University v. People
ERROR to the Supreme Court of the State of Illinois.
At the June Term, 1875, of the County Court of Cook County, Illinois, application, in the manner prescribed by the revenue law of the State, was made by the county collector, for a judgment against lands in that county, delinquent for the taxes levied and assessed upon them for the year 1874, for State, county, town, school, and municipal corporation purposes. In the list were embraced some four hundred and twenty-seven distinct parcels belonging to the Northwestern University.
Pending this application, the University appeared and filed its objections to judgment being entered against these parcels, and to their sale for delinquent taxes; alleging that, by an act of the legislature of Illinois, approved Jan. 25, 1851, it was created a corporation, and that by an amendment to its charter, made Feb. 14, 1855, all its property of whatever kind or description was declared to be for ever free from taxation for any and all purposes whatever; that by the terms of the charter and amendment the State contracted with it that from and after the passage of the amendment all its property of whatever kind and description should be for ever free from taxation for any and all purposes; that the charter and amendment had been accepted by it and were still in force; and that the taxes complained of had been levied without its assent and in violation of the charter and amendment.
At the trial, it having been admitted that the proper notice and return of the delinquent list had been made as required by law, the collector rested. The university thereupon offered in evidence a stipulation of counsel, that at the time and before the taxes were assessed and levied the parcels enumerated in the objections belonged to, and still belong to, the university, and are leased by it to different parties for a longer or a shorter period, and that all of the parcels are held for sale or lease, for its use and support, and for the objects contemplated in its charter; that the lands which are occupied by buildings or other direct appliances of education are not taxed or included in such parcels; that since the passage of the charter and amendment, the corporation has expended in the erection and purchase of buildings, apparatus, and other facilities and applicances for education, and for the promotion of the objects stated in the charter, over $200,000, realized from donations and the sale of lots and lands, and has built up a university with several departments, in which more than five hundred students are taught the higher branches of learning.
The charter was also offered in evidence. The first section constitutes certain individuals therein named a body corporate under the name of 'Trustees of the Northwestern University, with succession, and with power to acquire, hold, and convey real and personal property, and to make by-laws for the government of the institution,' &c. The second section regulates the term of office of the trustees, and requires the board of trustees to hold the property of the institution for the purposes of education, and not as stock for their individual benefit.
The fourth section locates the institution in or near Chicago, and gives the corporators power in their corporate name to take property by gift, grant, conveyance, or devise, and to grant, sell, devise, let, place out at interest, or otherwise dispose of the same for the use of the institution, and to apply the funds collected or the proceeds of the property to erecting buildings, supporting the teachers, officers, and servants of the institution, and procuring books and apparatus. It restricts the amount of land the corporation can hold to two thousand acres, unless it receives the same by gift, grant, or devise.
An amendment to the act of incorporation was approved Feb. 14, 1855. Its third section authorizes the corporation to take, use, lease, and dispose of property coming to the corporation charged with any trust, and to execute the trusts confided to it. Its fourth section is as follows: 'That all property, of whatever kind or description, belonging to or owned by the corporation, shall be for ever free from taxation.' The fifth section declares the act to be public, and that it shall take effect from its passage.
Another amendment, in force Feb. 19, 1867, changing the name of the corporation to 'Northwestern University,' authorized it by the latter name to exercise the powers and immunities conferred on it, and making other changes in the number of the board of trustees.
The objections were overruled, and, July 14, 1875, judgment was entered for the delinquent taxes against the lands of the university.
That judgment having been affirmed by the Supreme Court, the corporation sued out this writ of error.
So far as they bear upon this case, the provisions of the Constitution of Illinois of 1848, which was in force when the charter and its amendments were enacted; those of the Constitution of 1870, and of the act of 1872, under which the tax was sought to be collected,-are set forth in the opinion of the court.
The assignment of errors is as follows:--The Supreme Court erred in adjudging: First, That no valid contract existed between the State and the plaintiff in error by virtue of the amended charter granted to and accepted by it, whereby it was protected by the Constitution of the United States from the taxation complained of. Second, That the provision of the amended charter exempting the property of the plaintiff in error from taxation was in conflict with the Constitution of the State, and void. Third, That the parcels of land described in these proceedings were subject to taxation for State, county, and other purposes for the year 1874, under the Constitution and laws of the State, notwithstanding their exemption by the amended charter.
Mr. Matt. H. Carpenter and Mr. Wirt Dexter for the plaintiff in error.
