99 U.S. 309 (____)


Supreme Court of United States.

Attorney(s) appearing for the Case

Mr. Matt. H. Carpenter and Mr. Wirt Dexter for the plaintiff in error.

Mr. James K. Edsall, Attorney-General of Illinois, and Mr. Consider H. Willett, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

This is a writ of error to the Supreme Court of Illinois, bringing before us a judgment of that court, deciding that certain property of the plaintiff was liable to taxation, which was resisted, on the ground that it was exempt by a legislative contract.

The university was incorporated by an act of the legislature of the State of Illinois, approved Jan. 28, 1851, which contained the powers necessary to its usefulness as an institution of learning, and, among other provisions, authorized it to purchase and hold real estate to the extent of two thousand acres of land, and receive gifts and devises of land above that amount, which must be sold within ten years. In 1855, the legislature, by an amendment to this charter, appointed three additional trustees, and enlarged its powers, in some respects not very important. But the fourth section of that act is the one supposed to contain the contract on which this case must be decided. It was this: "That all property, of whatever kind or description, belonging to or owned by said corporation, shall be for ever free from taxation for any and all purposes."

The State Constitution of 1848, in force when the charter and amended charter above cited were enacted, declares that "the property of the State and counties, both real and personal, and such other property as the General Assembly may deem necessary for school, religious, and charitable purposes, may be exempt from taxation."

The record shows a very large list of lots and lands in Cook County which the plaintiff asserted to be free from taxation under this law, but which were listed for taxes of the year 1874, and about to be sold for their non-payment. By proper judicial proceedings the question arose before the Supreme Court of the State, which held that they were liable to be so taxed.

A motion was made some time before the case was reached for argument in this court, to dismiss it for want of jurisdiction, and was overruled; but the attorney-general of Illinois renews the objection now in connection with the main argument.

This question of jurisdiction to review the judgments of State courts is so frequent, and the principles which govern it so well settled, that we need not be very elaborate in our opinion on that point. The argument is that the judgment of the State court is limited to a construction of the fourth clause of the amendatory charter of 1855, as it is affected by the constitution under which it was enacted, and that whether that statute was a contract or not, or whether it was properly construed or not, it is still but the decision of a court construing a contract or a statute, and there is no law of the State impairing the obligation of that contract, within the meaning of the Constitution of the United States.

If this were true in point of fact, the conclusion would be sound, as we have repeatedly held in this court. Railroad Company v. Rock, 4 Wall. 177; Railroad Company v. McClure, 10 id. 511; Knox v. Exchange Bank, 12 id. 379.

But the premises assumed are not justified by the facts. The general revenue law of Illinois, prior to the amendment of 1855 to plaintiff's charter, contained nothing which exempted its property from taxation. When that act was passed, it became a part of the law of the State governing taxation as applicable to the property of the university. The law remained in this condition until the State adopted a new constitution, in 1870, the part of which relating to this subject is in these words: —

"The property of the State, counties, and other municipal corporations, both real and personal, and such other property as may be used exclusively for agricultural and horticultural societies, for school, religious, cemetery, and charitable purposes, may be exempted from taxation; but such exemption shall be only by general law."

In order to conform the law of the State on the subject of taxation to this provision of the new constitution, the legislature revised its revenue laws in 1872, and in this statute the exemption established was: —

"First, All lands donated by the United States for school purposes, not sold or leased. All public school houses. All property of institutions of learning, including the real estate on which the institutions are located, not leased by such institutions or otherwise used with a view to profit.

"Second, All church property actually and exclusively used for public worship, when the land (to be of reasonable size for the location of the church building) is owned by the congregation."

