THE RIGHT OF EMINENT DOMAIN.--UNCONSTITUTIONALITY OF MUNICIPAL AID
TO RAILROADS.
The question of taxation for the benefit of private corporations has
agitated the public mind since the construction of railroads became one
of the admitted necessities of the country. For the purpose of
justifying and legalizing governmental aid to railroad corporations, in
the various forms in which such aid has been afforded, the doctrine has
obtained among the advocates of the measure that railroads are public
highways, as well as a public necessity; and such being the fact, that
aid in the shape of grants, taxes, and subsidies, are legal, legitimate,
and proper. They draw an argument in favor of this doctrine, from the
fact that legislatures, state and national, have provided by law for the
condemnation of private property, for the use of the companies,
respectively, upon paying the assessed value thereof; and that thus the
right of eminent domain is vested in these corporations; that the right
of _eminent domain_ is an attribute of sovereignty, and that the
granting of this attribute to corporations imparts to them the character
of public highways. They reason that because they are public highways,
and the companies owning them are common carriers, taxes may be legally
levied and collected for the exclusive use of these companies. They
claim that because the United States, states, counties, cities, towns,
and townships, have authority to construct, or to aid in constructing,
common highways, they have the same right to construct, or aid in
constructing, railroads.
If it were not that precedent has tended to sustain this "false
doctrine," we would not think it profitable to combat it. The only point
in the argument in favor of this doctrine that has any real foundation,
is, that railroad companies are allowed to locate their roads where they
please, upon payment of the damages assessed in the manner prescribed by
statute. The answer to this is, that railroads could not be built,
unless the companies had permission to pass over the lands of private
citizens. If the title from each land owner could be procured only by
negotiation and purchase, no railroad could be constructed, for the
reason that a direct or continuous line for a road could rarely be
secured. Railroads are constructed to aid in the transportation of
freight and passengers from one part of the country to another; to
promote commerce throughout the whole country; to supply the wants of a
people, just as a mill or factory supplies the wants of a particular
locality. The miller constructs his dam across a stream, and, under the
statutes of most of the states, he can procure the condemnation of the
land of his neighbor overflowed by his dam, to his own use, upon payment
of the damages assessed. It is not a condemnation for the use of the
public, but for the use and benefit of the owner of the mill. The mill
itself, while it is owned by a private individual, and can be sold and
transferred by him at any time, is also a public benefit. Can it be said
that the right of eminent domain attaches to the mill or its owner? So
with railroads: They are owned by private companies--are built and
controlled by them; they are of public benefit, but not owned or
controlled by the public or by the state, or local authority, as in the
case of public highways. Their private owners can sell them, with all
their franchises, rights, and privileges. The rules for their operation,
rates of charges, and all other matters affecting their government, are
exclusively under the control of the parties owning them. Only that the
companies may become the owners of the necessary grounds over which to
build their roads, have legislatures provided that they may enter upon
lands owned by private persons, and upon the payment of the appraised
value thereof, appropriate a narrow strip (the width being fixed by
statute) for the purpose of locating their road upon it. It is not
condemned for public use, as in the case of a public highway, or where
land is needed for public buildings, or any other public purpose. The
assessed value is not paid by the government, or from the public fund,
nor by individuals for the public; but by the private corporation out of
its own purse, and for its own gain.
This is what is called, by the advocates of the measure, "the right of
eminent domain," a right that only belongs to the supreme government.
This power cannot be exercised by local or subordinate governments,
unless it is delegated to them by the supreme or superior government.
While the courts in some of the states, Iowa included, have, by
decisions, made this right of eminent domain attach to railroad
companies, it cannot be supported on principle. To allow it to obtain is
to clothe private corporations with the attributes of sovereignty. But
conceding that this right attaches to these corporations, upon no
principle of constitutional law or justice can the right to levy taxes
upon private citizens to aid in the construction of railroads, either by
acts of congress, by state statutes, or by local municipal government,
be supported. And it matters not in what form these taxes are imposed
upon the people, whether in the shape of municipal subscriptions of
stock, to be paid by assessments upon the people; by donations of land
or money, to be repaid by imposing a larger price upon lands sold to the
citizen; by indirect taxation, or by special local elections held in
cities, towns, or counties,--the compulsory taxation of the property of
individuals, under our system of government, can only be imposed for
governmental or public purposes. Taxes are levied for the support of the
government in all its departments; for the construction and repairing of
highways; for the building of school houses and all other edifices of a
public character; for the support of schools; for the necessities of
local municipal governments, and for other objects having the public
weal for their sole consideration. These taxes are legitimate and
proper, because the ends sought to be reached by such taxation are for
the use and benefit of the whole people, and for the protection of their
rights. For all of these purposes the legislature can provide an uniform
system of taxation. But when the government attempts to compel A to pay
a tax to assist B and C in building a railroad, it enters upon the
exercise of a despotic and oppressive power, that is in conflict with
the letter and spirit of our constitutions, both state and national.
