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The Wisconsin Central Railroad Co. vs. Taylor County and others.

a limitation upon the executive and judicial departments by vesting exclusively in the legislature the selection of taxable property. The other clause is a limitation on the legislature by compelling them to tax by a uniform rule whatever property they prescribe for taxation. Both clauses leave the reserved power of selection of taxable property in the legislative body. The constitution is to be considered, not as a grant of powers, but as in the nature of a restriction or limitation. People v. Coleman, 4 Cal., 46; Munn v. Illinois, 94 U. S., 113, 124. The provision in question protects the people, first, against every form of taxation which the legislature does not order; and second, against an unequal system of imposition upon such property as the legislature shall select. People v. McCreery, 34 Cal., 432, 451. (6) Ch. 21, Laws of 1877, is not invalid under subd. 7, sec. 31, art. IV of the constitution. It grants no corporate powers or privileges. The exemption of lands from taxation is in no sense a corporate grant, because it would be equally available to any individual donee of the grant. It does not change any of the chartered powers or privileges. It simply prevents these lands from falling into the grand body of taxable property. U. S. Exp. Co. v. Ellyson, 28 Iowa, 371; McAunich v. R. R. Co., 20 id., 339. Moreover, that provision of the constitution, adopted as an amendment in 1871, does not apply to the charters of the respondent, which were granted in 1866. Att'y General v. Railroad Companies, 35 Wis., 425, 561. (7) If there is any doubt on the question of the constitutionality of ch. 21, Laws of 1877, it must be resolved in favor of its validity. Munn v. Illinois, 94 U. S., 124. 5. Ch. 21, Laws of 1877, is a contract, made upon a valuable consideration passing between the state and the respondent. It has been executed by parties. who acted in reliance on it, and is valid under the constitutions of the United States and of Wisconsin, as construed by the supreme court of the United States before the parties so acted. It is now too late to question its validity under the constitu

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The Wisconsin Central Railroad Co. vs. Taylor County and others.

tion of Wisconsin. The taxes in question, even if valid under the law of the state, will be declared invalid in this forum if they are void under the supreme law of the land. Before ch. 21 was enacted, the supreme court of the United States had substantially decided that the legislature of Wisconsin could make valid exemptions of property from taxation. Gilman v. Sheboygan, 21 Black, 510. The same court had also declared the validity of contracts for exemption upon sufficient consideration passing between the state and the party in any form. The consideration need not be a direct pecuniary return. It is sufficient if the state has apparently found it for its interest to assume the obligation, and that some one has acted in reliance on it. Cooley's Principles of Com. Law, 305; New Jersey v. Wilson, 7 Cranch, 164; Pacific R. R. v. Maguire, 20 Wall., 36; University v. People, 99 U. S., 309. And that court determines for itself whether or not such contract exists, whatever may be the decision of the state court. Railroad Co. v. Rock, 4 Wall., 177; Railroad Co. v. McClure, 10 id., 511; Knox v. Exchange Bank, 12 id., 379; University v. People, 99 U. S., 309. It is true that exemptions made as a mere gratuity and favor may be repealed at any time at the will of the legislature. Salt Co. v. East Saginaw, 13 Wall., 373; Home Ins. Co. v. City Council, 93 U. S., 116; West Wis. Railway v. Trempealeau Co., id., 595; Welch v. Cook, 97 id., 541. But this case does not involve any question of legislative power to repeal. The supreme court of the United States has also decided that adverse judicial constructions, whether of a constitution or a statute, which are made by a state court after a contract has been made, and a fortiori after it has been performed, do not prejudice the rights of the party who so performed in reliance upon an earlier, favorable construction by that court. Gelpeke v. Dubuque, 1 Wall., 175; City v. Lamson, 9 id., 477; Lee County v. Rogers, 7 id., 181; Havemeyer v. Iowa Co., 3 id., 294; Ohio L. I. & T. Co. v. Debolt, 16 How., 432. This court, therefore, in obedience to

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The Wisconsin Central Railroad Co. vs. Taylor County and others.

the supreme law of the land, must, in this suit, hold ch. 21, Laws of 1877, valid under the settled law of the United States, whatever its own abstract view might now be of the conformity of such exemptions to the constitution of the state.

