Washington Univ. v. Rowse

• Decision Date: 31 March 1868
• Parties: THE WASHINGTON UNIVERSITY, Defendant in Error, v. EDWARD S. ROWSE, Collector of the Revenue of St. Louis County, Plaintiff in Error.
• Court: Missouri Supreme Court

42 Mo. 308

THE WASHINGTON UNIVERSITY, Defendant in Error,

v.EDWARD S. ROWSE, Collector of the Revenue of St. Louis County, Plaintiff in Error.

Supreme Court of Missouri.

March Term, 1868.

Appeal from St. Louis Circuit Court.

Plaintiff's charter (Adj. Sess. Acts 1853, p. 290) was substantially as follows: “Be it enacted,” etc.: “1. Christopher Rhodes,” etc., “and their associates and successors, are hereby constituted a body corporate and politic, by the name of The Eliot Seminary, and by that name shall have perpetual succession, and be capable of taking and holding, by gift, grant, devise, or otherwise, and conveying, leasing, and otherwise disposing of, any estate, real, personal, or mixed, annuities, endowments, franchises, and other hereditaments which may conduce to the support of said seminary or to the promotion of its objects. All property of said corporation shall be exempt from taxation; and the sixth, seventh, and eighth sections of the first article of the act concerning corporations, approved March 19, 1845, shall not apply to this corporation. 2. The management of the affairs of this corporation shall be vested in a board of seventeen directors. The persons herein named shall constitute the first board of directors. Vacancies occurring in the board by resignation, death, or otherwise, shall be filled by the board. 3. The board of directors shall prescribe the course of instruction in said seminary, and organize the institution under such regulations and provide in such way as they may deem proper for the appointment of its professors, teachers, and other officers, and may make such by-laws and rules as they may deem necessary for the management of the institution.”

Plaintiff's charter was amended by an act approved February 12, 1857 (Adj. Sess. Acts 1857, p. 610), which altered the name of the institution to that of The Washington University, and provided, in the second section thereof, as follows: “2. No instruction, either sectarian in religion, or party in politics, shall be allowed in any department of said university; and no sectarian or party test shall be allowed in the election of professors, teachers, or other officers of said university, or in the admission of scholars thereto, or for any purpose whatever.” Section 3 provided for the enforcement of the provision of section 2.

Clover, for plaintiff in error.

The Legislature, in 1853, attempted to exempt all property of a corporation, created by the name of the Eliot Seminary, from taxation, and expressly declared that the sixth, seventh, and eighth sections of the corporation law of March 19, 1845, should not apply to it. The corporation so created is in no manner limited as to the amount of property of any kind, real, personal, or mixed, which it may hold. Its property, now worth hundreds of thousands of dollars, may in time become swollen to millions; and the corporation claims perpetual exemption from payment of any portion of the burdens of government, under the theory of an irrepealable contract with it on the part of the State which created it.

I. The only question in this case is, can the exemption prevail against subsequent legislation? Can the General Assembly in 1866 repeal or affect the legislation made in 1853; or, in other words, can the generations of men in political government at this day be circumscribed in their political action by the work of men of an earlier day? The following fundamental propositions are submitted: 1. All property within the limits of a State is subject to taxation. 2. The taxing power is sovereign power. 3. The act of 1855 forever exempting all property of this corporation from taxation cannot be supported. The act is without preamble, and a preamble might state a consideration. The corporation is without an object so far as the acts creating it show any. It is perpetual as to time. It is without limit as to amount of capital to be owned and possessed. There was no purpose in the creation of this corporation, unless we can infer it from the use of the words “Seminary” and “University.” The exemption is claimed to be perpetual. A covenant which prevents all future taxation must be void, because every Legislature has a right to determine what property shall be taxed, without regard to what may have been done by a preceding Legislature, and without the power of binding a subsequent Legislature. (3 Pars. on Cont. 543.) The question in this case is novel; because in no other case, so far as known, has a corporation, the creature of a State government, claimed perpetual exemption from all taxation. Here the creature has become greater than the creator. The State may fall, but the corporation is to live forever under the ægis of the federal Constitution. The decisions of the Supreme Court in the cases of the Piqua Branch Bank v. Knoop, 16 How. 369; Dodge v. Woolsey, 18 How. 331, 432; Jefferson Bank v. Skelly, 1 Black, 439, do not touch the point involved.

