4 Haw. 29 | Haw. | 1877
Opinion of the Court by
The above title embodies two separate submissions argued by the same counsel at the same time, respectively as follows:
“1. The plaintiff', Bishop, is the owner of real estate in the District of Honolulu, which estate is subject to'mortgage for «$650 to Mrs. L. B. Coan.
“2. The plaintiff'is also the holder of three shares in the capital stock of the ‘ Haiku Plantation,’ a corporation carrying on business at Iiaiku, in the Island of Maui, the value of such shares,.for the purposes of this case, being taken to be $5,000.
“ 3. The plaintiff' has made a return to the defendant as such Tax Assessor, and claims to be entitled to deduct from his taxable real or personal estate the amount of the said mortgage as a debt owing by him.
“4. The plaintiff also claims that he is not liable to be assessed and pay taxes upon the value of his shares in the ‘Haiku Plantation,’ inasmuch that the capital stock of the Company is assessed and liable to taxation in the district where such Company carries on business.
“ 5. The defendant, on the contrary, insists that he is entitled to assess, and has assessed the plaintiff the full 'value of his said real estate, and refuses to allow the plaintiff'to deduct from the value of the said real estate the amount of the said mortgage debt; and also insists that he is entitled to assess, and has assessed the plaintiff'for the full value of his shares in the ‘Haiku Plantation,’ as personal property in the District of Honolulu, where the plaintiff resides.
*31 “6. Tbe questions submitted, to tbe said Justices are:
1. "Whether tbe plaintiff is entitled to deduct from tbe value of bis property, real or personal, tbe said mortgage debt.
2. Whether tbe plaintiff is chargeable with taxes upon bis said shares of stock in tbe Haiku Plantation.
“Judgment to be entered for tbe plaintiff' or defendant according to tbe decision'of tbe Court upon these issues.”
“ 1. The plaintiff (Armstrong) has loaned tbe sum of* $850 to tbe estate of Kailiub, and has taken a mortgage over certain real estate situated at Honolulu, together with a promissory note as security, which real estate is assessed, independent of tbe mortgage, in tbe district where situate.
“ 2. Pursuant to tbe requirements of tbe law, tbe plaintiff' has made a return to tbe defendant, as such Tax Assessor as aforesaid, whereby, after stating tbe value of her personal property, she claims to deduct therefrom tbe amount due on tbe said note and mortgage.
“ 8. Tbe defendant, on tbe contrary, insists that under tbe existing law, be is entitled to assess, and has assessed the pláintiff with tbe said debt as being a debt secured by a promissory note.
“Tbe question for tbe opinion of tbe Justices is : Whether tbe plaintiff is properly assessed for tbe amount of tbe said mortgage debt, tbe property being already assessed in tbe district where situate.” >
Before proceeding to. consider tbe issues thus submitted we think it proper to express our doubts whether such cases, come within tbe purview of tbe statute of submissions. That statute provides for tbe submission to tbe J ustices of tbe Supreme Court on agreed statement of a question of difference which might become tbe subject of a civil action in tbe Supreme Court. But it is not manifest what civil action could be brought against tbe Assessor of Taxes. A special remedy, which is exclusive (see Widemann vs. Minister of Finance, 3d Haw. Rep. p. 789), by appeal to tbe Tax Appeal Board, has
If the Assessor is a judicial officer, and acted judicially and with jurisdiction over the persons and property of the' plaintiffs, then as held in Swift vs. City of Poughkeepsie, N. Y., 37 Court of Appeals, 511, he is entitled to the protection accorded to all tribunals and parties thus acting: ¥e are aware that there- are authorities supporting the contrary doe-txine, the Courts of many of the States of the United States permitting actions possibly similar to this.
The Court here is only asked to find whether the plaintiffs are chargeable according to the assessment, there being no claim of injury sustained to which the defendant should respond in damages, and the result of a finding for the plaintiffs we are given to understand would be an amendment of the assessment. But taking this into consideration and the further view that the-term “civil action” includes legal and equitable proceedings, so that the judgment of the Court might have the effect of mandamus or injunction, we are not prepared to hold that the- questions here in difference could so be brought before the- Court. It might become a precedent for using this method of litigation to obtain the findings of the Court on questions of difference from which it was anticipated that parties-might hereafter suffer damage, and lead to making the Court an office of consultation. -
But one of the parties in these cases is the Government, in. the name of the Assessor, for whom the Attorney General"appears officially. We have a provision of the Constitution'that the Government may require the opinion of the Court upon
We first consider the two questions, whether the holder of real estate may deduct from its assessed value the amount of' a mortgage thereon, and whether the mortgagee shall be assessed for the amount of his mortgage.
