Colorado Farm & Live Stock Co. v. Beerbohm

Mr. Justice G-oddard delivered tbe opinion of tbe court: Tbe defendant in error challenges tbe right of plaintiff in error 'to tbe relief sought, upon tbe grounds: 1. That tbe interests acquired by plaintiff in error by virtue of its contract of purchase were taxable under former and existing statutes, and that tbe amendment of 1889 was in contravention of section 3, article 10, of tbe constitution, and especially of section 6, article 10, in that it attempted to exempt from taxation property other than therein mentioned and was therefore unconstitutional and void and could not establish a contract. Counsel refer to section 18 of tbe general laws of 1877, tbe original statute providing for tbe sale of public lands, as expressing an intention by tbe legislature to create a taxable property in tbe purchaser pending tbe contract of purchase. This section did not provide for tbe taxation of any equitable or contingent interest of tbe purchaser, but of • tbe land itself; and therefore, to be upheld, must be construed to apply only to consummated sales and as fixing tbe estimate upon wbicb tbe land was sold as tbe maximum valuation for assessment during tbe five -years after tbe sale was completed; otherwise, it must be condemned under tbe decision in tbe case of Colorado Company v. Commissioners, 95 U. S. 259-266. Under other provisions of tbe act tbe .sale was consummated at tbe time of tbe purchase, and tbe land was to be paid for in cash or a bond was re — 472 — quired to be given to secure tbe deferred payments, and for tbe recovery of tbe deferred payments suit might be instituted upon such bond by the state; in other words, the state treated the transaction in the nature of a mortgage and retained the title as additional security for the payment of the deferred installments, and might, if it so elected, resell the land on default of such payments and bid in the land itself for costs of sale. Such was the construction given to a like provision in Courtney v. Missoula County, 21 Mont. 591, 55 Pac. 359. It is there said: “In a certain and qualified sense, the land intermediate the making of the contract of sale and the payment of the entire purchase price is the property of the state, for the state retains the legal title to secure the payment of the deferred portions of the purchase price; but plaintiff, the purchaser, having entered into a valid contract to pay the consideration agreed upon and to accept title to the land, which the state, on its part, is bound to convey, and having entered, into occupation and made partial payments, is the owner for the purpose of taxation. ’ ’ It is manifest, therefore, that this statute does not evidence an intention of the legislature to tax any inchoate equity the purchaser might acquire by his contract of purchase, apart from the land itself. This act was repealed by the act of March 2, 1887, which, as amended in 1889, provides a complete scheme for the sale and conveyance of public lands, the terms upon which they may be sold, and the consequences that shall follow in case of default of any of the payments. Under this statute no absolute, unconditional sale is made, and no equitable title vests in the purchaser until he has fully complied with the terms of his contract and has paid the full price required thereby. In such circumstances — 473 — the property is exempt from taxation under section 4 of article 10 of our constitution and on general principles of public policy independently of this provision of our constitution, while the title to the land remains in the state, to he conveyed to the purchaser only upon the voluntary payment hy him. of the deferred installments and upon his electing to comply with the terms expressed in the certificate of purchase. In Stearns v. Minnesota, 179 U. S. 223-262, Justice Brewer, after citing authorities in support of the proposition -that when full payment has been made for public lands and the full equitable title thereto has passed to the purchaser, the mere delay in furnishing to the purchaser the legal evidence of his title does not relieve the land from ordinary state taxation, said at page 251: “But it has also been held that until the very last moment that liens or equitable rights of the United States are extinguished, no matter how trivial or- small may be the right or the lien reserved, the land is not subject to state taxation. — Railway Company v. Prescott, 16 Wall. 603; Railway Company v. McShane, 22 Wall. 444; Colorado Company v. Comissioners, 95 U. S. 259; Northern Pacific R. R. Co. v. Traill County, 115 U. S. 600; Wisconsin Central R. R. Co. v. Price County, 133 U. S. 496.” In Railway Company v. McShane, 22 Wall. 444, Justice Miller uses the following language: “That the payment of these costs of surveying the land is a condition precedent to the right to receive the title from the government, can admit of no doubt. Until this is done, the equitable title of the company is incomplete. There remains a payment to be made to perfect it. There is something to be done without which the company