There was an express payment of a sum of money to Ohio by the banks, or an express agreement to receive a sum of money by Ohio from the banks, which formed the consideration of the contract in these cases; and in any event the banks were of limited existence; there was a period named for their existence, and the exemption from taxation was temporary--limited by the term of existence of the bank; and the capital was fixed so that the amount of the exemption was definitely known beforehand; all which facts and circumstances might justify the decisions of the court in the above cases, and yet make them of no bearing in the case at bar. The banks did not claim perpetual charters and perpetual immunity, as does this seminary or university.

It is one thing for a State to charter a bank for ten or twenty years, and, for a sum of money, to exempt the property of the bank from further taxation for the period of this ten or twenty years; and quite another to charter a bank forever, unlimited as to capital or time, and, without any consideration whatever or price paid (as was paid in all cases heretofore decided), to exempt all its property acquired and to be acquired by gift, grant, devise, or otherwise, whether real estate, personal estate, mixed estate, or whether annuities, endowments, franchises, or hereditaments, from any taxation. Unquestionably this court ought to decide this act nugatory; if for no other reason, because it was and is a fraud upon the body politic, perpetrated by the agent--the General Assembly--upon the constituent--the people at large. (3 Pars. on Cont. 543.)

II. In the case of this corporation no presumption ought to be made in its favor that the exemption is a perpetual one, for the language of the charter does not so declare, and it ought to be construed as a charter of exemption during the pleasure of the State, and no longer. (Christ Church v. Philadelphia, 24 How. 300; Commonwealth v. Bird, 12 Mass. side p. 442; Dale v. Governor, 3 Stew. 387; Alexander v. Willington, 2 Russ. & M. 35; 12 Harris, 232; Lindley's Jurisp. § 42.)

III. The acts do not make or express a contract. There was no consideration moving to the State, either pecuniary or valuable, nor does the Legislature seem ever to have contemplated the idea of a consideration to the contract. Chief Justice Marshall, in the Dartmouth College case, says: “The objects for which a corporation is created are universally such as the government wishes to promote. They are deemed beneficial to the country, and this benefit constitutes the consideration, and in many cases the sole consideration, of the grant.” This is certainly only partial truth, and not whole truth. It is in one sense true that the objects for which a corporation is created are such that the government wishes to promote them, else the government would not incorporate; but that charters are granted because deemed beneficial to the State may have been true in the time of Judge Marshall, but was not true when the Eliot Seminary was chartered, and is not true now. From a consideration of the charter itself, what benefit is supposed to have accrued to the State by the act to incorporate the Eliot Seminary? A seminary of what? Whether of religion or free thought, of vice or goodness, of learning or gymnastics, does not appear. For charter of the Eliot Seminary, vide Sess. Acts of 1853, pp. 290-1; and for amendatory act, Sess. Acts of 1856, pp. 610-11.

Wingate, for plaintiff in error.

I. Under our frame of government, the power of taxation is essential to its existence, and is one of the incidents of sovereignty inherent in the people, not to be abridged by the Legislature in exclusion of its succeeding action. Neither a Legislature nor a convention of the people can extinguish an essential right of sovereignty. Another convention may declare otherwise, or another Legislature repeal the exemption. If the Legislature, without the authority of the constitution, may exempt one kind of property from taxation, it may exempt all; and if the Legislature may exempt all property from taxation beyond its future control, the government contains within its own organization the elements of its own destruction.

II. An exemption from taxation is not a contract in the sense of the constitution. A consideration, one of the necessary requirements to constitute a contract, is wanting, for nothing can compensate for the yielding of a sovereign right upon which the government must depend for existence.

III. The words of the act in question do not create a perpetual exemption from taxation, and, to give them such a construction, resort must be had to inference or presumption arising from the language employed, which cannot be relied upon to abridge the powers of legislation touching the surrender of a sovereign right of the people. (1 New Am. Law. Reg. 718; Adj. Sess. Acts 1853, p. 49; Blackw. on Tax Tit. 478-82; Const. Mo. art 11, § 16; Gen. Stat. 1865, p. 95, § 1.)

Hitchcock, for defendant in error.

I. The State may make a contract not to...