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for the purposes of taxation, to tax the property at its actual value, and to apportion those taxes among the several owners of it. The ide right to apportion its taxes among its citizens is one of the sovereign rights of the State. A right to make exemptions is involved in the fix right to apportion taxes, and must be understood to exist wherever it is not forbidden. The right is supposed to be exercised on reasons of State policy, and presumptively such exemptions contribute to the the general public benefit. It was never the intention of the Fourteenth Amendment to the Constitution of the United States, to interfere with State power in the exercise of the right of taxation. The history connected with that amendment, so familiar to all who have lived in the United States during the last twenty-five years, embracing a vast and destructive war over a question much discussed during the earlier history of the United States, furnishes the true key to the construction of the Fourteenth Amendment to the Constitution of the United States.

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Just after the adoption of that amendment, the United States Supreme Court took occasion to say, that it was doubtful whether a case would ever be found in which that amendment to the Constitution of the United States would be held to be applicable to any person tu- excepting the colored race. The amendment was drafted and adopted in view of the fact that a race of people had been relieved from slavery, and were compelled to live as the neighbors of their old masters and those who had been accustomed to control them absolutely. The necessity at that time for the adoption of this amendment was due largely to the fact, that in the States where slavery existed, the sentiments of the people were not in accord with the policy of the General Government in the making of the emancipation proclamation. Rights at that time were denied to the emancipated citizens of the several Southern States which were essential to the enjoyment of the liberty which the Federal Government had so recently conferred upon them. The exercise of the right of suffrage was interfered with to such an extent as that Federal interference at one time became necessary. The right to trials in Courts of justice before juries of their peers was scarcely awarded to the emancipated citizens; and in view of these cle things, and for the purpose of consummating the scheme adopted by the Government during the administration of Lincoln, this amendment to the Constitution of the United States was drafted and adopted, and at that time was understood to have reference purely and solely to the civil liberties and civil rights of the citizens. At that time, no one dreamed that that amendment would ever be construed to interfere with the taxing power of the States, or to control the States in the management of corporations created by them. In one of the first cases in which this provision received a construction at the hands of the Supreme Court of the United States, after holding that it was not the intention of the Fourteenth Amendment to transfer the security and protection of all the civil rights heretofore universally conceded to the States, from the States to the Federal Government, that Court proceeds to say: "Such a construction, followed by the reversal of the judgments of the Supreme Court of Louisiana in these would constitute this Court a perpetual censor upon all legislation of the States on the civil rights of their own citizens, with authority to nullify such as it did not approve as consistent with those rights as they existed at the time of the adoption of this amendment. The argument, we admit, is not always the most conclusive

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which is drawn from the consequences urged against the adoption of a particular construction of an instrument. But when, as in the case before us, these consequences are so serious, so far reaching and pervading, so great a departure from the structure and spirit of our institutions; when the effect is to fetter and degrade the State Gov. ernments by subjecting them to the control of Congress, in tha exercise of powers heretofore universally conceded to them of the most ordinary and fundamental character; when, in fact, it radi cally changes the whole theory of the relations of the States and Federal Government to each other, and of both these Governments to the people, the argument has a force that is irresistible, in the ab sence of language which expresses such a purpose too clearly to admit of doubt. We are convinced that no such results were intended by the Congress which proposed these amendments, nor by the Legislature of the States which ratified them."

In view, therefore, of the settled construction of the latter clause of the Fourteenth Amendment to the Constitution of the United States, it is fair to assume that the Supreme Court of the United States will hold that this provision of the Fourteenth Amendment to the Constitution of the United States was never intended to limit the State in the exercise of its taxing powers, and certainly was never intended to limit the State in the exercise of its legislative powers over cor porations created by itself. If, however, it should be held by the Supreme Court of the United States that Section 4 of Article 13 of the Constitution of California is in conflict with the latter provision of the Fourteenth Amendment to the Constitution of the United States, the result would be that the system of taxation in this State, as adopted in the new Constitution, would be absolutely defeated. A careful reading of Section 4 of Article 13 renders it absolutely cer tain that the object of the framers of the Constitution was to subject all property within the State to taxation. And this result follows, so far as land upon which mortgages exist and in which the Govern ment of the United States has no interest, is concerned, but it is claimed by the Central Pacific Railroad Company that the Govern ment of the United States holds a mortgage upon its road; that mortgage, of course, is not taxable, and cannot be made taxable by State legislation. If, therefore, as the result of the method of appor tionment as established by Section 4 of Article 13, the Central Pacific Railroad Company is absolutely entitled to a deduction of the mortgage held by the Government of the United States, the result is that the property of that road, to the extent of that mort gage, will not be subject to taxation at all, and hence all the property in the State will not be the subject of taxation.

