Williamson v. New Jersey/Opinion of the Court

This is a writ of error to the supreme court of the state of New Jersey. The case arose on a writ of certiorari issued by that court at the instance of the mayor and common council of the city of New Brunswick, to review an assessment for taxation made by the township of North Brunswick, and a levy made by the collector of that ownership, against a farm known as the 'Poor Farm,' and personal property thereon, situated in the township of North Brunswick, and owned by the mayor and common council of the city of New Brunswick. The case arose on the following facts, which were agreed upon by the counsel for the respective parties: By a special act of the legislature of New Jersey, approved February 28, 1860, (Laws 1860, c. 67, p. 162,) parts of the townships of North Brunswick and Monroe, in the county of Middlesex, were set off and established as a separate township, to be called 'East Brunswick,' and part of the township of North Brunswick was set off and established as a separate township, to be called the 'Township of New Brunswick,' and the township committees of the said townships of North Brunswick East Brunswick, and New Brunswick were authorized and required to divide the real and personal property of the township of North Bruns wick between said townships. The poor-farm of the original township of North Brunswick was situate within the limits of what remained of the township of North Brunswick, after the setting off of the townships of East Brunswick and New Brunswick as aforesaid. By a special act of the legislature, approved March 15, 1861, (Laws 1861, c. 170, p. 507,) the said township of New Brunswick and the city of New Brunswick were declared to be one corporate body, under the name of 'The Corporation of the City of New Brunswick,' and the said corporation was made subject to all the liabilities of the inhabitants of the township of New Brunswick. The poor-farm and the personal property thereon were never divided between the townships of North Brunswick and East Brunswick and the corporation of the city of New Brunswick, but the townships agreed to sell and convey their interests in the same to said corporation. By a special act of the legislature, approved February 18, 1862, (Laws 1862, c. 37, p. 52,) the township committees of North Brunswick and East Brunswick were authorized to convey all the interests of the said townships in said farm and the personal property thereon to the said corporation; and it was thereby further enacted that the said poor-farm and the personal property thereon should be at all times thereafter liable and subject to taxation by the township of North Brunswick, so long as it should be embraced in the limits of said township. By virtue of the authority thereby given, the township committees of said townships sold and conveyed said farm and the personal property thereon to said corporation, by deed of conveyance, bearing date March 27, 1862. The said corporation of the city of New Brunswick entered into possession of said farm, and the personal property thereon, under the contract expressed in said deed of conveyance, and is still in possession of the same, and the said farm is still within the limits of the township of North Brunswick.

The said farm and property have been duly assessed by the township of North Brunswick each year since said sale and conveyance, and the taxes so assessed have been paid by the corporation of the city of New Brunswick to the township of North Brunswick up to and including the year 1877, when further payments were refused, on the ground that said poor farm was used exclusively for charitable purposes, and therefore was not liable to taxation. This certiorari brings up the assessment for the year 1878, for the purpose of determining whether said farm and personal property thereon are liable and subject to taxation by said township of North Brunswick. The deed of March 27, 1862, which contains a copy of the act approved February 18, 1862, is set forth in the margin.

