U.S. Supreme Court
Home of the Friendless v. Rouse, 75 U.S. 8 Wall. 430 430 (1869)
Home of the Friendless v. Rouse
75 U.S. (8 Wall.) 430
1. A statute which, for the declared purpose "of encouraging the establishment of a charitable institution," and enabling the parties engaged in thus establishing it "more fully and effectually to accomplish their laudable purpose," gave to the institution a charter, and declared by it chanrobles.com-red
that 11 the property of said corporation shall be exempt from taxation,
and that an already existing statutory provision, that every charter of incorporation should be subject to alteration, suspension, or repeal, at the discretion of the legislature, should not apply to it, becomes, after the corporation has been organized, a contract; and its property is not subject to taxation, so long as the corporation owns it and applies it to the purposes for which the charter was granted.
2. A state which, after granting such a charter, passes a law, taxing property of the corporation, passes a law violating the obligation of a contract, and, consequently, such its law, is void, under the Constitution.
On the 3d of February, 1853, the Legislature of Missouri passed "an act to incorporate the Home of the Friendless, in the City of St. Louis." The preamble and one section of the act were thus:
"Whereas it is proposed to establish in the City of St. Louis a charitable institution, to be called 'The Home of the Friendless,' having for its object, to afford relief to destitute and suffering females, and the affairs of which shall be in the keeping of ladies, who contribute pecuniary aid to the institution; therefore, for the purpose of encouraging said undertaking, and enabling the parties engaged therein more fully and effectually to accomplish their laudable purpose,"
"Be it enacted &c., as follows:"
"SECTION 1. All such persons, of the female sex as heretofore have or hereafter may become contributors of pecuniary aid, as hereinafter specified, to said institution, shall be and they are hereby constituted a body politic and corporate by the name of 'The Home of the Friendless,' and by that name shall have perpetual succession, and be capable in law as well to take, receive, and hold, as to dispose of, as they see proper, all and all manner of lands, tenements, rents, annuities, franchises, and other hereditaments and personal property which may be conducive to the objects of said institution; and all property of said corporation shall be exempt from taxation; and the sixth, seventh, and eighth sections of the first article of the act concerning corporations, approved March 19, 1845, shall not apply to this corporation."
The sections thus referred to provided, that the charter chanrobles.com-red
of every incorporation that should thereafter be granted by the legislature should be subject to alteration, suspension, and repeal, at the discretion of the legislature.
The corporation was organized and set in action, and by gifts, grants, and devises, had acquired a considerable amount of real estate in St. Louis. A constitution, adopted by the state, in the year 1865, authorized the legislature to impose certain taxes, and soon after, the legislature did impose a tax upon the real property of the Home. The corporation declining to pay, the collector of taxes for the county was about to levy on and sell its real estate, when the corporation filed a bill in one of the state courts, praying for an injunction against collecting the taxes, on the ground that they were illegally assessed, all property of the Home being, by its act of incorporation, expressly exempted from taxation at all times. The defendant interposed a demurrer, which was overruled, and the judgment on the demurrer made final. The cause was removed to the supreme court of the state, and resulted in the reversal of the judgment of the lower court, and the dismissal of the bill or petition.
The case was now here for review, and Supreme Court of Missouri certifying, as a part of the record, that in the determination of the suit there was necessarily drawn in question the construction of that clause of the Constitution of the United States, which prohibits a state from passing a law impairing the obligation of a contract, and that the decision was against the right claimed by the complainant, and was necessary to the adjudication of the cause, thus bringing the case clearly within the 25th section of the Judiciary Act, which gives to this Court in such cases a power to examine and affirm or reverse the decision of the state court.
The question was, whether the act of 1853 was a contract never to tax. If so, the subsequent act was in violation of that clause of the Constitution which says, that "no state shall pass any law impairing the obligation of contracts." chanrobles.com-red