attainder, ex post facto law, or law impairing the obligation of contracts," and the prohibition of bills of attainder and ex post facto laws being a restraint upon governmental action, there is not to be implied "in words which import a general prohibition to impair the obligation of contracts, an exception in favour of the right to impair the obligation of those contracts into which the state may enter.' It has, therefore, since 1810, been settled that the term "contract" includes not only contracts between individuals, private and corporate, but also contracts, executed and executory, between the state and individuals, private and corporate. Following in the line of Fletcher v. Peck, it has been held that, a grant of land by a state to a railway corporation is a contract whose obligation is impaired by a subsequent act resuming the land,* that a state cannot deprive of his right to recover mesne profits from a disseisor one whose title vested under a compact between that state and another state, and who under that compact was entitled to recover mesne profits, and that a state cannot, by statute, divest religious corporations of their title to land acquired under colonial laws antecedently to the revolution."

Express contracts of exemption from taxation.

5

67. When in 1812 the case of New Jersey v. Wilson' came before the Supreme Court, the doctrine of Fletcher v. Peck necessarily required the court to hold that the state was bound by the express contract contained in a statute which authorized the purchase of certain land for the remnant of the tribe of Delaware

*Davis v. Gray, 16 Wall. 203; H. & T. C. Ry. v. Texas, 170 U. S. 243; cf. A. Ry. v. New York, 176 id. 335.

Green v. Biddle, 8 Wheat. 1.

Terrett v. Taylor, 9 Cr. 43.

17 Cr. 164.

Indians, and which, in terms, declared that the land so purchased "shall not hereafter be subject to any tax," and that that contract forbade the subsequent taxation of such lands, after their sale to other parties with the state's consent. The legal inviolability of a state's contract to exempt lands from state taxation having been thus established, it followed that a similar contract with regard to corporate franchises or assets was entitled to the like protection, and that contracts of exemption from state taxation, contained in corporate charters, or stipulated by subsequent agreement, if made in express terms and supported by an adequate consideration, constitute contracts so binding upon the state that their obligation cannot be impaired by a subsequent repeal of the charter, or by an imposition of a rate of taxation inconsistent with the state's contract. Thus, the line and rolling stock of a railway cannot be taxed when its charter exempts from taxation its "property" and "shares;" nor can the shares of the capital stock of a corporation be taxed in the hands of the shareholders, when the charter requires the corporation to pay to the state a tax on each share of the stock "in lieu of all other taxes;" 10 nor can the gross receipts of a corporation be taxed when its charter exempts the corporation from taxation; 11 nor can a corpor

8 Jefferson Branch Bank v. Skelly, 1 Bl. 436; Chicago v. Sheldon, 9 Wall. 50; W. & R. R. v. Reid, 13 id. 264; R. & G. R. v. Reid, ibid. 269; Humphrey v. Pegues, 16 id. 244; P. R. v. Maguire, 20 id. 36; New Jersey v. Yard, 95 U. S. 104; University v. People, 99 id. 309; Asylum v. New Orleans, 105 id. 362; W. & W. R. v. Alsbrook, 146 id. 279; M. & O. R. v. Tennessee, 153 id. 486; Shelby County v. Union & Planters' Bank, 161 id. 149; Stearns v. Minnesota, 179 id. 223; Citizens' Bank v. Parker, 192 id. 73; cf. G. & S. I. R. v. Hewes, 183 id. 66.

9

W. & R. R. v. Reid, 13 Wall. 264; C. R. & B. Co. v. Wright, 164 U. S. 327. 10 Farrington v. Tennessee, 95 U. S. 679; Bank of Commerce v. Tennessee, 161 id. 134, 163 id. 416; Shelby County v. Union & Planters' Bank, 161 id. 149.

"P. R. v. Maguire, 20 Wall. 36.

ation be taxed in excess of the limits specifically designated in the charter,12 or other contract.13 Nor can a municipal corporation, in the exercise of authority delegated to it by statute, assess a street railway for a new paving of a street, when the railway has contracted with the municipality to keep the street in repair, for the acceptance of that contract limits by necessary implication the obligation of the railway to repairs, and relieves it from liability for betterments; 14 nor can property held by a charitable corporation as an investment be taxed, when its charter exempts from taxation all property of whatever kind or description belonging to, or owned by, the corporation.15 An adequate consideration for a charter exemption from taxation is to be found in the exercise by the corporation of the powers conferred by the charter,16 or, in the case of corporations for charitable purposes, in the contribution of funds to the corporation for the accomplishment of its benevolent purpose.17 So also the building by a railway corporation of its line, under the terms of a statute amendatory of its charter and granting in express terms an exemption from taxation, constitutes a consideration for the exemption, though the original charter granted a power to the corporation, which it did not exercise, to build the line.18 Statutory exemptions from state taxation not incorporated in charters and unsupported by a consideration moving to the state, or from the exempted corporation, do not constitute irrepealable

12 R. & G. R. v. Reid, 13 Wall. 269.

18 New Jersey v. Yard, 95 U. S. 104.

"Chicago v. Sheldon, 9 Wall. 50.

