147 U.S.

190
13 S.Ct. 293
37 L.Ed. 132

ILLINOIS CENT. R. CO.

v.
CITY OF DECATUR.
No. 56.
January 9, 1893.

Proceedings by the city of Decatur, Ill., to assess a special tax for the cost
of grading and paving a street in said city on contiguous property,
including land forming part of the right of way of the Illinois Central
Railroad Company. Judgment of the county court confirming the
assessment was affirmed by the supreme court of the state. 18 N. E. Rep.
315. The railroad company brings error. Affirmed.
Statement by Mr. Justice BREWER:
On February 10, 1851, an act was passed by the general assembly of
Illinois incorporating the Illinois Central Railroad Company. By it the
company was made the beneficiary of the land grant from congress to the
state, of September 20, 1850, (9 St. p. 466.) The twenty-second section
was in these words:
'Sec. 22. The lands selected under said act of congress, and hereby
authorized to be conveyed, shall be exempt from all taxation under the
laws of this state until sold and conveyed by said corporation or trustees;
and the other stock, property, and effects of said company shall be, in like
manner, exempt from taxation for the term of six years from the passage
of this act. After the expiration of said six years, the stock, property, and
assets belonging to said company shall be listed by the president,
secretary, or other proper officer, with the auditor of state, and an annual
tax for state purposes shall be assessed by the auditor upon all the
property and assets, of every name, kind, and description, belonging to
said corporation. Whenever the taxes levied for state purposes shall
exceed three fourths of one per centum per annum, such excess shall be
deducted from the gross proceeds or income herein required to be paid by

said corporation to the state, and the said corporation is hereby exempted
from all taxation, of every kind, except as herein provided for. The
revenue arising from said taxation, and the said five per cent. of gross or
total proceeds, receipts, or income aforesaid, shall be paid into the state
treasury, in money, and applied to the payment of interest-paying state
indebtedness, until the extinction thereof: provided, in case the five per
cent. provided to be paid into the state treasury, and the state taxes to be
paid by the corporation, do not amount to seven per cent. of the gross or
total proceeds, receipts, or income, then the said company shall pay into
the state treasury the difference, so as to make the whole amount paid
equal at least to seven per cent. of the gross receipts of said corporation.'
By section 27 it was provided that 'this act shall be deemed a public act,
and shll be favorably construed, for all purposes therein expressed and
declared, in all courts and places whatsoever.'
In 1887, proceedings were had in the county court of Macon county to
defray the cost of grading and paving a certain street in the city of
Decatur. Under those proceedings two separate parcels of land belonging
to the Illinois Central Railroad Company, and forming part of its right of
way, were assessed to the amount of $262.70. The company objected to
this assessment on the ground that by its charter it was exempted from all
taxation, of every kind, except as therein provided for, and that there was
no provision permitting such an assessment. This objection was overruled,
and a judgment entered by the county court against the two parcels of
land. Exception was taken, and an appeal allowed to the supreme court of
the state. In that court the ruling of the county court was sustained, and
the judgment affirmed, and the case is now brought here for review by
writ of error.
B. F. Ayer, for plaintiff in error.
[Argument of Counsel from pages 191-197 intentionally omitted]
E. S. McDonald and Hugh Crea, for defendant in error.
Mr. Justice BREWER, after stating the facts in the foregoing language,
delivered the opinion of the court.

The single question in this case is whether this special tax for a local
improvement is within the exemption from taxation granted to the railroad
company by section 22 of the act of 1851.

