New Jersey v. Wilson.

NOTE.

THE case decides, briefly, that the repeal by the legislature of New Jersey of a contract of tax exemption previously granted by it was void, as a bill passed by a state "impairing the obligation of contracts." It appeared that the state of New Jersey, in 1858, pursuant to agreement with certain Indian tribes, passed an act authorizing the purchase of certain lands for the Indians. and providing" that the lands to be purchased for the Indians aforesaid shall not hereafter be subject to any tax." That act was repealed and the plaintiff in this case, a purchaser from the Indians, was taxed on account of some of the same lands bought for the Indians. Marshall decided shortly, under Fletcher v. Peck (supra, p. 228) that the repeal impaired the obligation of a contract entered into by the Indians and the state, and that, in the absence of any express words, the privilege of exemption attached to the lands after they had been sold by the Indians.

The case is the second of Marshall's great cases on the question of impairment of contracts, the least considered of them, and it would seem now, the most unfortunate of them.

It is, it seems, a sound enough governmental policy to exempt from taxation all state institutions. Such a policy is almost universal in the United States, and the exemption of Indian lands by the state of New Jersey is a sufficiently sound policy so long as the Indians are wards of the state and possessed of those lands. But when the land has passed out of the hands of the Indians the exemption seems absolutely unnecessary and unwise. True, it is of vital importance that legislative contracts made

by a state, even when unwise, should not be impaired by later legislation, but as an original question it seems most doubtful whether any legislature has the right to deprive subsequent legislatures of the very bone and sinew of governmental power, the natural incident of sovereignty, the right to tax. In later decisions (Fertilizing Co. v. Hyde Park, 97 U. S., 659, 666, and in many other cases) the Supreme Court has laid down the doctrine that one legislature cannot contract away the right of a subsequent legislature to protect the public health, safety, and morals, it is not easy to see how the right to tax differs from these other attributes of sovereignty. But the law has always been regarded as settled according to Marshall's decision, though not without a constantly recurring rumbling of judicial protest against this visiting of the follies of the fathers upon later generations, that found its strongest expression in the dissenting opinion of Catron, J., in Bank of Ohio v. Knoop, 18 How. (U. S.), 369, 392.

As a matter of construction it would, it seems, have been easy for Marshall to have construed the tax exemption granted by the state of New Jersey to the Indians merely as a revocable license of exemption. Such a construction was adopted in the case of Grand Lodge, etc. v. City of New Orleans, 166 U. S., 143, and is now generally adopted when exemptions are granted under later laws. Salt Co. v. East Saginaw, 13 Wall, 373. And this construction would have been perfectly possible in view of the doctrine soon after enunciated in the Charles River Bridge case and the Providence Bank case, that a grant of public right is to be construed most strongly against the grantee, cf. Pearsall v. Great Northern Railway Co., 161 U. S., 647.

66

Again, the exemption could have easily been construed to be a purely personal right lost by the transfer of it, cf. Yazoo and Mississippi V. Ry. Co. v. Adams, 180 U. S., 1, 23. The Supreme Court to-day is, as they said in the Yazoo case, astute to seize upon evidence tending to show either that such exemptions were not originally intended, or that they have become inoperative by changes in the original constitution of the companies." See also the case of Gulf and Ship Island Rd. Co. v. Hewes, 183 U. S., 66.

But the temper of the courts to this case is perhaps best shown in Given v. Wright, 117 U. S., 648. The very same exemption in question in New Jersey v. Wilson came before the Supreme Court. It appeared that the land had passed out of the hands of the Indians, the original grantees, and the early decision in some way forgotten or overlooked, so that for seventy years this land had been regularly taxed. This the court held a waiver of the right of exemption. In that opinion Mr. Justice Bradley said at page 655: "We do not feel disposed to question the decision in New Jersey v. Wilson. It has been referred to and relied on in so many cases from the day of its rendition down to the present time that it would cause a shock to our constitutional jurisprudence to disturb it now. If the question were a new one we might regard the reasoning of the New Jersey judges as of great weight, especially since the emphatic declarations made by this court in Providence Bank v. Billings."

The case then is still law, but hampered and limited in every way, almost overruled-standing largely by virtue of Marshall's name. The main objection to it is that it renders irrevocable exemptions and bounties given in new communities to encourage manufactures and capital which, as communities prosper, become purely arbitrary and monopolistic discriminations which excite violent and just public opposition. It is hardly to be thought that the clause as to the obligation of contracts was ever intended so far to hamper the repealing of short-sighted laws. It is simply a case where Marshall construed the restriction against the states more closely than subsequent political experience has warranted. Later decisions have almost whittled away his doctrine. The exact questions presented in New Jersey v. Wilson arise less and less often because of the almost universal provisions in the constitutions or general laws of the various states, reserving the healthful power of amendment and repeal of all corporate charters granted.

VOL. 1.-17.

The State of New Jersey

V.

Wilson.

[7 Cranch, 164.]

1812.

This case was submitted to this court, upon a statement of facts, without argument.

March 3d. All the Judges being present, Marshall, Ch. J., delivered the opinion of the court as follows:

This is a writ of error to a judgment rendered in the court of last resort in the state of New Jersey, by which the plaintiffs allege they are deprived of a right secured to them by the constitution of the United States.

*The case appears to be this:

*165 The remnant of the tribe of Delaware Indians, previous to the 20th February, 1758, had claims to a considerable portion of lands in New Jersey, to extinguish which became an object with the government and proprietors under the conveyance from King Charles 2d, to the Duke of York. For this purpose a convention was held in February,

1758, between the Indians and commissioners appointed by the government of New Jersey; at which the Indians agreed to specify particularly the lands which they claimed, release their claim to all others, and to appoint certain chiefs to treat with commissioners on the part of the government for the final extinguishment of their whole claim.

On the 9th of August, 1758, the Indian deputies met the commissioners and delivered to them a proposition reduced to writing-the basis of which was, that the government should purchase a tract of land on which they might reside-in consideration of which they would release their claim to all other lands in New Jersey south of the river Raritan.

This proposition appears to have been assented to by the commissioners; and the legislature on the 12th of August, 1758, passed an act to give effect to this agreement.

This act, among other provisions, authorizes the purchase of lands for the Indians, restrains them from granting leases or making sales, and enacts "that the lands to be purchased for the Indians aforesaid shall not hereafter be subject to any tax, any law, usage or custom to the contrary thereof, in any wise notwithstanding."

In virtue of this act, the convention with the Indians was executed. Lands were purchased and conveyed to trustees for their use, and the Indians released their claim to the south part of New Jersey. The Indians continued in peaceable possession of the lands thus conveyed to them until some time in