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Such result would work manifest inequality and injustice as against other taxpayers, and hence, if such a rule should be adopted, some change ought to be had, either by constitutional amendment or by legislation, which will keep up and maintain the system equality, which it was the intention of the Constitution makers to of create. This might necessitate an entire change in our system apportioning taxes. I confidently believe that the opinions of the Circuit Judges will be overruled by the Supreme Court of the United States before the time for the adjournment of the next Legislature shall have arrived; and if this should prove to be true, but little legislation upon this important subject would be necessary.

As a part of the plan adopted by the railroad companies to prevent

tion the collection of taxes assessed against them by the State Board of the Equalization for the year 1881, temporary injunctions were obtained and from the Superior Court of the City and County of San Francisco, Our restraining the Tax Collectors of the several counties of the State Joy from selling the railroad property for the payment of the delinquent the taxes in the manner provided by the general laws of the State, and the by such temporary injunctions the Tax Collectors were prevented adi from making a sale of such property, and the collection of taxes and owing by the railroad companies effectually prevented, except by the prosecutions of suits for the recovery thereof.

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In my opinion the taxpayer should never be permitted to litigate y to with the State as to the legality of a tax, until he has first paid the same to the proper authorities. If such payments were required the public treasury would at all times contain the amounts estimated to be necessary for the support of the Government. I therefore respectse of fully recommend to the Legislature the enactment of a law similar ates to Section 3224 of the Revised Statutes of the United States, which will provides that "no suit for the purpose of restraining the assessment Conor collection of any tax shall be maintained in any Court;" and also, State providing that before the validity of a tax can be in anywise quesded tioned the tax shall be first paid to the proper authorities, and that cor. then, if it is claimed that such tax is invalid, an action may be the brought to recover back the amount so paid-in which action the 13 of validity or invalidity of the tax can be determined, and the rights sion of the taxpayer and of the State fully protected.

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The passage of such a law will, in a measure, avoid the vexatious tate, delays which have heretofore attended the collection of the public ited.

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ACT TO PROMOTE DRAINAGE.

I desire also to call your attention to the fact, that under the Act to promote drainage, large expenditures were made by the officers it is appointed by you, who were acting under the belief (it is to be assumed) that that Act of the Legislature was without constitutional that objection. Whether the officers themselves, and those who were e by mainly instrumental in promoting the scheme, acted in good faith por in the matter, however, is not a question of much importance to the itral subject contained in this report. There were, however, a great numof ber of men whose only connection with the scheme was their employthe ment by the officers appointed by you, and their labor, and the mate1ortrial which they furnished under that employment, to be used towards erty the construction of the dams mentioned in the Act. These men were

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farmers, merchants, and laborers, and I presume there is no doubt e as that they, and each of them, acted in good faith, under the belief that oted, the employment thus had, under what purported to be an Act of the nent Legislature, was made by competent authority. During my term of office, and since that Act has been declared to be unconstitutional, it has come to my knowledge that many of those men have lost large sums of money because of their faith in the ability and willingness of the State to pay for the labor which they thus performed and the materials which they have thus furnished. Some of them have been entirely and utterly impoverished, and it can hardly be a subJect of surprise that these men have been clamorous for their pay, and that some of them have gone so far as to ask officials to make promises of violations of duty in their interest. In view of the fact

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that these men acted in good faith, and performed faithfully the duties which they agreed to perform, it ought to be hoped that, in justice to them, the State might find some means of remunerating them for their services and compensating them for their materials Even though an Act of the Legislature, under which labor has been performed for the State, may be declared unconstitutional upon technical grounds, still the State ought to be willing to remunerate those who have acted in good faith, and expended their time and money for it.