Between taxesor 'general taxes,' as they are sometimes called, by way of

distinction, which are the exactions placed upon the citizen for the support of
the government, paid to the state as a state, the consideration of which is
protection by the state and special taxes or special assessments, which are
imposed upon property within a limited area for the payment for a local
improvement, supposed to enhance the value of all property within that area,
there is a broad and clear line of distinction, although both of them are properly
called taxes, and the proceedings for their collection are by the same officers,
and by substantially similar methods. Taxes proper, or general taxes, proceed
upon the theory that the existence of government is a necessity; that it cannot
continue without means to pay its expenses; that for those means it has the right
to compel all citizens and property within its limits to contribute; and that for
such contribution it renders no return of special benefit to any property, but only
secures to the citizen that general benefit which results from protection to his
person and property, and the promotion of those various schemes which have
for their object the welfare of all. 'The public revenues are a portion that each
subject gives of his property in order to secure or enjoy the remainder.' 13
Montesq. Sp. Laws, c. 1; Association v. Topeka, 20 Wall. 655, 664; Opinions
of Judges, 58 Me. 591; Hanson v. Vernon, 27 Iowa, 28, 47; Judd v. Driver, 1
Kan. 455, 462; Association v. Wood, 39 Pa. St. 73, 82; Bank v. Hines, 3 Ohio
St. 1, 10.

On the other hand, special assessments or special taxes proceed upon the theory
that, when a local improvement enhances the value of neighboring property,
that property should pay for the improvement. In Wright v. Boston, 9 Cush.
233, 241, Chief Justice Shaw said: 'When certain persons are so placed as to
have a common interest among themselves, but in common with the rest of the
community, laws may justly be made, providing that, under suitable and
equitable regulations, those common interests shall be so managed that those
who enjoy the benefits shall equally bear the burden.' In McGonigle v.
Allegheny City, 44 Pa. St. 118, 121, is this declaration: 'All these municipal
taxes for improvement of streets rest, for their final reason, upon the
enhancement of private properties.' In Litchfield v. Vernon, 41 N. Y. 123, 133,
it was stated that the principle is 'that the territory subjected thereto would be
benefited by the work and change in question.' In Cooley on Taxation (page
416) the matter is thus discussed by the author: 'Special assessments are a
peculiar species of taxation, standing apart from the general burdens imposed
for state and municipal purposes, and governed by principles that do not apply
generally. The general levy of taxes is understood to exact contributions in
return for the general benefits of government, and it promises nothing to the
persons taxed beyond what may be anticipated from an administration of the
laws for individual protection and the general public good. Special assessments,

on the other hand, are made upon the assumption that a portion of the
community is to be especially and peculiarly benefited, in the enhancement of
the value of property peculiarly situated as regards a contemplated expenditure
of public funds; and, in addition to the general levy, they demand that special
contributions, in consideration of the special benefit, shall be made by the
persons receiving it. The justice of demanding the special contribution is
supposed to be evident in the fact that the persons who are to make it, while
they are made to bear the cost of a public work, are at the same time to suffer
no pecuniary loss thereby; their property being increased in value by the
expenditure to an amount at least equal to the sum they are required to pay.
This is the idea that underlies all these levies. As in the case of all other
taxation, it may sometimes happen that the expenditure will fail to realize the
expectation on which the levy is made, and it may thus appear that a special
assessment has been laid when justice would have required the levy of a
general tax; but the liability of a principle to erroneous or defective application
cannot demonstrate the unsoundness of the principle itself, and that which
supports special assessments is believed to be firmly based in reason and
justice.'
4

These distinctions have been recognized and stated by the courts of almost
every state in the Union, and a collection of the cases may be found in any of
the leading text-books on taxation. Founded on this distinction is a rule of very
general acceptance, that an exemption from taxation is to be taken as an
exemption simply from the burden of ordinary taxes, taxes proper, and does not
relieve from the obligation to pay special assessments. Thus, in an early case,
(In re Mayor, etc., of New York, 11 Johns. 77, 80,) under a statute which
provided that no church or place of public worship 'should be taxed by any law
of this state,' the court observed: 'The word 'taxes' means burdens, charges, or
impositions put or set upon persons or property for public uses, and this is the
definition which Lord Coke gives of the word 'talliage,' (2 Inst. 532;) and Lord
Holt, in Brewster v. Kidgell, Carth. 438, gives the same definition, in
substance, of the word 'tax.' The legislature intended by that exemption to
relieve religious and literary institutions from these public burdens, and the
same exemption was extended to the real estate of any minister, not exceeding
in value fifteen hundred dollars. But to pay for the opening of a street, in a ratio
to the 'benefit or advantage' derived from it, is no burden. It is no talliage or tax,
within the meaning of the exemption, and has no claim upon the public
benevolence. Why should not the real estate of a minister, as well as of other
persons, pay for such an improvement, in proportion as it is benefited? There is
no inconvenience or hardship in it, and the maxim of law that 'qui sentit
commodum debet sentire onus' is perfectly consistent with the interests and
dictates of science and religion.'

