182 P. 477 | Mont. | 1919
Lead Opinion
delivered the opinion of the court.
At 12 o’clock noon on the first Monday of March of this year, plaintiff owned personal property subject to taxation in Lewis and Clark County, but owned no real estate in that county. His property was duly assessed at $1,000, its full cash value, and upon this valuation the taxes were computed, amounting to $35.05, and the county treasurer thereupon demanded payment. Plaintiff tendered $7.01, and,upon refusal of his tender commenced this action to restrain the treasurer from seizing and selling the property.
The controversy involves the validity of House Bill No. 30 (Laws 1919, Chapter 51) entitled: “An Act providing for the classification of taxable property in the state for the purpose of taxation, and providing the percentage of the true and full value of each class which shall be taken and used as the basis for the imposition of the tax thereon.”
Section 1 distributes all taxable property into seven distinct classes; the kind of property constituting each of the first six classes being specifically enumerated. The seventh class includes all property not assigned to some one of the preceding classes.
Section 2 provides: “As a basis for the imposition of taxes upon the different classes of property above specified, a percentage of the true and full value of the property of each class shall be taken as follows:
“ (a) Class one: 100 per cent of its true and full value.
“ (b) Class two: 20 per cent of its true and full value.
*163 “ (c) Class three: 33% per cent of its true and full value.
“(d) Class four: 30 per cent of its true and full value.
“ (e) Class five: 7 per cent of its true and full value.
“ (f) Class six: 40 per cent of its true and full value.
“(g) Class seven: 40 per cent of its true and full value.”
The property involved in this litigation belongs to class two, and it is conceded that if House Bill No. 30 is a valid legislative enactment, the plaintiff tendered the amount of tax due; if it is not, the amount demanded by the treasurer is the amount to be paid.
1. It is insisted by the treasurer that House Bill No. 30 is
The legislative department of this state possesses all the
Taxation for the purpose of raising public revenue is a subject
The Constitution of Wisconsin declares, “The rule of taxation shall be uniform” (Wisconsin Constitution, Article VIII, sec. 1), and the same principle, though expressed differently, is to be found in the Constitution of each of some thirty other states. Whenever the question has arisen in any of these jurisdictions, it has been held that the language of the Constitution under review, by necessary implication, evidenced an intention to maintain the rule of uniformity as expressed above. We find no fault with the conclusions reached in the cases so holding.
Great stress is laid upon the fact that the legislature is
When our Constitution was prepared and ratified, the term “assessment” and the term “taxation” each had a definite, well-understood meaning. Assessment was the process by which persons subject to taxation were listed, their property described, and its value ascertained and stated. Taxation consisted in determining the rate of the levy and imposing it. Speaking generally, the assessment was made by the assessor, subject to review by the board of equalization. The rate of taxation was fixed and imposed by the legislature for state purposes, by the county commissioners for county purposes, by the city council for city purposes, etc. This has been the history of our revenue legislation from the time Montana was organized as a territory, and the framers of our Constitution understood these words and 'used
The Act in question has nothing whatever to do with either the assessment of property or the determination of the rate of the tax levy. It is not directed to the assessor. His duties are defined by the statutes in force when this measure was enacted.
The mandate of the Constitution that the legislature • shall prescribe such regulations as shall secure a just valuation for taxation of all taxable property was complied with by the first state legislature which passed any laws after the Constitution was adopted. An elaborate revenue measure was enacted, comprising 206 sections, which provided, among other things, for the assessment of all taxable property at its full cash value, for the proper methods of ascertaining such value, and for the review of the assessments and the equalization thereof. (Laws 1891, p. 73.) Those provisions, with slight amendments, have been brought forward and constitute the law upon the subject at the present time. (Secs. 2498-2745, Rev. Codes.) The provisions of section 5 of the Act of 1891 have never been changed. “All taxable property must be assessed at its full cash value.” (Sec. 2502, Rev. Codes.) This is the command of the statute to-day directed to the assessor and to the boards of equalization.
