the dividends on the preferred stock, should be | debtedness and liability by turning over ten per paid before the interest or principal of the state cent. of your gross receipts, until we are satisbonds. That the ordinance in question is a pal- fied that the debt is paid, and if you do not, pable violation of this contract, is a proposition we will sell your franchise and all your proptoo plain to require argument to sustain it.

"

erty.

The ordinance, disregarding the obligation of the State to pay, through its Fund Commismissioner, out of the gross earnings and daily receipts of the Corporation" what might be necessary to keep the road in a good state of repair, and what might be necessary for such additions to the rolling stock, buildings and appurte-it any of the elements of a tax? Taxes are denances of the road as may be required to enable the Corporation to accommodate and transact the business of the road, the amount of salary to the Fund Commissioner, the interest on the first mortgage bonds as the same fell due, the cost of construction and equipment, the dividends on preferred stock, the principal of the first mortgage bonds, to all of which the gross earnings were pledged before the principal of the state bonds could be paid, provides for the levy of an assessment of ten per cent. of all gross receipts for transportation of freight and passengers for two years, and fifteen per cent. thereafter for the payment of the principal and interest of these bonds, until they shall be fully paid.

Thus it will be seen that the contract is impaired in a most important particular.

What is this but assuming the position of first mortgagee? The ordinance goes further than this, even. It not only makes the State a first mortgagee, in violation of the provisions of the Act of 1865, but it changes the mode and time of payment. Can this be considered a tax? Has fined to be burdens or charges imposed by the legislative power of the State upon persons and property, to raise money for public purposes. Blackw. Tax Titles, 1; Bleecker v. Ballou, 3 Wend., 266: Cooley, Const. Lim., 479. Taxes are burdens imposed upon persons or property, to raise money for public purposes. Can this be called a public purpose? The money raised does not go into the treasury of the State to be appropriated and expended for the general purposes of the State, but it is to be applied to the payment of a particular debt. The road had already been placed, by the Act of 1865, in the hands of a receiver or Fund Commissioner, and the Company was required to pay all the gross earnings and daily receipts into his hands, under penalty of $10,000 for each instance of neglect to do so. See section 5 of the Act.

The Supreme Court of Missouri in passing Everything that may be done under the name upon this question in this case, admits that the of taxation is not necessarily a tax: "and it Law of 1865 was a contract, and within the pro- may happen that an oppressive burden imposed tection of the United States Constitution. See by the Government, when it comes to be careN. M. R. R. Co. v. Maguire, 49 Mo., 498. fully scrutinized, will prove, instead of a tax, The questions then left for consideration are: to be an unlawful confiscation of property, un(a) Whether the assessment of ten per cent. warranted by any principle of constitutional on the gross earnings of the road, provided for government. by the ordinance of the Convention, is a tax.

(b) Whether, if it be considered a tax, there is anything in the Act of 1865 manifesting an intention on the part of the State to abandon the right of taxation.

It appears, by the provisions of the ordinance, that there was an existing indebtedness due by the Railroad Company to the State for interest paid, and that there were bonds of the State outstanding, for the payment of which the Company might become liable to the State. The ten per cent.is to be applied to the payment of this interest and these bonds, and to this purpose only.

This assessment is not upon all railroads in the State, but only upon the particular roads mentioned in the Act.

The amount collected is to be appropriated by the General Assembly, not to the general purposes of the State, but to the payment of a debt already accrued, the principal and interest of these bonds; and when the bonds and interest shall have been fully paid, the assessment and collection of the money is to cease.

Cooley, Const. Lim., 486.

An unlimited power to make any and everything lawful which the Legislature might see fit to call taxation would be, when plainly stated, an unlimited power to plunder the citizens.

Cooley, Const. Lim. 487; Tyson v. School Directors, 51 Pa., 9; Freeland v. Hastings, 10 Allen, 575.

When the burden is common, there should be a common contribution to discharge it. Cooley, Const. Lim., 436; Sanborn v. Rice Co., 9 Minn., 273; 2 Kent, Com., 331; Woodbridge v. Detroit, 8 Mich., 301.

If, then, this exaction of ten per cent. upon the gross receipts, is not a tax but a means of enforcing payment of debts, a decree by which a certain portion of the gross income of the Company is set apart and appropriated until an alleged indebtedness is discharged, then it is in violation of the contract contained in the Act of 1865; for it is admitted that there was such a contract, and that it comes within the pro tection of the Federal Constitution, and that nothing but an exercise of the sovereign power of taxation can justify its violation.

