LOCKWOOD v. COMMISSIONER OF REVENUE
Calendar No. 48,442
Supreme Court of Michigan
October 22, 1959
357 Mich. 517
Statute, amending the use tax act and providing for the levy and collection of a 1% tax upon use of tangible personal property to be collected by the seller in addition to a 3% sales tax, is construed as exceeding the 3% limitation upon sales taxes set forth in the present sales tax diversion amendment to the Constitution (
2. EVIDENCE-JUDICIAL NOTICE.
The Supreme Court takes judicial notice of what every citizen of the State knows from his daily life.
3. CONSTITUTIONAL LAW-CONSTRUCTION OF SALES TAX DIVERSION AMENDMENT.
The presently effective sales tax diversion amendment to the Constitution is construed to accomplish its manifest objective and intent to limit the rate of taxation on the retail sale of tangible personal property (
4. SAME-CONSTRUCTION BY COURTS.
Courts must construe provisions of the Constitution to arrive at that meaning which accomplishes the manifest objective intended by the people, as determined from judicial notice taken of common experience in daily life.
REFERENCES FOR POINTS IN HEADNOTES
[1, 3] 47 Am Jur, Sales and Use Taxes §§ 14, 54.
Constitutionality, construction, and application of general use tax or other compensating tax designed to complement state sales tax. 129 ALR 222, 153 ALR 609.
[2] 20 Am Jur, Evidence § 18.
[4] 11 Am Jur, Constitutional Law § 61.
[5] 11 Am Jur, Constitutional Law § 57.
[7] 11 Am Jur, Constitutional Law § 129.
[8] 47 Am Jur, Sales and Use Taxes § 15.
[10] 14 Am Jur, Costs § 37.
A constitutional limitation must be construed to effectuate, not to abolish, the protection sought by it to be afforded.
6. SAME-CONSTRUCTION.
The people have a right to have the limitations in a State Constitution respected and given the fair and legitimate force which its terms require.
7. SAME-PRESUMPTIONS-STATUTES.
The presumption of constitutionality accorded to acts of the legislature cannot prevail, where the statute is prohibited by the express language of the Constitution or by necessary implication.
8. TAXATION-USE TAXES-SALES TAXES-CONSTITUTIONAL LAW.
Provisions of act, amending the use tax act, whereby an additional 1% specific tax is levied upon transactions occurring within this State, that is measured by the same price paid for the article as the 3% sales tax, and is paid at the same time, and whereby the tax burden of the consumer of tangible personal property is intended to be increased held, unconstitutional as violative of provision of Constitution limiting sales tax to 3% (
9. COURTS-CONSTRUCTION OF OPINION.
The language of a court‘s opinion is to be read, and interpreted, in the light of the facts the court faced when it employed the language in question.
10. COSTS-PUBLIC QUESTION-USE TAX.
No costs are allowed in mandamus proceeding to declare act amending the use tax act void, a public question being involved (
DETHMERS, C.J., and CARR and KELLY, JJ., dissenting.
Original mandamus by Charles C. Lockwood and Charles P. Lockwood seeking to restrain Louis M. Nims, State Commissioner of Revenue, and Sanford Brown, State Treasurer, from collecting tax and praying that PA 1959, No 263, amending the use tax act be declared unconstitutional and void. Attorney General intervenes as party plaintiff. Submitted October 5, 1959. (Calendar No. 48,442.) Writ granted October 22, 1959.
Paul L. Adams, Attorney General, Joseph B. Bilitzke, Deputy Attorney General, Samuel J. Torina, Solicitor General, and Leon S. Cohan, Assistant Attorney General, for intervening Attorney General.
Stanton S. Faville, Chief Assistant Attorney General, T. Carl Holbrook and William D. Dexter, Assistants Attorney General, for defendants by direction of the Attorney General.
CARR, J. (dissenting). The legislature of the State at its current session undertook to increase revenues deemed necessary to defray governmental expenses. To accomplish that end PA 1959, No 263, was enacted as an amendment to the use tax act of 1937.* Said amendment followed in terminology the language of the statute as originally adopted. By section 3 thereof provision was made for an increase of the use tax to 4%, subject to the further provision that if the property used, stored or consumed, had been acquired in a transaction on which the 3% sales tax† had been paid then the use tax should be 1% of the price of the property involved. In practical effect the exemption contained in the 1937 use tax act applicable to instances in which the sales tax had been paid to the State was continued to the extent of such payment.
At the general November election in 1946 an amendment to the Constitution was adopted adding thereto
“On and after July 1, 1955, there shall be returned to local governmental units by the method hereinafter set forth, 1/2 cent of a State sales tax levy on each dollar of sales of tangible pеrsonal property on the 1946 statutory base (not rate). The State disbursing authority shall remit to counties as a whole on a population basis and payment shall be made to the county treasurer who shall remit to the respective cities, townships and villages within the county on a per capita basis. Population computation shall be based on the last and each succeeding State-wide Federal census for purposes of division among counties and upon the same basis or upon any special Federal county-wide census, whichever is later, for intra-county division purposes: Provided, That there shall be excluded from such computation 50% of the total number of persons who are wards, patients and/or convicts committed to and/or domiciled in any city institution located outside the boundaries of said city or committed to or domiciled in any county, State or federal tax supported institution, provided such persons were included in said Federal census. All remittances provided shall be made on a quarterly basis.
