222 U.S. 334 (1912), 95, Berryman v. Board of Trustees of Whitman College

Docket NºNo. 95
Citation222 U.S. 334, 32 S.Ct. 147, 56 L.Ed. 225
Party NameBerryman v. Board of Trustees of Whitman College
Case DateJanuary 09, 1912
CourtUnited States Supreme Court

Page 334

222 U.S. 334 (1912)

32 S.Ct. 147, 56 L.Ed. 225



Board of Trustees of Whitman College

No. 95

United States Supreme Court

January 9, 1912

Argued December 13, 1911




The amount in controversy where the question is whether a contract of exemption from taxation has been impaired by subsequent legislation is measured by the value of the right to be protected, and not by a mere isolated element, such as the tax for a single year.

In this case, the jurisdictional value of amount in controversy held to exceed $2,000, although the actual tax, the collection whereof was sought to be enjoined on the ground that its imposition impaired the obligation of a legislative contract, was less than $2,000.

Cases in which the jurisdictional value of amount in controversy is limited to the single tax involved reviewed and distinguished.

The Act of March 2, 1867, 14 Stat. 426, now Rev.Stat., § 1889, prohibiting the granting by territorial legislatures of especial privileges related to conferring new privileges on existing corporations as well as to granting privileges in original charters, and the prohibition included all especial privileges such as exemption from taxation.

In construing a statute, the court must be controlled by the power

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manifested by the act, and not by the motive which initiated it; the scope of the act may extend beyond the generating cause thereof.

The rule that exemption from taxation must be strictly construed against the exemption is as broad as the subject to which it relates; the rule applies not only to the extent of the legislative grant itself, but also to the power of the legislature to make it.

A contract for exemption from taxation is an especial privilege, and is nonetheless within the prohibition of § 1889, Rev.Stat., because granted to an educational institution; it cannot be regarded as beyond the prohibition because granted as an equivalent.

The fact that Congress failed to disapprove an act of a territorial legislature does not validate it if the act was passed in direct violation of a prohibitive provision in the organic act. Clayton v. Utah, 132 U.S. 632.

The facts, which involve the jurisdiction of the Circuit Court of the United States on the question of the amount involved and also the validity of an act of the Legislature of the Territory of Washington exempting property of an educational institution from taxation, are stated in the opinion.

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WHITE, J., lead opinion

MR. CHIEF JUSTICE WHITE delivered the opinion of the Court.

On December 20, 1859, the Legislature of Washington enacted a private law creating Whitman Seminary in Walla Walla County. By the act, eight persons were incorporated under the name of the "President and Trustees of Whitman Seminary." The corporation was given perpetual existence and the incorporators authority to govern its affairs and to name their successors. The right to acquire and hold [32 S.Ct. 148] real estate was conferred, with the duty of devoting all the revenue to the support of an institution of learning, for the education of both sexes, which it was the purpose of the act to have established. The capital stock of the corporation was limited by the sixth section to $150,000. The act was accepted by the incorporators, and the institution for which it provided, the Whitman Seminary, was established in Walla Walla County. After a lapse of twenty-three years, the Seminary, in November, 1883, owned considerable personal and real property devoted to the purposes of the corporation. In that year and month, a special act was passed by the territorial legislature entitled, "An Act to Amend . . . " the act previously referred to. By this act, in the form of an amendment, the original incorporators were incorporated under the name of "The Board of Trustees of Whitman College." The act, section by section, amended the prior act. It gave the trustees power to perpetuate themselves and govern

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the new corporation, which was endowed with perpetual existence. The act, in many respects, enlarged the powers of the old corporation, struck out the sixth section, which contained the limitation of $150,000 of capital stock, and substituted for it the following:

That the property of said Board of Trustees of Whitman College, including all income and proceeds, shall be used exclusively for the purpose of education, and in consideration of said use, the said property, income, and proceeds shall not be subject to taxation.

The organic law of the territory, the Act of Congress of March, 1867, § 1, 14 Stat. 426, c. 150, when this last act was passed, contained the following, now embodied in Rev.Stat. § 1889:

That the legislative assemblies of the several territories of the United States shall not, after the passage of this act, grant private charters or especial privileges, but they may, by general incorporation acts, permit persons to associate themselves together as bodies corporate, for mining, manufacturing, and other industrial pursuits, or the construction or operation of railroads, wagon roads, irrigating ditches, and the colonization and improvement of lands in connection therewith, or for colleges, seminaries, churches, libraries, or any benevolent, charitable, or scientific association.

Whitman College took over the property and effects of the Seminary. It increased its holdings of real and personal property, the avails of which were all devoted to the purposes of the institution. It was in existence when the territorial government passed out of being and the State of Washington was incorporated into the Union, and it is conceded by both sides in argument that no question which requires to be decided on this record calls for a consideration of any of the events or legislation which were a part of the transition from the territorial form of government to statehood. Up to 1905, it is inferable that no attempt was made to tax the property of Whitman College.

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In 1905, however, the assessing officers of the County of Walla Walla, who are the appellants upon this record, acting under the authority of the state taxing law and upon the assumption that the property of the corporation was taxable, assessed its real property in the County of Walla Walla not actually and physically used for the purposes of the institution, and taxes were levied on such assessment, amounting to $946.32. The corporation thereupon filed in the circuit court of the United States the bill which is now before us. The bill contained no averment of diversity of citizenship, and exclusively invoked the authority of the court below upon the ground of the existence of a perpetual contract right of exemption from taxation created by the sixth section of the Act of 1883, and the impairment of such contract by the assessment and levy of the taxes in question.

The bill, as amended by stipulation, averred the existence of the contract, the compliance by the corporation with all its obligations, the acquisition of large amounts of property through contributions and otherwise dedicated to the purposes of the corporation, the detriment and loss which would be occasioned as the result of levying taxes upon the property of the corporation by the County of Walla Walla or otherwise by state authority, the destruction of the right of perpetual exemption, not only as to the present, but as to all future acquired property of the corporation, which would result, and a consequent loss or damage vastly in excess of $2,000. In substance, the prayer was for a decree recognizing and enforcing the contract of perpetual exemption from taxation as to all the property of the corporation, present or prospective, and for an injunction adequate to secure these results.

The defendants by demurrers challenged the jurisdiction of the court and the equity of the bill. After hearing, the court held that it had jurisdiction, that the contract

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declared on had been established, and was protected from impairment by the contract clause of the Constitution, and therefore the assessment and levy of the taxes complained of were void. As defendants elected not to further plead, a final decree was [32 S.Ct. 149] entered granting the relief prayed in the bill. The appeal now before us was then taken.

The taxing officers of the County of Walla Walla, the defendants below and appellants here, insist that we may not review the merits, because the court below had no jurisdiction over the cause, and therefore we must reverse and remand with directions to dismiss the bill. This rests upon the proposition that, as the tax was below the jurisdictional amount, it afforded...

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