664

EXEMPTION FROM TAXATION

right of taxation nor any other sovereign power will be held to have been relinquished unless the intention is expressed in terms too plain to be mistaken. Such contracts are to be rigidly scrutinized, and never allowed to extend farther in scope or duration than the terms clearly require; and if a doubt arises, it must be solved in favor of the State.1

In The Providence Bank v. Billings,2 Marshall, C.-J., said that a State might for a valuable consideration relinquish the right to tax, but as the right was one in which the community was interested, such an intention ought not to be presumed in any case where it did not distinctly appear; and in The Easton Bank v. The Commonwealth, a charter incorporating a bank on the conditions thereinafter expressed, one of which was that the bank should pay eight per cent on its dividends, was held not to forbid an augmentation of the tax.

1 Vicksburg R. R. Co. v. Dennis, 116 U. S. 665, 668; Newton v. The Commissioners, 100 U. £. 548; The Delaware R. R. Taxes, 18 Wallace, 206; The Munson Passenger R. R. Co. v. Philadelphia, 101 U. S. 528.

"The rule of interpretation is well settled in this court. In Tucker v. Ferguson, 22 Wallace, 527, we said: The contract must be shown to exist. There is no presumption in its favor. Every reasonable doubt should be resolved against it. Where it exists, it is to be rigidly scrutinized, and never permitted to extend, either in scope or duration, beyond what the terms of the concession clearly manifested on the part of the State to grant what is claimed. Such a purpose cannot be inferred from equivocal language. Providence Bank v. Billings, 4 Peters, 514; Gilman v. City of Sheboygan, 2 Black, 510. It must not be a mere gratuity; there must be a sufficient consideration, or, no matter how long the alleged right has been enjoyed, it may be resumed by the State at its pleasure. Christ Church v. Philadelphia, 24 Howard, 300. No grant can be raised by mere inference or presumption, and the right granted must be clearly defined. Charles River Bridge v. Warren Bridge, 11 Peters, 420. "The rule of construction in this class of cases is that it shall be most strongly against the corporation. Every reasonable doubt is to be resolved adversely. Nothing is to be taken as conceded but what is given in unmistakable terms or by an implication equally clear. The affirmative must be shown. Silence is negation, and doubt is fatal to the claim. This doctrine is vital to the public welfare. It is axiomatic in the jurisprudence of this court." Fertilizing Co. v. Hyde Park, 97 U. S. 659; Newton v. The Commissioners, 100 U. S. 548.

2 4 Peters, 514.

It was decided on like grounds in The Holyoke Co. v. Lyman that even if the legislature of a State can confer an irrevocable power to construct a dam across a river flowing through two or more States which will permanently exempt the grantees from leaving a way open for the passage of fish, and thus materially lessen the available supply of food, such an intention will not be implied from the grant of the right to erect the dam, nor unless it is expressed in terms.1

"Charters of private corporations duly accepted, it must be admitted, are executed contracts; but the different provisions, unless they are clear, unambiguous, and free from doubt, are subject to construction; and their true intent and meaning must be ascertained by the same rules of interpretation as other legislative grants. Repeated decisions of this court have established that whenever privileges are granted to a corporation and the grant comes under revision in the courts, such privileges are to be strictly construed against the corporation and in favor of the public, and that nothing passes but what is granted in clear and explicit terms.2 Whatever is not unequivocally granted in such acts is taken to have been withheld; as all acts of incorporation and acts extending the privileges of corporate bodies are to be taken most strongly against the corporations." 3

It has been decided, conformably to the same principle, that a statute or ordinance authorizing a natural or artificial person to use or occupy a street or highway is, in the absence. of a plainly expressed intention that the right shall be permanent, a mere license and as such revocable, although the grantee has made valuable improvements in the belief that the privilege will not be recalled. In the case last cited, the city councils of Philadelphia gave the complainant a written

1 Holyoke Co. v. Lyman, 15 Wallace, 522.

2 Rice v. Railroad Co., 1 Black, 380; Charles River Bridge v. Warren Bridge, 11 Peters, 544.

Sedgwick on Statute and Constitutional Law, 339; Lees v. Canal Co., 11 East, 652; Holyoke Co. v. Lyman, 15 Wallace, 511.

The Southwark R. W. Co. v. The City of Philadelphia, 47 Pa. St. 314; Branson v. The City, 47 Pa. 329.

666

GOVERNMENTAL POWER WILL NOT

permission to construct a turnout or siding from the city railway in Broad Street to his warehouse. The city subsequently proposed to remove the railway; and the complainant asked for an injunction, on the ground that he had gone to a great expense in the erection of fixtures for the prosecution of his business, which would be useless unless the railway was allowed to remain. The court held that if a license to connect a private with a public way might operate as a contract that the public way should remain open, where the question arose as between individuals, it did not admit of such an interpretation when given by a municipal corporation and the streets of a city were concerned. A like view was taken in The Monongahela Navigation Co. v. Coons 1 with regard to a dam which had been erected across a navigable stream under a general authority conferred by statute.

These decisions are obviously sound. An individual who gives a license which cannot be enjoyed without the expenditure of money, may fairly be presumed to intend that it shall be irrevocable; 2 but no such inference can be drawn where the State or a city is dealing with a highway, and ought to retain the power of supervision and control.