is not entitled to a patent. The case, clearly, is not within the rule — 474 — which authorizes state taxation of lands the title of which is in the United States. The reason of this rule is also fully applicable to this case. The United States retains the legal title by withholding the patent, for the purpose of securing the -payment of these expenses, and it cannot be permitted to the states to defeat or embarrass this right by a sale of the lands for taxes.” And in conclusion stated: “That the state had no right to tax the lands for which the cost of surveying had not been paid, and for which no patent had been issued.” The state, therefore, held these lands in trust free from taxation under 'this well settled rule, as -well as under the provisions of section 4, article 10, of the constitution, which exempts from taxation property belonging to the state until such time as a purchaser, by a full compliance with the terms of his contract of purchase, becomes vested with the full equitable title thereto. Under these conditions it was clearly within the power of the state, as such trustee, in order to make the lands more valuable, to provide in a statute authorizing a sale of the lands that such sale should carry with it the same exemption. The amendment of 1889 does not attempt to exempt from taxation any property theretofore taxable within the meaning of the statutes requiring “all property to be taxed,” but for the purpose of better administering the trust and to enable the state board of land commissioners “to secure the maximum possible amount” for the donated lands, it provided, as a material condition of the contract of sale and as an inducement to purchasers, that the lands and any interest therein should remain untaxable so long as the title was vested in the state. We think, therefore, this amendment does not, — 475 — properly speaking, present a question as to the right of the legislature to exempt property from taxation, but rather its right to exercise a discretion necessarily within its power as the administrator of the trust imposed upon it in the control and disposition of these lands. As was said in Stearns v. Minnesota, supra, at pages 240 and 241: “The right of a state to accept such a trust cannot now be doubted. It has become a part of the judicial history of the country. These lands were not donated by congress to the state, to be used by it for its own benefit and in its own way, but were conveyed to the state in trust with the understanding that, as trustee, it should use them in the best possible manner for accomplishing, the purposes of the trust. Of course, this implied that, except as restrained by its own powers, the state should make the grant as valuable as possible for the accomplishment of the purpose of the trust. Under those circumstances the peculiar nature of the trust created enabled the state to determine the limits and mode of taxation to which that property thus placed in its hands should be subjected. It might have provided that the title be retained by the state •* * *. Is it to be doubted that the state, retaining the title, although authorizing the railroad company to sell, could, while that title was so retained, hold it free from any kind of taxation? Would it not be a legitimate and appropriate discharge of the trust conferred if the state adjudged that such property should be held in its own name free from all taxation until such time as its full value in cash could be obtained from some individual? If the state could retain the title free from taxation until siich time as its disposition to a private purchaser enabled the railroad company to realize the full value of the — 476 — land, was it not also within its power to say that a temporary transfer to the corporation charged with the duty of constructing the railroad should also be accompanied by a like exemption from taxation1?” At page 251 it is further said: “The state, accepting the trust given by congress, has all the powers of a trustee, and must have also all the freedom of a trustee, and may determine in what way that trust may be most successfully carried out. The mere fact that the legal title has passed by act of congress from the nation to the state is not the vital fact. Under section 3, article 9, of the state constitution, public property used exclusively for any public purpose is exempted from taxation. It*is undoubtedly true, as a general rule, that a state does not tax .its own property, but we do not rest on this express language of the state constitution. We place our conclusion upon higher grounds. Accepting this property as a trustee, as it had a right to do, it was not compelled to weaken the full accomplishment of that trust by subjection of the lands to taxation. ’ ’ And, further, at pages 252 and 253: “When the state accepted the position o'f trustee it had all the freedom of .judgment which belongs to a trustee in respect to the best means 'of carrying the trust into execution. The legislature was the body representing the state, whose judgment was invoked as to such means, and its action was taken not so much in discharge of its constitutional obligations to the people as of its contract' obligations as trustee to the grantor of the trust.” In our judgment, the claim that this amendment is inhibited by section 6, article 10, of the constitution, is untenable. 