Perry v. Keene

• Court: New Hampshire Supreme Court
• Citation: Perry v. Keene, 56 N.H. 514 (N.H. 1876)
• Decision Date: 21 March 1876
• Parties: Perry v. Keene.

56 N.H. 514

Perry v. Keene.

Supreme Court of New Hampshire

March 21, 1876

Municipal aid to railroads.

The statute of this state (Gen. Stats., ch. 34, sec. 16), which authorizes towns to raise and appropriate money, &c., to aid in the construction of a railroad, is not in conflict with the constitution

CHESHIRE COUNTY

BILL IN EQUITY, brought by certain tax-payers in Keene against the city and its officers, praying for an injunction to restrain them from levying a tax, or in any other way raising or appropriating the money or credit of the city to aid in the construction of the Manchester & Keene Railroad. The question came before this court on an agreed statement of facts, which sufficiently appear in the opinions.

Sargent & Chase and Hardy, for the plaintiffs

The legislature cannot lawfully interfere with private property except in the following cases: (1) It may authorize it to be forfeited for crime, or sold for the owner's debts judicially established. (2) It may take it for public use under the power of eminent domain, on condition of just compensation; but for any private use the legislature cannot touch the property of the citizen, no matter how much compensation is made. (3) It may condemn it, under peculiar circumstances, under the police power, when the property itself, or its use or situation, endangers the public health or safety. (4) It may be taken by the taxing power.

Taxes are burdens or charges imposed by the legislature upon persons or property to raise money for public purposes, or to accomplish some governmental end; and without such public governmental use or purpose there can be no legal tax. The legislature has only the power to raise revenue by taxation for a public purpose, but when revenue is attempted to be raised for a purpose not connected with the public interest it is no longer taxation, but robbery. Hanson v. Vernon, 27 Iowa 28---opinion by DILLON C. J.

It is also there held that railroad companies are private corporations in all respects, except so far as they may be empowered to exercise the right of eminent domain in taking land for railroad construction; that in all other respects they are private, and that their undertaking can no more be aided by taxation than can the undertakings of any other private corporation, or of an individual.

So, in Whiting v. Sheboygan Railway Company, 25 Wis. 167,---opinion by DIXON, C. J.,---it is distinctly held that, as to the use of the land for the purpose of a highway, and the right of the public to pass and repass over it and enjoy its advantages upon the payment of reasonable fare and charges, the corporation may be said to be public, but in all other respects it is private. The road, with all its rolling-stock, buildings, fixtures, and other property pertaining to it, is private property, and operated and used by the company for the exclusive benefit and advantage of the stockholders. This constitutes a private corporation in the fullest sense of the term, and stands just like an institution of learning, or a manufacturing company, or any other private company or individual, who may be engaged in some employment or enterprise that is supposed to be beneficial to the public: and a statute authorizing a tax for the sole purpose of making a gift of the money raised to a railway company, in which the state or the tax-payers have no ownership, is unconstitutional and void.

What is the meaning of the word tax? Webster says it is "a rate or sum of money assessed on the person or property of a citizen by government, for the use of the nation or state." They are "contributions paid by the inhabitants of a country for the use of the government." New Am. Ency., vol. 15, p. 307; Pray v. Northern Liberties, 31 Pa. St. 69; Cooley on Const. Lim. 479, 487; Camden v. Allen, 2 Dutch. 398;

"A public governmental use or purpose is involved in and is essential to the idea of a tax"---Hanson v. Vernon, 27 Iowa 48, 49. "If the right to impose a tax exists, it is a right which in its nature acknowledges no limits," because the needs of the public, or the necessities of the government, can have no bounds set to them. "The power to tax involves the power to destroy,"---that is, to levy a tax upon property equal to its full value. McCulloch v. Maryland, 4 Wheat. 431; Bank v. New York City, 2 Black 631; Weston v. Charlestown, 2 Pet. 449; Cooley's Const. Lim. 482, 483, and cases cited; Sedgw. Const. Law 554, 555.