But it seems that Section 32 of Article 4 of the Constitution, e industria, prohibits what in the past have been known as relief bills." That section provides that "the Legislature shall have no power to authorize the payment of any claim hereafter created against the State, or any county or municipality of the State, under any agreement or contract made without express authority of law: and all such unauthorized agreements or contracts shall be null and void." The object of this provision of the Constitution is selfevident. An Act of the Legislature which is in conflict with the Constitution, is absolutely void under our system, and is not law. It has become the settled doctrine that whenever the legislative department transcends its constitutional powers, its act is void, and its enactment is not law. It would seem to follow, as the result of this doctrine, that these contracts were made "without express authority of law," and that therefore the Legislature has no power to authorize the payment of any claim created against the State by such contracts. Under this Act of the Legislature a great deal of money has been paid out, and, as established in the case of the People v. Chapman, involving the right of the State to recover back money illegally taken by the State Prison Directors, the money which has been paid out under this Act of the Legislature is recoverable. It has been my intention to prosecute actions for the recovery of this money, but the great volume of my official duties during the past year has denied me the time necessary to the trial of those actions in case they were brought. In justice to those who performed the labor and furnished the materials aforesaid, I think the State ought, if possible, to wait until the meeting of the Legislature and allow those people to undertake to get such legislation as will enable them to make as complete a defense as possible; but I am of the opinion that any legislation which they may obtain upon this subject will utterly fail to strengthen their defense. I commend to my successor the consideration of this question, with the statement that, if I had been reëlected, I should have considered it my duty to commence and prosecute those actions to final judgment. The time, however, which under ordinary circumstances, I might now devote to such actions, will be necessarily consumed in the preparation for the argument of the railroad tax cases at Washington. I regret exceedingly that the approaching close of my term of office is too near to permit me to settle this as well as many other important questions that properly address themselves to this office.

THE STATE PRISON DIRECTORS.

The legislation of this State in relation to the expenses of the Directors of the State Prison is manifestly unconstitutional, and has been so declared by the Supreme Court in the case of the People v.

Chapman, to which reference has already been made. That legislation in effect provides a salary and fees for those officers, while Section 4 of Article 10 of the Constitution provides that they shall receive "no compensation other than reasonable traveling and other expenses incurred while engaged in the performance of official duties, to be audited as the Legislature may direct." These expenses, it will be observed, are allowed by the Constitution itself, and all that is left to be done by the Legislature is to provide a method of auditing them. The provision is too plain to admit of more than one construction, and it is to be regretted that the Legislature, at its last session, so completely misconceived the meaning of its language. The result of this misconception has been to deny to those officers even the expenses which the Constitution itself provides for, and has necessitated an expensive litigation necessary to the determination of the constitutional questions involved. Why the framers of the Constitution should have required the performance of duties by these officers without any compensation other than traveling and other expenses, is hard to conceive, because it can hardly be expected of any officer that he will perform important public duties without some corresponding remuneration. I would recommend to the Legislature about to meet the passage of a law directing the method in which these expenses shall be audited, and I think a constitutional amendment providing for reasonable compensation to these officers would not be out of place. The duties which they perform are of a nature as important as those performed by any other department of the State Government, requiring not only the exercise of capacity, but the expenditure of time and money. And it cannot be expected in the future that men of sufficient capacity can be found to perform these duties properly without a compensation adequate to the labor to be performed.

SALARIES.

As has been before stated in this report, the labor of some departments of the State-under the new Constitution has been greatly increased. An examination of the records of this office will show that during the three years of my incumbency opinions have been given covering over twelve hundred pages of ordinary letter book. This is greatly in excess of all of the work of the same kind performed in the office prior to my incumbency of which there is any evidence in the office. The records of this office also show that two hundred and sixty-four criminal cases have come into this office, and have been tried, since the first Monday in January, 1880; and, also, that sixty civil cases have been brought in the name of the people, and Some of them have been tried and determined. The vast amount of labor is such, both in importance and amount, as that the salary provided by the Constitution is entirely inadequate to the labor to be performed. No person-unless he is a first class lawyer-can perform that labor and do it well. The amount of salary paid to the Attorney-General is not much in excess of that paid to the ordinary District Attorney; and while it is a matter of no personal interest to myself, I suggest that an increase of the salary of the Attorney-General should be had immediately. In this manner only can first class talent be secured; the office being one requiring the performance of duties as important as any other that are required to De performed by any department of the State Government. The