People v. Salem
Encyclopedia
Detroit & Howell R Co v Salem Township Board, (20 Mich. 452
) (1870) is a legal case
in which the Michigan Supreme Court
held that the Michigan
State Constitution of 1850 prohibited the use of public money to finance a privately owned railroad.
and the Michigan Southern Railroad (which would become the Lake Shore and Michigan Southern Railway
). A second wave of construction came in the 1850s as federally sponsored land grants encouraged the development of new routes such as the north-south Grand Rapids and Indiana Railroad
and the Flint and Pere Marquette Railroad
, which traversed the lumber-rich region of northern Michigan.
The third wave developed during the 1860s as communities in southern Michigan sought railroad connections. Railroads were believed to spur economic growth and offered better transportation than plank road
s; additionally, those communities which already possessed railroads desired additional lines to promote competitive rates between railroad companies. Private finance, however, proved lacking: "there seemed to be little chance that southern Michigan communities hoping for a railroad could get one without some form of public subsidy."
Seeking aid, local communities petitioned the state legislature for permission to loan money to railroads. Initially, this was done on an individual basis. A typical example was the city of Saginaw, which sought and obtained permission by an act of legislature to "issue bonds and loan up to $40,000 to the Amboy, Lansing and Traverse Bay Railroad
," subject to approval by local voters. By 1867 there were dozens of such requests pending before the state legislature.
to Howell
. Part of the proposed route passed through Salem Township
, which is located in Washtenaw County
, north of Ann Arbor
. Under an act passed in 1864, the people of Salem Township voted to provide aid to the D&H in the form of bonds. The township authority, however, refused to issue the bonds, claiming the act was unconstitutional, prompting the railroad to apply for a writ of mandamus
.
struck down the law on the grounds that railroads were a private enterprise and the public funding thereof violated the Michigan constitution. Cooley enunciated three principles which formed the basis of taxation:
Cooley rejected the notion that railroads were a "public highway," writing:
Reflecting on the state constitution's bar on the funding of internal improvements, Cooley stated that "what the state as a political community cannot do it cannot require the inferior municipalities to do. When the case is found to stand entirely outside the domain of taxation, state burdens and township burdens are alike precluded' no township vote and no township majority however large, can affect the principle."
, which held in Taylor v. Ypsilanti (1881) that bonds issued prior to the Michigan court's ruling were valid and had to be honored:
Far from terminating local funding of railroads, the ruling forced municipalities and railroad companies to change their approach. In lieu of direct aid, railroads sought stock subscriptions from private citizens directly. So-called "promoters" roamed the state, drumming up support for various railroad schemes, many of which never came to fruition.
In the same year as People v. Salem, the D&H merged with the Howell and Lansing
to form the Detroit, Howell and Lansing
under James F. Joy. After this the D&H ceased to exist as an independent company.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
) (1870) is a legal case
Legal case
A legal case is a dispute between opposing parties resolved by a court, or by some equivalent legal process. A legal case may be either civil or criminal...
in which the Michigan Supreme Court
Michigan Supreme Court
The Michigan Supreme Court is the highest court in the U.S. state of Michigan. It is known as Michigan's "court of last resort" and consists of seven justices who are elected to eight-year terms. Candidates are nominated by political parties and are elected on a nonpartisan ballot...
held that the Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
State Constitution of 1850 prohibited the use of public money to finance a privately owned railroad.
Mid-century railroading
Following a disastrous experiment with state-financed railroad construction in the 1830s and 1840s the people of Michigan had expressly outlawed the direct investment in or construction of "any work of internal improvement" in the state constitution of 1850. Out of that calamity had come two railroads which would dominate the Michigan landscape: the Michigan Central RailroadMichigan Central Railroad
The Michigan Central Railroad was originally incorporated in 1846 to establish rail service between Detroit, Michigan and St. Joseph, Michigan. The railroad later operated in the states of Michigan, Indiana, and Illinois in the United States, and the province of Ontario in Canada...
and the Michigan Southern Railroad (which would become the Lake Shore and Michigan Southern Railway
Lake Shore and Michigan Southern Railway
The Lake Shore and Michigan Southern Railway, sometimes referred to as the Lake Shore, was a major part of the New York Central Railroad's Water Level Route from Buffalo, NY to Chicago, primarily along the south shore of Lake Erie and across northern Indiana...
