Gordy v. DennisGordy v. Dennis
After the six members of the court, who were entitled after the first argument to express an opinion, had equally divided on the principal question presented on this appeal, a reargument was ordered on the application of the Attorney General of the State. All the judges sat on the reargument, and a majority of the court were of the opinion that the judgment of the nisi prius court should be affirmed. Because of the importance of a prompt decision, a per curiam order of affirmance was filed, to be followed by an opinion of the court, and the dissent of the minority.
The first question is whether the appeal could be entertained, since the problem raised involved the exemption from taxation of the salary of every judge of all the courts of the State. The circumstance that the cause here relates to the salary of the Chief Judge of the Supreme Court of Baltimore City, and not to that of any member of the appellate court, left every one of the judges of the latter court with a common, although indirect, interest in the result.
The only constitutional disqualification specifically imposed upon a member of the appellate bench is that he may not participate in the decision of any cause which he heard below. Constitution, art. 4, sec. 15. In addition to this particular provision, there is another constitutional one of general application that: “No Judge shall sit in any case wherein he may be interested or where
It is apparent that these constitutional and statutory provisions do not contemplate the unusual conditions of this appeal, where every judge is collaterally affected by the judgment to be rendered on the incidence of a tax upon income.
Under these circumstances the disqualification of all the judges would destroy the only tribunal in which relief by appeal may be sought. To bar the opportunity for redress by appeal is more prejudicial to sound public policy than the alternative, to permit an appeal to be heard by judges whose disqualification is in their collateral interest in the legal effect of the judgment to be rendered. So, of necessity, the rule as to the disqualification of judges must yield if the right of appeal is to be preserved. “The settled rule of law is that, although a judge had better not, if it can be avoided, take part in the decision of a case in which he has any personal interest, yet he not only may but he must do so if the case cannot be heard otherwise.” Pollock, First Book of Jurisprudence, 235; 1 Freeman on Judgments (5th Ed.), sec. 330; and reviews of cases in 39 A. L. R. 1476; L. R. A. 1915 E, 858; Ann. Cas. 1917 A, 1061. There being neither
An issue of law between parties in reference to a constitutional right must have an appropriate tribunal for its adjudication.
The principal question is one of constitutional law. It is whether the salary which is received by the Chief Judge of the Supreme Bench of Baltimore City may be embraced in the income upon which a state income tax is laid pursuant to the terms of chapter 11 of the Acts of the General Assembly of Maryland passed at its Extraordinary Session held in 1937. While the judgment in the pending litigation affects directly the particular judge against whom the action is brought, the ruling of the appellate court will apply collaterally to the other members of the judiciary. So, in its broader aspect, the
The imperative inhibition of the present Constitution (1867) that a judge‘s salary shall not be diminished during his continuance in office was embodied in the State‘s first Constitution of 1776, in article 30 of the Declaration of Rights. The form there adopted was: “That salaries, liberal, but not profuse, ought to be secured to the Chancellor and the Judges, during the continuance of their commissions, in such manner, and at such times, as the Legislature shall hereafter direct, upon consideration of the circumstances of this State.” Niles on Constitutional Law, p. 357. Some thirteen years later the Constitution of the United States stated the rule more explicitly in section 1 of article 3, by these words: “* * * The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.” Since the people of the several original states established the Constitution by ratification, this section of the Constitution has not been changed.
The wording of the Constitution of 1776 was not altered until chapter 55 of the Acts of 1804 proposed certain changes, which became, by ratification in 1805, a part of the Constitution of Maryland. By this amendment, the language of the Constitution of the United States was closely followed, and the mandate read: “the salaries of the said judges shall not be diminished during the period of their continuance in office.” Niles on Constitutional Law, p. 377. In the Constitution of 1851
Although there is abundant evidence that in every constitutional convention the amount of compensation to be paid for the services of the members of the judiciary has been the subject of controversy, the investigation of the court has not disclosed any question having been made as to the propriety of the denial of the power to diminish the amount of salary once that amount is decided. It is true that during the period (1851-1867) of the Constitutions of 1851 and 1864, there was the further prohibition of an increase of compensation, as has been uniformly provided since 1851 with respect to other public officers within the meaning of the constitutions. The difference in public policy which is reflected by these distinctions is attributable to the greater length of the judicial periods of service, which have either been for life and good behavior, or for a period of ten (1864-1867) or fifteen (1867-1939) years, so that there is a greater probability of a depreciation in value of the dollar aris-
One of the greatest evils to which the colonists were subjected was the effect of a dependent and subservient judiciary. In the arraignment of the King of Great Britain by the Declaration of Independence appears the charge that “He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.” Speaking towards the close of his eventful and great career, Chief Justice John Marshall declared that the greatest scourge to be inflicted upon a people “was an ignorant, a corrupt or a dependent Judiciary.” Niles on Constitutional Law, p. 357. With a knowledge born of experience, the framers of the first Constitution of Maryland set forth in article 30 of the Declaration of Rights: “That the independency and uprightness of Judges are essential to the impartial administration of justice, and a great security to the rights and liberties of the people“; and the statement of this fundamental necessity is found expressed in every later