So that, if the legislature have the constitutional right and power to authorize a tax of three per cent. to aid this railroad, or, in other words, to levy three per cent. upon their valuation and give it to the railroad without reserving any right whatever in the city to manage or control said road, then they have the constitutional right and power to levy a tax upon all the property in the city of Keene, equal to the full value of such property, and give that to the same road. In other words, the legislature might constitutionally authorize the bare majority in numbers of the legal voters in the city to give away every dollar of the property

of every citizen in the city, without any consideration or any compensation or any equivalent whatever, so far as a large minority are concerned who are never to be benefited by this road, but who, from the fact that they are already interested in other roads to which this new road is to be a rival, instead of being benefited, are to be in fact actually injured by such new road.

Private property can only be taken for public uses, and then only by the payment or the securing of a full compensation; but in this case the private property of these plaintiffs is taken not for a public use, but for one essentially private, and that without any compensation or equivalent. What this law does is simply to take the private property of A and give it to B without giving A any equivalent, simply because it is supposed, or claimed, that B, if he has the property, will make a use of it which will be more to the pecuniary advantage of the majority of the people than A would if he were left to do what he pleased with his own.

In the case of Whiting v. Sheboygan Railway Company, supra, C. J. DIXON considers and answers many of the arguments adduced in favor of the theory that railroads are public corporations, and therefore that money may be raised by taxation for their benefit.

1. It is assumed that whatever is a public use so as to justify the exercise of the power of eminent domain, is also a public use which will, under all circumstances, justify the exercise of the power of taxation. This position is proved fallacious, and fully answered. He shows, as does C. J. DILLON, in Hanson v. Vernon, p. 54, "that the taxing power and the right of eminent domain are, though in some respects kindred, essentially different."

2. Again: it has been said that property in the hands of these railroads is public property. This is shown to be false.

3. Again: it is said that a writ of mandamus will lie, at the instance of the state, to compel the company to build and operate the road, and that, when the public have such an interest, taxes may be levied. But this is all a mistake; no such power is shown to exist. In that case, and in this case, after the people of any particular place have levied and paid their gratuity in the form of a tax, there is nothing in the act of incorporation, nor in any law in that state or this, to bind the company to run a single car over their road, or to prevent them from taking up the track and abandoning the use of their road altogether.

4. It is also said that a gratuity can be sustained on the same principle that subscriptions for stock in similar companies are sustained: but a broad distinction is shown between the two cases. But the power to do either is doubted, and has been questioned by high authority. Judge Redfield doubts the authority of these cases---nor does Judge Cooley approve of the doctrine. 2 Red. on Railways, sec. 230, note; Cooley's Const. Lim. 213, 214.

There is also the case of The People v. Township Board of Salem, 20 Mich. 452, in which Judge COOLEY delivered the opinion, in which he showed that railroads in all other respects, except in regard to the

right of eminent domain, are private corporations just as much as manufacturing companies or institutions of learning; that their interests are all private, though their business may be supposed to subserve the public good and convenience, the same as the building of a saw-mill or the erection of a hotel, whether by a company or an individual, would be likely to do. Judge COOLEY'S reasoning seems entirely conclusive upon this subject, and his arguments are commended to the careful consideration of the court.

I also wish to call the attention of the court to a note of Judge Redfield's upon this opinion of Judge COOLEY, found in the Am. Law Reg., vol. 9 (new series), p. 501; as also to a note of the same judge upon the opinion of APPLETON, C. J., of the supreme court of Maine, in the case of Allen v. Inhabitants of Jay, as found in the Am. Law Reg., vol. 12 (new series), 493. In the last note, Judge Redfield refers to the case then recently decided, of Lowell v. City of Boston, in the supreme court of Massachusetts. He says,---"Public use and public good have been too often regarded as synonymous terms, and consequently it has been maintained by reasonably good lawyers and good judges, that taxation, which it is conceded on all hands can only be resorted to for public uses, might be made to contribute to the support of all objects which conduced to the public good." And he thinks that railroads have been largely subsidized by towns and cities from the public treasury, mainly upon this mistaken ground.

The difficulty has been...