But it is contended that House Bill No. 30 violates the principle of a uniform rate of taxation declared in section 1. If that section be construed independently of any other provision, the argument of counsel would be persuasive, if not convincing;
Section 11, Article XII, provides: £ £ Taxes shall be levied and collected by general laws and for public purposes only. They shall be uniform on the same class of subjects within the terri-' torial limits of the authority levying the tax.” But counsel for the treasurer would have us construe section 1 independently of section 11, upon the theory that each deals with a different subject — section 1 with state taxes exclusively, and section 11 with local taxes exclusively. Indeed, counsel insist that sections 1, 3, 7, 9, 10 and 17 were intended to provide, and do provide, a “method for raising revenue for the support and maintenance of the state,” while sections 4, 5 and 11 provide a complete method of taxation for county, city, town and school district purposes. The argument is founded upon an entire misconception of the purpose of Article XII.
Our state Constitution, unlike the Constitution of the United
Nowhere is the legislature prohibited from classifying property for the purpose of taxation; but, on the contrary, section 11 contains a distinct recognition of the right to do so. Counsel argue, however, that section 11 goes no further than to recognize the right of the legislature to classify subjects of taxation, and does not refer to the classification of property.. Counsel concede that his argument runs counter to the decisions of this court in State ex rel. Sam Toi v. French, 17 Mont. 54, 30 L. R. A. 415, 41 Pac. 1078, and State v. Camp Sing, above. In, the former, Justice De Witt, speaking for the court, said: “We are of the opinion that the first sentence of section 1, Article XII, and the whole of section 41, Article XII, are upon the same subject, and must be read togethér, and that they refer to taxation, and the equality and uniformity thereof.” Since the first sentence of section 1 deals exclusively with property taxation (Northwestern Mut. Life Ins. Co. v. Lewis and Clark County, 28 Mont. 484, 98 Am. St. Rep. 572, 72 Pac. 982), it would seem that by necessary implication the court held that section 11 does likewise. In the Camp Sing Case the court reviewed at great length the several provisions of Article XII, explained their purpose, and reached the conclusion, in effect, that all the restrictions imposed upon the legislature by that Article are restrictions with reference to property taxation. We are asked now to overrule these decisions, but in our judgment the correctness of each of them is beyond question.
At the time our Constitution was prepared and adopted, property and licenses were the only sources of tax revenue in Montana. The so-called poor poll and road poll taxes were then imposed, but neither is a tax within the meaning of that term as employed in the Constitution. (Pohl v. Chicago, M. & St. P. Ry. Co., 52 Mont. 572, 160 Pac. 515.) Licenses are excepted from the uniformity provision, so that it is practically certain that the term subjects in section 11 was used in its then popular sense to denote the different kinds of property liable to taxation.
The definition of “property” in section 17 of this same Article
As indicating further that it was not the purpose of our Constitution to prohibit the legislature from classifying property for the purpose of taxation, a reference to section 15, Article XII, is pertinent. That section defines the duties of the state board of t equalization as follows: “The state board of equalization may adjust and equalize the valuation of taxable property among the several counties and the different classes of taxable property in the same and in the several counties and between individual taxpayers; supervise and review the acts of county assessors and county boards of equalization; change, increase or decrease valuations made by county assessors or equalized by county boards of equalization and has such authority and may do all things necessary to secure a fair, just and equitable valuation of taxable property among the counties and between the different classes of property and individuals.” Prior to the amendment adopted in 1916, section 15 defined those duties to be “to adjust and equalize the valuation of the taxable property among the several counties of the state.” Counsel now urge upon us that the only purpose of the amendment was to obviate the decisions of this court in State ex rel. Wallace v. State Board, 18 Mont. 473, 46 Pac. 266, and State ex rel. Board v. Fortune, 24 Mont. 154, 60 Pac. 1086;
That the ironclad rule of uniformity, as first ¡stated above,
There is further slight evidence of a deliberate purpose to exclude from our Constitution tbe old “uniform ad valorem system.” Section 1, Article XII, of tbe Constitution, proposed in 1884, was a literal copy of tbe section of tbe Nebraska Constitution, ante, with the exception that tbe last words “and franchises” were omitted. It declared tbe uniform rule of general property taxation in language too clear to admit of doubt. When tbe Constitution of 1889 was written, many of tbe provisions of tbe proposed 1884 Constitution were copied verbatim, but in preparing section 1, Article XII, the old draft was abandoned and for it was substituted tbe section in tbe language quoted above. Many of tbe members of tbe first convention were also members of tbe second. Tbe same member who presided over the committee wbicb framed Article XII of tbe first proposed Constitution was likewise chairman of tbe committee wbicb drafted Article XII of our present Constitution. This is a matter of slight consequence in itself, but it tends to indicate a purpose to
Decided eases almost without number have been pressed upon our attention, but they are practically without value in this instance. They construe constitutional provisions altogether unlike our own. Indeed, no other state in the Union has provisions in its Constitution similar to those of ours enumerated above. Some of these may be found in the Constitution of one state; some in another; some of them cannot be found in the Constitution of any other state. A review of these authorities would be a work of supererogation.