A similar limitation upon the Federal Government is not declared in set words of the Constitution, but is imposed as a necessary inference from its provisions. Kilbourn v. Thompson, 103 U. S. 168, 190, 26 L. Ed. 377. Thus it results that by both national and state constitutions the independence of the members of the judiciary is of paramount importance. The function of the judges is to ascertain whether legislation has exceeded constitutional bounds, and whether the acts of the executive department are within the limits of its lawful power. If the judge be subservient or dependent upon either the legislative or executive branch of the government, the central unity, balance, and harmony of the government is destroyed. For the judge to be free and independent neither his tenure of office nor his substistence may be at the will of the executive or legislative branch. Therefore the people of Maryland have assured to every judge a definite term of office from which he cannot be removed except for grave and specified causes, and by the procedure prescribed by the Constitution. Article 4, sections 3, 4, 5, 14, 19, 21, 27, Declaration of Rights, art. 33. It is not enough for his independence that a judge be distinguished for integrity, wisdom, and legal knowledge and have a certain, fixed term of office, from which he may not be removed by arbitrary action, if he have not a sufficient salary whose amount is beyond the power of
The statutory, common, and constitutional laws of the State will fail to provide the remedies, secure the rights and enforce the liabilities of those within their operation, if they be not administered by an independent judiciary without fear or favor of the executive and legislative branches of the government. In the construction, therefore, of the mandate of the Constitution that the salary of a judge shall not be diminished during his continuance in office, the preservation of the independence of the judges ought to supersede all other considerations. As was said by Hamilton in The Federalist: “Next to permanency in office, nothing can contribute more to the independence of the judges than a fixed provision for their support. * * * In the general course of human nature, a power over a man‘s subsistence amounts to a power over his will. And we can never hope to see realized in practice the complete separation of the judicial system from the legislative power, in any system which leaves the former dependent for pecuniary resources on the occasional grants of the latter. * * *” The plan of the convention accordingly has provided that the judges of the United States “shall at stated times receive for their services a compensation which shall not be diminished during their continuance in office.” No. 79 and No. 78. Report of Joseph Story (1806) to Legislature of Massachusetts, see Life and Letters of Joseph Story, vol. 1, pp. 130-136; 1 Kent‘s Commentaries (1826), pp. 292-295; Laws and Jurisprudence of England and America, Dillon, pp. 118, 120; 2 Story on Constitution, secs. 1628-1631; 1 Carson‘s Supreme Court, 6; Works of James Wilson (1896), vol. 1, p. 367; Bancroft‘s History of the Constitution (1882), vol. 2, pp. 29, 196, 197; The American Commonwealth, Bryce, vol. 1, p. 275; Democracy in America, De Tocqueville, vol. 1, p. 178.
Theodorick Bland, Chancellor of Maryland, was appointed on August 16th, 1824. When the General Assembly of Maryland met, at the December session, 1824, an angry excitement prevailed against him, and a controversy originated between the House of Delegates and the Senate with reference to his compensation. The House of Delegates asserted the right to reduce the salary of the Chancellor, either by direct enactment that would repeal all the laws which had made provision for its payment, or by a refusal to continue the usual appropriation. The Senate denied this right, on the ground that when the Chancellor came into office his salary was fixed by law and secured to him by the Declaration of Rights, so that, during his continuance of his commission, the Legislature had not the constitutional power to reduce that salary in any manner whatsoever, during that period. As a result of this controversy, the session was adjourned without any appropriation, and the Chancellor was thereby totally deprived of all compensation after the close of the session. When the Legislature convened for the December session, 1825, the Chancellor addressed, on December 26th, 1825, a memorial to the General Assembly of Maryland because, independent of its bearing on his fate, which he regarded as of comparatively minor consideration, there were matters involved in the controversy “vitally affecting the constitution, and the safeguard of the people‘s rights of infinitely greater moment than the mere personal wrongs of the Chancellor.” The memorial, with a short statement of the circumstances, is reported in full under the title “The Chancellor‘s Case” in 1 Bland, pp. 595-686. The constitutional question, in its historical setting, was presented with dignity, learning, completeness and force. Although not an adjudication, it has, through the strength and soundness of its exposition and the gravity of the problem at issue, the weight of an opinion and the importance of a state paper.
The position taken by the Chancellor was that the salary, when fixed, although it may be increased, cannot be
“The salary of the chancellor is to be secured to him; that is, it shall not, at any time, on purpose, or by neglect, be withheld or diminished, during the continuance of his commission. This, the constitution has declared, shall not be directly and purposely done by the General Assembly; and surely, what is prohibited, and, therefore, cannot be directly done, can never be accomplished by any contrivance or indirect movement. * * * Commissions during good behaviour, and salaries secured during the continuance of those commissions, constitute that strong well marked boundary between the judiciary and the other two departments. Thus founded and sustained, the judges are, and can be—and without it they cannot be—a firm, efficient, co-ordinate check and balance in the government. It is this independency of character, that enables the judiciary to shield the citizen against unconstitutional legislation; and against unwarranted wrong and violence from the wealthy and the influential.
