(40 Sup.Ct.)

38-LEGISLATION HELD NOT TO DENY DUE PROCESS BY IMPOSING TAXES FOR PRIVATE PURPOSES.

being that the amendment involved is the pro- | 6. CONSTITUTIONAL LAW 283-TAXATION posed Nineteenth Amendment to the Constitution extending the right of suffrage to women. The Supreme Court of Ohio, upon the authority of its decision in Hawke v. Smith, 126 N. E. 500, held that the Constitution of the state requiring such submission by a referendum to the people, did not violate article 5 of the federal Constitution, and for that reason rendered a like judgment as in No. 582.

5. CONSTITUTIONAL LAW ~70(3) — CouRTS NOT CONCERNED WITH WISDOM OR POLICY OF LEGISLATION.

Act N. D. Feb. 25, 1919 (Laws 1919, c. 151), creating the Industrial Commission, with extensive powers; the Bank of North Dakota Act (Laws 1919, c. 147), establishing a bank operated by the state under the control of such commission; the act (Laws 1919, c. 148) providing for a bond issue to create the capital of such bank; the act (Laws 1919, c. 154) providing for a bond issue to replace funds employed by the bank in making loans on real estate; the act (Laws 1919, c. 152) providing for the engagement by the state in the business of manufacturing and marketing farm products vator, and flour mill system operated by the and for the establishment of a warehouse, elestate; the act (Laws 1919, c. 153) providing for a bond issue for the purpose of carrying

on the business of the mill and elevator association; and the Home Building Act (Laws 1919, c. 150), declaring the purpose of the state to engage in the enterprise of providing homes for its residents and to operate a home building association-do not take property without due process of law, by imposing taxes for private purposes, in view of the conditions existing in North Dakota as found by the Supreme Court of that state.

In Error to the Supreme Court of the State of North Dakota.

Action by E. A. Green and others against Lynn J. Frazier, Governor, and others. An order sustaining a demurrer to the complaint was affirmed by the Supreme Court of North Dakota (176 N. W. 11), and plaintiffs bring error. Affirmed.

Mr. Thomas C. Daggett, of St. Paul, Minn., for plaintiffs in error.

Mr. Frederick A. Pike, of St. Paul, Minn., for certain defendants in error.

Mr. Justice DAY delivered the opinion of the Court.

This is an action by taxpayers of the state of North Dakota against Lynn J. Frazier,

*234

Governor, John N. *Hagan, Commissioner of Agriculture and Labor, William Langer, Attorney General, and Obert Olson, State Treasurer, and the Industrial Commission of that state, to enjoin the enforcement of certain state legislation. The defendants Lynn J. Frazier, as Governor, William Langer, as Attorney General, and John Hagan, as Commissioner of Agriculture and Labor, constitute the Industrial Commission, created by the Act of February 25, 1919, of the Sixteenth Legislative Assembly of the state of North Dakota (Laws 1919, c. 151).

[1] The laws involved were attacked on vaWith the wisdom of state legislation, at-rious grounds, state and federal. The Sutacked as taking property without due process of law, by imposing taxes for private purposes, preme Court of North Dakota sustained the and with the soundness of the economic policy constitutionality of the legislation. So far involved, the federal Supreme Court has no as the decision rests on state grounds it is conclusive, and we need not stop to inquire

concern.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

concerning it. Davis v. Hildebrant, 241 U. S. 565, 36 Sup. Ct. 708, 60 L. Ed. 1172. The only ground of attack involving the validity of the legislation which requires our consideration concerns the alleged deprivation of rights secured to the plaintiffs by the Fourteenth Amendment to the federal Constitution. It is contended that taxation under the laws in question has the effect of depriving plaintiffs of property without due process of

law.

state in the sum of $2,000,000, the proceeds of which are to constitute the capital of the Bank of North Dakota. The earnings of the bank are to be paid to the state treasurer. Tax levies are authorized sufficient to pay the interest on the bonds annually. The bonds shall mature in periods of five years, and the board of equalization is authorized

$236

to levy a tax in an amount equal to one-fifth of the amount of their principal. The state treasurer is required to establish a bank bond payment fund into which shall be paid moneys received from taxation, from appropriations and from bank earnings. $10,000 is appropriated for the purpose of carrying the act into effect. (4) An act (Laws 1919, c. 154) providing for the issuing of bonds in the sum of not exceeding $10,000,000, to be known as "Bonds of North Dakota, Real Estate Series." These bonds are to be issued for the

for the Bank of North Dakota to replace such

The legislation involved consists of a series of acts passed under the authority of the state Constitution, which are: (1) An act creating an Industrial Commission of North Dakota, which is authorized to conduct and manage on behalf of that state certain utilities, industries, enterprises, and business projects, to be established by law. The act gives authority to the commission to manage, operate, control, and govern all utilities, enterprises, and business projects owned, under-purpose of raising money to procure funds taken, administered, or operated by the state of North Dakota, except those carried on in penal, charitable, or educational institutions. To that end certain powers and authority are given to the commission, among others: The right of eminent domain; to fix the buying price of things bought, and the selling price of things sold, incidental to the utilities, industries, enterprises, and business projects, and to fix rates and charges for services rendered, having in mind the accumulation of a fund with which to replace in the general funds of the state the amount received by the commission under appropriations made by the act; to procure the necessary funds for such utilities, industries, enterprises, and business projects by negotiating the bonds of