The theory of classification of property for the purpose of taxation is not new. In an address before the meeting of the International Tax Association in 1909, Charles J. Bullock, Professor of Economics, Harvard University, directed attention to <the fact that immediately following the Civil War discontent with the workings of the uniform ad valorem system became general, and that the system had long since been abandoned in most European countries for a system of classification.
In 1869 the supreme court of Pennsylvania, in upholding the right of the legislature to classify property for taxation' said: “To hold otherwise would logically require that all the subjects of taxation, as well persons as things, should be assessed, and an equal rate laid ad valorem. Practically no more unequal system could be contrived.” (Durach’s Appeal, 62 Pa. 491, 494.)
In 1885 the supreme court of the United States, in referring to the Kentucky Constitution of 1850, said: “But there is nothing in the Constitution of Kentucky that requires taxes to be levied by a uniform method upon all descriptions of property. The whole matter is left to the discretion of the legislative power, and there is nothing to forbid the classification of property for purposes of taxation and the valuation of different classes by different methods. The rule of equality, in respect ,to the subject, only requires the same means and methods 'to be applied impartially to all the constituents of each class, so that the law shall operate equally and uniformly upon all persons in similar
We cannot say whether these expressions of the courts or the prevailing discontent with the “uniform ad valorem, system” influenced the framers of our Constitution. It is sufficient for us to know that the Article on Bevenue and Taxation apparently omits any restriction upon the classification of property for the purpose of taxation.
With the merits of these respective systems we are not concerned in determining the validity of a statute, but in passing we direct attention to the following from the opinion of the supreme court of the United States: “This court has repeatedly laid down the doctrine that diversity of taxation, both with respect to the amount imposed and the various species of property selected either for bearing its burdens or for being exempt from them, is not inconsistent with a perfect uniformity and equality of taxation in the proper sense of -those terms; and that a system which imposes the same tax upon every species of property, irrespective of its nature or condition or class, will be destructive of the principle of uniformity and equality in taxation and of a just adaptation of property to its burdens.” (Pacific Express Co. v. Seibert, 142 U. S. 339, 351, 35 L. Ed. 1035, 12 Sup. Ct. Rep. 250, 253.)
In theory, the doctrine of classification seeks to remove the temptation to dishonesty in returning property for assessment; to shift the burden of taxes from property, as such, to productivity, or, in other words, to impose the burdens of government upon property in proportion to its use, its productivity, its utility,'its general setting in the economic organization of society, so that everyone will be called upon to contribute according to his ability to bear the burdens, or as nearly so as may be, and to relieve administrative officers from the apparent necessity of continuing the legal fiction of full valuation in the face of contrary facts. Whether in practice it will realize the hopes of its advocates, experience alone will demonstrate.
While it is possible to lay the burdens of taxation so unevenly as to deprive some taxpayers of the equal protection of the
Later, in Michigan Central R. Co. v. Powers, 201 U. S. 245, 293, 50 L. Ed. 744, 26 Sup. Ct. Rep. 459, 462, the court quoted with approval from the decision of the trial court in the same case the following: “There can at this time be no question, after the frequent and uniform expressions of the federal supreme court, that it was not designed by the Fourteenth Amendment to the Constitution to prevent a state from changing its system of taxation in all proper and reasonable ways, nor to compel the states to adopt an ironclad rule of equality to prevent the classification of property for purposes of taxation, or the imposition of different rates upon different classes. It is enough that there is no discrimination in favor of one as against another of the same class, and the method for the assessment and collection of the tax is not inconsistent with natural justice.”