2. The validity of the amendment is also attacked upon the ground that the subject of the — 477 — amendment is not expressed in the title of the act, and that its suhject-matter is not germane to the section amended, and is, therefore, in conflict with section 21, article 5, of the constitution. The act is entitled, “An act to amend section, twenty-one of an act entitled ‘An act to create the office of register of the state hoard of land commissioners, to prescribe the powers and duties of said board, and providing for the leasing, sale and management of the state lands, and repealing other acts upon the same subject,’ ” approved April 2, 1887. In Prescott v. Beebe, 17 Kan. 320, a case cited by counsel for defendant in error in support of another proposition, in answering a similar objection, the court said: “The title of the act is, ‘An act to provide for the sale of the school lands’; and the subject-matter of the act is fairly indicated, by its title. Surely, a section defining the interests and rights acquired by a purchaser of these lands, is germane to the subject, and within the scope of the title. The state holds the land free from taxation under the provision of the tax law which exempts ‘property belonging exclusively to this state. ’ — Gen. Stat. 1021, § 3. Should not a statute authorizing a sale prescribe whether such a sale carried with it the exemption? and could such a provision be held foreign to the subject-matter?” ■ The act under consideration embraces one subject, to wit, the disposal and management of the public lands, and everything contained in the section as amended relates to and is germane to that general subject, and its subject-matter is clearly indicated by tire title. The Kansas statute directed the taxation of the property sold, while the amendment under considera — 478 — tion directed the exemption from snch taxation. The only difference between the cases is, that the Kansas ease had under* consideration the title of the original act, while this case involves the sufficiency of the title of the amendatory act. This difference does not render the decision in the Kansas case any less an authority in favor of the validity of this amendment, it being sufficient if the title to the original act is sufficient to embrace the matters covered by the provisions of the amendatory act; in' other words, the amendment is valid if it is germane to the title of the original act. — Commonwealth v. Brown, 91 Va. 562, 21 S. E. 357-363; Lewis v. State, 148 Ind. 346, 47 N. E. 675; State v. Jones, 9 Idaho 693, 75 Pac. 819-826; People ex rel. Comstock v. Judge of Superior Court, 39 Mich. 195; Holden v. Supervisors, 77 Mich. 202, 43 N. W. 970. In Commonwealth v. Brown it is said: “It will be observed that it is an amendatory act, and not the original act on the subject. In such case, if the title of the original act is sufficient to embrace the matters covered by the provisions of the act amendatory thereof, it is unnecessary to inquire whether the title of the amendatory act would of itself be sufficient. If the title of the original act is sufficient to embrace the matters contained in the amendatory act, whether that of the amendatory act is in itself sufficient is unimportant.”. In Leiois v. State the following language is used: “Where the title of an original act is sufficiently broad to include the provisions embraced in an amendatory one, it is- not essential that the title of the- latter, in this respect, be- of itself sufficient. Strictly speaking, an amendatory statute is not to be regarded independently of the one which it .amends! It may be so framed as to serve to amend certain parts, and add such supplementary sections — 479 — as are embraced in and connected with the subject expressed in the title of the original act.” It is further contended, that the subject-matter of the amendment is not germane to the subject-matter of the section amended. The original section twenty-one contains certain conditions on which the land was sold; the amendment enlarges the scope of these conditions and adds other conditions that are within the purpose of the act as expressed in its title, to wit, the leasing, sale and management of state lands. The amendment was, therefore, cognate Ito the section-amended, because the subject-matter in the original section is in substance the same subject-matter dealt with in the amended section. We think, therefore, that the subject-matter of the amendatory act of 1889 was germane not only to the title of the original act, but was also germane to section twenty-one specifically amended thereby, and is not obnoxious to any of the objections urged against it; that it constitutes a valid exercise of legislative power, and necessarily entered into and became a part of any contract of purchase made thereunder, and that the provisions