CASSODAY, J. This action was brought to restrain the defendants from levying any tax upon or collecting the same from the lands described of the plaintiff, on the ground that they were exempt from taxation. It is urged, upon the part of the plaintiff company, that the lands in question could not be subjected to taxation by the state or any of its municipalities, for the reason that they were acquired by the plaintiff under a grant from the United States, for the purpose of aiding in the construction of the plaintiff's railroad, and for no other purpose.

MARSHALL, C. J., in M'Culloch v. Maryland, 4 Wheat., 429, said: "All subjects over which the sovereign power of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles, exempt from taxation." Again: "That the power to tax involves the power to destroy; that the power to destroy may defeat and render nseless the power to create; that there is a plain repugnance in conferring on one government a power to control the constitutional measures of another, which other, with respect to those measures, is declared to be supreme over that which exerts the control,- are propositions not to be denied." Id.,

431.

In Railway Co. v. McShane, 22 Wall., 444, it was held "that lands on which the costs of survey have not been paid, and for which the United States have not issued a patent to the company, are exempt from state taxation." In Ross v. Outagamie Co., 12 Wis., 38, COLE, J., said: "It is conceded that, so long as the land remains a part of the public domain of the general government, it is not subject to taxation." Section 2, art. II of the constitution of this state, expressly pro

The Wisconsin Central Railroad Co. vs. Taylor County and others.

vides, among other things, that "no tax shall be imposed on land the property of the United States." So, as to lands which the state held title to as mere trustee of the United States, and as to which the trust remained unexecuted, the power of state taxation would not apply. In Tucker v. Ferguson, 22 Wall., 572, where the grant to Michigan by congress was substantially like this to Wisconsin, SWAYNE, J., said: "Upon general principles she (the state) could not tax the lands while the title remained in the United States, nor while she held them as the trustee of the United States, which, in the view of the law, was the same thing."

These propositions are virtually conceded by counsel for the defendants; but they maintain that, as soon as the plaintiff perfected its title to the lands and acquired the right to sell them, the case assumed an entirely different aspect, and they at once became subject to taxation by the state. On the other hand, it is claimed that the plaintiff company was merely the instrumentality or agent through which the state was execut-. ing the trust assumed, and hence, as the lands were exempt while held in trust by the state, the exemption continued while they were held by the railroad company as agent of the state. In support of this position we are referred to section 8 of the act of May 5, 1864, granting to the state the lands in question, which provided "that the said lands hereby granted shall, when patented as provided in section 7 of this act, be subject to the disposal of the companies respectively entitled thereto for the purposes aforesaid, and no other."

We are also referred to section 10, art. VIII of the constitution of this state, declaring, among other things, that "whenever grants of land or other property shall have been made to the state, especially dedicated by the grant to particular works of internal improvement, the state may carry on such particular works, and shall devote thereto the avails of such grants, and may pledge or appropriate the revenues derived from such works in aid of their completion." The seventh section of the

The Wisconsin Central Railroad Co. vs. Taylor County and others.

grant referred to, among other things provided, "that whenever the companies to which this grant is made, or to which the same may be transferred, shall have completed twenty consecutive miles of any portion of said railroads,

patents shall issue conveying the right and title to said lands to the said company entitled thereto, on each side of the road, so far as the same is completed, and coterminous with said completed section, not exceeding the amount aforesaid, and patents shall in like manner issue as each twenty miles of said road is completed." There is no dispute but that the lands in question had, prior to the levying of the taxes in question, been earned by the plaintiff by fully completing the requisite portion of its road, and that patents had been issued to the plaintiff, as required, thereby conveying to it the right and title to the lands in question.

The case of the Railroad Co. v. Peniston, 18 Wall., 5, involved the power of Lincoln county, Nebraska, to levy a tax upon the road-bed, depots, wood stations, water stations, and other realty and personal property of the Union Pacific Railroad Company, which had previously been chartered by the United States, and in which many important rights and privileges had been reserved to the United States; and the majority of the court held that, as congress had not prohibited taxation by the state, it had the power to tax the property of the corporation, as distinguished from its franchises. STRONG, J., giving the opinion of the majority of the court, said: "That the taxing power of a state is one of its attributes of sovereignty; thatit exists independently of the constitution of the United States, and underived from that instrument; and that it may be exercised to an unlimited extent upon all property, trades, business and avocations existing or carried on within the territorial boundaries of the state, except so far as it has been surrendered to the federal government, either expressly or by necessary implication, are propositions that have often been asserted by this court." Page 29.

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