It is well settled that, to confer jurisdiction here to review the decision of a State court, it is not necessary that the record should show in ipsissimis verbis that a Federal question was presented, or that the pleadings in the case should either refer to the particular clause in the Federal Constitution relied upon, or set out the general law of the State which is alleged to be in violation of that Constitution. Furman v. Nichol, 8 Wall. 44; Murray v. Charleston, 96 U.S. 432, and cases cited; Murdock v. City of Memphis, 20 Wall. 590.
The question of the invalidity of a State statute and of the authority exercised thereunder, on the ground of their repugnancy to the Constitution, was directly raised and presented below. The Federal right claimed by and decided adversely to the plaintiff was necessarily involved in the judgment rendered. The jurisdiction of this court is therefore clearly established. Home of the Friendless v. Rouse, 8 Wall. 430; Parmelee v. Lawrence, 11 id. 36; McManus v. O'Sullivan et al., 91 U.S. 578; Bolling v. Lersner, id. 594.
This court has enforced the obligations of similar contracts of exemption. Jefferson Branch Bank v. Skelly, 1 Black, 436; State Bank of Ohio v. Knoop, 16 How. 369; Wilmington Railroad v. Reid, 13 Wall. 264; Humphrey v. Pegnes, 16 id. 244; Pacific Railroad Co. v. Maguire, 20 id. 36; The Washington University v. Rouse, 8 id. 439; Home of the Friendless v. Rouse, supra.
The enforced collection of this tax is in violation of the contract, if there was one, between the State and the plaintiff in error; and the sole question, therefore, is as to the existence of such a contract. The decision of it requires this court to determine, not only whether the amended charter exempting the institution from taxation is in its terms a contract, but also whether the legislature had the power to grant it.
The decision of a State court, holding that as a matter of construction a particular charter does not constitute a contract, is not binding on this court. The question of construction is an original one to be determined here. Jefferson Branch Bank v. Skelly, supra; Bridge Proprietors v. Hoboken Company, 1 Wall. 117; Butz v. City of Muscatine, 8 id. 575; State Bank of Ohio v. Knoop, supra; Delmas v. Insurance Company, 14 Wall. 661.
In regard to the exemption of such property as might be deemed necessary for school purposes the Constitution conferred discretion upon the legislature, and the judgment of the latter exercised in making the exemption under consideration is not subject to judicial review. Cooley, Const. Lim. 168, 173; Luther v. Borden et al., 7 How. 1; Bank of Rome v. Rome, 18 N. Y. 42; People v. Mahoney, 13 Mich. 400; Wynehamer v. People, 13 N. Y. 429; People v. Draper, 15 id. 532; Commonwealth v. Hartman, 17 Pa. St. 119; Sharpless v. Mayor of Philadelphia, 21 id. 147.
It is a rule of universal application, that a proper respect for a co-ordinate branch of the government requires that a court must be convinced beyond a reasonable doubt before it will declare a law unconstitutional. Fletcher v. Peck, 6 Cranch, 128; Ogden v. Saunders, 12 Wheat. 213. The rule is the same whether the question involves the construction of a law or of the Constitution itself. Cooley, Const. Lim. 184, and cases cited; Twitchell v. Blodgett, 13 Mich. 162; Martin v. Mott, 12 Wheat. 19; Masier v. Hilton, 15 Barb. (N. Y.) 657; State v. County Court of Boone County, 50 Mo. 317; Carpenter v. Montgomery, 7 Blackf. (Ind.) 415; Franklin v. State Board of Examiners, 23 Cal. 173.
In any view, the exemption under consideration was clearly for school purposes, and should be sustained as a proper exercise of the legislative power.
Such an institution as this university coming into life, without direct donations from the State itself, must have something more than the mere land on which the building stands. There must be a source of revenue which will support its professors, and keep the institution alive. The one is an much a necessity of its success, even of its existence, as the other; and the distinction, that the grounds and buildings thereon and furniture therein are clearly for 'school purposes,' while property used to erect more buildings, as necessity may require, and buy more furniture and pay teachers, is not for 'school purposes,' is one without reason, and is an unworthy foundation for an argument with which to sweep away a contract which reposes upon the faith of a great State, and had been confirmed by twenty years of practical acquiescence.
It is a construction which has heretofore received no support from the Supreme Court of Illinois. Taylor v. Thompson, 42 Ill. 9; Burr v. City of Carbondale, 76 id. 455.