“But, it would be a mockery to expect of judges who are dependent upon legislators for their continuance in office, perhaps for their bread, a firmness and independency necessary for such purposes. No judge, thus dependent, would have the boldness to thwart a House of Delegates in their most ill-advised and wanton sports with the constitution.” Pages 671, 672.
The effect of this address was immediate and decisive. The memorial was referred by the House of Delegates to a special committee, whose report was a full vindication of the Chancellor‘s position, and an adoption of the grounds upon which his address proceeded. See paper of William L. Marbury on: “The High Court of Chancery and the Chancellors of Maryland,” Proceedings of Maryland State Bar Association (1905), pp. 143-146. The General Assembly passed the necessary legislation to pay the Chancellor his back and future salary. Until the passage of the income tax, no further attempt is known to
Until 1862 no attempt, it is stated, had been made to tax the salaries of judges, but in that year the Congress of the United States passed an act imposing a tax of three per centum on the salaries of all officers in the employment of the United States. The Treasury Department construed this tax to include the salaries of judges, and deducted the amount of the tax from their salaries. Against this action the then Chief Justice of the Supreme Court of the United States, Mr. Justice Roger B. Taney, protested in a formal letter of February 16th, 1863, to S. P. Chase, Secretary of the Treasury. In his letter he called attention to the first section of the third article of the Constitution, and its provision that the compensation of the judges should not be diminished during their continuance in office. He asserted that the act, as construed, would diminish the compensation of every judge three per centum, and that “if it can be diminished to that extent by the name of a tax, it may, in the same way, be reduced from time to time at the pleasure of the Legislature.” His communication then continues with these pertinent comments:
“The Judiciary is one of the three great departments of the Government created and established by the Constitution. Its duties and powers are specifically set forth, and are of a character that requires it to be perfectly independent of the other departments. And in order to place it beyond the reach and above even the suspicion, of any such influence, the power to reduce their compensation is expressly withheld from Congress and excepted from their powers of legislation.
“Language could not be more plain than that used in the Constitution. It is, moreover, one of its most impor-
tant and essential provisions. For the articles which limit the powers of the Legislative and Executive branches of the Government, and those which provide safeguards for the protection of the citizen in his person and property, would be of little value without a Judiciary to uphold and maintain them which was free from every influence, direct or indirect, that might by possibility, in times of political excitement, warp their judgments.”
The Chief Justice wrote in maintenance of a constitutional prerogative, and in the belief that the federal judges were disqualified because of interest and so could not hear and decide the question. The Secretary ignored the remonstrance and the Supreme Court, on March 10th, 1863, ordered it to be entered on its records. It will be found reported in full in 157 U. S. 701, 39 L. Ed. 1155, 1156. Nine years later, when Taney was dead, another Secretary of the Treasury came to the conclusion that the tax on the salaries of judges had been illegally withheld, and the amounts paid were refunded. Memoir of Roger B. Taney, Tyler, pp 431-435; Swisher‘s Taney, pp. 568, 569.
In the Income Tax Act of 1894, 28 Stat. 509, the salaries of the judges were not mentioned, and in the Acts of 1913, 1916, and 1917, 38 Stat. 114, 39 Stat. 756, 40 Stat. 300, 329, the salaries were expressly excepted from the income tax. So, it was not until the Act of 1919 that the income tax was attempted to be laid upon the compensation received by the judges of the Supreme and inferior courts of the United States. In a suit brought by a district judge to test the legality of this imposition, the United States District Court of Kentucky, 262 Fed. 550, held that an income tax on judicial salaries did not diminish the compensation of the federal judges within the meaning of the Constitution. An appeal was taken to the Supreme Court of the United States, and the case is reported as Evans v. Gore, 1920, 253 U. S. 245, 40 S. Ct. 550, 64 L. Ed. 887. By the Act of February 24th, 1919, ch. 18, sec. 213, 40 Stat. 1057, 1065, Congress passed an income tax law by which the salaries of the judges of
The case was fully argued and Justice Van Devanter wrote an able and vigorous opinion for the court, in which Chief Justice White and Associate Justices McKenna, Day, Pitney, McReynolds, and Clarke concurred. Justices Holmes and Brandeis dissented. The Court held (1) that the constitutional prohibition against the diminution of salaries of federal judges during continuance in office is to be construed as a limitation imposed in the public interest and not as a private grant for the benefit of the members of the judiciary; (2) that the Sixteenth Amendment, relating to the income tax, does not extend the taxing power to new or excepted subjects, but merely removes all occasion otherwise existing for an apportionment among the States of taxes laid on incomes from whatever source derived; and (3) that any diminution whose necessary operation and effect withholds or takes from a federal judge a part of the compensation promised by law for his services is forbidden by the constitutional provision, and the prohibition embraces and prevents diminution by taxation.