This rule of exemption has been applied in cases where the language granting
the exemption has been broad and comprehensive. Thus in Baltimore v.
Cemetery, 7 Md. 517, the exemption was from 'any tax or public imposition
whatever,' and it was held not to relieve from the obligation to pay for the
paving of the street in front. In Cemetery v. Buffalo, 46 N. Y. 506, the
exemption was from 'all public taxes, rates, and assessments,' and it was held
not to discharge from liability for a paving assessment. A like rule was held in
Paterson v. Society, 24 N. J. Law, 385, where the exemption was from 'taxes,
charges, and impositions.' And in Bridgeport v. Railroad Co., 36 Conn. 255, the
railroad company was held liable for a street assessment, although it paid a
sum of money to the state which, by its charter, was to be 'in lieu of all other
taxes.'
Indeed, the rule has been so frequently enforced that, as a general proposition,
it may be considered as thoroughly established in this country. It is unnecessary
to refer to the cases generally. It may be well, however, to notice those from
Illinois. In Trustees v. City of Chicago, 12 Ill. 403, (decided in the lower court
at May term, 1849, and before the passage of the act creating the contract relied
upon, and by the supreme court at the June term, 1851,) the exemption was
'from taxation of every description by and under the laws of this state,' and it
was held that that did not include an assessment made to defray the expense of
opening a street. It was observed: 'In our opinion, the exemption must be held
to apply only to taxes levied for state, local, and municipal purposes. A tax is
imposed for some general or public object. * * * The assessment in question
has none of the distinctive features of a tax. It is imposed for a special purpose,
and not for a general or public object.' See, also, Chicago v. Colby, 20 Ill. 614;
Peoria v. Kidder, 26 Ill. 351; Pleasant v. Kost, 29 Ill. 490, 494; Illinois Cent. R.
Co. v. Commissioners of Drainage Dist., 129 Ill. 417, 21 N. E. Rep. 925. Nor is
this a mere arbitrary distinction created by the courts, but one resting on strong
and obvious reasons. A grant of exemption is never to be considered as a mere
gratuity,a simple gift from the legislature. No such intent to throw away the
revenues of the state, or to create arbitrary discriminations between the holders
of property, can be imputed. A consideration is presumed to exist. The recipient
of the exemption may be supposed to be doing part of the work which the state
would otherwise be under obligations to do. A college or an academy furnishes
education to the young, which it is a part of the state's duty to furnish. The state
is bound to provide highways for its citizens, and a railroad company, in part,
discharges that obligation. Or the recipient may be doing a work which adds to
the material prosperity or elevates the moral character of the people.
Manufactories have been exempted, but only in the belief that thereby large
industries will be created, and the material prosperity increased; churches and
charitable institutions, because they tend to a better order of society. Or it may

be that a sum, in gross or annual installments, is received in lieu of taxes. But in

every case there is the implied fact of some consideration passing for the grant
of exemption. But those considerations, as a rule, pass to the public generally,
and do not work the enhancement of the value of any particular area of
property. So, when the consideration is received by the public as a whole, the
exemption should be, and is, of that which otherwise would pass to such public,
to wit, general taxes.
7

Another matter is this: In a general way, it may be said that the probable
amount of future taxes can be estimated. While, of course, no mathematical
certainty exists, yet there is a reasonable uniformity in the expenses of the
government; so that there can be, in advance, an approximation of what is given
when an exemption from taxation is granted, if only taxes proper are within the
grant. But, when you enter the domain of special assessments, there is no basis
for estimating in advance what may be the amount of such assessments. Who
can tell what the growth of the population will be in the vicinity of the
exempted property? Will there be only a little village, or a large city? Will the
local improvements which the business interests of that vicinity demand be
trifling in amount, or very large? What may be the improvements which the
necessities of the case demand? Nothing can be more indefinite and uncertain
than these matters; and it is not to be expected that the legislature would grant
an exemption of such unknown magnitude, with no corresponding return of
consideration therefor.