If the Company should fail to pay the ten per cent., the road and other property and the fran- The next question to be considered is, whethchises of the Company are to be sold, and the er, if this exaction of ten per cent. on the gross proceeds of the sale are to be applied to the pay-earnings of the road to pay a debt is to be conment of the bonds and the debt, notwithstand-sidered a tax, there is anything in the Act of ing the fact that the State has agreed that they 1865 manifesting an intention on the part of should be paid in another way. In other words, the State to abandon the right of taxation. the State says to the Railroad Company: you owe a debt, and are likely to owe us more on bonds for which we are liable and which we may have to pay. You must discharge that in

The Act of 1865, by which this contract was made between the State and the Company, provides a full and complete disposition of all the funds of the Company, coming from whatever

Bank v. Billings, 4 Pet., 562.

source. The Company is not left in control of | ply exemption from state taxation, because they a dollar with which to pay taxes. The Com- expressly release, as a first lien, what the ordipany, as a Corporation, could not own anything nance again, in effect, makes a first lien, though except its road and the property and appliances in form a tax. The argument, even in this necessary to operate them, and every dollar form, still proceeds on the practical operation from this source is, by the Act of 1865, applied of the ordinance, looks outside of the Laws of to other purposes. What is left, out of which 1864 and 1865, and does not deduce an implicathe taxes could be paid, and who is authorized tion against the power to tax from the face of to pay them? Not the Company, for the Com- the Acts themselves. But, says this court, "It is in pany is required, under a heavy penalty, to the language of the instrument we must look for pay over everything to the Fund Commissioner. the exemption; and if we do not find it there, Not the Fund Commissioner, for he is directed it would be going very far to insert it by conspecifically to pay out all the money in a par- struction." ticular way. The Supreme Court of Missouri endeavors to avoid this inevitable construction of the Act of 1865, by saying that the Fund Commissioner was authorized, in the first class of disbursements, to pay the current expenditures for carrying on the ordinary business of the Corporation, and that the payment of taxes would certainly fall within this class. How the payment of taxes is any part of the ordinary business of the Company, it is difficult to understand; but if so, this could not be done by the Corporation. The Fund Commissioner, who was an officer of the State, has control of the funds, and if authority was given to any one to pay the taxes as a part of the expenses of running the road, it was given to him and not to the Company.

Messrs. M. Blair, F. A. Dick, A. H. Buckner and R. E. Rombauer, for defendant in error: It is evident that the Act of 1865 was not intended as a general surrender of the right of taxation from the express exemption in section 11 of the Act, which exempts county and city bonds issued to pay for stock, and also the $6,000,000 of first mortgage bonds. Here the rule, Expressio unius, exclusio est alterius, applies. For the benefit of the road, and to aid in its construction, these bonds were exempted by express provision. Certainly the State may say nothing else was relieved from taxation.

The care with which the State relinquishes its priority and rights, is also shown in the 2d section of the Act, saying: “And the State for this object and to this extent only, hereby relinquishes her first lien and mortgage upon said main line;" and again, in sec. 5: "And the State in order to give validity and priority to said bonds, relinquishes her first lien and mortgage on the main line of the North Missouri R. R., to the amount and to the extent only of the bonds actually negotiated." These and the 11th section are the only ones in which the State makes any relinquishment, and as both are express to a certain and accurate extent, it certainly must be held that no other rights than these named can be included.

But if it were true, as alleged, that the Acts of 1864 and of 1865 required the income of the several Companies to be disbursed in a specified order, which the ordinance in effect reversed, to the prejudice of the Company and to the advantage of the State, this could not be a violation of a contract created by either of these Acts, because neither of these Acts contain any stipulation on the part of the State to exempt the Company from taxation. It is not enough to take this power from a State, that by its exercise a contract with a corporation may be changed or destroyed. Nor would it help the argument to say that the Acts necessarily im

And as the Acts themselves contain no reference whatever to the subject of taxation, either direct or indirect, the exemption claimed cannot be placed upon any language of the instrument and, therefore, rests wholly upon grounds which this court has uniformly held to be inadmissible.