The argument was made that the tax was upon the judge‘s income, and, consequently, since the income was the money yield received by the judge from various sources, his salary or compensation, although included in his income for the purposes of taxation, was not diminished by the imposition of a tax upon an income of
“Obviously, diminution may be effected in more ways than one. Some may be direct and other indirect, or even evasive as Mr. Hamilton suggested. But all which by their necessary operation and effect withhold or take from the judge a part of that which had been promised by law for his services must be regarded as within the prohibition. Nothing short of this will give full effect to its spirit and principle. Here the plaintiff was paid the full compensation, but was subjected to an involuntary obligation to pay back a part, and the obligation was promptly enforced. Of what avail to him was the part which was paid with one hand and then taken back with the other? Was he not placed in practically the same situation as if it had been withheld in the first instance? Only by subordinating substance to mere form could it be held that his compensation was not diminished. Of course, the conclusion that it was diminished is the natural one.
“* * * But it is urged that what the plaintiff was made to pay back was an income tax, and that a like tax was exacted of others engaged in private employment. If the tax in respect of his compensation be prohibited, it can find no justification in the taxation of other income as to which there is no prohibition; for, of course, doing what the Constitution permits gives no license to do what it prohibits.
“The prohibition is general, contains no excepting words, and appears to be directed against all diminution, whether for one purpose of another; and the reasons for its adoption, as publicly assigned at the time and commonly accepted ever since, make with impelling force for
the conclusion that the fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise—that they regarded the independence of the judges as of far greater importance than any revenue that could come from taxing their salaries.” Pages 254, 255, 40 S. Ct. page 553.
It has been urged upon our attention that this tribunal is not bound by Evans v. Gore, supra, but its authority on the question at bar is derived from the power and cogency of its reasoning in respect of a constitutional inhibition similar to that found in the Constitution of Maryland. It is furthermore the construction of a provision of a federal income tax statute which has its counterpart in the statute now before this court for construction. As in section 213 of the federal act, the term “gross income,” as used in the statute passed by the General Assembly of Maryland, “includes gains, profits, and income derived from salaries, wages or compensation for personal services of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce or sales or dealings in property, whether real or personal, growing out of the ownership, or use, or interest in such * * * property also from rent, royalties, interest, dividends, securities or transactions of any business carried on for gain or profit, or gains or profits, and income derived from any source whatever, including gains or profits and income derived through estates or trusts by the beneficiaries thereof, whether as distributive or as distributable shares. The amount of all such items shall be included in the gross income for the taxable year in which received by the taxpayer,” unless otherwise to be accounted for as of a different period. There are certain specified receipts which are not to be reported as “gross income,” and certain deductions to be made from the total sum of the gross income. The sum of the “gross income,” if there are no deductions, or the difference between the sum of the “gross income” and the sum of the deductions, if there are one or more allowable, is called the “net income,” which is defined as “the gross income
The opinion, which was written for the court by Chief Judge Bond, said: “The present prohibition is comprehensive in terms and ordinary meaning. And the consti-
It is submitted that this conclusion is irrefragably supported by Evans v. Gore, supra; that it is sustained by the legal principles inculcated by our decisions and that it is confirmed by the genius of the constitutional structure of the State. Supra. The latest affirmation of this State‘s consistent policy was in 1891, when the voters of the State adopted an amendment to the Constitution which is popularly known as the Budget Amendment, and is found in section 52 of article 3 of the Constitution. By the Budget Amendment one of the grand divisions of the budget bill to be submitted to the General Assembly is designated by the title “Governmental Appropriations,” and among the appropriations necessarily incorporated in the “Governmental Appropriations” are the itemized appropriations: “(3) for the Judiciary Department, as provided by law, certified to the Governor by the Comptroller; * * * (5) for the salaries payable by the State under the Constitution and laws of the State.” The Budget Amendment declares that: “The General Assembly shall not amend the budget bill so as to affect either the obligations of the State under Section 34 of Article III of the Constitution, or the provision made by the laws of the State for the establishment and maintenance of a system of public schools, or the payment of any salaries required to be paid by the State of Maryland by the Constitution thereof; and the General Assembly may amend
The great weight of reason and authority are in accord with the construction adopted. Miles v. Graham, 268 U. S. 501, 45 S. Ct. 601, 69 L. Ed. 1067; Collector v. Day, 11 Wall. 113, 127, 20 L. Ed. 122, 126; Dobbins v. Erie County, 16 Pet. 435, 450, 10 L. Ed. 1022, 1027; Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429, 604, 606, 15 S. Ct. 673, 39 L. Ed. 759; 13 Opinions of Att. Gen. (Hoar) 161 (1869); Freedman v. Siegel, 9 Fed. Cas. page 746, No. 5080; Comm. ex rel. Hepburn v. Mann, 5 Watts & S. 403, 415; Comm. v. Mathues, 210 Pa. 372, 394, 59 A. 961; Bailey v. Waters, 308 Pa. 309, 162 A. 819; O‘Donoghue v. United States, 289 U. S. 516, 531, et seq, 53 S. Ct. 740, 77 L. Ed. 1356; Sweatt v. Boston etc. Ry. Co., 23 Fed. Cas. p. 530, No. 13,684; New Orleans v. Lea, 14 La. Ann. 197; Re Taxation of Salaries, 131 N. C. 692, 42 S. E. 970; Purnell v. Page, 133 N. C. 125, 45 S. E. 534; Long v. Watts, 183 N. C. 99, 110 S. E. 765; Cooley, Constitutional Limitations (8th Ed.), vol. 2, pp. 1095-1097; Willoughby on the Constitution of the United States (2nd Ed.), sec.