“On and after July 1, 1955, there shall be set aside for the school districts 2 cents of a State sales tax levy on each dollar of sales of tangible personal property on the 1946 statutory base (not rate), to be allocated among said school districts by law. Such taxes so collected shall be deposited in a special school aid fund and be expendable only by legislative appropriations for aid to the school districts and school employees retirement purposes as shall be provided by law. Said school aid fund shall be separate and distinct from the State general fund.
“Prior to any division or allocation of the sales tax, the cost of collection as determined by the de-
partment of revenue shall be deducted from total collections and credited to the general fund of the State.
“The legislature shall by law appropriate from the school aid fund for such public school employees’ retirement system as shall from time to time be in effect under the laws of this State an amount which shall not be less than 5% nor more than 7-1/2% of the salaries of school district employees participating in the respective retirement systems: Provided, That such percentages shall apply only to that portion of salary as may be provided by law: Provided, That at no time shall the legislature levy a sales tax of more than 3%.
“The provisions of section 23 of article 10 as constituted prior to the effective date of this amendment shall continue in force and effect until July 1, 1955, and all sums collected and payable thereunder shall be paid.”
Plaintiffs in the instant mandamus proceeding instituted said action by petition for the issuance of a writ restraining the defendant State officers from collecting the added use tax imposed by the amendment of 1959, claiming that the said act is unconstitutional in that it undertakes to provide for an increase in the sales tax and as such is within the inhibition of the Constitutional provision above quoted limiting the amount of the sales tax to 3%. The attorney general of the State has intervened in the case as a party plaintiff, asking that the relief sought be granted and that the Court find that all provisions of the amendment of 1959 relating to the 1% increase in the use tax be held unconstitutional. On behalf of defendants answer has been filed to plaintiffs’ petition, denying the right to the relief thereby sought and asserting that the State legislature has not exceeded its powers in the adoption of PA 1959, No 263. Briefs have been filed
The attack on the statute is directed primarily against the provisions of section 3, which reads as follows:
“There is hereby levied upon and there shall be collected from every person in this State a specific tax for the privilege of using, storing or consuming tangible personal property in this State, which tax shall be equal to 4% of the price of such property, except that the tax shall equal only 1% of the price of such property when acquired in a transaction on which a tax is payable under the provisions of Act No. 167 of the Public Acts of 1933, as amended, being sections
205.51 to205.78 of the Compiled Laws of 1948, and to such tax there shall be added penalties and interest where applicable as hereinafter provided. For the purpose of the proрer administration of this act and to prevent the evasion of the tax hereby levied, it shall be presumed that tangible personal property purchased by any person for delivery in this State is purchased for storage, use or other consumption in this State.“The tax imposed by this section for the privilege of using, storing or consuming a vehicle shall be collected prior to the transfer of any vehicle title, except transfers to a licensed dealer for purposes of resale, that arises by reason of a transaction made by a person who does not transfer vehicles in the ordinary course of his business done in this State. Notwithstanding any limitation contained in section 2 of this act, the price of any vehicle subject to taxation hereunder shall be measured by the value in money thereof as fixed pursuant to rules and regulations promulgated by the department: Provided, That no value in money shall be established when the transaction is made by reason of a bona fide gift including transfer as a gift to a beneficiary in the administration of an estate or when the trans-
action is a sale by a public official in the administration or enforcement of law.
“The department is hereby authorized to utilize the services, information or records of any other department or agency of the State government in the performance of its duties hereunder, and other departments or agencies of the State government are required to furnish such services, information or records upon the request of the department.”
The question at issue is whether the section above quoted does in fact, as plaintiffs assert, undertake to provide for an increase in the sales tax, or, on the contrary, as counsel for defendants insist, is it a proper exercise of the legislative authority to levy a tax on the use, storage or consumption in this State of tangible personal property. In determining the legislative intent we must look primarily to the language employed. As before noted, in specifying the nature of the excise tax to be levied the language of the enactment of 1937 was followed. In specific terms the burden of the tax is on the privilege of “using, storing or consuming” tangible pеrsonal property acquired for the purpose indicated. No claim is made that PA 1937, No 94 is invalid, or that there is any uncertainty as to the nature of the tax thereby imposed, or that the construction placed thereon by this Court in Banner Laundering Co. v. State Board of Tax Administration, 297 Mich. 419, in which the validity of the enactment was sustained, was not correct.
