Illinois Cent Co v. City of Decatur

• Decision Date: 09 January 1893
• Docket Number: No. 56,56
• Parties: ILLINOIS CENT. R. CO. v. CITY OF DECATUR
• Court: U.S. Supreme Court

147 U.S. 190

13 S.Ct. 293

37 L.Ed. 132

ILLINOIS CENT. R. CO.

v CITY OF DECATUR.

No. 56.

January 9, 1893.

Proceedings by the city of Decatur, Ill., to assess a special tax for the cost of grading and paving a street in said city on contiguous property, including land forming part of the right of way of the Illinois Central Railroad Company. Judgment of the county court confirming the assessment was affirmed by the supreme court of the state. 18 N. E. Rep. 315. The railroad company brings error. Affirmed.

Statement by Mr. Justice BREWER:

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 St. p. 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 per centum per annum, such excess shall be deducted from the gross proceeds or income 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 per cent. 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 per cent. provided to be paid into the state treasury, and the state taxes to be paid by the corporation, do not amount to seven per cent. 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 per cent. of the gross receipts of said corporation.'

By section 27 it was provided that 'this act shall be deemed a public act, and shll 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.

B. F. Ayer, for plaintiff in error.

[Argument of Counsel from pages 191-197 intentionally omitted] E. S. McDonald and Hugh Crea, for defendant in error.

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 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 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.' 13 Montesq. Sp. Laws, c. 1; Association v. Topeka, 20 Wall. 655, 664; Opinions of Judges, 58 Me. 591; Hanson v. Vernon, 27 Iowa, 28, 47; Judd v. Driver, 1 Kan. 455, 462; Association v. Wood, 39 Pa. St. 73, 82; 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 Pa. 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) 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 governed by principles that do not apply generally. The general levy of taxes is understood to exact contributions in return for the general benefits of government, and it promises nothing to the persons taxed beyond what may be anticipated from an administration of the laws for individual protection and the general public good. Special assessments, on the other hand, are made upon the assumption that a portion of the community is to be especially and peculiarly benefited, in the enhancement of the value of property peculiarly situated as regards a contemplated expenditure of public funds; and, in addition to the general levy, they demand that special contributions, in consideration of the special benefit, shall be made by the persons receiving it. The justice of demanding the special contribution is supposed to be evident in the fact that the persons who are to make it, while they are made to bear the cost of a public work, are at the same time to suffer no pecuniary loss thereby; their property being increased in value by the expenditure to an amount at least equal to the sum they are required to pay. This is the idea that underlies all these levies. As in the case of all other taxation, it may sometimes happen that the expenditure will fail to realize the expectation on which the levy is made, and it may thus appear that a special assessment has been laid when justice would have required the levy of a general tax; but the liability of a principle to erroneous or defective application cannot demonstrate the unsoundness of the principle itself, and that which supports special assessments is believed to be firmly based in reason and justice.'

These distinctions have been recognized and stated by the courts of almost every state in the Union, and a collection of the cases may be found in any of the leading text-books on taxation. Founded on this distinction is a rule of very general acceptance, that an exemption from taxation is to be taken as an exemption simply from the burden of ordinary taxes, taxes proper, and does not relieve from the obligation to pay special assessments. Thus, in an early case, (In re Mayor, etc., of New York, 11 Johns. 77, 80,) under a statute which provided that no church or place of public worship 'should be taxed by any law of this state,' the court observed: 'The word 'taxes' means burdens, charges, or impositions put or set upon persons or property for public uses and this is the definition which Lord Coke gives of the word 'talliage,' (2 Inst. 532;) and Lord Holt, in Brewster v. Kidgell, Carth. 438, gives the same definition, in substance, of the word 'tax.' The legislature intended by that exemption to relieve religious and literary institutions from these public burdens, and the same exemption was extended to the real estate of any minister, not exceeding in value fifteen hundred dollars. But to pay for the opening of a street, in a ratio to the 'benefit or advantage' derived from it, is no burden. It is no talliage or tax, within the meaning of the exemption, and has no claim upon the public...