It was agreed between the attorney for the plaintiff in the certiorari and the attorney for the defendant that the sole question to be discussed in the supreme court of New Jersey was whether the poor-farm, situated in the township of North Brunswick, and owned by the city of New Brunswick, was exempt from taxation, and that the poor-farm referred to, the buildings thereon, and the furniture and fixtures therein, were used exclusively for charitable purposes by the city of New Brunswick, the owner thereof. The questions considered by the supreme court of New Jersey were (1) whether the second section of the act approved February 18, 1862, was repealed by the general tax law of the state, approved April 11, 1866, (Revision, 1150,) the fifth section of which enacted that the property of the cities of the state, and all buildings used exclusively for charitable purposes, with the land whereon the same are erected, and which may be necessary for the fair enjoyment thereof, and the furniture and personal property used therein, shall be exempt from taxation; and the thirty-second section of which, after repealing certain acts named, repealed all other acts, or parts of acts, whether special or local, or otherwise, inconsistent with the provisions of the act of 1866, except one act, approved in 1864, and such special or local acts as had been approved since 1862; (2) whether, if the legislature had, by the act of April 11, 1866, declared its purpose to repeal the second section of the act of February 18, 1862, such purpose could be constitutionally enforced. The supreme court held (44 N. J. Law, 165) (1) that the declaration in the general law of 1866 that all acts and parts of acts, whether special or local, or otherwise, inconsistent with its provisions, were repealed, abrogated the provisions in the prior special act of 1862 for the taxation of the poor-farm and the personal property thereon by the township of North Brunswick, because such provision in the act of 1862 was inconsistent with the provision in the act of 1866 exempting from taxation all property of the cities of the state and all property used exclusively for charitable purposes; (2) that the legislature could constitutionally repeal the power of taxing the poor-farm and the personal property thereon, given by the act of 1862 to the township of North Brunswick. The court decided that the provisions of the two statutes could not stand together, and that it was impossible to give full effect to the language of the repealing provision of the act of 1866 and keep in operation the second section of the act of 1862. It also decided that the provision of the second section of the act of 1862 did not become, by reason of the subsequent conveyance of March 27, 1862, to the corporation of the city of New Brunswick, a contract between that corporation and the township of North Brunswick, the obligation of which the legislature was forbidden to impair; that one legislature could not confer upon a township a power of taxation which a subsequent legislature could not revoke, against the objection of the township; that the power of a legislature over a corporation created for the purposes of local government was supreme; that no contract with such a corporation arose from the delegation to it of taxing authority, (citing Tinsman v. Railroad Co., 26 N. J. Law, 148; Mayor v. Railroad Co., 20 N. J. Eq. 360; and Rader v. South-Easterly Road Dist., 36 N. J. Law, 273;) and that the power of taxation was not in any sense the private property of the municipality, but was peculiarly a public and governmental power, and must, as such, be at all times susceptible of repeal or modification, according to legislative discretion, so far as the mere right of the township to exercise it was concerned. The judgment of the supreme court was that the assessment of taxes should be set aside. The collector of the township removed the case, by a writ of error, to the court of errors and appeals of the state, which affirmed the judgment in an opinion (46 N. J. Law, 204) adopting the reasons given by the supreme court. The case having been remitted to the supreme court, the collector has brought it here by a writ of error to that court.

On the question as to the effect of the act of 1866, in repealing the second section of the act of 1862, we concur with the highest court of New Jersey, that the provisions of the two statutes cannot stand together, and that it is impossible to give full effect to the language of the repealing provision of the act of 1866, and keep in operation the second section of the act of 1862. We must therefore hold, as the state court held, that the second section of the act of 1862 was repealed by the act of 1866. This leaves open only the consideration of the question as to whether the second section of the act of 1862 created a contract, the obligation of which could not be constitutionally impaired by the repeal of such second section. It is contended for the collector that the tax provided for by the second section of the act of 1862 is in the nature of a ground-rent, and of a right reserved by the township of North Brunswick out of the land conveyed by the deed of March, 1862; that the fee of the poor-farm belonged to the township in its private and proprietary character; that the farm had been acquired by the taxation of the inhabitants of the township; that the legislature could not deprive them of it without their consent; that the township was authorized by the legislature to convey the farm to the corporation of the city of New Brunswick for the consideration, in part, of the right of the township of North Brunswick to tax it so long as it should be embraced in the limits of that township; that, in taking the title, the city of New Brunswick agreed to pay to that township an annual sum to be determined in amount by the annual tax-rate of that township, so long as the farm should remain under, and receive the benefit of, the municipal government of that township; that the right thus reserved of levying and collecting such tax became thereby vested in that township, and the amount of tax, when determined, became its private property; and that the case involves the question of the authority of the legislature over the private property and vested rights of the township, and not the question of its authority over the public and governmental powers of the township.