It has been decided on like grounds that the enumeration of particular burdens or restrictions in a charter, as those to which the company is or may be subjected, will not preclude the State or a municipal corporation from imposing others which fall within the scope of its general powers, and are legitimate if they do not contravene the constitutional prohibition. A statute imposing a tax of eight per cent on each yearly dividend of the banks which it incorporates, will be interpreted as meaning that they shall pay so much, and not that the rate shall not be increased by future legislation.3 So the incorporation of a railway company with authority to pass through a city, subject "to such regulations as may be required for paving, repairing, and culverting the streets,"

16 Watts & Sergeant, 101, 112.

22 Am. Leading Cases (5 Am. ed.), 546; Rerick v. Kern, 14 S. & R. 267. 8 The Bank v. The Commonwealth, 10 Pa. 442, 449; The Bank of Pennsylvania v. The Commonwealth, 19 Pa. 144, 155.

PASS BY IMPLICATION.

667

will not preclude the city councils from exacting an annual license fee of thirty dollars for each car and prescribing the charges for the conveyance of passengers.1 "Expressio unius exclusio est alterius is not," said Sharswood, J., "the rule of construction applicable to charters."

In like manner, the power of a State to regulate the charges of railway companies for the transportation of persons and property within her limits is governmental, "and if it can be bargained away at all, it can only be by words of positive grant, or something which is in law equivalent." If there is a reasonable doubt, it is to be resolved in favor of the existence of the power. In the language of ChiefJustice Marshall in the Providence Bank v. Billings, a surrender of such powers "ought not to be presumed unless the purpose appears to have been deliberately entertained and is distinctly expressed." 8

When the intention to confer an immunity from taxation is distinctly expressed, or a necessary inference from the words employed, the court will not resort to a strained interpretation for the sake of withholding a privilege which may have been the chief inducement to the acceptance of the grant or charter. A clause in an act of incorporation providing for a specific tax on the shares of a bank, and that it "shall be in lieu of all others," is in effect a stipulation that no other or greater tax shall be imposed, and will be binding as such on the same and subsequent legislatures. Where the legislature of Pennsylvania authorized a railroad company, chartered by the State of New York, to pass through Pennsylvania, and subsequently granted the same company other privileges by a statute which imposed a tax of $10,000 per annum, "together with such further taxation of their

1 Johnson v. Philadelphia, 60 Pa. 440.

2 4 Peters, 514, 561.

a Stone v. The Farmers' Loan & Trust Co., 116 U. S. 307, 325; Railroad Co. v. Maryland, 21 Wallace, 456; The Chicago, B. & Q. R. R. Co. v. Iowa, 94 U. S. 155; Ruggles v. Illinois, 108 Id. 526, 531.

4 Farrington v. Tennessee, 95 U. S. 679; The Commonwealth v. The Pennsylvania Canal Co., 66 Pa. 46, 65.

VOL. II. - 2

668

EXEMPTION FROM TAXATION

stock to an amount equal to the cost of construction of that part of their road situate in the Commonwealth as similar property in this State is or may be subject to," it was held to be an implied contract which precluded additional taxation.1

An exemption from taxation will, in obedience to the general principle, "Nothing is to be taken for granted against the State," be construed as the personal privilege of the individuals or company on whom it is specifically conferred, unless the manifest intention is that the privilege shall pass as a continuing franchise to assignees or purchasers.2 This rule of interpretation is founded upon an obvious public policy, which regards such exemptions as in derogation of the sovereign authority and the duty of each man to bear his share of the common burden, and therefore not to be extended beyond the exact legislative requirements of the grant construed strictissimi juris. A grant to one company of all the rights and privileges of another may carry with it an exemption from taxation conferred in the former charter; but a sale of the road-bed, property, and franchises of a railroad company will not ordinarily entitle the purchasers to the immunity from taxation which the company themselves enjoyed, nor will it render the purchasers a body corporate, or entitle them to act otherwise than as individuals. franchise of becoming and being a corporation is incommunicable by the act of the parties, and will not pass under a judicial sale, unless there is some provision to that effect in the charter or the statute by which the sale is regulated." What

1 The New York & Erie R. R. Co. v. Sabin, 26 Pa. 242.

3

The

2 Morgan v. Louisiana, 93 U. S. 217; Wilson v. Gaines, 103 Id. 417; Louisville R. R. Co. v. Palmes, 109 Id. 244; Memphis R. R. Co. v. The Commissioners, 112 Id. 609, 617; Chesapeake & Ohio R. R. Co. v. Miller, 114 Id. 176.

Humphrey v. Pegues, 16 Wallace, 244; The Railroad Co. v. Gaines, 97 U. S. 697.

Morgan v. Louisiana, 93 U. S. 217; Memphis R. R. Co. v. The Commissioners, 112 Id. 609.

5 Commonwealth v. Smith, 10 Allen, 448; Hall v. Sullivan R. R. Co., 21 Law Reporter, 138; 2 Redfield's Am. Railway Cases, 621; Memphis R. R. Co. v. The Commissioners, 112 U. S. 609, 619.