It was under this law the local officers proceeded in assessing plaintiff's land for taxation, and it was their construction of the law which was sustained by the Supreme Court. If, therefore, the legislation of 1855 was a contract which exempted the property in question from taxation, and by the law of 1872, as construed by the Supreme Court, it is held liable to taxation, it is manifest that it is the law of 1872 and the Constitution of 1870 which impairs the obligation of that contract, however the court, by an erroneous construction of that contract, may be led to hold otherwise. It is strenuously insisted that these provisions of the Constitution of 1870 and the revenue law of 1872 do not repeal the exemption as established by the fourth section of the amended charter of 1855, because that section was in excess of the authority conferred by the Constitution of 1848. But this depends on the construction of that contract as affected by the constitution under which it was enacted. If by virtue of that constitution the legislature of that day could only exempt plaintiff's real estate so far as it was in immediate use for school purposes, as was held by the Supreme Court, then it may not repeal that statute or impair that contract, for the exemption will probably amount to the same thing under either statute. But if it is a contract, as is contended for by plaintiff's counsel, which, under a true construction of the Constitution of 1848, exempts all the property of plaintiff which is held by it for appropriation to the purposes of the university as a school, as an institution for teaching, and which is held for no other purpose whatever, and which can as effectually promote the purpose by leases, of which the rent goes to support the school, as in any other way, then the law of 1872 and the Constitution of 1870 do, to the extent of the difference arising from these two constructions, impair the obligation of the contract of 1855.

Whether that contract is such as to be impaired by these later laws is one of the questions of which this court always has jurisdiction. Jefferson Branch Bank v. Skelly, 1 Black, 436; Bridge Proprietors v. Hoboken, 1 Wall. 144; Delmas v. Insurance Company, 14 id. 668.

The Supreme Court of Illinois, in its opinion found in the record, appears to concede that the act of 1855, to the extent that it was authorized by the State Constitution, was a contract.

"It is not claimed," says the court, "that appellant is in any sense a public corporation, but it is claimed that the purpose for which it is created is so far beneficial to the public that it affords a sufficient consideration for the grant of exemption from taxation in the amendment, and that when the amendment was accepted and acted on by the corporation it must be held a vested right which cannot be withdrawn by subsequent legislation, because of the provision of the United States which prohibits a State from passing a law impairing the obligation of a contract. If it was competent for the General Assembly to make the exemption, we are not disposed to contest the correctness of their position; but if it was not competent to make the exemption, the attempt was a nullity, and the case is not affected by the Constitution of the United States."

The court thus concedes that there was a contract so far as the legislative power extended.

It is possible, if that question had been fully investigated, and all the facts necessary to decide it were before the court, it might not appear that all the lands subjected to taxation by the judgment of the Supreme Court were bought after the date of the amended charter, or donated on the faith of that exemption.

But it does appear, by a stipulation made for that purpose, that since the granting of said amended charter the corporation "has expended, in the erection and purchase of buildings, apparatus, and other facilities and appliances for education, and for the promotion of the objects stated in and contemplated by the act of incorporation, over $200,000, realized from donations and the sale of lots and lands, and has built up a university, with several departments of learning, in which more than five hundred students are taught the higher branches of learning."

It is, perhaps, a fair inference from this statement, and in deference to the holding of the Supreme Court, that there was such acceptance of this act of 1855, and such investments made on the faith of it, that at least some portion of the property now in question is protected by contract, if the exemption clause lawfully covers it.

It will readily be conceded that the language of the fourth section of the act of 1855 is broad enough for that purpose: "All property, of whatever kind or description, belonging to or owned by said corporation, shall be for ever free from taxation for any and all purposes." But the argument is, that since the constitution then in force only permitted the legislature to exempt from taxation the property, real and personal, used by the university, in immediate connection with its function of teaching, the statute must be limited to property so used. This was the view taken by the Supreme Court of the State. "By the language of the Constitution," says the court, "while a discretion is conferred on the General Assembly whether to exempt or not, and if it shall determine to exempt, the amount of the exemption, it is clearly restricted in the exercise of this discretion to property for schools and religious and charitable purposes; property for such purposes, in the primary and ordinary acceptation of the term, is property which in itself is adapted to and intended to be used as an instrumentality in aid of such purposes. It is the direct and immediate use, and not the remote or consequential benefit to be derived through the means of the property that is contemplated."