The State concedes that the Legislature has no power directly to reduce a judge‘s salary during his continuance in office. Calvert County v. Monnett, 164 Md. 101, 104, 164 A. 155; Anne Arundel County v. Goodman, 172 Md. 559, 192 A. 325. It is a sound principle of law that what is prohibited from being done directly by legislation is, also, prohibited from being done indirectly. Unless this were the rule applied, the inhibition would be ineffectual. Miller v. Milwaukee, 272 U. S. 713, 715, 47 S. Ct. 280, 71 L. Ed. 487; Macallen Company v. Massachusetts, 279 U. S. 620, 49 S. Ct. 432, 73 L. Ed. 874; Baltimore v. O‘Conor, 147 Md. 639, 646, 647, 652, 128 A. 759; Fairbank v. United States, 181 U. S. 283, 294, 300, 21 S. Ct. 648, 45 L. Ed. 862; Brown v. Maryland, 12 Wheat. 419, 6 L. Ed. 678.
So, it must necessarily be sound that should an enactment diminish, either directly or indirectly, the compensation of a judge during his period of service, the enactment is invalid. Supra. The State, therefore, cannot prevail unless the effect of the income tax is neither directly nor indirectly to diminish the judicial salary. The State rejects the decision of the Supreme Court in Evans v. Gore, supra, and relies upon the dissent of Mr. Justice Holmes and Mr. Justice Brandeis in that case. The court here cannot adopt that view, as its judgment is that the prevailing opinion of Mr. Justice Van Devanter anticipated and ably refuted the points made in the dissent. The decisions cited of Dupont v. Green, 1937, 38 Del. 566, 195 A. 273, which reversed a decision of the Superior Court for New Castle County, Green v. Dupont, 37 Del. 46, 180 A. 437; Martin v. Woolford, 1937, 269 Ky. 411, 107 S. W. 2nd 267; Poorman v. State Board, 1935, 99 Mont. 543, 45 P. 2nd 307, and Taylor v. Gehner, 1932, 329 Mo. 511, 45 S. W. 2nd 59, were all rendered after Evans v. Gore, supra, and follow specifically the dissent in Evans v. Gore, supra, although in Dupont v. Green, supra, the effect of the income tax upon a salary of the Attorney General of Delaware was involved and the court declined to express
Another case much relied on is State ex rel. Wickham v. Nygaard, 1915, 159 Wis. 396, 150 N. W. 513. The decision was a few years before Evans v. Gore, supra. The single provision of the Wisconsin Constitution which related to the permanency of compensation was the inhibition: “nor shall the compensation of any public officer be increased or diminished during his term of office.” The court stated that if this were the only clause of the constitution, there was not much authority to be found, but what little there was tended to support the claim of the circuit judge that his judicial salary was not subject to the income tax. The Wisconsin Constitution first provided: “The rule of taxation shall be uniform, and taxes shall be levied upon such property as the Legislature shall prescribe,”
The court stressed the fact that the amendment was broad and sweeping, making and containing no exceptions, and construed the change in the constitution to authorize the taxation of incomes in any case where the power rests in the State to impose such a tax. In none of these decisions are the constitutional provisions against a diminution of judicial salary so explicit as those of the Maryland Constitution, as clarified and strengthened by the specific and imperative safeguards of the Budget Amendment.
It may be first noted that Mr. Justice Holmes did not dissent in Miles v. Graham, 1925, supra, which followed Evans v. Gore, 1920, supra, although Mr. Justice Brandeis did. As a further indication of an acceptance of the holding in Evans v. Gore, Mr. Justice Holmes cites that case with approval in Gillespie v. Oklahoma, 1922, 257 U. S. 501, 42 S. Ct. 171, 172, 66 L. Ed. 338, saying “In cases where the principal is absolutely immune from interference an inquiry is allowed into the sources from which net income is derived and if a part of it comes from such a source the tax is pro tanto void. Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429, 15 S. Ct. 673, 39 L. Ed. 759; Id., 158 U. S. 601, 15 S. Ct. 912, 39 L. Ed. 1108; a rule lately illustrated by Evans v. Gore [1920], 253 U. S. 245, 40 S. Ct. 550, 64 L. Ed. 887, and applied in a case somewhat like the present by the Supreme Court of Hawaii, Oahu Ry. & Land Co. v. Pratt, 14 Hawaii 126.” We take the Supreme Court to hold, as Mr. Justice Holmes wrote for the court—Mr. Justice Pitney, Mr. Justice Brandeis and Mr. Justice Clarke dissenting—that Evans v. Gore is authoritative, and that if judicial compensation is immune from diminution by taxation “an inquiry is allowed into the sources from which net income is derived and if a part of it comes from such a source the tax is pro tanto void,” and the amount of the judge‘s salary would be deducted.