49 Mo., 497; Tomlinson v. Branch, 15 Wall., 469 (82 U. S., XXI., 192); Tomlinson v. Jessup, 15 Wall., 454 (82 U. S., XXI., 204); Humphrey v. Pegues, 16 Wall., 247 (83 U. S.. XXI., 326); Providence Bank v. Billings, 4 Pet., 559; see, cases collected in Home of the Friendless v. Rouse, 8 Wall., 430 (75 U. S., XIX., 495).

In The State Bank of Ohio v. Knoop,16 How., 369, the rate of taxation was fixed by express words, saying. "which shall be in lieu of all taxes." P. 378.

If there be a reasonable doubt, that doubt must be solved in favor of the State."

Wilmington R. R. Co. v. Reid, 13 Wall., 264 (80 U. S., XX., 568); Osborn v. Mobile, 16 Wall., 481 (83 U. S., XXI., 472); Jefferson Bank v. Skelly, 1 Black, 446 (66 U. S., XVII., 178); Richmond R. R. Co. v. Louisa R. R. Co., 13 How., 71, 81.

But if it be conceded that the Act of the General Assembly, after its acceptance by the Company, was a contract coming within the principles of the Dartmouth College case, and within the protection of the prohibition of the 10th section of the first article of the Constitution, the State could not by any subsequent legisla tion, without the consent of the Corporation, resume its position as first mortgagee, except by an extinguishment and discharge of the outstanding obligation secured by said mortgage. We deny that that was the intention of the State, or that any such intention can be extracted from the provisions of the ordinance of April 8, 1865.

The ordinance only provided for the levying and collecting a tax from the Company, just in itself, and neither unusual in the object taxed nor excessive in the amount levied. It will be observed that the convention ordinance was adopted but a short time after the Act of Feb. 16, 1865, was approved. The convention that submitted the ordinance was in session at the time of the passage of the Legislative enactment. The interest on the bonds issued to this Company had not been paid since 1860. In the meantime civil war had been raging through a large part of the State, and all the available resources of the State and people were needed to meet the overdue interest on the bonds, as well as to pay the expenses incurred in the defense of the State. Why should not this Company bear a portion of the burden of

mortgage bouds or other indebtedness is paid; and the most reasonable conclusion is, that the parties to this contract contemplated that the taxes should be paid out of the gross earnings, as a part of the necessary current expenditures necessary to run the road.

necessarily increased taxation? The ordinance | business, and which are paid before interest on selected the gross earnings of the railroads as a source of revenue to the State, and the same ordinance (sec. 6) provided for additional taxation of one fourth of one per centum on real and personal property of the State; the former to pay the interest on the bonds which the Railroad Company might fail to pay, and the other to pay the principal of the state indebtedness Both are denominated taxes in the ordinance, and they both specify the purpose to which these taxes shall be applied by the General Assembly. Would this ordinance be less obnoxious to the objections of the appellant, if it had merely ordered a tax of ten per cent. on the gross earnings of the railroads, to be applied to the dis charge of the bonded indebtedness of the State? Does the fact that it specified a particular indebtedness, to which the tax is to be applied, devest it of its real character, and make the ordinance an Act of legislative confiscation instead of a tax?

Nor is this mode of taxation on the gross or net earnings of corporations an unusual subject

of taxation.

But it is urged by the plaintiffs in error, that this tax on gross earnings is not a tax and, therefore, something else: (a) because it is unjust and oppressive; (b) because it is levied to pay a debt and not a public burden; (c) because it was the exercise of judicial and not legislative power; and (d) because the ordinance secks to deprive the plaintiffs in error of their property without due process of law. These arguments in fact assume and admit that if it was a tax, then no such thing as its impairing the obligation of the contract in a legal sense, can be predicated of the Ordinance of April 1865.

