147 U.S. 190 (1893), 56, Illinois Central Railroad Company v. Decatur

Docket Nº:No. 56
Citation:147 U.S. 190, 13 S.Ct. 293, 37 L.Ed. 132
Party Name:Illinois Central Railroad Company v. Decatur
Case Date:January 09, 1893
Court:United States Supreme Court

Page 190

147 U.S. 190 (1893)

13 S.Ct. 293, 37 L.Ed. 132

Illinois Central Railroad Company



No. 56

United States Supreme Court

January 9, 1893

Argued November 22-23, 1892




The provisions in Section 22 of the act incorporating the Illinois Central Railroad Company, Private Laws, Ill. 1851, 61, 72, exempting it from taxation, do not exempt it from the payment of a municipal assessment upon its land within a municipality in the state, laid for the purpose of grading and paving a street therein.

An exemption from taxation is to be taken as an exemption from the burden of ordinary taxes, and does not relieve from the obligation to pay special assessments imposed to pay the cost of local improvements and charged upon contiguous property upon the theory that it is benefited thereby.

On February 10, 1851, an act was passed by the General Assembly of Illinois incorporating the Illinois Central Railroad Company. By it the company was made the beneficiary of the land grant from Congress to the state of September 20, 1850, 9 Stat. 466. The twenty-second section was in these words:

SEC. 22. The lands selected under said act of Congress and hereby authorized to be conveyed shall be exempt from all taxation under the laws of this state until sold and conveyed by said corporation or trustees, and the other stock, property, and effects of said company shall be in like manner exempt from taxation for the term of six years from the passage of this act. After the expiration of said six years, the stock, property, and assets belonging to said company shall be listed by the president, secretary, or other proper officer with the auditor of state, and an annual tax for state purposes shall be assessed by the auditor upon all the property and assets, of every name, kind, and description, belonging to said corporation. Whenever the taxes levied for state purposes shall exceed three-fourths of one percentum per annum, such excess shall be deducted from the gross proceeds or income

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herein required to be paid by said corporation to the state, and the said corporation is hereby exempted from all taxation of every kind except as herein provided for. The revenue arising from said taxation, and the said five percent of gross or total proceeds, receipts, or income aforesaid shall be paid into the state treasury in money, and applied to the payment of interest-paying state indebtedness until the extinction thereof, provided, in case the five percent provided to be paid into the state treasury and the state taxes to be paid by the corporation do not amount to seven percent of the gross or total proceeds, receipts, or income, then the said company shall pay into the state treasury the difference, so as to make the whole amount paid equal at least to seven percent of the gross receipts of said corporation.

By section 27, it was provided that

this act shall be deemed a public act, and shall be favorably construed, for all purposes therein expressed and declared, in all courts and places whatsoever.

In 1887, proceedings were had in the County Court of Macon County to defray the cost of grading and paving a certain street in the City of Decatur. Under those proceedings, two separate parcels of land belonging to the Illinois Central Railroad Company, and forming part of its right of way, were assessed to the amount of $262.70. The company objected to this assessment on the ground that by its charter it was exempted from all taxation, of every kind, except as therein provided for, and that there was no provision permitting such an assessment. This objection was overruled, and a judgment entered by the county court against the two parcels of land. Exception was taken and an appeal allowed to the supreme court of the state. In that court the ruling of the county court was sustained, and the judgment affirmed, and, the case is now brought here for review by writ of error.

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BREWER, J., lead opinion

MR. JUSTICE BREWER, after stating the facts in the foregoing language, delivered the opinion of the Court.

The single question in this case is whether this special tax for a local improvement is within the exemption from taxation granted to the railroad company by section 22 of the act of 1851.

Between taxes, or "general taxes," as they are sometimes called, by way of distinction, which are the exactions placed upon the citizen for the support of the government, paid to the state as a state, the consideration of which is protection by the state, and special taxes or special assessments, which are imposed upon property within a limited area [13 S.Ct. 294] for the payment for a local improvement, supposed to enhance the value of all property within that area, there is a broad and clear line of distinction, although both of them are properly called taxes, and the proceedings for their collection are by the same officers, and by substantially similar methods. Taxes proper, or general taxes, proceed upon the theory that the existence

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of government is a necessity; that it cannot continue without means to pay its expenses; that for those means it has the right to compel all citizens and property within its limits to contribute, and that for such contribution it renders no return of special benefit to any property, but only secures to the citizen that general benefit which results from protection to his person and property, and the promotion of those various schemes which have for their object the welfare of all. "The public revenues are a portion that each subject gives of his property in order to secure or enjoy the remainder." Montesq., Spirit of the Laws, book 13, c. 1; Loan Association v. Topeka, 20 Wall. 655, 664; Opinions of Judges, 58 Me. 591; Hanson v. Vernon, 27 Ia. 28, 47; Judd v. Driver, 1 Kan. 455, 462; Philadelphia Association v. Wood, 39 Penn.St. 73, 82; Exchange Bank v. Hines, 3 Ohio St. 1, 10.

On the other hand, special assessments or special taxes proceed upon the theory that when a local improvement enhances the value of neighboring property, that property should pay for the improvement. In Wright v. Boston, 9 Cush. 233, 241, Chief Justice Shaw said:

When certain persons are so placed as to have a common interest among themselves, but in common with the rest of the community, laws may justly be made providing that, under suitable and equitable regulations, those common interests shall be so managed that those who enjoy the benefits shall equally bear the burden.

In McGonigle v. Allegheny City, 44 Penn.St. 118, 121, is this declaration: "All these municipal taxes for improvement of streets rest, for their final reason, upon the enhancement of private properties." In Litchfield v. Vernon, 41 N.Y. 123, 133, it was stated that the principle is "that the territory subjected thereto would be benefited by the work and change in question." In Cooley on Taxation (page 416, c. 20, § 1), the matter is thus discussed by the author:

Special assessments are a peculiar species of taxation, standing apart from the general burdens imposed for state and municipal purposes, and...

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