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PEOPLE STATE NEW YORK EX REL. METROPOLITAN STREET RAILWAY COMPANY v. NEW YORK STATE BOARD TAX COMMISSIONERS

May 29, 1905

THE PEOPLE OF THE STATE OF NEW YORK EX REL. METROPOLITAN STREET RAILWAY COMPANY
v.
NEW YORK STATE BOARD OF TAX COMMISSIONERS



ERROR TO THE SUPREME COURT OF THE STATE OF NEW YORK

Fuller, Harlan, Brewer, Brown, White, Peckham, McKenna, Holmes, Day

Author: Brewer

[ 199 U.S. Page 35]

 MR. JUSTICE BREWER, after making the foregoing statement, delivered the opinion of the court.

The decision of the Court of Appeals settles that there is nothing in the law or the proceedings in this case in conflict with the constitution of that State. It is not contended by the plaintiff in error that there is any constitutional objection to the taxation of franchises. The right to subject them to a share in the burden of supporting the government is conceded.

The main contention is that this tax legislation impairs the obligation of contracts. It must be borne in mind that presumptively all property within the territorial limits of a State is subject to its taxing power. Whoever insists that any particular property is not so subject has the burden of proof and must make it entirely clear that, by contract or otherwise, the

[ 199 U.S. Page 36]

     property is beyond its reach. In Providence Bank v. Billings, 4 Pet. 514, Mr. Chief Justice Marshall, in delivering the opinion of the court, said (p. 561):

"That the taxing power is of vital importance; that it is essential to the existence of government; are truths which it cannot be necessary to reaffirm. They are acknowledged and asserted by all. It would seem that the relinquishment of such a power is never to be assumed. We will not say that a State may not relinquish it; that a consideration sufficiently valuable to induce a partial release of it may not exist; but as the whole community is interested in retaining it undiminished, that community has a right to insist that its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon it does not appear."

In Vicksburg &c. R. R. Co. v. Dennis, 116 U.S. 665, Mr. Justice Gray cited many authorities, quoting the different phraseology in which by the several writers of the opinions the same rule was announced. In Wells v. Savannah, 181 U.S. 531, the law was thus stated by Mr. Justice Peckham (p. 539):

"The payment of taxes on account of property otherwise liable to taxation can only be avoided by clear proof of a valid contract of exemption from such payment and the validity of such contract presupposes a good consideration therefor. If the property be in its nature taxable the contract exempting it from taxation must, as we have said, be clearly proved. It will not be inferred from facts which do not lead irresistibly and necessarily to the existence of the contract. The facts proved must show either a contract expressed in terms, or else it must be implied from facts which leave no room for doubt that such was the intention of the parties and that a valid consideration existed for the contract. If there be any doubt on these matters, the contract has not been proven and the exemption does not exist."

In Chicago Theological Seminary v. Illinois, 188 U.S. 662, the same Justice declared (p. 672):

"The rule is that, in claims for exemption from taxation

[ 199 U.S. Page 37]

     under legislative authority, the exemption must be plainly and unmistakably granted; it cannot exist by implication only; a doubt is fatal to the claim."

See also Erie Ry. Co. v. Pennsylvania, 21 Wall. 492; Wilmington & Weldon R. R. Co. v. Alsbrook, 146 U.S. 279; Ford v. Delta & Pine Land Co., 164 U.S. 662.

This rule is akin to, if not part of, the broad proposition, now universally accepted, that in grants from the public nothing passes by implication. As said by Mr. Chief Justice Taney, in Charles River Bridge v. Warren Bridge, 11 Pet. 420, 549:

"The inquiry, then, is, does the charter contain such a contract on the part of the State? Is there any such stipulation to be found in that instrument? It must be admitted on all hands that there is none; no words that even relate to another bridge, or to the diminution of their tolls, or to the line of travel. If a contract on that subject can be gathered from the charter, it must be by implication, and cannot be found in the words used. Can such an agreement be implied? The rule of construction before stated is an answer to the question. In charters of this description, no rights are taken from the public or given to the corporation, beyond those which the words of the charter, by their natural and proper construction, purport to convey. There are no words which import such a contract as the plaintiffs in error contend for, and none can be implied."

Applying these well-established rules to the several contracts, it will be perceived that there was no express relinquishment of the right of taxation. The plaintiff in error must rely upon some implication and not upon any direct stipulation. In each contract there was a grant of privileges, but the grant was specifically of privileges in respect to the construction, operation, and maintenance of a street railroad. These were all that in terms were granted. As consideration for this grant the grantees were to pay something, and such payment ...


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