The legislature, by the passage of such a statute, says, in substance,
to the taxpayer: "A company is formed for the purpose of building a
railroad which passes through the county in which you reside. This
company has not sufficient means for constructing and stocking its road.
That the necessary means may be furnished to it for that purpose, you
must pay a tax upon your property, amounting to one-tenth or
one-twentieth of its value; this amount you must donate to the company.
True, you will have no interest in this road when it is completed; you
will not be a stockholder; you cannot ride in its cars, or ship your
freights over the road, without paying the same price as other persons.
It may cause you to sacrifice a part of your property to pay this tax,
but the road will be of great advantage to the public, and you must make
this donation to help the enterprise." The consequences flowing from
this unjust and oppressive system of taxation are appalling. It has no
foundation in right or justice. The legislature has no inherent right to
impose taxes for any purpose. The authority to levy taxes is dependent
upon the power delegated by the people as contained in the fundamental
law. In a republic even a majority of the people do not possess the
inherent right to tax the minority for private purposes. Such taxation
can be imposed by no other government than a despotic one, where the
will of the despot is the supreme law, and where might rather than right
is the controlling power. So conscious are the advocates of this species
of taxation of the fact that taxes can be levied for public purposes
alone, that they deem it all-important to connect and blend in one--the
right of eminent domain and taxation.
But this position is not tenable. Bouvier defines the term, "Eminent
Domain," as follows: "The right which the people or government retains
over the estate of individuals, to resume the same for public use."
Taxes are defined to be burdens or charges imposed by the legislative
power of a state, upon persons or property, to raise money for public
purposes. It will be seen that there is a wide distinction between the
taxing power and the right of eminent domain: that while they both
appropriate private property for public uses, they differ in degree.
While the right of eminent domain takes from the private citizen the
absolute title to property upon just and fair compensation, taxation
exacts from each property owner a contribution for the support of the
government, or for the benefit of the public, without any other
compensation than the protection the government affords him in life,
liberty, and property. Contribution for this purpose is a duty imposed
upon all who are under the protection of government. A complete power to
procure a regular and adequate supply of revenue forms an indispensable
article in our constitution; and provisions for levying and collecting
this revenue is a charge laid upon the legislative department. The levy
and collection of all taxes deemed necessary for the administration of
the government and for the public good, is an incident of sovereignty;
but this does not extend to the levy and collection of taxes to aid
private interests or enterprises. The taxing power is limited; the needs
of the public fix this limit. When this is passed, the citizen is
subject to continual plunder. The value of his property is destroyed; he
is but a trustee holding his property subject to the will of an
arbitrary power, that can at any moment call for a part or all of it. He
had entered into a governmental contract for the purpose of appealing to
the strong arm of constitutional law when his rights are assailed, but
finds, instead of the protection he had reason to expect, an
irresponsible, arbitrary, power, compelling him to divide his property
with railroad corporations, or other private parties, without any
consideration; not only without consideration, but the taxes illegally
and forcibly taken from him are used to build up and protect a monopoly
that is blasting the fruit of his labor, while it is as surely
destroying constitutional and republican government. His property is
taken from him by what can only be termed a superior, despotic, power,
and appropriated without his consent for the benefit of a private
corporation.
It is not difficult to distinguish what are proper objects of public
support and for which taxes can be levied and collected from those that
are not, if we keep in sight the fundamental or organic law. In the
formation of a republic no new rights are created. The adoption of a
constitution is but declaratory of pre-existing rights and laws; its
object is to define and limit the powers of the government, and to guard
and protect the rights of the citizens. An eminent jurist, in speaking
of the constitution, uses the following clear and forcible language: "It
is not the beginning of a community, nor the origin of private rights;
it is not the fountain of law, nor the incipient state of government; it
is not the cause, but the consequence, of personal and political
freedom; it grants no rights to the people, but is the creation of their
power, the instrument of their convenience, designed for their
protection in the enjoyment of the rights and powers which they
possessed before the constitution was made; it is but the frame-work of
the political government, and necessarily based upon the pre-existing
condition of laws, rights, habits, and modes of thought. There is
nothing primitive in it; it is all derived from a known source. It
pre-supposes an organized society, law, order, property, personal
freedom, a love of political liberty, and enough of cultivated
intelligence to know how to guard it against the encroachments of
tyranny. A written constitution is, in every instance, a _limitation_
upon the powers of the government in the hands of agents, for there
never was a written republican constitution which delegated to
functionaries all the _latent powers_ which lie _dormant_ in every
nation, and are boundless in extent, and incapable of definitions."