(a) Among the authorities cited by the plaintiffs in error, none can be found which holds that a lawful tax on a new subject, or an increased tax on an old one, interferes with the contract, or impairs its obligation within the The State of Pennsylvania has, for years, meaning of the Constitution. Such taxation raised a large portion of her state revenue from may effect contracts, it may increase the debt this source (the earnings of corporations, rail- of one and lessen the security of another; it may roads, banks and insurance companies) and impose additional burdens upon one class and the United States collected large amounts of relieve the burdens of another; still, unless withinternal revenue at one time, from the gross in some constitutional prohibition, there is no earnings of moneyed and other corporations escape from it, and it cannot be said to impair (Laws U. S., 1863-4, pp. 275, 276), and we the obligation of any existing contract, in its could readily show that this tax was not excess- true legal sense; nor can the unjust or oppressive, and if excessive, that the burden did not ive character of the tax make it less a tax than fall on the Company, if we deemed it a matter of if it were equal, just and uniform in its bearing legitimate inquiry or discussion before this court. upon the whole community. The power of taxIt is enough for the purpose of the appellee, ation in the States is absolute and unlimited. that there was at no time any exemption from Chief Justice Marshall, in McCulloch v. Marytaxation, by the State, of this Company or its land, 4 Wheat, 429, said: "It was a power to property. There is no pretense of such exemp- destroy." It acknowledges no other limits than tion, and no principle is better settled than that those expressly prescribed in the Constitution, it cannot be presumed. If exemption from tax- and like sovereign power of every description, ation is claimed, it must appear in the clearest, is trusted to the discretion of those who use it. most explicit and unequivocal terms; and the All powers over which the sovereign power of better opinion is, that it must not be a mere act a State extends, are objects of taxation, and of grace and favor on the part of the State, but redress against the exercise of the power of taxmust have been parted with for consideration. ation, because it has been unjustly and oppressProvidence Bank v. Billings, 4 Pet., 561; Jef-ively exercised, cannot be bad in courts of jusferson Bank v. Skelly, 1 Black, 436 (66 U. S., tice. Unrestricted by constitutional limitations, XVII., 173); People v. Stevens, 35 N. Y., 629; the only curb upon the taxing power of the Mott v. Pa. R. R. Co., 30 Pa., 9; 12 Mass., 442; States is the responsibility of those in whom the Christ Church Hospital v. Philadelphia, 24 power is lodged; and the power of appropriaHow., 300 (65 U. S., XVI., 602); Washington tion of the proceeds of tax is equally unlimited. University v. Rowse, 42 Mo., 325 (see, S. C., XIX., It was held in Griffin v. Mayor of New York, 9 498, this ed.); St. Louis v. Boatmen's Ins. & N. Y., 456, that the two clauses of the ConstiTrust Co., 47 Mo., 150; North Mo. R. R. Co. v. tution, which declare that no person shall be Maguire, 49 Mo., 499; Ohio Life Ins. & Trust deprived of his property without due process of Co. v. De Bolt, 16 How., 416. law, and that private property shall not be taken for public use without just compensation. have no application to the taxing power. And it was also decided in that case, that the power to tax carries with it a power to apportion a tax as the Legislature shall see fit; and that the power of apportionment has no limit when there is no constitutional restriction.

In the case at bar there is nothing in the Act of February, 1865, that can lead to the inference that the question of taxation entered into the consideration of the Legislature, or that it was contemplated to donate or transfer for a consideration to the Corporation any other additional privileges than had been granted prior to that time. If anything is to be inferred where the whole Act is silent, we cannot but conclude that the taxes were to be paid from the gross earnings, as other necessary expenses of operating the road and, therefore, included in the first class of disbursements. Ordinarily, taxes and charges that appertain to the current expenditures of any

Glasgow v. Rowse, 43 Mo., 489; Brewster v. Syracuse, 19 N. Y., 116; Toon of Guilford v. Supervisors of Chenango Co., 13 N. Y., 143; Thomas v. Leland, 24 Wend., 65; Litchfield v. Vernon, 41 N. Y., 123; People v. Lawrence, 41 N. Y., 137; Hamilton v. St. Louis Co. Ct., 15. Mo., 3; Calder v. Bull, 3 Dall., 386.