in the act of 1902, in so far as they attempt to subject to taxation any interest acquired by this .plaintiff in error under its contract of purchase is in violation of section 11, article 2, of the bill of rights, in that it impairs the obligation of a contract. — State of New Jersey v. Wilson, 7 Cranch 164; McGee v. Mathis, 4 Wall. 143; Stearns v. Minnesota, supra. It therefore follows that the action of the defendant in error in attempting to subject said interests to taxation and sale was without authority of law. 3. Nor do we think there is any merit in the further claim of defendant in error that the court was without jurisdiction to entertain this action and grant the relief prayed for. — 480 — The cases cited by defendant in error, to wit, Insurance Co. v. Bonner, 24 Colo. 220, and Highlands v. Johnson, 24 Colo. 371, are distinguishable from this case in that the property therein sought to be taxed was, in fact, subject to taxation' These cases, therefore, do not support the contention of defendant in error that the plaintiff is not entitled to injunctive relief in the circumstances of this case. Without further considering the cases cited by counsel in support of their respective claims, which in the main determine under what circumstances a court of equity will exercise its jurisdiction to remove a cloud from title, suffice it to say, that jurisdiction is invoked in this case for a different purpose. As before stated, the purpose of this action as originally brought, was to have the lands .sought to be taxed declared not subject to taxation until the contracts for the purchase thereof have expired, and to restrain the defendant in error and his successors from selling, on the date named and until the final determination of the suit, said lands or any part thereof for the taxes for the years named, on the ground that said taxes were void; and to obtain on final hearing a decree perpetually enjoining him from selling said lands or any interest therein for said taxes. Pending the action the defendant in error, having proceeded with the sale and issued certificates of purchase therof, such facts appearing from the supplemental complaint, the further relief was asked that said sales be declared void and that the certificates of purchase issued thereon be adjudged null and void; and that any tax deed or deeds which the defendant or his successor in office might assume to issue by virtue of said pretended sales, likewise be adjudged wholly null and void. The question, therefore, as to when and under what circumstances a — 481 — court 'of equity will entertain jurisdiction to remove a cloud from title is not involved in this case; hut the right of a court of equity to enjoin the enforcement of a tax that is void because the land sought to be taxed is exempt from taxation. Such a remedy is clearly within the jurisdiction of a court of equity, and the court having acquired jurisdiction of the action brought for that purpose, the subsequent wrongful conduct of the defendant in error will not deprive it of the power to grant such ultimate relief as the plaintiff may be entitled to upon the facts occurring during the pendency of the suit and which were fully presented by the supplemental complaint. We think that the doctrine applicable under the facts of this case is stated by Mr. High, in his work on Injunctions, as follows: “An important exception to the general doctrine of non-interference by injunction against the collection of the revenue because of illegality in the tax is recognized in that class of cases where the relief is sought against a tax assessed upon property which has been exempted by law from taxation. Indeed, the' exception has been so uniformly recognized as to become of itself a governing, rule in the class of cases now under consideration. ’ ’ — 1 High on Injunctions (4th ed.), §530. And, further, at pages 504 and 505: “And where- an act of legislature, held by the court to be constitutional, exempts certain property from taxation, an injunction will be allowed against the enforcement of a tax upon such property.” This rule is approved in Fargo v. Hart, 193 U. S. 490, wherein it is said: “ ‘If there was no right to assess the particular thing at all, * * * an assessment under such circumstances would be void; and, of course, no pay — 482 — ment or tender of any amount would be necessary before seeking an injunction. ’ ’ ’ Tbe view that we have taken of the foregoing questions renders it unnecessary to consider the- further- reasons urged why the attempted levy and sale óf plaintiff’s interest were illegal and void. Our conclusion is, that the plaintiff’s complaint alleged facts sufficient to entitle it to the injunctive and other relief sought, and that the court erred in sustaining the demurrer thereto and in striking from the files the supplemental complaint, and in rendering the judgment complained of. . The judgment is, therefore, reversed and the cause remanded, with direction to the trial court to grant the relief prayed for. Decision en bane. Reversed and remanded. Mr. Justice Maxwell not participating.