The language of the statute that “real estate is to be assessed in the district where situated, irrespective of any mortgage,” is -so explicit that no attempt was made to show any other possible construction of the law than the obvious one. The statute as to personal property is that “All personal property of whatever kind not subject fr> specific taxes or specially exempted from taxation, shall be ” taxed, and that the term “personal property should be construed to include all * * money, notes of hand, * * and every species of property not included in real estate.” The amendment of 1876 struck out the words “in hand and money loaned, all mortgages,” and inserted in their place “notes of hand, unsecured debts, growing crops,” and further amended the provisions as to real estate that “it should be assessed its full cash value irrespective of any mortgage. ” From this some argument was offered that the intention of the Legislature was to exempt mortgages from taxation and transfer the tax to real estate. To concede this view we must hold that a mortgage is real estate, for every species of property not included in real estate, and not specially exempt or subject to specific tax, is to be taxed as. “personal property,” or we must hold that a mortgage is not property at alL. The latter view is maintained by some speculative writers,, but, without discussion of the theory, we say that we hold a seemed solvent debt, to be property; and if property it is included in the description of personal property, and to be assessed unless
In respect to the third point, that the holder of stock in an incorporated plantation should not be taxed, it was assumed that the plantation property, real and personal, were- fully assessed in the-district where situated; and for the purpose of the argument we may take it to be so. “ Stocks in corporations” are to be taxed as being personal property by the terms of law, and equally explicit is it that the plantation^ its land, building, machinery, cattle, horses and implements are to be taxed in the district where situated.
Thus each of the three items of property in question is made taxable by the terms of the statute, as was mainly conceded by counsel for the plaintiffs.
The constitutional provision which is claimed to be infringed by the law, is apart of the 14th Article: “Each member of society has a right to be protected by it (Government) in the enjoyment of life, liberty and property, and therefore shall be obliged to contribute his proportional share to the expense of this protection.” It Is claimed that this prohibits disproportional or double taxation, and that the operation of the law is to impose double taxes by taxing mortgages and the real estate, stock and the plantation. "When it is claimed that the plaintiff, who holds the mortgage, has charged the borrower a rate of interest higher by the amount of the taxes she must pay for her mortgage, and that so the mortgagor pays a tax once on that part of his property which is involved in the mortgage, and again in the shape of enhanced interest, we fail to see
It is to be remarked that the expression in our Constitution is, not that all property shall be taxed equally, as is the provision in the Constitutions of some of the States to whose authorities we are cited, but in substance this, that in consideration of the protection accorded to life, liberty and property, every person shall pay his proportional share of the expense of Government. Now if a mortgage is property, and if it is protected by law, we cannot see wherein it contravenes the Constitution that the holder of it should pay taxes on it at the common rate of assessment.
It is well settled as sound doctrine that before Courts will exercise the high power of declaring a statute unconstitutional and so set aside the will of the supreme law-making power, it must appear that such Act is clearly in contravention of the fundamental law. The New York Court of Appeals, in a case reported m the Albany Law Journal of September 22d, 1877, “ Gilbert Elevated R. R. Company,” use this language with regard to constitutional construction: Every presumption is
As to taxing stocks in corporations, we first meet with the difficulty that there is an inequality between the tax imposed on incorporated and non-incorporated property of tbe same description, tbe second being taxed only in rem, tbe first in that and also in tbe several shares which represent tbe same thing and tbe right to tbe revenue to be derived. It is to be ob
We must regard tbe creation of stock as in a certain sense tbe creation of new taxable property: In tbe case of a plantation it may well be tbat tbe -aggregated values of tbe acres of land, tbe buildings, machinery, cattle and implements, as rated by tbe assessor of tbe district, will not represent the property value of tbe organization represented by tbe stock, Tbe stock of established plantations bas now a value as an investment greatly in excess of tbe value of tbe several items forming tbe visible plantation. It may be said further tbat tbe value of stock is estimated in view of tbe fact tbat tbe plantation tax is subtracted before dividends are made.
Perhaps a perfectly equal assessment will require a new statute provision for deducting from tbe value of tbe shares tbe Value of all property, real or personal, which is taxed directly to tbe corporation. We have been cited to tbe Massachusetts Statute for an instance of such legislation. But as tbe case stands, can it be said tbat the holder of a share of stock which is valued at |5,00Q in tbe market, because after payment of taxes by tbe plantation among other expenses it yields a net profit on such valuation, should not pay tbe Government bis proportional share, bis tax on tbe property be owns? Nor do we see why it should be more unconstitutional to tax tbe stock, when tbe plantation is also taxed than to tax tbe plantation if tbe stock is taxed. Tbe Court is required to direct tbe assessor in bis election whether be shall bold tbe
The subjects involved in the three questions submitted have given rise to profound legal discussion and judicial opinions, without a final and uniform settlement of the difficulties involved, and that, too, where the statutes of assessment and constitutional provisions have been much more full and explicit than our own. There are two, systems of taxation, either one of which may be adopted as the theory of a consistent series of statutes. ■ One, of taxation in rem, where every species of visible property is taxed in full, and no other. Under this, debts of every kind, whether presented by notes, mortgages or accounts, and all intangible property, such as stock, are not assessed. The other is the .system of taxation in personam, wherein every person is taxed for all the property he owns, his visible and real personal estate, less his debts thereon, his notes, mortgages and stock.
We do not understand that our statute is consistent with either system.
The Court cannot undertake in this proceeding to remedy or relieve the apparent injustice which tax payers may suffer by the statutes on taxation. The Legislature is the tribunal to which such grievances must be addressed. We do not find the statutes to be unconstitutional.
Judgment for the defendant.