What then are the grounds upon which the contention rests that judicial salaries received by an incumbent during his occupancy of office may be taxed under a statute passed during his holding of the office? The reasons urged are (first) that the constitutional provision has
Nor will there be found any protection in the incidence of the tax upon other taxpayers. No method of taxation equals the income tax in the multiform classification of taxpayers indulged and in the variety of rates imposed according to the respective amounts of the incomes. The most numerous class embraces all those who are excluded from paying the tax because their income does not exceed the prescribed minimum. It is this non-taxed class which in a democracy dominates the fiscal policy of the nation, since its number makes for political predominance. If the constitutional requirement of equality and uniformity
The comment that the judges should pay the taxes of every man as their share in the cost of the institutions upon which their well-being, if not their life, depends, is an argumentum ad hominem. If the Constitution of Maryland, which is the supreme law on this question, forbids the laying of the tax because it renders the judiciary dependent upon the legislative and executive branches of the government, it becomes the paramount and solemn obligation of the judiciary to defend and maintain unimpaired the constitutional mandate in its full vigor and effect against all subversive legislation. In such an emergency acquiescence is recreancy. The articles of the Constitution which limit the powers of the legislative and executive branches of the government, and those which establish safeguards for the protection and security of the citizen in his person and property, would quickly lose their value if there were no judiciary
The conventions which framed the Constitution of the United States, and those which formulated the several constitutions of this State, understood that the provision against the diminution of compensation of public officials is a denial of those methods by which the legislative
The answer attempted to be made by the State is that the compensation ceases to be a salary and becomes income instantly on its receipt by the judge. Before its payment the salary was prospective income. When it was paid it was income accruing due as salary, and after it was received it lost none of its quality as income derived from the State in the form of salary. For the purpose of the income tax law, its nature with reference to its origin never changed from the moment of its receipt, no matter when or how it was used or kept, paid out or absorbed in a capital account. Whatever its liability to the imposition of an income tax became fixed as of the date of its accruing due and receipt. If the salary-income was not liable then to the payment of the tax pursuant to the terms of the statute, its status would not be affected by its amount either being called “gross income,” if the judge had no other income; or being included in the sum of other items of income subject to the tax and called “gross income,” if the judge had other sources of income, since no item of income may, for the purpose of taxation, form the whole or any part of the “gross income,” unless such item of income is separately subject to the imposition of the tax. While the computation of the income tax to be paid is upon the “net income,” which is the differ
The notion that as soon as salary-income is received it is irretrievably commingled with the general income of the owner for the purpose of taxation, so that the amount of the salary-income may not be separately considered as having been illegally included as part of the net income is, of course, untenable on principle and authority. In the form prepared by the State and found on this record, there are ten items or sub-divisions of income in the title “gross income,” with six accompanying explanatory schedules for details. The heading of the first is “Salaries, Wages, Commission, Fees, etc. (State name and address of employer)“. Under this item is given the amount of the judge‘s salary received from the State. Under the caption “Deductions,” there are seven items or headings for separate deductions, with six schedules for explanation and details. Item 18 is entitled “Other Deductions Authorized by Law (Explain in Schedule G).” It is after this heading that the amount of the salary is set for deduction. Chapter 11, sec. 238. The statute exacts that the return to the comptroller by the person required shall state “especially the items of his entire income and the items which he claims as deductions and exemptions allowed by this sub-title.” Ibid, secs. 232, 241, 242. The legislation provides for revisions and appeals and refunds for the correction and rectification of mistakes and errors in the enforcement of the law.
The particular circumstances of a judge admit of three typical situations. He may have no other source of in
The State has cited decisions of the Supreme Court of the United States which, in our opinion, do not reverse or modify Evans v. Gore, supra. The attention of the court has been directed to decisions of the British and Colonial courts which we do not discuss because of the fundamental differences in the conception of constitutional law in the United States and that which prevails in foreign jurisdictions. Dicey on the Law of the Constitution, 140, 141. For reference to these cases and annotations on the points involved, see Evans v. Gore, 253 U. S. 245, 40 S. Ct. 550, 64 L. Ed. 887; 329 Mo. 511, 45 S. W. 2nd 59; Brush v. Commr., 300 U. S. 352, 57 S. Ct. 495, 81 L. Ed. 691; Dupont v. Green, 38 Del. 566, 195 A. 273.
The decisions of this tribunal adhere to the principle stated by the great Chief Justice Marshall in Marbury v. Madison, 1 Cranch 137, 176, 2 L. Ed. 60: “The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written. To what purpose are powers limited, and to what purpose is that limitation committed to writing, if these limits may, at any time, be passed by those intended to be restrained?” Thomas v. Owens, 4 Md. 189, 227, and supra. The judgment appealed from must be affirmed.
Judgment affirmed, with costs to the appellant.
Bond, C. J., filed a dissenting opinion as follows, in which Sloan and Mitchell, JJ., concurred.
The view of a majority of the judges, that the amount of a judge‘s salary from the state must be omitted from the basis of calculating his state income tax, has received an acceptance in decisions elsewhere sufficient to demonstrate that careful seekers for the correct conclusion may think it not only tenable, but compelled. It seems to me, however, that the weight of authority and reason is against it.