And, again, as special assessments proceed upon the theory that the property
charged therewith is enhanced in value by the improvement, the enhancement
of value being the consideration for the charge, upon what principles of justice
can one tract within the area of the property enhanced in value be released from
sharing the expense of such improvement? Is there any way in which it returns
to the balance of the property within that area any equivalent for a release from
a share in the burden? Whatever may be the supposed consideration to the
public for an exemption from general taxation, does it return to the property
within the area any larger equivalent with the improvement than without it? If
it confers a benefit upon the public, whether the general public or that near at
hand,a benefit which justifies an exemption from taxation,does it confer
any additional benefit upon the limited area by reason of sharing in the
enhanced value springing from the improvement? Obviously not. The local
improvement has no relation to or effect upon that which the exempted property
gives to the public as consideration for its exemption. Hence there is manifest
inequity in relieving it from a share of the cost of the improvement. So, when
the rule is laid down that the exemption from taxation only applies to taxes
proper, it is not a mere arbitrary rule, but one founded upon principles of natural

justice.
9

But it is said that it is within the competency of the legislature, having full
control over the matter of general taxation and special assessments, to exempt
any particular property from the burden of both, and that it is not the province
of the courts, when such entire exemption has been made, to attempt to limit or
qualify it upon their own ideas of natural justice. Thus, in the case of College v.
Boston, 104 Mass. 470, an assessment for altering a street was held within the
language of the college charter exempting the property 'from all civil
impositions, taxes, and rates.' See, also, the following authorities: Brightman v.
Kirner, 22 Wis. 54; Southern R. Co. v. Mayor, etc., 38 Miss. 334; State v. City
of Newark, 27 N. J. Law, 185; City of Erie v. First Universalist Church, 105 Pa.
St. 278; Olive Cemetery Co. v. City of Philadelphia, 93 Pa. St. 129; City of
Richmond v. Richmond & D. R. Co., 21 Grat. 604. This is undoubtedly true.
So we turn to the language employed in granting this exemption to see what the
legislature intended; and we notice that by the charter certain sums are to be
paid into the state treasury, in money, and applied to the payment of interestpaying state indebtedness until the extinction thereof, and it is in consideration
of this payment that the corporation is exempted from all taxation of every
kind. Inasmuch as the payment by the corporation is to be always made into the
state treasury, and for a time to be applied only to a single state purpose, a very
plausible argument might be made to the effect that all that was intended to be
granted was an exemption from state taxes, leaving the property, like other
property, still subject to municipal taxation. That question, however, is not
before us; and it has been held by the supreme court of Illinois, in Neustadt v.
Railroad Co., 31 Ill. 484,and properly so, in view of the provision in section
27 that the act 'shall be favorably construed for all purposes therein expressed
and declared,'that the charter exemption extends to all general municipal
taxation.

10

But can any intent be derived from the language of these exempting clauses to
include within them special assessments? Obviously not; for out of the state
treasury seldom, if ever, is money appropriated for merely local improvements.
The rule is to charge them upon the property in the vicinity; and when the
transaction between the parties, the state and the corporation, contemplates the
payment into the state treasury of a sum in lieu of taxation, it must be held to
contemplate a release only as to such charges as would ordinarily find their way
into the state treasury for legislative appropriation. So that, independently of
the use of the word 'taxation,' which has under such circumstances received
almost a uniform construction, the terms of the agreement between the state
and corporation excluded special assessments, and included only those matters
which are the ordinary equivalent of state taxation.

