Cole v. La Grange

113 U.S. 1 (1885)

COLE
v.
LA GRANGE.

Supreme Court of United States.

Submitted December 8, 1884. Decided January 5, 1885. IN ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF MISSOURI.

Mr. George A. Sanders for plaintiff in error.

Mr. David Wagner for defendant in error.

MR. JUSTICE GRAY delivered the opinion of the court. He recited the facts as above stated, and continued:

The general grant of legislative power in the Constitution of a State does not enable the legislature, in the exercise either of the right of eminent domain, or of the right of taxation, to take private property, without the owner's consent, for any but a public object. Nor can the legislature authorize counties, cities or towns to contract, for private objects, debts which must be paid by taxes. It cannot, therefore, authorize them to issue bonds to assist merchants or manufacturers, whether natural persons or corporations, in their private business. These limits of the legislative power are now too firmly established by judicial decisions to require extended argument upon the subject.

In Loan Association v. Topeka, 20 Wall. 655, bonds of a city, issued, as appeared on their face, pursuant to an act of the legislature of Kansas, to a manufacturing corporation, to aid it in establishing shops in the city for the manufacture of iron bridges, were held by this court to be void, even in the hands of a purchaser in good faith and for value. A like decision was made in Parkersburg v. Brown, 106 U.S. 487. The decisions in the courts of the States are to the same effect. Allen v. Jay, 60 Maine, 124; Lowell v. Boston, 111 Mass. 454; Weismer v. Douglas, 64 N.Y. 91; In re Eureka Co., 96 N.Y. 42; Bissell v. Kankakee, 64 Illinois, 249; English v. People, 96 Illinois, 566; Central Branch Union Pacific Railroad v. Smith, 23 Kansas, 745.

We have been referred to no opposing decision. The cases of Hackett v. Ottawa, 99 U.S. 86, and Ottawa v. National Bank, 105 U.S. 342, were decided, as the Chief Justice pointed out in Ottawa v. Carey, 108 U.S. 110, 118, upon the ground that the bonds in suit appeared on their face to have been issued for municipal purposes, and were therefore valid in the hands of bona fide holders. In Livingston v. Darlington, 101 U.S. 407, the town subscription was towards the establishment of a State Reform School, which was undoubtedly a public purpose, and the question in controversy was whether it was a corporate purpose, within the meaning of the Constitution of Illinois. In Burlington v. Beasley, 94 U.S. 310, the grist mill-held to be a work of internal improvement, to aid in constructing which a town might issue bonds under the statutes of Kansas, was a public mill which ground for toll for all customers. See Osborne v. Adams County, 106 U.S. 181, and 109 U.S. 1; Blair v. Cuming County, 111 U.S. 363. Subscriptions and bonds of towns and cities, under legislative authority, to aid in establishing railroads, have been sustained on the same ground on which the delegation to railroad corporations of the sovereign right of eminent domain has been justified, the accommodation of public travel. Rogers v. Burlington, 3 Wall. 654; Queensbury v. Culver, 19 Wall. 83; Loan Association v. Topeka, 20 Wall. 661, 662; Taylor v. Ypsilanti, 105 U.S. 60. Statutes authorizing towns and cities to pay bounties to soldiers have been upheld, because the raising of soldiers is a public duty. Middleton v. Mullica, 112 U.S. 433; Taylor v. Thompson, 42 Illinois, 9; Hilbish v. Catherman, 64 Penn. St. 154; State v. Richland, 20 Ohio St. 362; Agawam v. Hampden, 130 Mass. 528, 534.

The express provisions of the Constitution of Missouri tend to the same conclusion. It begins with a Declaration of Rights, the sixteenth article of which declares that "no private property ought to be taken or applied to public use without just compensation." This clearly presupposes that private property cannot be taken for private use. St. Louis County Court v. Griswold, 58 Missouri, 175, 193; 2 Kent Com. 339 note, 340. Otherwise, as it makes no provision for compensation except when the use is public, it would permit private property to be taken or appropriated for private use without any compensation whatever. It is true that this article regards the right of eminent domain, and not the power to tax; for the taking of property by taxation requires no other compensation than the taxpayer receives in being protected by the government to the support of which he contributes. But, so far as respects the use, the taking of private property by taxation is subject to the same limit as the taking by the right of eminent domain. Each is a taking by the State for the public use, and not to promote private ends.

The only other provisions of the Constitution of Missouri, having any relation to the subject, are the following sections of the eleventh article:

"SECT. 13. The credit of the State shall not be given or loaned in aid of any person, association or corporation; nor shall the State hereafter become a stockholder in any corporation or association, except for the purpose of securing loans heretofore extended to certain railroad corporations by the State.

"SECT. 14. The general assembly shall not authorize any county, city or town to become a stockholder in, or loan its credit to, any company, association or corporation, unless two thirds of the qualified voters of such county, city or town, at a regular or special election to be held therein, shall assent thereto."

Both these sections are restrictive, and not enabling. The thirteenth section peremptorily denies to the State the power of giving or lending its credit to, or becoming a stockholder in, any corporation whatever. The aim of the fourteenth section is to forbid the legislature to authorize counties, cities or towns, without the assent of the taxpayers, to become stockholders in, or to lend their credit to, any corporation, however public its object; State v. Curators State University, 57 Missouri, 178; not to permit them to be authorized, under any circumstances, to raise or spend money for private purposes.

It is averred in the answer, and admitted by the demurrer, that the La Grange Iron and Steel Company, to which the bonds were issued, was "a private manufacturing company, formed and established for the purpose of carrying on and operating a rolling-mill," and "was a strictly private enterprise, formed and prosecuted for the purpose of private gain, and which had nothing whatever of a public character." The ordinance referred to shows that the mill was to manufacture railroad iron; but that is no more a public use than the manufacture of iron bridges, as in the Topeka Case, or the making of blocks of stone or wood for paving streets. There can be no doubt, therefore, that the act of the legislature of Missouri is unconstitutional, and that the bonds, expressed to be issued in pursuance of that act, are void upon their face.

As for this reason the action cannot be maintained, it is needless to dwell upon the point that the answer demurred to, besides the special defence of the unconstitutionality of the act, contains a general denial of the allegations in the petition. That point was mentioned and passed over in the opinion of the Circuit Court, and was not alluded to in argument here, the parties in effect assuming the general denial in the answer to have been withdrawn or waived, and the case submitted for decision upon the validity of the special defence.

Judgment affirmed.