These cases from New York are adjudica- | the people of the State had no interest whatever tions upon tax laws when there was no consti- in the tax when collected. The tax in this case tutional limitation upon the powers of the Gen- is levied by the supreme power of the State, eral Assembly. In the case at bar, the tax is without any restriction upon its action on this authorized by the Constitution itself, which subject, except what may be found in the Conpower and authority over the subject was su- stitution of the United States. And unless such preme and paramount, and subject to no con- a case is made out as would amount to taking trol but the Constitution of the United States. the property of A and transferring it to B, so (b) All the objections urged against this tax as to make it practically and in reality a judion gross earnings, to show that it is not a tax cial decree, and not a legislative enactment, the but a seizure or legislative confiscation or seq-case of the plaintiff in error is not helped in the ustration of property of the plaintiff in error, least. The Convention ordaining this tax had may be well urged against almost every levy of absolute and despotic authority to take any taxation, state or federal. Indeed, it may be portion of the property of the people, and place said that they are almost necessary ingredients in the public Treasury for public purposes. It of all taxation. There may be a difference in could not transfer it to another portion of the the degree of inequality, injustice and oppres- same people, but it could have taken the whole sion in taxing laws, but equality, absolute jus- earnings of the road of the plaintiff in error, as tice to all tax payers and uniformity of opera- well as the ten per cent., and put them into the tion upon all classes are exceptions, and not state treasury; and it is respectfully submitted the rule of taxation. But the courts have no that neither the state courts nor this court could scales whereby to weigh and determine ques- have interfered to prevent such action by the tions of this character. They do not sit to ad- Convention. We insist that the power of this judicate upon degrees of wrong, inequality or Convention as to taxation, was only limited by oppression. That duty belongs to another de- its discretion, and for the abuse of this dispartment of the government. And when it is said cretion the Convention is alone responsible to its that the ordinance directing the levy of this tax constituency; not to this or any other court. So was for the purpose of paying a debt due the State | long as the proceeds of the tax are applied to and not discharging a public burden, or that it purposes common to the whole people, there was the exercise of judicial and not legislative can be no judicial inquiry, either as to the obpower, or that it deprives the plaintiffs in error jects to be taxed or the inequality, injustice, opof its property without due process of law, the pressiveness, or the extent of the taxation. plaintiffs in error have given a fair description and characterization of the ordinary tax law. Every tax, in its very nature, is a seizure of the property of the citizen for public use, without | trial or judicial inquiry, and without due process of law; and whether oppressive, or relatively unequal, is not a matter of the least importance so as to affect its legal character. But it is the grandest fallacy that this tax is not such, because thd proceeds are to be applied to the payment of a debt due by the appellant to the State and, therefore, is not for a public purpose. True, the purpose for which the tax was ordered to be collected was to pay a debt due by the plaintiff in error to the State, for interest due on its account, and for its benefit; but it was none the less a public charge and burden, which must needs be discharged by taxation of the property of the people of the State. It was a debt of the highest obligation, so far as the State was concerned; and it is difficult to conceive of one having higher claims upon the honor and good faith of a people, than the payment of its own bonded indebtedness. The tax was strictly for revenue purposes, and it can make no difference in determining its character whether the tax was appropriated to a specific purpose, or was collected and paid into the treasury, and afterwards appropriated by the Legislature. Money raised by taxation is revenue, and the obligations of the State can only be paid by applying the revenue to their payment, whether by specific or general appropriation.

(c) On the theory that this tax on the gross earnings of the railroad, plaintiff in error, was a naked seizure and sequestration of so much of its property, before this court could hold that it was not levied or ordered to be levied, in the exercise of the paramount and sovereign power of taxation, it must appear, further, that

Sharpless v. Mayor of Phila., 21 Pa., 147, 160; Dist. of Pittsburgh, 2 Watts. & S., 323; Bank v. N. Y., 2 Black, 620 (67 U. S., XVII.. 451).

Mr. Justice Clifford delivered the opinion of the court:

Much discussion of the evidence in the case will be unnecessary, as the principal facts are embodied in an agreed statement, which is made a part of the record.

By the agreed statement it appears that the plaintiff Company is a corporation established by the laws of the State, and that the other plaintiff claims to be the legal owner of all the property lately owned by the Corporation. Said Company was incorporated on the 3d of March, 1851, with a capital stock of $6,000,000 divided into shares of $100 each.

Pecuniary aid in large amounts was furnished to the Company by the State, as appears from several legislative Acts. Such aid was granted by the Act of the 23d of December, 1851, in terms as follows: that when evidence is produced satisfactory to the Governor that the Company has collected $50,000 on their capital stock, and that they have expended the same in the survey, location and construction of the railroad, the Governor shall cause to be issued and delivered to the Company special bonds of the State to the same amount, as a loan of public credit, bearing interest and payable as therein provided. Provision is also made in the same section that upon like proof that the Company have expended the whole of the sum realized from those bonds, and that they have also expended a further sum of the same amount of their own moneys, that the Governor shall in like manner cause to be issued and delivered to the Company further like bonds for the same amount, and so on in like manner as often as the