11

But, again, it is urged that, whatever may be the rule obtaining in the courts of
the states, this court has given a broader and more extended meaning to clauses
exempting from taxation; and the case of McGee v. Mathis, 4 Wall. 143, is
cited. But the case does not warrant the contention. The facts in that case were
these: In 1850 the United States granted to the state of Arkansas all the swamp
and overflowed government lands within its limits on condition that the
proceeds of the lands, or the lands themselves, should be applied, as far as
possible, for reclaiming them by means of levees and drains. The state accepted
the grant, and by an act of the legislature, in 1851, provided for the sale of the
lands. In the fourteenth section of this act it was provided that 'to encourage, by
all just means, the progress and the completing of the reclaiming such lands, by
offering inducements to purchasers and contractors to take up said lands, all
said swamp and overflowed lands shall be exempt from taxation for the term of
ten years, or until they shall be reclaimed.' In 1855 this section was repealed,
but prior thereto McGee had become the owner of certain of these lands lying in
Chicot county. In 1857 an act of the legislature, local in its nature, provided for
the making of levees and drains in Chicot county, and authorized a special tax
to meet the cost. This special tax was assessed upon the unreclaimed swamp
lands of McGee, as well as other lands, and the question was whether this
special tax impaired the contract of exemption provided by the fourteenth
section of the act of 1851, and it was held that it did. The argument is thus
stated by the chief justice, in delivering the opinion of the court, on page 157:
'It was strenuously urged for the defendant that the exemption contemplated by
the statute was exemption from general taxation, and not from special taxation
for local improvements benefiting the land, such as the making of levees, and
many authorities were cited in support of this view. The argument would have
great force if the provision for exemption had been contained in a general tax
law, or in a law in framing which the legislature might reasonably be supposed
to have in view general taxation only. But the provision under consideration is
found in a law providing for the construction of levees and drains, and devoting
to that object funds supposed to be more than adequate, derived from the very
lands exempted, and the exemption is for ten years, or until reclaimed, and is
offered as an inducement to take up the lands, and thus furnish those funds. It is
impossible to say that this exemption was not from taxation for the purpose of
making these levees and drains, as well as from taxation in general. Any other
construction would ascribe to the legislature an intention to take the whole land
for the purpose of the improvement, and then to load it with taxation for the
same object in the hands of purchasers, whom it had led to expect exemption
from all taxation, at least until the land should be reclaimed.'

12

In other words, the general rule which we have been considering was
recognized, but its applicability was denied by the court, and properly so. In

order to create a fund to reclaim these lands from overflow, the state sold them
exempted from taxation. To turn around, after such sale, and charge the cost of
reclamation upon the same lands, would fullify the purpose for which they
were sold. It is precisely as though the state had sold a body of lands for the
specific purpose of raising funds to build a state house, and then, after the sale
and receipt of the money, had turned around, and charged the cost of building
such state house upon the very lands sold. By the sale the land was once
appropriated to a given purpose, and could not be burdened a second time for
the same purpose. It would be practically a second appropriation, which
nullified that created by the sale. There is nothing in this case, therefore, which
announces a doctrine in conflict with that we have been considering, and which
has been recognized in all the states.
13

But, finally, it is urged that, if this exemption does not include special
assessments, the constitution of Illinois of 1870 recognizes a distinction
between special taxes and special assessments, and that in this case the charges
are special taxes, rather than special assessments, and therefore to be included
within the exemption of the charter. Section 2 of article 9 of the constitution of
1848, which was in force at the time of the charter of the railroad company, is
as follows: 'The general assembly shall provide for levying a tax by valuation,
so that every person or corporation shall pay a tax in proportion to his or her
property.' Section 5 of the same article contained this as to local taxation: 'The
corporate authorities of counties, townships, school districts, cities, towns, and
villages may be vested with power to assess and collect taxes for corporate
purposes; such taxes to be uniform in respect to persons and property within the
jurisdiction of the body imposing the same;' while in section 11 of article 13
was the ordinary provision that no property should be taken or applied to public
use without just compensation. And under that constitution it was ruled, in the
case of City of Chicago v. Larned, 34 Ill. 203, that 'an assessment for
improvements made on the basis of the frontage of lots upon the street to be
improved is invalid, containing neither the element of equality nor uniformity,
if assessed under the taxing powers, and equally invalid if in the exercise of the
right of eminent domain, no compensation being provided.' In quite an
elaborate opinion the court held, substantially, that special assessments could
only be imposed in proportion to the benefits actually received by the property
upon which they were charged, and that, in the absence of an ascertainment of
such special benefits, the expense must be borne by the entire property of the
city. This decision was reaffirmed in City of Ottawa v. Spencer, 40 Ill. 211.
Subsequently, and in 1870, a new constitution was adopted, section 9 of article
9 of which is as follows: 'The general assembly may vest the corporate
authorities of cities, towns, and villages with power to make local
improvements by special assessment, or by special taxation of contiguous