Keeping in mind the distinction existing between measures of a
governmental or public nature, and those that are private, and applying
the above quoted definition of constitutional power, we cannot find it
difficult to determine what are, and what are not, constitutional levies
and collection of taxes.
Another thought having weight in connection with the constitutional
right to tax the people in aid of railroads, is, that minorities have
the right to live, and to own and enjoy property; and the majority has
no right to compel the minority to contribute aid to railroad
corporations. It has always been conceded that in a republican
government the majority should rule, and that their will expressed in a
constitutional and legal manner should be the law of the land; yet no
one claiming to respect constitutional law will contend that this will
of the majority can act outside, or independent of, constitutional
restrictions. If this doctrine should obtain, constitutional government
is at an end; private rights are destroyed, and the unrestricted will of
a bare majority becomes supreme; all the guarantees of the constitution
are annulled; life, liberty, and property, are all dependent upon the
popular will; constitutional safeguards are destroyed, and the stability
of the government is lost. The first step in this direction is fraught
with the greatest danger. When the restrictions embodied in the
constitution are overridden and disregarded in one instance it affords a
precedent for a second step in the same direction. Acquiescence in
encroachments upon constitutional restriction by the people, undermine
and absolutely destroy republican institutions and the government
itself. If, for the accomplishment of some private purpose, a community,
a state, or the general government disregard the provisions of the
constitution, and assume powers not granted them by that instrument,
they arbitrarily act the part of the absolute tyrant. And it makes no
difference whether the course pursued, or the measure adopted, proves
beneficial to the public, or oppressive. In the fact that it is the
usurpation of an unauthorized power, lies the danger. The disregard of
the limits fixed by the constitution, in the administration of the
government, destroys the only guarantee the people have for the
protection of their private rights. Among all the unconstitutional
measures which now obtain throughout the country, the affording of aid
to railroads, by the government, state and national, has proved the most
burdensome to the people. Of this class of subsidies, that afforded by
local, municipal subscription, with or without a vote of the people, has
caused the greatest injury. A local or municipal government can lawfully
impose taxes for the support of its administration, and for contribution
to the general comfort and happiness of the people. It can tax for the
purpose of laying out and constructing streets and public highways,
because these objects are intended to be, and in fact are, open to the
use of the whole people; all can use them on equal terms; they are made
for the benefit of the public; each citizen has undertaken to contribute
his just proportion of the expense of providing for the common, public
benefit. But when a county, a city, town, or township, organized for
the convenience of the people, and to more effectually protect their
rights, attempts to become a stockholder in a railroad corporation, it
attempts the exercise of a power it does not and cannot possess under
the constitution. Municipal corporations were not created for the
purposes of private speculation or private gain, but for purely and
strictly government purposes. No power is granted (nor can it be
implied) to county judges, commissioners, or supervisors, nor to
township trustees, or city boards, to take stock in railroad
corporations, or to issue bonds of the municipality in payment for such
stock, for the reason that such power is not necessary for the
administration of these several governments, and does not come within
the limit of the powers granted by the people. We know there are many
decisions of courts sustaining the position that municipal corporations
can become stockholders in railroads, and may issue bonds in payment
therefor, and that it is within the scope of the powers vested in such
corporations to levy taxes for the payment of the bonds so issued; but
we have yet to see a decision that is sustained by any provision of the
constitution. Many of these decisions admit that the right to subscribe
stock is not contained in the constitution, and cannot be justified on
constitutional grounds. Of these decisions we shall speak hereafter, and
we leave them for the present. We insist that there is no authority in
the constitutions, state or national, under which any department of any
of the governments can become stockholders in a railroad corporation;
nor is the right to take such stock in accordance with the genius or
spirit of republican government. The distinction that exists between
cities and towns acting under charters, and counties, townships, school
and road districts, is marked, and should be kept in mind in considering
the nature of the powers possessed by each. County, township, school,
and road district organizations are necessary in the administration of
the laws of the state. They are at most but _quasi_ corporations; all
their powers are derived from, and executed under, the general statutes
of the state. They have no special grants or privileges, but are the
chosen means for executing state laws. In the distribution of the powers
and duties vested in and imposed upon the state governments, the duties
of administering the local affairs of the counties, townships, and
districts, are delegated to, and imposed upon, these _quasi_