The correctness of the view sustaining the power to make the exemption is conclusively determined by the contemporaneous and practical construction given by the legislative and executive departments of the government of Illinois, and sanctioned by the long acquiescence of her people.
The principle of contemporaneous and practical construction is expressed in some of the oldest maxims of the law: 'Contemporanea expositio est fortissima in lege;' 'Optima est legis interpres consuetudo;' 'A communi observantia non est recedendum.' This court has frequently recognized and applied the doctrine in construing the Federal Constitution and the laws of Congress. Stuart v. Laird, 1 Cranch, 299; Ogden v. Saunders, supra; Prigg v. Pennsylvania, 16 Pet. 539; Dred Scott v. Sandford, 19 How. 393. It has been illustrated and enforced by the decisions of the ablest State courts. Rogers v. Goodwin, 2 Mass. 477; Boyden v. Town of Brookline, 8 Vt. 284; Ramsey v. The People, 19 N. Y. 41; Cronise v. Cronise, 54 Pa. St. 255; People v. Maynard, 15 Mich. 463; Scanlan v. Childs, 33 Wis. 663; Johnson v. Joliet & Chicago Railroad Co., 23 Ill. 202.
The grave errors in the opinion of the learned court below in this case destroy its weight as an authority.
We deny that any case arising on the construction of a statute giving exemption from taxation can be 'pertinent' to the construction of a clause in a constitution limiting a legislative power, or that a clause in a statute conferring exemption on an individual, and a clause in a constitution defining or limiting the legislative power to make exemption, can be 'like clauses.'
But aside from the inherent and marked difference between the cases cited by that court and the case at bar in this particular, it will be found that in all of them there were limiting or qualifying words not found in the clause under consideration, which were the basis of the conclusion of the court.
Mr. Jomes K. Edsall, Attorney-General of Illinois, and Mr. Consider H. Willett, contra.
I. The State has passed no subsequent law repealing or impairing any of the provisions or obligations of the amendment to the charter under which the exemption from taxation is claimed.
1. The revenue law passed in 1872 is a mere revision of that of 1853, and makes no substantial change therein, so far as respects the question of the exemption of property from taxation. Session Laws of 1853, p. 3, sects. 1, 3; Gross, Statutes of Ill. (ed. of 1869), p. 580, sects. 45, 47, with the corresponding provisions found in Rev. Stat. of Ill. (of 1874), p. 857, sects. 1, 2.
2. The revenue law of 1872 does not assume to amend or repeal any exemption contained in special charters of private corporations. Nor can it be construed as having that effect, without violating the established rules of construction. A subsequent law, which is general, does not operate as a repeal of a special law upon the same subject, without express words declaring an intention to repeal. Town of Ottawa v. County of La Salle, 12 Ill. 339; Covington v. East St. Louis, 78 id. 549; Board of Supervisors v. Campbell, 42 id. 490; Tyson v. Postlethwaite, 13 id. 727; Blain v. Baily, 25 Ind. 165; State v. Newark, 2 Dutch. (N. Y.) 519; Sedgwick, Stat. and Const. Law (2d ed.), p. 97.
3. In this revision the legislature left all prior special acts purporting to exempt property of particular corporations from taxation as it found them, and did not attempt to amend or repeal any such acts. If the exemptions claimed were originally void and ineffectual, the general provisions of both the former and present revenue laws of the State prescribing the remedy to enforce the collection of taxes apply to such corporations as well as to all others having property subject to taxation, but otherwise not.
4. The State may lawfully change the remedy for the enforcement of the rights under pre-existing contracts, so long as no substantial right secured by the contract is impaired. Bank of the State of Alabama v. Dalton, 9 How. 522; Sampeyreac & Stewart v. United States, 7 Pet. 222. The enactment of laws so changing the remedy as to rights under past contracts cannot be justly regarded as impairing the obligation of such contracts.
5. Cases cited by counsel for plaintiff in error, where there was an actual attempt by subsequent legislation, or the adoption of a new constitution, to amend or repeal former special charters, are inapplicable to the case presented by this record. For example, Jefferson Branch Bank v. Skelly, 1 Black, 436; Home of the Friendless v. Rouse, 8 Wall. 430; The Washington University v. Rouse, id. 439; State Bank of Ohio v. Knoop, 16 How. 369; Wilmington Railroad v. Reid, 13 Wall. 264; Pacific Railroad Co. v. Maguire, 20 id. 36; Delmas v. Insurance Company, 14 id. 661.
