Arguing from the fact that all charter contracts are presumed to be entered into with a knowledge and consent that they are, in their performance, subject to a legitimate exercise of the police power, the doctrine was early advanced that they are similarly subject to the State's taxing power; that, in other words, the power to tax is as necessarily and as inherently a sovereign power of the State and may not be bartered away, or its exercise in any way estopped. The courts have, however, held, as has been already intimated, that this is not so.

In many cases, though not without hesitation and against minority protests, exemptions from taxation granted by the State in return for some conceived substantial quid pro quo have been held contracts that might not thereafter be impaired. Such exemptions are, however, construed, it need not be said, with extreme strictness.

In Stone v. Mississippi36 the court say: "We have held, not, however, without strong opposition at times, that this clause pro-d a corporation in its charter exemptions from taxation. While taxation is in general necessary for the support of government, it is not part of the government itself. Government was not organized for the purposes of taxation, but taxation may be necessary for the purposes of government. As such, taxation becomes an incident to the exercise of the legitimate functions of government, but nothing more. No government dependent on taxation for support can bargain away its whole power of taxation, for that would be substantial abdication. All that has been determined thus far is that for a consideration it may, in the exercise of a reasonable discretion, and for the public good, surrender a part of its powers in this particular." 37

36 101 U. S. 814; 25 L. ed. 1079.

In Chicago Theological Seminary v. Illinois38 the court say: "The rule is that, in claims of exemption from taxation under legislative authority, the exemption must be plainly and unmistakably granted, it cannot exist by implication only; a doubt is fatal to the claim." In Metropolitan Street R. Co. v. Tax Commissioners39 it is said, "the rule is akin to, if not part of, the broad proposition, now universally accepted, that in grants from the public nothing passes by implication." 40

37 In a dissenting opinion, concurred in by Chief Justice Chase and Justice Field, Justice Miller in Home of the Friendless v. Rouse (8 Wall. 430; 19 L. ed. 4950 said: "We do not believe that any legislative body, sitting under a state constitution of the usual character has the right to sell, to give or to bargain away forever the taxing power of the State. This is a power which, in modern political societies, is absolutely necessary to the continued existence of every such society. To hold then that any one of the annual legislatures can, by contract, deprive the State forever of the power of taxation, is to hold that they can destroy the government which they are appointed to serve, and that their action in that regard is strictly lawful. . . . We are strengthened in this view of the subject by the fact that a series of dissents from this doctrine, by some of our predecessors, shows that it has never received the full assent of this court, and referring to those dissents for more elaborate defense of our views, we content ourselves with thus renewing the protest against a doctrine which we think must finally be abandoned."

38 188 U. S. 662; 23 Sup. Ct. Rep. 386; 47 L. ed. 641.

39 199 U. S. 1; 25 Sup. Ct. Rep. 705; 50 L. ed. 65.

40 See also Wells v. Mayor of Savannah, 181 U. S. 531; 21 Sup. Ct. Rep. 697; 45 L. ed. 986; Tucker v. Ferguson, 22 Wall. 527; 22 L. ed. 805; Bank of Commerce v. Tennessee, 161 U. S. 134; 16 Sup. Ct. Rep. 456; 40 L. ed. 645; New York ex rel. Met. Street Ry. Co. v. Tax Commissioners, 199 U. S. 1; 25 Sup. Ct. Rep. 705; 50 L. ed. 65.

In this last cited case it was held that the company was not exempted from liability to payment of a special franchise tax by reason of the fact as an impairment of the obligation of the contract of the city with its creditors.42