Though the court is here construing the Constitution of its own State, and is, therefore, entitled to our consideration on that ground, as well as for its character and standing for learning and ability, we find ourselves, in the performance of the duty of reviewing this case, compelled to differ with that court in the nature and extent of the constitutional limitation of this contract, as made by the legislature of the same State. For this constitution necessarily becomes a part of the contract which is said to be impaired by subsequent legislation.

The first observation we have to make is that the Constitution does not say "property used for schools," as the opinion of the court implies. Neither the important word use or schools is found in the section of the instrument on that subject. If the language were that the legislature might "exempt property for the use of schools," we should readily agree with that court. Indeed, that would be the appropriate language to convey the idea on which the court rests its decision.

The makers of the Constitution, however, used other language because they had another meaning, and did not use that because they did not mean that. They said that the legislature might exempt from taxation "such property as they might deem necessary" (not for the use of schools, but) "for school purposes." The distinction is, we think, very broad between property contributing to the purposes of a school, made to aid in the education of persons in that school, and that which is directly or immediately subjected to use in the school. The purposes of the school and the school are not identical. The purpose of a college or university is to give youth an education. The money which comes from the sale or rent of land dedicated to that object aids this purpose. Land so held and leased is held for school purposes, in the fullest and clearest sense.

A devise of a hundred acres of land "to the president of the university, for the purposes of the school," would be not only a valid conveyance, but, if the president failed to do so, a court of chancery would compel him to execute the trust; but if he leased it all for fair rent and paid the proceeds into the treasury of the corporation to aid in the support of the school, he would be executing the trust.

When the Constitution, in 1870, came to be reconstructed, its framers had learned something about exemption from taxation, as we shall see by placing the provision in that constitution alongside that of 1848 on the same subject: —

         1848.                                  1870.

  "The property of the State and          "The property of the State, counties,
counties, both real and personal,         and other municipal corporations,
and such other property as the General   both real and personal, and such other
Assembly may deem necessary              property as may be used exclusively
for school, religious, and charitable    for agricultural and horticultural societies,
purposes, may be exempt from taxation."  for school, religious, cemetery,
                                         and charitable purposes, may be exempted
                                         from taxation; but such exemption
                                         shall be only by general law."

Here it is only such property as may be exclusively used for school purposes that may be exempted, and this only by a general law.

The general law passed in 1872 to give effect to the change in the Constitution exempted only "the real estate on which the institutions of learning are located, not leased by such institutions or otherwise used with a view to profit." This is what the Supreme Court says was meant by the Constitution of 1848; but if it was, it took a deal of change in the language when the framers of the new constitution and of the new tax law came to express the same idea. We cannot come to the conclusion that they were intended to mean the same, but that the later law was designed to limit the more enlarged power of the earlier one.

If our construction of the Constitution of 1848 is sound, the judgment of the Supreme Court must be reversed; for the stipulation of facts on which the case was tried says that "it is admitted that all the lots and lands mentioned and described in the objections filed in said proceeding for judgment, whereon said taxes are levied, excepting improvements on the same, are leased by said university to different parties for a longer or shorter period, and that all said lots and lands are held for sale or lease, for the use and support of said institution and the objects contemplated by said charter."

We are of opinion that such use and such holding bring the lots within the class of property which by the Constitution of 1848 the legislature could, if it deemed proper, exempt from taxation, and that the legislature did so exempt it.

The judgment of the Supreme Court of the State will be reversed, and the case remanded to that court for further proceedings not inconsistent with this opinion; and it is

So ordered.

MR. JUSTICE STRONG and MR. JUSTICE BRADLEY did not sit in this case nor take any part in deciding it.


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