15

362.

University v. People, 99 U. S. 309; Asylum v. New Orleans, 105 id.

19 C. Ry. v. C. S. R., 166 U. S. 557.

"University v. People, 99 U. S. 309; Asylum v. New Orleans, 105 id. 362.

18 Humphrey v. Pegues, 16 Wall. 244.

contracts of exemption, but are subject to modification or repeal in the exercise of legislative discretion; as, for instance, bounty laws offering such an exemption as an inducement for the organization of corporations to develop a particular industry,19 or voluntary grants of exemption of the real property of a charity from taxation.20

If the constitution of a state prohibits legislative grants of exemption from state taxation, such a grant, though accepted in good faith by the exempted corporation, cannot constitute a contract whose obligation is impaired by a subsequent imposition of taxation.21 Such a constitutional prohibition operates to extinguish an exemption made by contract in the case of a railway which, having been exempted before the adoption of the constitutional prohibition, had been after the adoption thereof sold under foreclosure to reorganize the corporation.22 On the same principle, a statutory consolidation of two railways works the dissolution of the original corporation, and subjects the consolidated corporation to the operation of an amended state constitution, which took effect subsequently to the incorporation of the original corporations, but prior to their consolidation; and, therefore, the state legislature may, without impairment of the obligation of the contract, prescribe rates for the transportation of passengers by the consolidated corporation, though one of the original corporations was by charter protected against

19 Salt Co. v. East Saginaw, 13 Wall. 373; Welch v. Cook, 97 U. S. 541; W. & M. Ry. v. Powers, 191 id. 379.

20 Christ Church v. Philadelphia, 24 How. 300; Grand Lodge v. New Orleans, 166 U. S. 143.

21 R. Cos. v. Gaines, 97 U. S. 697; G. & S. I. R. Co. v. Hewes, 183 id. 66; cf. Stearns v. Minnesota, 179 id. 223, 253; N. C. Ry. v. Maryland, 187 id. 258.

"Trask v. Maguire, 18 Wall. 391; Morgan v. Louisiana, 93 U. S. 217; People v. Cook, 148 id. 397. See also Memphis City Bank v. Tennessee, 161 id. 186; P. Ins. Co. v. Tennessee, ibid. 193.

such legislative regulation.23 General statutory prohibitions of the exemption of corporations from state taxation are not binding on subsequent legislatures,2* unless referred to in, and incorporated with, subsequently granted charters.25 In the case of a statutory consolidation accepted by two railways, each of whose charters contained a limited exemption from taxation, a reservation by a general statute before the enactment of the consolidating act and incorporated therewith, operates to extinguish the limited exemption contained in the original charters.26 Of course, if the state in the charter reserves the right to alter, modify, or repeal that charter, that reservation authorizes any such amendment of the charter granted as will not defeat nor substantially impair the obligation of the grant or any rights that may be vested thereunder.27 The first suggestion of any such reservation is to be found in the judgment of Parsons, C. J., in Wales v. Stetson,28 which is cited by Miller, J., in Greenwood v. Freight Co.29 A provision in a charter, or a general statute incorporated therewith, that that charter shall not be alterable in any other manner than by an act of the legislature, operates as a reserved power

23 Shields v. Ohio, 95 U. S. 319.

"New Jersey v. Yard, 95 U. S. 104.

25 Greenwood v. Freight Co., 105 U. S. 13; Tomlinson v. Jessup, 15 Wall. 454.

R. Co. v. Georgia, 98 U. S. 359.

"Close v. Glenwood Cemetery, 107 U. S. 466; S. C. S. Ry. v. Sioux City, 138 id. 98; L. W. Co. v. Clark, 143 id. 1; H. G. L. Co. v. Hamilton City, 146 id. 258; People v. Cook, 148 id. 397; N. Y. & N. E. R. v. Bristol, 151 id. 556; Bryan v. Board of Education, ibid. 639; C. Ry. v. C. S. R. 166 id. 557; Covington v. Kentucky, 173 id. 231; Citizens' Savings Bank v. Owensboro, ibid. 636; Looker v. Maynard, 179 id. 46; G. & S. I. R. v. Hewes, 183 id. 66; B. W. S. Co. v. Mobile, 186 id. 212; cf. Stearns v. Minnesota,. 179 id. 223, 239. See also Pearsall v. G. N. Ry., 161 id. 646; N. C. Ry. v. Maryland, 187 id. 258; Wright v. M. M. L. I. Co., 193 id. 657.