#235

the state in such amounts and in such man

ner as may be provided by law. $200,000 of the funds of the state are appropriated to carry out the provisions of the act. (2) The Bank of North Dakota Act (Laws 1919, c. 147),

funds as may have been employed by it from time to time in making loans upon first mortgages upon real estate. The faith and credit of the state of North Dakota are pledged for from the sale of the bonds are to be placed the payment of the bonds. Moneys derived by the Industrial Commission in the funds of the bank, and nothing in the act is to be construed to prevent the purchase of the bonds with any funds in the Bank of North Dakota. It is further provided that the state board of equalization shall, if it appears that the funds in the hands of the state treasurer are insufficient to pay either principal or interest, accruing within a period of one year thereafter, make a necessary tax levy to meet the indicated deficiency. Provision is made for the repeated exercise of the powers granted by the act, for the purposes stated. An appropriation of $10,000 is made for carrying into effect the provisions of this act. (5) An act the state of North Dakota to engage in the (Laws 1919, c. 152) declaring the purpose of business of manufacturing and marketing farm products, and to establish a warehouse, of "North Dakota Mill & Elevator Associaelevator, and flour mill system under the name tion," to be operated by the state. The purpose is declared that the state shall engage in the business of manufacturing farm products and for that purpose shall establish a system of warehouses, elevators, flour mills, factories,

*237

which establishes a bank under the name of "The Bank of North Dakota," operated by the state. The Industrial Commission is placed in control of the operation and management of the bank, and is given the right of eminent domain to acquire necessary property. Public funds are to be deposited in the bank, and the deposits are guaranteed by the state of North Dakota. Authority is given to transfer funds to other departments, institutions, utilities, industries, enterprises, or business projects, plants, machinery and equipment, owned, and to make loans to counties, cities, or polit-controlled, and operated by it under the name ical subdivisions of the state, or to state or of the "North Dakota Mill & Elevator Associnational banks, on such terms as the com-ation." The Industrial Commission is placed mission may provide. Loans to individuals, in control of the association, with full power, associations, and private corporations are authorized, when secured by duly recorded first mortgages on lands in the state of North Dakota. An appropriation of $100,000 is made immediately available to carry out the provisions of the act. (3) An act (Laws 1919, c. 148) providing for the issuing of bonds of the

and it is authorized to acquire by purchase, lease, or right of eminent domain, all necessary property or properties, etc.; to buy, manufacture, store, mortgage, pledge, sell, and exchange all kinds of raw and manufactured farm products, and by-products, and to operate exchanges, bureaus, markets and agencies

(40 Sup.Ct.)

within and without the state, and in foreign ferring to leave its scope to judicial decicountries. Provision is made for the bring- sions when cases from time to time arise. ing of a civil action against the state of Twining v. New Jersey, 211 U. S. 78, 100, 29 North Dakota on account of causes of action Sup. Ct. 14, 53 L. Ed. 97. arising out of the business. An appropriation is made out of state funds, together with the funds procured from the sale of state bonds, to be designated as the capital of the association. (6) An act (Laws 1919, c. 153) providing for the issuing of bonds of the state of North Dakota in a sum not exceeding $5,000,000, to be known as "Bonds of North Dakota, Mill & Elevator Series," providing for a tax and making other provisions for the payment of the bonds, and appropri

ations for the payment of interest and principal thereof. The bonds are to be issued and sold for the purpose of carrying on the business of the Mill & Elevator Association. The faith and credit of the state of North Dako

ta are pledged for the payment of the bonds, both principal and interest. These bonds may be purchased with funds in the Bank of North Dakota. Taxes are provided for sufficient to pay the bonds, principal and interest, taking into account the earnings of the association. The sum of $10,000 is appropriated from the general funds of the state to carry the provisions of the act into effect. (7) The Home Building Act (Laws 1919, c. 150) declares the purpose of the state to engage in the enterprise of providing homes for its residents and to that end to establish a business system operated by it under the name

*238

of the "Home Building Association of North Dakota," and defines its duties and the extent of its powers. The Industrial Commission is placed in control of the "Home Build

ing Association," and is given the power of eminent domain, and the right to purchase and lease the requisite property. Provision is made for the formation of home building unions. The price of town homes is placed at $5,000, and of farm homes at $10,000. A bond issue of $2,000,000, known as "Bonds of North Dakota, Home Building Series," is pro

vided for.