The question is a new one in the state. All the Constitutions, beginning with the Declaration of Rights of 1776, art. 30, have included prohibitions against diminishing the salaries. The first followed more closely the wording of the English act of 1760 (1 Geo. III, ch. 23, sec. 3), in which, completing the Act of Settlement, this final step toward the independence of judges was taken, and provided that their salaries “ought to be secured to the Chancellor and the judges during the continuance of their commission.” An amendment in pursuance of an Act of 1804, chapter 55, ratified in 1805, adopted the present
With cases of plain, direct reductions in amounts previously fixed for official salaries the court need not concern itself; we have no such case to deal with. And in cases on the relation of taxes to salaries, and their possible effect as diminutions in the constitutional sense, we find differences in the taxes considered and different conceptions controlling. In Northumberland County Commrs. v. Chapman, 1829, 2 Rawle 73, the Supreme Court of Pennsylvania held that a tax on “all offices and posts of profit,” was collectible from judges, notwithstanding a provision in the Pennsylvania Constitution of 1790, art. 5, sec. 2, that salaries of judges should not be diminished during their continuance in office. There was, in the opinion of the court, no diminution of them; “the demand of the judge upon the commonwealth for his services is not in the least degree abated.” The same court, in Comm. v. Mann, 5 Watts & S. 403, held that a tax assessed on salaries and emoluments of public office, to be deducted before payment, was unconstitutional as
In 1863, Chief Justice Taney, in a letter to the Secretary of the Treasury, protested that a Civil War tax of three per cent on the salaries of all officers, to be deducted before payment (Act July 1, 1862, ch. 119, secs. 90 and 91), amounted to a diminution of the salaries, and could not constitutionally apply to those of judges, and the Supreme Court ordered the letter to be published in the reports, 157 U. S., 701. The tax appears to have been deducted until 1869, when the Attorney General, E. R. Hoar, declared it not deductible. Foster, Income Tax, sec. 28. Subsequently in the lower court case of Freedman v. Siegel, 9 Fed. Cas. page 746, No. 5080, a general income tax was held inapplicable to the income of a federal judge to the extent of his official salary; and in Sweatt v. Boston etc. R. Co., 23 Fed. Cas. page 530, No. 13,684, a tax directly upon a judicial salary was held invalid.
It is suggested that in the elaborate enumeration in the Maryland statute (Acts 1937, Ex. Sess., ch. 11, sec. 216) of sources and kinds included in gross income, from which the taxable net income under the statute shall be ascertained, this tax is laid specifically and directly on judicial salaries, because in the beginning there are enumerated “gains, profits and income derived from salaries, wages or compensation for personal services of what
The majority opinion in Evans v. Gore, 253 U. S. 245, 1920, 40 S. Ct. 550, 64 L. Ed. 887, the first case in that court on the effect of a general income tax, supplemented by Miles v. Graham, 268 U. S. 501, 45 S. Ct. 601, 69 L. Ed. 1067, is, of course, strong authority for holding that such a tax is unconstitutional to the extent that a judicial salary forms the basis of computing it. It has been followed, however, in only one state court, the Supreme Court of North Carolina, in Long v. Watts, 183 N. C. 99, 110 S. E. 765. An opinion by the Attorney General of that state, finding a tax on salaries unconstitutional, had previously been accepted. Matter of Taxation of Salaries of Judges, 131 N. C. 692, 42 S. E. 970. Except in that one state, the majority opinion in Evans v. Gore, as is pointed out in what seems to be the most recent case on the subject, “has not found favor in the State Courts.” Dupont v. Green, 1937, 38 Del. 566, 195 A. 273, 277. Nor has it been found acceptable in some cases in the British Dominions and England dealing with the same question.
A number of the state constitutions, including that of Maryland, contain in a prohibition of diminution of salaries of any public officers whatever, some indication of their conceptions of diminution which is not found in the Constitution of the United States. The same meaning must have been in the minds of the framers in exactly the same prohibitions. In some constitutions only one clause is used for all the prohibitions. “Where the same language is used in different clauses of the constitution, upon the same or similar subjects, it must receive the same construction, unless some particular reason to the contrary can be signed.” Roberts v. Gibson‘s Excr., 6 H. & J. 116; 90 Md. 193, 202, 44 A. 1055; Calvert County v. Monnett, 164 Md. 101, 104, 164 A. 155; Baltimore & Annapolis R. R. Co. v. Lichtenberg, 176 Md. —, 2 A. 2nd 784. What would, within the meaning of the framers, be diminution of the salary of a judge, would be diminution of the salary of a county treasurer, or any other officer, state or local. Calvert County v. Monnett, supra. And if we are to give the clause a meaning to accomplish objects we think the framers had in mind, those objects must have been sought for judges and all other officers alike. But it seems to strain the words of the framers to suppose that they intended by their brief prohibition to secure a tax immunity for all officers, high and low, throughout the State and its local governments, to whom they extended the prohibition. And I am unable to believe that the framers would entertain with respect to the incomes of all these officers the solicitude which we now attribute to them with respect to the incomes of judges.