). A second wave of construction came in the 1850s as federally sponsored land grants encouraged the development of new routes such as the north-south Grand Rapids and Indiana Railroad
Grand Rapids and Indiana Railroad
The Grand Rapids and Indiana Railroad at its height provided passenger and freight railroad services between Cincinnati, Ohio and the Straits of Mackinac in Michigan, USA...
and the Flint and Pere Marquette Railroad
Flint and Pere Marquette Railroad
The Flint and Pere Marquette Railroad is a defunct railroad which operated in the U.S. state of Michigan between 1857 and 1899. It was one of the three companies which merged to become the Pere Marquette Railway.-Early history:...
, which traversed the lumber-rich region of northern Michigan.
The third wave developed during the 1860s as communities in southern Michigan sought railroad connections. Railroads were believed to spur economic growth and offered better transportation than plank road
Plank road
A plank road or puncheon is a dirt path or road covered with a series of planks, similar to the wooden sidewalks one would see in a Western movie. Plank roads were very popular in Ontario, the U.S. Northeast and U.S. Midwest in the first half of the 19th century...
s; additionally, those communities which already possessed railroads desired additional lines to promote competitive rates between railroad companies. Private finance, however, proved lacking: "there seemed to be little chance that southern Michigan communities hoping for a railroad could get one without some form of public subsidy."
Seeking aid, local communities petitioned the state legislature for permission to loan money to railroads. Initially, this was done on an individual basis. A typical example was the city of Saginaw, which sought and obtained permission by an act of legislature to "issue bonds and loan up to $40,000 to the Amboy, Lansing and Traverse Bay Railroad
Amboy, Lansing and Traverse Bay Railroad
The Amboy, Lansing and Traverse Bay Railroad is a defunct railroad which operated in the state of Michigan during the 1850s and 1860s. Initially planned as an ambitious land grant railroad which would run the length of the Lower Peninsula of Michigan, poor finances and politically-motivated routes...
," subject to approval by local voters. By 1867 there were dozens of such requests pending before the state legislature.
Detroit and Howell Railroad
The Detroit and Howell Railroad (D&H) was incorporated on June 17, 1864, at a meeting of Howell businessmen in New Hudson. The D&H intended to construct a 48 miles (77.2 km) line from DetroitDetroit, Michigan
Detroit is the major city among the primary cultural, financial, and transportation centers in the Metro Detroit area, a region of 5.2 million people. As the seat of Wayne County, the city of Detroit is the largest city in the U.S. state of Michigan and serves as a major port on the Detroit River...
to Howell
Howell, Michigan
Howell is a city in the U.S. state of Michigan. As of the 2010 census, the city had a total population of 9,489. It is the county seat of Livingston County and is located mostly within Howell Township, but is politically independent from Howell Township...
. Part of the proposed route passed through Salem Township
Salem Township, Washtenaw County, Michigan
Salem Township is a general law township of Washtenaw County in the U.S. state of Michigan, located northeast of Ann Arbor. As of the 2000 census, the township population was 5,562.The unincorporated community of Salem is located within the township....
, which is located in Washtenaw County
Washtenaw County, Michigan
Washtenaw County is a county in the U.S. state of Michigan. As of the 2010 census, the population was 344,791. Its county seat is Ann Arbor. The United States Office of Management and Budget defines the county as part of the Detroit–Warren–Flint Combined Statistical Area...