We concur in the views of the court of errors and appeals of New Jersey on this question. It is not the same question as that involved in the principle recognized by this court, that a provision in an act of a legislature, exempting certain specified property from taxation by the authorities of a state or a municipality, for all time or for a limited time, constitutes a contract in respect of such property, the obligation of which cannot be impaired by a subsequent legislature, and is therefore a contract within the protection of the constitution of the United States. It is to be observed in the present case that the act of February 18, 1862, does not assert or recognize the fact that the privilege of taxing the poor-farm in the future was a part of the consideration for the conveyance of that farm by the township of North Brunswick. The act recites that the townships of North Brunswick and East Brunswick had agreed to convey and sell to the corporation of the city of New Brunswick their interest in the poor-farm, and the personal property thereon, for the sum of $2,611.13, 'the value of the interest of those townships therein.' It then empowers the two townships to convey their interest in the poor-farm, and the personal property thereon, to the corporation of the city of New Brunswick 'for the sum aforesaid.' It then enacts, in the second section, which is a separate and independent section, 'that the said poor-farm, and the personal property thereon, shall be at all times hereafter liable and subject to taxation by the said township of North Brunswick, so long as it is embraced in the limits of the said township of North Brunswick.' So, also, the deed of March 27, 1862, recites as its consideration the sum of $2,611.13, paid by the corporation of the city of New Brunswick to the grantors. No other consideration is expressed. The act of February 18, 1862, is incorporated in the deed as the authority by virtue of which the grantors convey the property. It is not intended to suggest that, if the right of taxation had been named in the act or in the deed as a part of the consideration for the conveyance, it would have made a different case; but reference is made to the actual provisions of the act and the deed solely for the purpose of showing that they evince no idea on the part of the legislature, or of the parties to the conveyance, that the perpetual right of taxation now asserted formed any part of the consideration of the transaction. The true principle involved in the case is whether the power of taxation on the part of a municipal corporation is private property, or a vested right of property, in its hands, which, when once conferred upon it by an act of the legislature, cannot be subsequently modified or repealed. Even without the special provision of the second section of the act of February 18, 1862, it is to be presumed that the poorfarm, and the personal property thereon, would, while situated in the township of North Brunswick, be subject to taxation by that township, unless exempted from such taxation on the ground of a charitable use. The special question in this case arises, therefore, solely out of the use of the words, in the second section, 'at all times hereafter.' The provision of the second section, and the contention here made on the part of the collector, necessarily imply the authority of the legislature to confer the power of taxation upon the township, and the non-existence of such power unless conferred by the legislature. The question arising is therefore whether the legislature which passed the act of February 18, 1862, could lawfully so grant the power of taxation to the township in perpetuity that a subsequent legislature could not repeal or modify such grant of power. We are clearly of opinion that such a grant of the power of taxation by the legislature of a state does not form such a contract between the state and the township as is within the protection of the provision of the constitution of the United States which forbids the passage by a state of a law impairing the obligation of contracts. The conferring of such right of taxation is an exercise by the legislature of a public and governmental power. It is the imparting to the township of a portion of the power belonging to the state, which it can lawfully impart to a subordinate municipal corporation. But, from the very character of the power, it cannot be imparted in perpetuity, and is always subject to revocation, modification, and control by the legislative authority of the state. The authorities to this effect are uniform. 1 Dill. Mun. Corp. (3d Ed.) §§ 61, 63, and cases there cited; Cooley, Const. Lim. (3d Ed.) * 192, * 193, * 237, and cases there cited; East Hartford v. Bridge Co., 10 How. 511, 534; Bank v. Knoop, 16 How. 369, 380; U.S. v. Railroad Co., 17 Wall. 322, 329; Philadelphia v. Fox, 64 Pa. St. 169; Mayor v. Railroad Co., 20 N. J. Eq. 360; Police Jury v. Shreveport, 5 La. Ann. 661, 665; State v. St. Louis Co. Court, 34 Mo. 546, 552; People v. Morris, 13 Wend. 325, 331; Warner v. Beers, 23 Wend. 103, 126; City of Richmond v. Railroad Co., 21 Grat. 604, 613; County of Richland v. County of Lawrence, 12 Ill. 8; Trustees v. Tatman, 13 Ill. 27, 30; Gutzweller v. People, 14 Ill. 142; Sangamon Co. v. City of Springfield, 63 Ill. 66, 71.

In the present case, the second section of the act of February 18, 1862, has no more force than if the words 'at all times hereafter' had been omitted, and the section is to be construed as if it only temporarily conferred the right of taxation on the township, subject to be recalled at the pleasure of the legislature. There is no element of private property in the right of taxation conferred upon a municipal corporation. Property acquired by paying for it with money raised by taxation is property. The legislation in question does not affect or interfere with any such property. The poor-farm, and the personal property thereon, are not the property of the township of North Brunswick, but are the property of the corporation of the city of New Brunswick. Nor is there anything violative of any provision of the constitution of the United States in the enactment of the legislature of New Jersey that the property in question shall be exempt from taxation because it is used exclusively for charitable purposes. The long recognized and universally prevalent policy of making such exemption is a warrant for saying that the second section of the act of February 18, 1862, is fairly to be regarded as containing an implied reservation that such exemption might be thereafter made, as being the exercise of a public and governmental power, resting wholly in the discretion of the legislature, and not the subject of contract. Judgment affirmed