the judgments were entitled to the same exemption, and that, independently of this, in the absence of any provisions in the contract giving the right to impose a tax, it could not be imposed upon non-residents without impairing the obligation itself.

§ 73. Contract right to tax as a remedy.

The contract clause of the Constitution has been applied to another class of cases, where parties have been adjudged entitled to a levy of taxes in the enforcement of claims. against municipalities. Here was involved the same principle which was enforced in the Virginia coupon cases, as the principle applied in both classes of cases is the familiar rule that the remedy for the enforcement of the contract existing when it is made enters into it, and cannot be destroyed or prejudicially affected, without impairing its obligation.1 Thus when a municipality is authorized to incur debts and issue bonds, the power of taxation then existing is part of the contract within the meaning of the Constitution, and a subsequent statute which repeals or restricts the power of taxation is an impairment of such contract.

The leading case on this subject is Von Hoffman v. Quincy, where the statute of Illinois at the time the bonds were issued authorized the levying of a sufficient special tax to pay the coupons as they fell due, and this law was subsequently repealed, so that the only tax allowed to be levied was insufficient to meet the debt and current expenses of the city. The court said that the power of taxation thus given was a contract within the meaning of the Constitution and could not be withdrawn until the contract was satisfied, and that it was the duty of the city to impose and collect the taxes in all respects as if the second statute

had not been passed, and this duty would be enforced by mandamus. This ruling has been followed in numerous cases involving the enforcement of taxation for the payment of municipal bonds.1

In the case last cited it was argued that the power of taxation belongs exclusively to the legislative department of the government, that the extent to which it may be delegated to municipal bodies is a matter of discretion, and that in general the power may be revoked at the pleasure of the legislature. But the court said that legislation revoking the power of taxation was subject to the qualification that attends all State legislation, that it shall not conflict with the prohibitions of the Constitution of the United States, and, among other things, shall not operate directly upon contracts of the corporation, so as to impair their obligation by abrogating or lessening the means of their enforcement. It was urged in Louisiana v. Pilsbury that the people of New Orleans had been impoverished by the abolition of slavery and disabled from performing the contract according to its terms. The court said that the obligation of the city to perform its contract was no more lessened by the fact that there were no longer slaves to be taxed than it would be by the destruction of any other portion of the taxable property, although the taxation on what was left might be thereby increased.

Thus a statute of Missouri providing that no tax other than for current expenditures and schools and interest on the State bonds should be levied without an order of the Circuit Court, was void as to bonds issued prior to its enactment.2

1 Wolff v. New Orleans, 103 U. S.358; Louisiana v. Pilsbury, 105 U.S.278. 2 United States v. Lincoln County, 5 Dillon, 184; United States v. Johnson County, 5 Dillon, 207; Ralls County Court v. United States, 105 U. S. 733; see author's "Taxation in Missouri," pp. 71 to 81, as to conflict between State and Federal courts on this question in State of Missouri.

§ 74. Remedy may be changed, if substantial right not impaired.

The principle repeatedly enforced by the court has been declared in these words (122 U. S., p. 294):

"It is competent for the States to change the form of the remedy, or to modify it otherwise as they may see fit, provided no substantial right secured by the contract is thereby impaired. No attempt has been made to fix definitely the line between alterations of the remedy which are to be deemed legitimate and those which, under the form of modifying the remedy, impair substantial rights. Every case must be determined upon its own circumstances. Whenever the result last mentioned is produced the act is within the prohibition of the Constitution, and to that extent void.”1

But where the charter of the city was repealed and the State had taken control and custody of her public property and assumed the collection of the taxes previously levied, the Supreme Court held that the taxes levied before the repeal of the charter that were not paid could not be collected through the instrumentality of a court of chancery at the instance of creditors of the city. Such taxes could only be collected under authority of the legislature.2

§ 75. Contractual and governmental legislation distinguished.

While the State may by legislative act exempt from taxation, if not prohibited by the State constitution, such exemption can only be effected by contractual, as distinguished from governmental, legislation.

1 Seibert v. Lewis, 122 U. S. 284; Louisiana v. New Orleans, 102 U. S. 203; Von Hoffman v. Quincy, 4 Wall. 535; Morgan v. Town Clerk, 7 Wall. 610; Morgan v. Beloit, 7 Wall. 613; Stuart v. Jefferson Police Jury, 116 U. S. 135.

2 Meriwether v. Garrett, 102 U. S. 472, Justices Strong, Swayne and Harlan dissenting.

Thus a statute of a State taxing inheritances does not impair any contract rights of inheritance, even if such an act could be construed as a change in the law of succession, rather than as a fiscal imposition, and could not be held to violate the Constitution of the United States.1 Neither does the enactment of an inheritance tax law constitute a contract between the State and the person living at the time of its enactment that if he shall die while the law is in full operation and unchanged, he may dispose of his estate without the imposition of any further tax upon any rights or interests acquired under his will than the tax imposed by law.2

§ 76. Municipal charter powers not contractual.

3

An act of New Jersey, providing that certain property of New Brunswick, used for charitable purposes, should be subject to taxation by the township in which it was located, was an exercise of governmental power and subject to repeal. It did not create a contract between the State and the township. The conferring such rights of taxation is the 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.

§ 77. State exemption of municipal property not con

tractual.

An act of Kentucky exempted from State, county and city taxation the water works of the city of Covington.

1 Carpenter v. Pennsylvania, 17 How. 456; Orr v. Gilman, 183 U. S. 278. 2 In re Vanderbilt, 50 N. Y. App. Div. 246.

3 Williams v. New Jersey, 130 U. S. 189.

The Kentucky Court of Appeals held that the water works were the proprietary property of the citizens as distinguished from the property held for public or governmental purposes, and were therefore subject to taxation under the new constitution, notwithstanding the exemption of all public property used for public purposes. The Supreme Court1 accepted this construction of the Kentucky statute, though it doubted the soundness of the ruling that the water works were not held for governmental purposes. But it agreed with the Kentucky court that the exemption from taxation by the terms of the act, was not irrepealable; and said further that, if the property was held in a governmental not a proprietary sense, the power of the legislature as to such property was still supreme, and that the charter of a municipal corporation is in no sense a contract between the State and the corporation.

2

§ 78. State control of proceeds of municipal taxation. The distinction between the relation of the State to municipal corporations and to individuals was illustrated in a decision of the Supreme Court, holding that a State, unless restrained by the provisions of its constitution, can direct a restitution to the taxpayers of a county or other municipal corporation of property exacted from them by taxation, in whatever form the property may be changed, so long as it remains in the possession of the municipality. The county in that case, had, under legislative authority, subscribed to stock in a railroad company to be paid by a special tax levied for that purpose. The legislature enacted a law, providing that the railroad company should issue to the taxpayers certificates for the taxes paid, which were made assignable, and it was

1 Covington v. Kentucky, 173 U. S. 231.

2 Board of Commissioners v. Lucas, 93 U. S. 108.