In 1915 it was held by the Supreme Court of Wisconsin that the amount of a judge‘s salary must be included in the basis of computing his state income tax. The court considered that the prohibition against diminution of the salary, read together with a constitutional authorization of an income tax, and a requirement that state taxes must be uniform, allowed no exception to the judges. State ex rel. Wickham v. Nygaard, 159 Wis. 396, 150 N. W. 513. In Taylor v. Gehner, 329 Mo. 511, 45 S. W. 2nd 59, 60, decided in 1932, judges were by a unanimous court held subject to a general state income tax to the extent of their salaries. “Taxes,” said the court, “are proportional contributions imposed by the state upon individuals for the support of government and for all public needs. The power to tax is not granted by the Constitution; it is inherent in the Legislature. There are no restrictions or limitations upon the power, except such as are expressly imposed by the State and Federal Constitutions.
The validity of an income tax based on salaries received by judges was again in question in Poorman v. State Board, 1935, 99 Mont. 543, 45 P. 2nd 307, and, again, it was found valid, by a majority of the judges. They agreed that legislative reductions of the amounts fixed for salaries, and taxes directly on salaries, would come under the constitutional ban. The “host” of state officers protected by the constitutional prohibition was taken to indicate that it was not intended to affect a general net income tax on judges. The Court of Appeals of Kentucky, three judges dissenting, came to the same conclusion in 1937 with respect to a state income tax. Martin v. Wolfford, 269 Ky. 411, 107 S. W. 2nd, 267. That court regarded Evans v. Gore, Miles v. Graham, and Long v. Watts, as inapplicable. And in the most recent case found, that of Du Pont v. Green, Del. 1937, supra, the court reached the same conclusion, all judges agreeing.
In England it seems never to have been thought that imposition of a general net income tax on judges along with all other citizens constituted a departure from the principle of the Act of 1760. The Income Tax Act of 5 & 6 Vict., ch. 23, expressly included the salaries of judges in the basis of the tax. In Australia, in 1907, an Order in Council which had superior, binding force, and forbade, in the words of the Act of 1760, the diminishing of judges’ salaries, was cited as preventing application of an income tax to the amounts of the salaries, but the
Section 100 of the South Africa Act contained a provision that the remuneration of judges should “not be diminished during their continuance in office,” and the decision in Evans v. Gore was cited in opposition to the application of a local income tax to the amounts of judicial salaries, but without dissent it was held applicable nevertheless. Krause v. Commissioner, 1929, So. Afr.
The British North American Act of 1867, which has constitutional force, as we should say, contains (section
While the courts of two jurisdictions, then, the federal courts, following Evans v. Gore, and the Supreme Court of North Carolina, have adopted the view that a general income tax of the kind with which we are now dealing is not collectible from judges to the extent of their incomes from salaries, the opposite view has been taken by the Supreme Court of Pennsylvania, in a dictum, and by the Supreme Court of Wisconsin, the Supreme Court of Missouri, the Court of Appeals of Kentucky, the Supreme Court of Delaware, the High Court of Australia, the South African Appellate Division, and the Judicial Committee of the Privy Council in England. With these should be considered the opinion of the majority of the Supreme Court of the United States in Hale v. State Board, 302 U. S. 95, 58 S. Ct. 102, 82 L. Ed. 72. In the State of Iowa, holders of bonds exempted from taxation of principal or interest were assessed with respect to amounts received from the bonds for “personal net income taxation” by the State. The Supreme Court, accepting the analysis of the state tribunals, that the income tax was an excise and not a tax on property, a tax on the person rather than on the interest from the bonds, held that as such it was no impairment of the exemption contract. “Unless the foregoing analysis is faulty,” said the court (page 108, 58 S. Ct. page 106), “the tax complained of by appellants is not laid upon the obligation to pay the principal or interest created by the bonds, at all events within the mean
As this court, therefore, looks to authority, the weight of it appears favoring inclusion of judicial salaries in the basis of computing a judge‘s income tax. Reasons which seem to me to have the greater weight are stated in the cases reviewed. I would add that the mere meaning of the words of the constitutional provision, prohibiting the diminishing of official salaries, if taken in their ordinary acceptation, do not support the construction the court is adopting. If an income tax based on the amount of a judge‘s salary should be, within that meaning, a diminishing of it by the legislative enactment, then it would be accurate to say that the salary of every private citizen subject to the tax is diminished by Act of Assembly; but we know that is not the sense of the words used. The devaluation of the dollar as a result of the Gold Reserve Act of February 1st, 1934, more directly reduced compensations of all public officers, yet we do not think of it as a violation of the prohibition against diminishing them. If by some means it had been ordered that only the content of money paid to judges should be reduced, there might be agreement in holding that an unconstitutional diminution resulted, but the general incidence of the devaluation prevents our giving it that meaning. So it would logically be under the state income tax.
By that tax nothing is done to the salary as a salary. It is not taxed as salary; no deduction is made from it; it is paid in full. It is not then earmarked, but is mingled with the general income, and loses its identity as salary. The subject on which the tax is computed is a net fund after exemptions and allowances made, and the tax is
As I see it, what is secured to a judge under the view adopted by the majority is not only an undiminished salary, but an undiminished salary plus a tax immunity.