Home of the Friendless 1 and the Washington University 2 cases from Missouri, decided in 1869. Both of these corporations had been chartered by the State of Missouri, and their charters exempted their property from taxation. At that time there was no constitutional prohibition of such exemptions. Subsequently, however, the constitution of 1865 prohibited all exemptions from taxation. The Supreme Court of Missouri 3 held that the property was taxable, and said in the University case:

"When the charter of the university was granted, the legislature might have considered it reasonable to foster and encourage it in its infancy and confer upon it privileges and immunities while struggling into existence. But no provision is made in express terms, or by reasonable intendment, that those immunities should be perpetual and have the effect of withdrawing millions of subsequently acquired property from taxation. In 1853 taxes were light and the State debt was small, and exemptions could be made without great detriment. After that period the State embarked into a false and ruinous system of loaning its credit to corporations, by which it incurred an immense debt; then followed the Civil War, which increased its already burdensome obligations, and taxation became exceedingly onerous.

"In this condition of things it was deemed the part of wisdom to make all property within the jurisdiction of the State, receiving the benefit of her laws and protection, contribute its proper proportion and share the common burdens. This was entirely a matter resting in the sound discretion of the legislative branch of the government, and we have been unable to find any objection to their exercise of the power.'

18 Wallace, 430.

2 8 Wallace, 439. See remarks of court as to this case in Grand Lodge v. New Orleans, 166 U. S. 143.

3 Washington University v. Rowse, 42 Mo. 308, 1. c. p. 326.

§ 46. Opinion in Missouri cases.

Both cases were reversed by the Supreme Court (Chief Justice Chase and Justices Miller and Field dissenting). The court said, in Home of the Friendless v. Rowse, 1. c. page 438:

"The validity of this contract is questioned at the bar on the ground that the legislature had no authority to grant away the power of taxation. The answer to this position is, that the question is no longer open for argument here, for it is settled by the repeated adjudications of this court, that a State may by contract based on a consideration exempt the property of an individual or corporation from taxation, either for a specified period or permanently. And it is equally well settled that the exemption is presumed to be on sufficient consideration and binds the State if the charter containing it is accepted."

It was said further, that it was unnecessary that there should have been a consideration named in the act; it was sufficient if the legislature deemed the objects of the grant to be beneficial to the community.

To the argument made in the University case, that the exemption involved a dangerous power which might be abused by the university, the court replied, 1. c. page 440:

"It is urged that the corporation, as there is no limit to its right of acquisition, may acquire property beyond its legitimate wants, and in this way abuse the favor of the legislature, and in the end become dangerous, on account of its wealth and influence. It would seem that this apprehension was more imaginary than real, for the security against this course of action is to be found in the nature of the object for which the corporation was created. It was created specially to promote the endowment of a seminary of learning, and it is not to be presumed that it will ever act in such a manner as to jeopardize its corporate

rights; nor can there be any well-grounded fear that it will absorb, in its efforts to establish a literary institution of high order of merit, in the city of St. Louis, any more property than is necessary to accomplish that object. Should a state of case in the future arise showing that the corporation has pursued a different line of conduct, it will be time enough then to determine the rights of the parties to this contract, under this altered condition of things. The present record presents no such question, and we have no right to anticipate that it will ever occur. It is enough for the purpose of this suit to say, that so long as the corporation uses its property to support the educational establishments for which it was organized, it does not forfeit its right not to be taxed under the contract, which the State made with it."

§ 47. Dissent in Missouri cases.

Justice Miller in a strong dissenting opinion, in which Chief Justice Chase and Justice Field concurred, said, 1. c. page 443:

"We do not believe that any legislative body, sitting under a State constitution of the usual character has the right to sell, to give or to bargain away forever the taxing power of the State. This is a power which, in modern political societies, is absolutely necessary to the continued existence of every such society. While under such forms of government the ancient chiefs or heads of the government might carry it on by revenues owned by them personally, and by the exaction of personal service from their subjects, no civilized government has ever existed that did not depend upon taxation in some form for the continuance of that existence. To hold, then, that any one of the annual legislatures can, by contract, deprive the State forever of the power of taxation, is to hold that they can

destroy the government which they are appointed to serve, and that their action in that regard is strictly lawful."

"With as full respect for the authority of former decisions, as belongs, from teaching and habit, to judges trained in the common-law system of jurisprudence, we think that there may be questions touching the powers of legislative bodies, which can never be finally closed by the decisions of a court, and that the one we have here considered is of this character. We are strengthened, in this view of the subject, by the fact that a series of dissents, from this doctrine, by some of our predecessors, shows that it has never received the full assent of this court; and referring to those dissents for more elaborate defense of our views, we content ourselves with thus renewing the protest against a doctrine which we think must finally be abandoned."

§ 48. Northwestern University v. People and other cases. In University v. People of Illinois,' the court, in an opinion by Justice Miller, held that the statute of Illinois, as construed by the Supreme Court of the State, limiting the chartered exemptions of the Northwestern University to the lands and other property in the immediate use of the institution, was erroneous and that the exemption extended to the property, the annual profits whereof were devoted to the purposes of the institution.

In the case of St. Ann's Asylum in New Orleans, which was exempted from taxation as to all of its property, real and personal, it was held that the exemption extended to the devise of certain property, i. e., a cotton press, the revenues whereof were applied to asylum purposes." But in the case of Christ Church Hospital of Philadelphia, it

1 99 U. S. 309.

2 Asylum v. New Orleans, 105 U. S. 362.

3 Rector &c. v. County of Philadelphia, 24 Howard, 300.

3

was held that there was no contract for perpetual exemption, but only a gratuitous concession on account of temporary conditions.

§ 49. Bank notes and coupons made receivable for taxes. The charters of banks of some of the Southern States provided that their bills and notes should be receivable in payments of all taxes and other moneys due the States. It was held that such charters were contracts on the part of the States with all subsequent holders of the notes, as if attached to the notes when issued, and that the contract right to tender the notes in payment of taxes continued after the repeal of that section of the charter. The court said: "The guaranty is in no sense a personal one. It attaches to the note, is a part of it as much so as if written on the back of it, and goes with the note everywhere and invites every one who has taxes to pay to take it."

§ 50. Tennessee constitutional amendment held void.

In Tennessee, a constitutional amendment adopted in 1865 declared the issues of the Bank of Tennessee during the Civil War to be void, and forbade their receipt for taxes. But it was held that this amendment was void, for there was only one State of Tennessee and its attempted secession was ineffective. The political body continued as a State in the Union and never escaped the obligations of the Constitution. The court in its opinion cites the periods of the Commonwealth in England and of the Revolution in France as showing that the acts of the government were upheld. It could not presume that the notes were issued to sup

1 Woodruff v. Trapnall (Arkansas), 10 How. 190; Furman v. Nichol, 8 Wallace, 44; State v. Stoll (S. C. ), 17 Wallace, 425.

2 Keith v. Clark, 97 U. S. 454.