§ 268. Taxation Must Be for a Public Purpose. A tax being in the eyes of the law an enforced contribution upon persons or property to raise money for a public purpose, it follows that where this public purpose is absent, the contribution sought to be enforced cannot be justified as a tax but amounts to an attempt to take property without due process of law. The validity of this proposition is beyond dispute, but judicial records furnish comparatively few instances of tax levies being held void for this reason. This is due, in the first place, to the fact that not often do the laws expressly state the purpose for which a tax is levied; and, in the second place, where this purpose is stated, the courts will, in deference to the legislative judgment, construe the purpose to be a public one if it is possible to do so. In Broadhead v. City of Milwaukee22 the Supreme Court of Wisconsin say: "To justify the court in arresting the proceedings and declaring the tax void the absence of all possible public interest in the purpose for which the funds are raised must be clear and palpable to every mind at the first blush." A leading federal case with reference to this subject is that of Loan Association v. Topeka.23 This case did not involve a law levying a tax, but one authorizing towns to issue bonds payable to private manufacturing companies to encourage and aid them in establishing their plants within their respective limits. It was held by the court that inasmuch as taxes would have to be levied for the payment of these bonds, the law in effect attempted to authorize the towns to levy taxes in aid and encouragement of a private enterprise and was, therefore, void. In its opinion the court say: "The subject of the aid voted to railroads by counties and towns has been brought to the attention of the courts of almost every State in the Union. It has been thoroughly discussed and is still the subject of discussion in those courts. It is quite true that a decided preponderance of authority is to be found in favor of the proposition that the legislatures of the States, unless restricted by some special provisions of their Con 22 19 Wis. 624. 23 20 Wall. 655; 22 L. ed. 455. stitutions, may confer upon these municipal bodies the right to take stock in corporations created to build railroads, and to lend their credit to such corporations. Also to levy the necessary taxes on the inhabitants, and on property within their limits subject to general taxation, to enable them to pay the debts thus incurred. But very few of these courts have decided this without a division among the judges of which they were composed, while others have decided against the existence of the power altogether. State v. Wapello, 13 Iowa, 386; Hanson v. Vernon, 27 Ia. 28; Sharpless v. Mayor, 21 Pa. St. 147; Whiting v. Fond du Lac, 25 Wis. 188. In all these cases, however, the decision has turned upon the question whether the taxation by which this aid was afforded to the building of railroads was for a public purpose. Those who came to the conclusion that it was, held the laws for that purpose valid. -- Those who could not reach that conclusion held them void. In all the controversy this has been the turning point of the judgments of the courts. And it is safe to say that no court has held debts created in aid of railroad companies by counties as valid on any other ground than that the purpose for which the taxes were levied was a public use, a purpose or object which it was the right and the duty of state governments to assist by money raised from the people by taxation. The argument in opposition to this power has been, that railroads built by corporations organized mainly for the purpose of gain the roads which they built being under their control, and not that of the State - were private and not public roads, and the tax assessed on the people went to swell the profits of individuals and not to the good of the State, or the benefit of the public, except in a remote and collateral way. On the other hand, it was said that roads, canals, bridges, navigable streams and all other highways had in all times been matter of public concern. That such channels of travel and of the carrying business had always been established, improved, regulated by the State, and that the railroad had not lost this character, because constructed by private enterprise, aggregated into a corporation. We are not prepared to say that the latter view of it is not the true one, especially as there are other characteristics of a public nature conferred on these corporations, such as the power to obtain right of way, their subjection to the laws which govern common carriers, and the like, which seem to justify the proposition. Of the disastrous consequences which have followed its recognition by the courts and which were predicted when it was first established there can be no doubt. But in the case before us, in which the towns are authorized to contribute aid by way of taxation to any class of manufacturers, there is no difliculty in holding that this is not such a public purpose as we have been considering. If it be said that a benefit results to the local public of a town by establishing manufactures, the same may be said of any other business or pursuit which employs capital or labor. The merchant, the mechanic, the inn-keeper, the banker, the builder, the steamboat owner are equally promoters of the public good, and equally deserving the aid of the citizens by forced contributions. No line can be drawn in favor of the manufacturer which would not open the coffers of the public treasury to the importunities of two-thirds of the