corporations respectively. They can only exercise such powers as are
necessary for the accomplishment of the objects of their creation. Their
acts are the acts of the state government as applied to their respective
localities. They are not clothed with any extraordinary power; nor can
the state government delegate to them a power it does not itself
possess. When the constitution of a state (as in the case of Iowa and
other states) prohibits the state from subscribing stock, loaning its
credit, or issuing its bonds to private corporations, we would at once
conclude that it could not delegate authority to one of its subordinate
departments to do an act forbidden to itself by the constitution. But
this is what it has done, if these _quasi_ corporations possess the
power to afford aid to railroad or other private enterprises. Municipal
corporations, such as cities, towns, &c., act under special charters,
and in some respects are sovereign. But they are governed and controlled
as absolutely by the provisions of their charters, as is the state by
its constitution. They can only act within the scope of their delegated
powers, and in all doubtful questions the presumption is against their
right and in favor of the public, for the reason that only special
privileges are conferred upon them. Nor can the legislature confer upon
them privileges or powers not possessed by itself under the
constitution. It is then absolutely certain that neither counties,
cities, nor towns can aid private corporations, or become stockholders
in such corporations, unless the power has been delegated to them by the
state legislature. It is equally certain that unless the state, in its
sovereign capacity, possesses this power, it cannot delegate it to
either counties or cities, and that when the constitution of a state
forbids the exercise of a power, it includes the legislature, all the
departments of the state government, all counties, cities, and towns,
and all the people. All these corporations are agencies in the
administration of the affairs of the public. Being political in their
nature, they are entirely distinct from private corporations organized
for the purpose of pecuniary profit. They are established for public
purposes exclusively. Judge Dillon, in his valuable work on municipal
corporations, says that "They can exercise the following powers, and no
others: First, those granted in express words. Second, those necessarily
or fairly implied, or incident to the powers expressly granted. Third,
those essential to the declared objects and purposes of the
corporation--not simply convenient, but indispensable." The same author,
in treating upon aid to railroads, while admitting that the current of
judicial decision is in favor of the principle that in the absence of
special constitutional restrictive provisions, it is competent for the
legislature to grant this power to municipal corporations, says that
"Notwithstanding the opinions of so many learned and eminent judges,
there remains serious thought as to the soundness of the principle,
viewed simply as one of constitutional law. Regarded in the light of its
effects, however, there is little hesitation in affirming that this
invention to aid private enterprises has proved itself baneful in the
last degree," and he adds: "Taxes, it is everywhere agreed, can only be
imposed for public objects, and taxation to aid in building the roads of
private railway companies is hardly consistent with a proper respect for
the inviolability of private property and individual rights. Fraud
usually accompanies its exercise, and extravagant indebtedness is the
result, and sooner or later the power will be denied either by
constitutional provision (as in Pennsylvania, Ohio, and Illinois, it
already is) or by legislative enactment."
As we are now dealing with constitutional rights, and not with judicial
decisions, we think we have fully shown that public or municipal
corporations have no authority under the constitution to aid railroads
by subscription of stock, or the issue of bonds, and that no authority
exists for taxing the people to pay for such stock or bonds; and if it
be true that counties and cities are not, and cannot be, clothed with
the power to aid in the prosecution of private enterprises, it is
equally true that the legislature cannot delegate to the majority of the
voters of a county, city, township, or district, the authority to tax
the minority for the same purpose. Legislatures cannot create new
powers; they can only exercise such as they possess under the
constitution. The powers not delegated by the people in the fundamental
law, are retained by them. If the people are sovereign, they are the
source of power, and all that is not vested in some department of the
government remains vested exclusively in the sovereign. If the
legislative, executive, or judicial department of the government can act
independently of the restrictions and prohibitions contained in the
constitution, then the will of the servants of the people is the supreme
law, and the sovereign power supposed to reside in the people is
destroyed, and constitutional government is at an end. Oppressive
taxation imposed without authority, for private and selfish ends, if
persisted in, will eventually subvert our republican institutions. This,
and other unconstitutional legislation, to some of which we have already
referred, has caused such a departure from the old landmarks that it is
questionable if we now have, in fact, a republican government. Under the
rules adopted in legislation, and the pliant decisions of courts,
constitutions are made to yield to the demands of combinations,
stock-jobbers, and private corporations, until we cease, as a people, to
revere and respect these safeguards of our liberty.