The due process of law clause contains no specific limitation upon the right of taxation in the states, but it has come to be settled that the authority of the states to tax does not include the right to impose taxes for merely private purposes. Fallbrook Irrigation District v. Bradley, 164 U. S. 155, 17 Sup. Ct. 56, 41 L. Ed. 369. In that case the province of this court in reviewing the power of state taxation was thoroughly discussed by the late Mr. Justice Peckham speak*ing for the court. Concluding the discussion of that subject (164 U. S. 158, 17 Sup. Ct. 63, 41 L. Ed. 369), the Justice said:

*239

"In the Fourteenth Amendment the provision regarding the taking of private property is is confined to its depriving any person of life, omitted, and the prohibition against the state liberty or property, without due process of law. It is claimed, however, that the citizen is deprived of his property without due process of law, if it be taken by or under state authority for any other than a public use, either under the guise of taxation or by the assumption of the right of eminent domain. In that way the taken for any other than a public use becomes question whether private property has been material in this court, even where the taking is under the authority of the state instead of the federal government."

Accepting this as settled by the former adjudications of this court, the enforcement of the principle is attended with the application of certain rules equally well settled.

[3] The taxing power of the states is pri

When a

marily vested in their Legislatures, deriving
their authority from the people.
state Legislature acts within the scope of its
authority it is responsible to the people, and
their right to change the agents to whom
they have intrusted the power is ordinarily
deemed a sufficient check upon its abuse.
undertakes to exert the taxing power, and
When the constituted authority of the state
brought before this court, every presumption
the question of the validity of its action is
in its favor is indulged, and only clear and
demonstrated usurpation of power will au-
thorize judicial interference with legislative

action.

thority of the Constitution and laws prevail[4] In the present instance under the auing in North Dakota the people, the Legislature, and the highest court of the state have declared the purpose for which these several acts were passed to be of a public nature, and within the taxing authority of the state.

[2] There are certain principles which must be borne in mind in this connection, and which must control the decision of this court upon the federal question herein involved. This legislation was adopted under the broad power of the state to enact laws raising by taxation such sums as are deemed necessary to promote purposes essential to the general welfare of its people. Before the adoption of the Fourteenth Amendment this power of the state was unrestrained by any federal authority. That amendment introduced a new limitation upon state power into the federal Constitution. The states were forbidden With this united action of people, *Legislato deprive persons of life, liberty or proper- ture and court, we are not at liberty to interty without due process of law. What is fere unless it is clear beyond reasonable conmeant by due process of law this court has troversy that rights secured by the federal had frequent occasion to consider, and has al- Constitution have been violated. What is a ways declined to give a precise meaning, pre-public purpose has given rise to no little judi

*240

cial consideration. Courts, as a rule, have at- [ state), amounted to fifty-five millions of doltempted no judicial definition of a "public" lars to the wheat raisers of North Dakota. as distinguished from a "private" purpose, but have left each case to be determined by its own peculiar circumstances. Gray, Limitations of Taxing Power, § 176.

Questions of policy are not submitted to judicial determination, and the courts have no general authority of supervision over the exercise of discretion which under our system is reposed in the people or other departments As we have said, the question for us to conof government. Chicago, Burlington & Quin- sider and de*termine is whether this system cy R. R. Co. v. McGuire, 219 U. S. 549, 569, of legislation is violative of the federal Consti31 Sup. Ct. 259, 55 L. Ed. 328; German Alli-tution because it amounts to a taking of propance Ins. Co. v. Kansas, 233 U. S. 389, 34 erty without due process of law. The precise Sup. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915C, question herein involved so far as we have

opinion of its highest court, *if the state sees fit to enter upon such enterprises as are here involved, with the sanction of its Constitution, its Legislature and its people, we are not prepared to say that it is within the authority of this court, in enforcing the observance of the Fourteenth Amendment, to

The District Court was right in its conclusion that there was no jurisdiction. The decree is reversed, and the cause remanded to the District Court, with directions to dismiss the bill for want of jurisdiction. So ordered.

MISSOURI PAC. RY. CO. v. McGREW
COAL CO.

(Decided June 1, 1920.)
No. 765.

set aside such action by judicial decision. APPEAL AND ERROR 465(2)—ON WRIT OF Affirmed.

(253 U. S. 243)

SCOTT et al. v. FRAZIER et al.
(Argued April 19 and 20, 1920. Decided June
1, 1920.) No. 508.

COURTS 328 (4)—IN ABSENCE OF DIVERSE
CITIZENSHIP JURISDICTIONAL AMOUNT MUST
BE INVOLVED AS TO EACH COMPLAINANT.