business men of the city or town." The purpose for which local governing bodies may be authorized to lay and collect taxes must be not only public in character, but must, generally speaking, relate strictly to the locality concerned. In other words, a State may not compel a local body to levy a local tax for the benefit wholly or in considerable part of another community.2 24 "Con 24 In Morford v. Unger (8 Iowa, 82) the Supreme Court of Iowa say: ceding to the General Assembly a wide range of discretion as to the objects of taxation, the kind of property to be made liable, and the extent of the territory within which the local tax may operate, there must be some limit to this legislative discretion, which, in the absence of any other criterion, is held to consist in the discrimination to be made between what may reasonably be deemed a just tax, one which a just compensation is provided in the objects to which it is to be devoted, and that which is palpably not a tax, but which, under the form of a tax, is the taking of private property for the public use without just compensation. If there be such a flagrant and palpable departure from equality in the burden imposed, if it be imposed for the benefit of others, and for purposes in which those objecting have no interest, and are, therefore, not bound to contribute, it is no matter 4 The inability of the state courts by injunction or otherwise to control proceedings in federal courts is declared in Weber v. Lee Co.,3 United States v. Keokuk, and Supervisors v. Durant." This inability arises not so much from the supremacy of the federal courts as because the state and federal judicial systems are independent of one another. In Weber v. Lee Co. the court say: "State courts cannot enjoin the process of proceedings in the circuit [federal] courts; not on account of any paramount jurisdiction in the latter, but because they are entirely independent in their sphere of action." The same reason is given in United States v. Keokuk. § 73. Injunctions from Federal to State Courts. It is, however, not quite correct to say that the two judicial systems are entirely independent in their sphere of action." It is true that the state courts are wholly without power in any way to control the operations of the federal courts, but the reverse is not true. As has already appeared, a writ of error lies in certain cases from the federal Supreme Court to the state courts, and, when removal of a case is sought, the federal courts may issue a writ of certiorari to the state court demanding a copy of the record, and the clerk of the state court refusing compliance with this demand becomes, under an act of Congress, liable to fine or imprisonment. Furthermore the federal courts possess the right to protect their own jurisdictional rights or the rights of parties to suits before them by restraining orders forbidding proceedings in the state courts. It is true that, actuated by a desire to preserve so far as possible the independence of the state judiciaries Congress, by act of 1793, which is still in force, has provided that "the writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such an injunction may be authorized by any law relating to proceedings in bankruptcy." But, in other than cases in bankruptcy, 36 Wall. 210; 18 L. ed. 781. the federal courts have not hesitated to enjoin proceedings in state courts where this has been necessary to preserve their own jurisdictional rights, or to protect individuals in their federal rights. Thus in Dietzsch v. Huidekoper it was held that the prohibition of Section 720 of the Revised Statutes would not prevent a federal court from issuing an injunction restraining proceedings on a replevin bond, the state suit being based on a judgment obtained in a state court after the defendant had removed the case to the federal courts and there obtained judgment in his favor. The court said: "The action on the replevin bond in that [the state] court was simply an attempt to enforce the judgment of that court in the replevin suit, rendered after its removal to the United States circuit court, and after the state court had lost all jurisdiction over the case. If no judgment had been rendered. in the state court against the plaintiffs in the replevin suit, no action could have been maintained upon the replevin bond. The bond took the place of property seized in replevin, and a judgment upon it was equivalent to an actual return of the replevied property. The suit upon the replevin bond was, therefore, but an attempt to enforce a pretended judgment of the state court, rendered in a case over which it had no jurisdiction, but which had been transferred to and decided by the United States Circuit Court, by a judgment in favor of the plaintiffs in replevin. The bill [for injunction] in this case was, therefore, ancillary to the replevin suit, and was in substance a proceding in the federal court to enforce its own judgment by preventing the defeated. party from wresting the replevied property from the plaintiffs in replevin, who, by the judgment of the court, were entitled to it, or what was in effect the same thing, preventing them from enforcing a bond for the return of the property to them. A court of the United States is not prevented from enforcing its own judgments by the statute which forbids it to grant a writ of injunction to stay proceedings in a state court." 8 7103 U. S. 494; 26 L. ed. 497. 8 In Mississippi Railroad Commission v. Illinois Central R. Co. (203 U. S. 335; 27 Sup. Ct. Rep. 90; 51 L. ed. 209) it was held that the commission was not a court within the meaning of Rev. St., Sec. 720. |