Finally, in 1918, the court again reiterated the principle in the following terms: “That the state is not, because of the Fourteenth Amendment, required to tax all property alike, and may classify the subjects selected for taxation, is too well established to require citation of the many cases in this court which have so held. The classification may not be arbitrary and must rest upon real differences — subject to these qualifications the state has a wide discretion.” (Northwestern Life Ins. Co. v. Wisconsin, 247 U. S. 132, 139, 62 L. Ed. 1025, 38 Sup. Ct. Rep. 444, 446.)
From the very nature of the subject, there cannot be anything more than general rules for governing classification. Every state must adapt its laws to its own peculiar circumstances and
It is not essential to a valid classification that it depends upon
In the Act under consideration, class 1 includes the net proceeds of mines; class 2, the property generally exempt from execution, with other property of the same general character; class 3, livestock, agricultural products and merchandise; class 4, lands1 and improvements, machinery, fixtures and supplies; class 5, moneys and credits; class 6, shares of stock in banking corporations ; and class 7, all other property.
The fact that the mining industry is apparently favored by the provisions of section 3, Article XII, of the Constitution, would seem to furnish justification for the. imposition of taxes upon the higher percentage of the value of the net proceeds of mines. With reference to the other classes, it is sufficient to say that the difference in the nature and character of the property, its productivity or want of it, its utility, the difficulty of reaching some of it under the old system, the fact that the enforcement of our former tax laws operated’ as a practical confiscation of the entire income from some species ■ of property, as illustrated in the case of Cruse v. Fischl, 55 Mont. 258, 175 Pac. 878—these and other reasons equally cogent must have influenced the legislature in making the classification indicated above.
The validity of this statute does not depend upon an affirmative
Primarily, the question of the reasonableness of the classification ivas for the legislature to determine, or in other words, the classification is presumed to be reasonable. (Quong Wing v.
In conclusion we may say that, from the similarity of the language employed, it is reasonably certain that sections 1 and 11 of Article XII of our Constitution were borrowed from other states. As no other state Constitution contains both sections, it follows that section 1 was taken from a Constitution which did not contain provisions similar to those in section 11, and likewise that section 11 was borrowed from a Constitution which did not contain a section similar to our section 1. The two provisions are not altogether harmonious, and the construction of them intended by the framers, is not very clear. If we have correctly interpreted their meaning, the validity of House Bill No- 30 is placed beyond the range of controversy. In reaching our conclusion, however, it is not necessary for us to say that we are entirely free from doubt. As said by this court in State ex rel. Campbell v. Stewart, 54 Mont. 504, Ann. Cas. 1918D, 1101, 171 Pac. 755: “In the case of a statute assailed as unconstitutional,
It is ordered that an injunction, mandatory and prohibitory in form, issue herein forthwith, first, commanding >■the defendant treasurer to accept the tender made by plaintiff, and, second, restraining and enjoining defendant from seizing or selling
Concurrence Opinion
I am able to concur in much of the learned discussion of Mr. Justice Holloway in expressing the views of the majority of the court, particularly that “Article XII of our Constitution does not assume to create or define a system of assessment or taxation”; and that it is not a grant but a limitation of power to be exercised by the several departments of the state government — for the latter presupposes inherent power. To that I will add the authority to classify the different subjects of taxation, for in my opinion the power to tax, and the power to classify were “twinned” at the birth of parliamentary government. I am, however, firmly and unalterably of opinion that sections 1 and 11 of that Article are logically compatible, and that the words therein commanding the legislative assembly to “levy a uniform rate of assessment and taxation,” to “prescribe such regulations as shall secure a just valuation for taxation of all property,” and to fix rates of taxation that “shall be uniform upon the same class of subjects,” are of potent and living force; otherwise the provisions of a Constitution circumscribing delegated authority would be a jumble of meaningless words and mere empty fulminations.
In my opinion, with due deference to the learning and maturity of judgment of my distinguished colleagues, the Act in question, in its attempt to impose taxes on percentages of value ranging from seven per cent on money and credits to 100 per cent on other property, defies the letter, scorns the spirit, and seeks to override the equality clauses of the Constitution and the design of its authors to insure the adoption of some system of uniformity and impartiality making for the just apportionment of the burdens of taxation.