property, or otherwise. For all corporate purposes, all municipal corporations

may be vested with authority to assess and collect taxes; but such taxes shall be
uniform in respect to persons and property within the jurisdiction of the body
imposing the same.' And this came before the supreme court in the case of
White v. People, 94 Ill. 604, and it was held that the city council had power to
charge the cost of a sidewalk upon the lots touching it, in proportion to their
frontage thereon; that whether or not the special tax exceeded the actual benefit
to the lots taxed was not material; that it may be supposed to be based upon a
presumed equivalent; and that, where the proper authorities determine the
frontage to be the proper measure of benefits, this determination could be
neither disputed nor disproved,and the cases in 34 and 40 Illinois, supra,
were held to be inapplicable. This decision has been reaffirmed in Craw v.
Tolono, 96 Ill. 255; Enos v. City of Springfield, 113 Ill. 65; City of Sterling v.
Galt, 117 Ill, 11, 7 N. E. Rep. 471; City of Springfield Ill. 11, 7 N. E. Rep. 471;
City of Springfield
14

But the difference between the two constitutions is simply in the mode of
ascertaining the benefits, and does not change the essential fact that a charge
like the one here in controversy is for the cost of a local improvement, and is
charged upon the contiguous property, upon the theory that it is benefited
thereby. This is the interpretation put upon the matter by the supreme court of
Illinois. In White v. People, 94 Ill. 604, 613, it was said: 'Whether or not the
special tax exceeds the actual benefit to the lot is not material. It may be
supposed to be based on a presumed equivalent. The city council have
determined the frontage to be the proper measure of probable benefits. That is
generally considered as a very reasonable measure of benefits in the case of
such an improvement.' So, also, in Craw v. Tolono, 96 Ill. 255, it is said:
'Special taxation, as spoken of in our constitution, is based upon the supposed
benefit to the contiguous property, and differs from special assessments only in
the mode of ascertaining the benefits. In the case of special taxation, the
imposition of the tax by the corporate authorities is of itself a determination that
the benefits to the contiguous property will be as great as the burden of the
expense of the improvement, and that such benefits will be so nearly limited, or
confined in their effect, to contiguous property, that no serious injustice will be
done by imposing the whole expense upon such property.' And in City of
Sterling v. Galt, 117 Ill. 11, 7 N. E. Rep. 471, in which the difference between
special assessment and special taxation was noticed, it was held that the whole
of the burden in case of special taxation was imposed upon the contiguous
property, upon the hypothesis that the benefits will be equal to the burden.

15

We do not suppose that the company had by its charter any contract with the
state that the matter of special benefit resulting from a local improvement

should be ascertained and determined only in the then existing way. There was
nothing in the terms of that contract to prevent the state from committing the
final determination of the question of benefits to the city council, rather than
leaving the matter of ascertainment to a jury; and whether the charges are
called 'special taxes' of 'special assessments,' and by whatever tribunal or by
whatever mode the question of benefits may be determined, the fact remains
that the charges are for a local improvement, and cast upon the contiguous
property, upon the assumption that it has received a benefit from such
improvement, which benefit justifies the charge. The charges here are not taxes
proper, are not contributions to the state or to the city for the purpose of
enabling either to carry on its general administration of affairs, but are charges
only, and specially, for the cost for a local improvement supposed to have
resulted in an enhancement of the value of the railroad company's property. It is
not in lieu of such charges that the company pays annually the stipulated per
cent. of its gross revenues into the state treasury.
16

We see no error in the rulings of the supreme court of Illinois, and its judgment
is affirmed.

17

Mr. Justice BLATCHFORD took no part in the decision of this case.