, north of Ann Arbor
Ann Arbor, Michigan
Ann Arbor is a city in the U.S. state of Michigan and the county seat of Washtenaw County. The 2010 census places the population at 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area had a population of 344,791 as of 2010...
. Under an act passed in 1864, the people of Salem Township voted to provide aid to the D&H in the form of bonds. The township authority, however, refused to issue the bonds, claiming the act was unconstitutional, prompting the railroad to apply for a writ of mandamus
Mandamus
A writ of mandamus or mandamus , or sometimes mandate, is the name of one of the prerogative writs in the common law, and is "issued by a superior court to compel a lower court or a government officer to perform mandatory or purely ministerial duties correctly".Mandamus is a judicial remedy which...
.
Decision
Writing for the majority, Justice Thomas M. CooleyThomas M. Cooley
Thomas McIntyre Cooley, LL.D., was the 25th Justice and a Chief Justice of the Michigan Supreme Court, between 1864 and 1885. Born in Attica, New York, he was father to Charles Cooley, a distinguished American sociologist...
struck down the law on the grounds that railroads were a private enterprise and the public funding thereof violated the Michigan constitution. Cooley enunciated three principles which formed the basis of taxation:
- It must be used for a public purpose.
- It must be imposed "not arbitrarily or by caprice."
- If imposed specifically on a locality (as opposed to a statewide tax), the tax must be of benefit for the locality itself.
Cooley rejected the notion that railroads were a "public highway," writing:
"They are not, when in private hands, the people's highways; but they are private property, whose owners make it their business to transport persons and merchandize in their own carriages, over their own land, for such pecuniary compensation as may be stipulated. These owners carry on, for their own benefit, a business which has, indeed, its public aspect, inasmuch as it accommodates a public want, and its establishment is consequently, in a certain sense, a public purpose. But it is not such a purpose in any other or different sense than would be the opening of a hotel, the establishment of a line of stages, or the putting in operation of a grist mill..."
Reflecting on the state constitution's bar on the funding of internal improvements, Cooley stated that "what the state as a political community cannot do it cannot require the inferior municipalities to do. When the case is found to stand entirely outside the domain of taxation, state burdens and township burdens are alike precluded' no township vote and no township majority however large, can affect the principle."
Impact
The immediate impact of the decision was to throw the development of railroads in the state of Michigan into chaos and to call into question the validity of all municipal bonds already issued. The latter question would eventually be taken up by the Supreme Court of the United StatesSupreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
, which held in Taylor v. Ypsilanti (1881) that bonds issued prior to the Michigan court's ruling were valid and had to be honored:
... we are of opinion that the rights of the plaintiff, as the owner of bonds issued under a statute which, when passed, was valid by the laws of Michigan, as declared and acted upon by the several departments of its government, are not affected by decisions of the Supreme Court of the State rendered after the railroad company, to whose rights the plaintiff succeeded, has earned the bonds under contract with the city made in conformity with the statute.
Far from terminating local funding of railroads, the ruling forced municipalities and railroad companies to change their approach. In lieu of direct aid, railroads sought stock subscriptions from private citizens directly. So-called "promoters" roamed the state, drumming up support for various railroad schemes, many of which never came to fruition.
In the same year as People v. Salem, the D&H merged with the Howell and Lansing
Howell and Lansing Rail Road
The Howell and Lansing Railroad is a defunct railroad which proposed to construct a railway line between Howell and Lansing in central Michigan. The company incorporated on June 23, 1868 and began grading along the length of the line. The H&L had some difficulty obtaining financing; by the time it...
to form the Detroit, Howell and Lansing
Detroit, Howell and Lansing Railroad
The Detroit, Howell and Lansing Railroad is a defunct railroad which operated in central and southeast Michigan during the early 1870s. The company formed on March 29, 1870 through the consolidation of the Detroit and Howell and the Howell and Lansing...
under James F. Joy. After this the D&H ceased to exist as an independent company.