Seton Hall College v. South Orange, 242 U.S. 100 (1916)

Seton Hall College v. Village of South Orange

No. 74

Submitted November 3, 1916
Decided December 4, 1916
242 U.S. 100

ERROR TO THE SUPREME COURT

OF THE STATE OF NEW JERSEY

Syllabus

Nine years after the incorporation and establishment of a college under special charter, a supplemental act declared that its property should be exempt from taxation. Long afterward, a general tax law was passed repealing all general and special acts inconsistent with its terms, and thereunder a portion of the college property, consisting of farm buildings and pasture land, necessary for its use but not productive of income, was assessed for taxation. No previous attempt had been made to tax any part of its property. The college, however, entered upon no new undertaking when the exemption was given, nor promised nor parted with anything because of it. Furthermore, there was in force at that time a law providing that every charter to be granted should be subject to alteration, suspension, or repeal in the discretion of the legislature.

Held:

(1) That it was reasonable to assume that the exemption was extended subject to the right of alteration and repeal. New Jersey v. Yard, 95 U.S. 104, distinguished.

(2) That, in view of this and the apparent absence of any promise made or burden assumed in reliance on the exemption, this Court was not prepared to hold that the state court erred in holding the exemption a revocable privilege. Home of the Friendless v. Rouse, 8 Wall. 430, and University v. People, 99 U.S. 309, distinguished.

In determining whether there is a contract which has been impaired by subsequent legislation, this Court, though exercising its right of independent examination, accords much consideration and respect to the decision of the state court construing the state statutes involved in the inquiry.

To all claims of contract exemption from taxation must be applied the well settled rule that, as the power to tax is an exercise of the sovereign authority of the state, essential to its existence, the fact of its surrender in favor of a corporation or an individual must be shown in language which cannot be otherwise reasonably construed, and all doubts which arise as to the intent to make such contract are to be resolved in favor of the state.

86 N.J.L. 365 affirmed.

The case is stated in the opinion.