So, also, as to cases brought here upon writ of error to the Federal courts, like Chicago v. Sheldon, 9 Wall. 50; Humphrey v. Peques, 16 id. 244.
II. This court will not entertain jurisdiction of a case from a State court, merely because the judgment of that court impairs or fails to give effect to a contract.
1. In order to confer jurisdiction upon that ground, there must have been some law of the State, subsequently enacted, which impaired the obligation of the contract; and the validity of such law must have been sustained in the State court against this constitutional objection. Railroad Company v. Rock, 4 Wall. 177; Knox v. Exchange Bank, 12 id. 379; Railroad Company v. McClure, 10 id. 511.
2. The Federal question, if any exists, must be disclosed by the record and proceedings as sent here from the State court, otherwise jurisdiction will not be entertained. Warfield v. Chaffe et al., 91 U.S. 690; Murray v. Charleston, 96 id. 432; Moore v. Mississippi, 21 Wall. 636; Smith v. Adsit, 23 id. 368; Parmelee v. Lawrence, 11 id. 36; Murdock v. City of Memphis, 20 id. 590.
While it is not essential to confer jurisdiction that the record proper should in express terms show that a Federal question was raised and decided in the State court, yet the fact must exist; and it must be made to appear that such a question was necessarily involved in the decision.
In this case it neither appears from the record, nor otherwise, that the decision of the State court was based upon, or in any manner affected by, any law of the State passed subsequently to the making of the supposed contract, or that any such claim was ever made in that court by counsel on either side.
3. The State court correctly held that, under the Constitution of 1848, the General Assembly could not exempt from taxation the property of colleges not necessary for 'school purposes.' The express mandate of art. 9, sect. 2, of the State Constitution was, that 'the General Assembly shall provide for levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to the value of his or her property.' Rev. Stat. of Ill. of 1874, p. 52. All municipal taxes are required 'to be uniform in respect to persons and property within the jurisdiction of the body imposing the same.' These provisions have ever been regarded by the Supreme Court of Illinois as limitations upon the power of the General Assembly, and, standing by themselves, would have prohibited all exemptions. O'Kane v. Treat, 25 Ill. 557, 561; Trustees v. McConnell, 12 id. 138; City of Chicago v. Larned, 34 id. 203; City of Ottawa v. Spencer, 40 id. 211; The People v. Barger, 62 id. 452.
But to obviate this result, the framers of the Constitution introduced into the same article a section defining what property the General Assembly might exempt from taxation, as follows:--'SECT. 3. The property of the State and counties, both real and personal, and such other property as the General Assembly may deem necessary for school, religious, and charitable purposes, may be exempted from taxation.' Rev. Stat. of Ill. (of 1874), p. 52.
The General Assembly had no power to grant exemptions, except so far as authorized by this section; and as to educational, religious, and charitable corporations, the courts of the State have uniformly held that the power was confined to such property as was used directly for the purposes for which the corporations were created, and that it did not extend to property leased for other uses, or held for profit merely, although the rents and profits were applied to the proper purposes of the corporation. Northwestern University v. The People, 80 Ill. 333; First Methodist Episcopal Church v. Chicago, 26 id. 482; Illinois Central Railroad Co. v. Irwin, 72 id. 452.
In these rulings the Supreme Court of Illinois has followed the general current of authority upon analogous questions. Pierce v. Inhabitants of Cambridge, 2 Cush. (Mass.) 611; Cincinnati College v. The State, 19 Ohio, 110; Washburne College v. Commissioners of Shawnee County, 8 Kan. 344; Kendrick v. Farquhar, 8 Ohio, 197; Orr v. Baker, 4 Ind. 86; Trustees of Methodist Episcopal Church v. Ellis, 38 Ind. 3; State v. Newark, 2 Dutch. (N. J.) 519; State v. Flavel & Fredericks, 4 Zab. (N. J.) 370; State v. Commissioners of Mansfield, 3 id. 510; Railroad v. Berks County, 6 Pa. St. 670; Wyman v. Cify of St. Louis, 17 Mo. 335; Proprietors of Meeting-House in Lowell v. City of Lowell, 1 Metc. (Mass.) 538.
While it is now authoritatively settled that it is within the competency of a State legislature, possessing unrestrained legislative power, to enter into a valid contract exempting property from taxation, it is equally clear that the people of a State may, by constitutional provisions, limit the power of the legislature in this regard.
The Constitution of 1848 did impose such limitations upon the General Assembly of Illinois.
MR. JUSTICE MILLER delivered the opinion of the court.