In a suit to enjoin officers of a state from paying public funds and issuing state bonds, on the ground that rights under the Fourteenth Amendment are violated, where there is no diversity of citizenship, the amount in controversy must equal $3,000 as to each complainant, to give jurisdiction to a federal court.

Appeal from the District Court of the United States for the District of North Dakota.

Suit by John W. Scott and others against Lynn J. Frazier and others. From a decree dismissing the bill on the merits (258 Fed. 669), plaintiffs appeal. Reversed and remanded, with directions to dismiss for want of jurisdiction. Messrs. N. C. Young, of Fargo, N. D., and Tracy R. Bangs and C. J. Murphy, both of Grand Forks, N. D., for appellants.

Messrs. S. L. Nuchols, of Mandan, N. D., W. S. Lander, of Wahpeton, N. D., and Frederick A. Pike, of St. Paul, Minn., for appellees.

*244

*Memorandum opinion by direction of the Court by Mr. Justice DAY.

This suit, so far as the merits are concerned, is like No. 811, just decided. 253 U. S. 233, 40 Sup. Ct. 499, 64 L. Ed. It was brought in the District Court of the United States for the District of North Dakota to enjoin the payment of public funds in the state treasury and the issuing of state bonds under the Constitution and laws of North Dakota. We have sufficiently stated the nature of this Constitution and the laws involved in the opinion in No. 811.

ERROR TO STATE COURT, BOND FOR SUPERSE-
DEAS EXCEEDING JUDGMENT REQUIRED.

Where a defendant against whom a judgment for $14,000 was affirmed by the state court procured a writ of error with a supersedeas bond in the sum of $2,000 only, which, however, provided that it should not affect the liability on the bond for appeal to the state court, the supersedeas will be vacated unless a bond for $20,000 is given by the plaintiff in error.

Appeal from the Supreme Court of the State of Missouri.

Suit by the McGrew Coal Company against the Missouri Pacific Railway Company. A judgment for plaintiff was affirmed by the Supreme Court of the state of Missouri (217 S. W. 984), and defendant brings error. On motion by defendant in error to vacate supersedeas. Plaintiff in error ordered to furnish an additional bond, in default of which the supersedeas is to be vacated.

The motion to vacate supersedeas was as follows:

Defendant in error, McGrew Coal Company, moves this court to vacate the approval of the bond taken as a supersedeas herein by the honorable Chief Justice of the Supreme Court of Missouri, and for grounds of such motion does aver:

On April 20, 1915, in the circuit court of Lafayette county, Mo., at Lexington, a judg ment was entered in favor of McGrew Coal

Company against the Missouri Pacific Railway
Company for $14,303.77.

An appeal bond was given in that court for $28,000 and an appeal taken to the Supreme Court of Missouri. The appellate court affirmed the judgment of the circuit court on December 22, 1919.

A writ of error was allowed by the Chief Justice of the Supreme Court of Missouri, and a bond approved, in terms of a supersedeas, in the sum of $2,000. This bond contains the provision:

The parties to the bond given on appeal from the trial court are not parties to the bond on the writ of error in this court.

"This obligation is not intended to in any The jurisdiction was invoked because of al-wise affect the continuing liability of the prinleged violation of rights under the Fourteenth cipal and sureties on a bond heretofore given Amendment. The complainants were taxpay- in the circuit court of Lafayette county upon ers of North Dakota, who alleged that suit an appeal taken by the Missouri Pacific Railwas brought on behalf of themselves and all way Company to the Supreme Court of Misother taxpayers of the state. There was no souri from a judgment rendered in said circuit diversity of citizenship and jurisdiction was court against said company in favor of the Mcrested solely upon the alleged violation of conGrew Coal Company, which judgment has been stitutional rights. The District Court rendered affirmed in said court." a decree dismissing the bill on the merits; the judge stating that he was of opinion that there was no jurisdiction, and directing the dismissal on the merits to prevent delay, and to permit the suit being brought here by a single appeal. There is no allegation that the loss or injury to any complainant amounts to the sum of $3,000. It is well settled that in such cases as this the amount in controversy must equal the jurisdictional sum as to each complainant. Wheless v. St. Louis, 180 U. S. 379, 21 Sup. Ct. 402, 45 L. Ed. 583; Rogers v. Hennepin County, 239 U. S. 621, 36 Sup. Ct. 217, 60 L. Ed. 469.

Mr. Edwin A. Krauthoff, of Washington, D. C., for defendant in error.

PER CURIAM. Considering the motion to vacate the supersedeas herein, it is ordered that the plaintiff in error, within 20 days from the date of this order, furnish an additional bond in the sum of $20,000, to be approved by the clerk of this court, and in default of compliance with this order, the supersedeas hitherto granted to be vacated as prayed.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes