to every incorporated company and even to the taxation of land. The principle applied in McCulloch v. Maryland and Osborn v. Bank of the United States had no application. The exemption. there was founded expressly on the supremacy of the laws of Congress, and the necessary consequence of that supremacy was to exempt its instrument employed in the execution of its powers from the operation of any interfering power whatever. The vital power of taxation may

at p. 655: "If the question were a new one we might regard the reasoning of the New Jersey judges as entitled to a great deal of weight, especially since the emphatic declarations made by this court in Providence Bank v. Billings, 4 Peters, 514, and other cases, as to the necessity of having the clearest legislative expression in order to impair the taxing power of the State." But apart from that, the court held that long acquiescence under the imposition of the taxes raised the presumption that the exemption which had once existed had been surrendered.

be abused, but the Constitution of the United States was not intended to furnish the correction of every abuse of power which may be committed by the State governments. "The interest, wisdom and justice of the representative body and its relations with its constituents furnish the only security where there is no express contract against unjust and excessive taxation as well as against unwise legislation generally."

1

§ 42. The validity of tax exemption contracts established. In 1845, in the case of Gordon v. Appeals Tax Court,' the principle that contracts to which the State is a party, are protected by the Federal Constitution from impairment of their obligation, was enforced for the first time by the Supreme Court in case of exemption from taxation in a corporate charter. An act of Maryland continuing a bank charter, upon condition that the corporation should pay certain sums for public purposes, and declaring that upon its accepting and complying with the provisions of the act, the faith of the State was pledged not to impose any further tax or burden upon the corporation during the con

1 Providence Bank v. Billings, 4 Pet. 514. Justice McLean, in delivering the opinion of the court in Piqua Branch Bank v. Knoop, 16 Howard, 387, says: "In the argument the case of Providence Bank v. Billings, 4 Peters, 561 (decided in 1830), was referred to. This reference impresses me with the shortness and uncertainty of human life. Of all the judges on this bench when that decision was given I am the only survivor. From several circumstances the principles of that case were strongly impressed upon my memory, and I was surprised when it was cited in support of the doctrines maintained in the case before us. The principle held in that case was, that where there was no exemption from taxation in the charter, the bank might be taxed. This was the unanimous opinion of the judges, but no one of them doubted that the legislature had the power, in the charter or otherwise, from motives of public policy, to exempt the bank from taxation, or by compact to impose a specific tax upon it." See also Memphis Gas Co. v. Shelby Co., 109 U. S. 398, holding that exemption from license taxation could not be inferred.

23 Howard, 133.

tinuance of the charter, was held to exempt, not only the franchise, but the stockholders from a tax levied upon them as individuals. It has been held in later cases that this decision turned upon the construction of the act of Maryland above mentioned, exempting the bank from taxation on account of a large bonus to the State, and that the stockholders upon a true construction of the act were within the terms of the exemption.1

§ 43. Application to consolidated corporation.

Later decisions of the court applied the principle to the case of a consolidated corporation made up of constituent roads, one of which had a chartered exemption from taxation. It was held 2 that the exemption must be strictly con、 strued, that the taxing power is never presumed to have been relinquished unless the intention to relinquish is declared in clear and unambiguous terms, and that such of the property of the consolidated company as was subject to taxation before, continued to be so subject, notwithstanding the claim to exemption of part of it, which could only apply to that part. § 44. Ohio bank tax cases.

In a series of decisions the court enforced the limitation, contained in its charter, upon the liability to taxation of the State Bank of Ohio. The charter provision was held in these cases to be in lieu of all taxes to which the company or stockholders would be otherwise subject. In Jefferson

1 This case has been criticised and distinguished on the proposition that exemption may be implied from the payment of a consideration for the franchise. See New Orleans &c. Co. v. New Orleans, 143 U. S. 192 and 195; also upon the extension of an exemption of corporate property and franchises to corporate stockholders, see Shelby County v. Union Bank, 161 U. S. 149 and 157; see also dissenting opinion of Justice Catron in Piqua Branch v. Knoop, 16 Howard, 401.

2 Philadelphia & Wilmington R. Co. v. Maryland, 10 Howard, 376.

3 Piqua Branch v. Knoop, 16 Howard, 368, three judges, Catron, Daniel and Campbell dissenting; Ohio Life Ins. & Trust Co. v. Debolt, 16 How. 416; Dodge v. Woolsey, 18 How. 331.

Branch Bank v. Skelly,1 decided in 1861, the court reaffirmed this ruling, refusing to conform to the decision of the Supreme Court of Ohio, which, it seems, had changed its ruling upon the subject. But it said that its "appellate power would be of no use to a litigant if the court could not decide independently of all adjudication of the Supreme Court of the State, whether or not the phraseology of the instrument in controversy was expressive of a contract and within the protection of the Constitution of the United States, and its obligation should be enforced, notwithstanding a contrary conclusion of the Supreme Court of the State." And the court added:

“We are aware that the very stringent rule of construction of this court in respect to taxation by a State has not been satisfactory to all persons. But it has been adhered to by this court in every attempt hitherto made to relax it; and we presume it will be, until the historical recollections, which induced the framers of the Constitution of the United States to inhibit the States from passing any law impairing the obligation of contracts, have been forgotten. This court's view of that clause of the Constitution, in its application to the States, is now, and ever has been, that the State legislatures, unless prohibited in terms by State constitutions, may contract by legislation to release the exercise of taxing a particular thing, corporation, or person, as that may appear in its act, and that the contrary has not been open to inquiry or argument in the Supreme Court of the United States."

§ 45. Missouri exemptions enforced against constitutional repeal.

The general subject of the inviolability of charter exemptions, particularly with reference to charitable and educational corporations, is very thoroughly discussed in the

1 1 Black, 436.