On behalf of plaintiffs it is contended that the statement by the legislature as to the nature of the tax is not of material significance. In view of the fact that the question before us is primarily one of statutory construction we cannot agree that the intention of the legislature, clearly expressed by the language used, can be ignored. The correct rule on this subject, which should be deemed ap-
“While the mere declaration contained in a statute that it shall be regarded as a tax of a particular character does not make it such if it is apparent that it cannot be so designated consistently with the meaning and effect of the act, nevertheless the declaration of the lawmaking power is entitled to much weight, and in this statute the intention is expressly declared to impose a special excise tax with respect to the carrying on or doing business by such corporation, joint stock company or association, or insurance company. It is therefore apparent, giving all the words of the statute effect, that the tax is imposed not upon the franchises of the corporation irrespective of their use in business, nor upon the property of the corporation, but upon the doing of corporate or insurance business and with respect to the carrying on thereof.”
It has been repeatedly recognized by this Court and by other courts as well that a legislative enactment is presumed to be constitutional. It cannot be held otherwise unless it clearly appears that it violates some provision of the Constitution of the State, or is in conflict with Federal law. Such rule has been emphasized in tax cases. In Thoman v. City of Lansing, 315 Mich. 566, 576, it was said:
“‘The presumption of constitutionality following taxing statutes is stronger than applies to laws generally and only where a taxing system clearly and palpably violates the fundamental law will it be held invalid.’ Michigan Central R. Co. v. Powers, 201 U.S. 245, 267 (1906), citing numerous decisions of the United States supreme court.”
“Courts are bound, whenever possible, so to construe statutes as to give them validity and a reasonable construction (Van Fleet v. Van Fleet, 49 Mich. 610); courts should lean toward that construction which will give the statute force and validity (Thomas Canning Co. v. Southern Pacific Co., 219 Mich. 388); the validity of a statute must be sustained unless it is prohibited by the express language of the Constitution or by necessary implication (Child Welfare Society of Flint v. Kennedy School District, 220 Mich. 290); and it is our duty to adopt such a construction, if admissible, which will uphold validity rather than destroy a legislative enactment (People v. Lockhart, 242 Mich. 491; In re Harrand, 254 Mich. 584). Since 1844 (Green v. Graves, 1 Doug [Mich] 351), it has been a frequently repeated rule in construing statutes in this State that a statute should not be declared unconstitutional unless the conflict between the Constitution and the statute is palpable and free from reasonable doubt.”
Of like import are: In re Watson, 293 Mich. 263, 275; 1426 Woodward Avenue Corp. v. Wolff, 312 Mich. 352, 370; Stadle v. Township of Battle Creek, 346 Mich. 64, 69. The rule is equally well established that the burden rests on one challenging the validity of a legislative enactment to establish objections thereto on constitutional grounds. Newark Fire Insurance Co. v. State Board of Tax Appeals, 307 U.S. 313, 324 (1939).
Any assumption that a sales tax and a use tax are without substantial differences is unfounded. They are alike in that each is an excise tax levied on a privilege. However, those privileges are not
The language of the use tax act of 1937 definitely indicated the nature of the said tax as an excise or privilege tax imposed on the privilege of using, storing or consuming “tangible personal property,” which one has caused to become located in this State, and which is not within any of the exemptions specified in the act. It has been so construed by this Court. Western Electric Co. v. Department of Revenue, 312 Mich. 582; Kress v. Department of Revenue, 322 Mich. 590. The latter case expressly
This consideration of the excise taxes in question as being complementary, each to the other, carries with it the recognition of the fact that they are not identical. As a practical proposition they are assessed on different privileges, and the legal incidence of the tax falls in one case on the retailer and in the other on the user, storer or consumer. The fact that the seller of the goods designed for use, storage or consumption in Michigan is required by the statute to collect on behalf of the State the amount due from the purchaser does not alter the situation. The use tax is not imposed on such seller, but, rather, on the party exercising the privilege of use, storage or consumption, as the case may be. One may be charged with the duty оf collecting a tax on behalf of government although the ultimate burden of such tax does not rest on him. In Colorado National Bank of Denver v. Bedford, 310 U.S. 41 (1940)
“The person liable for the tax, primarily, cannot always be said to be the real taxpayer. The taxpayer is the person ultimately liable for the tax itself. The funds which were received by the State came from the assets of the user, not from those of the Federal instrumentality, the bank. The Colorado supreme court holds the user is the taxpayer. The determination of the State court as to the incidence of the tax has great weight with us and, when it follows logically the language of the act, as here, is controlling. As the user directly furnishes the funds for the tax, not as an ultimate consumer with a transferred burden but by section 12 of the act as the responsible obligor, we conclude the tax is upon him, not upon the bank. The Constitution or laws of the United States do not forbid such a tax.
“The tax being a permissible tax on customers of the bank, it is settled by our prior decisions that the statutory provisions requiring collection and remission of the taxes do not impose an unconstitutional burden on a Federal instrumentality. Especially is this true since the bank under the Colorado act is allowed 3% of the tax for the financial burden put upon it by the obligation to collect.”
As declared in Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363 (1941):
“‘The validity of such a tax (use tax), so far as the purchaser is concerned, has been withdrawn from the arena of debate.‘”
It was also pointed out, quoting from a prior decision, that the use tax is assessed on the privilege of use after commerce is at an end.
The use tax act of Michigan as adopted by the legislature in 1937 followed the general form of such statutes that had been previously adopted in other States. Among such was the Washington statute which is of particular interest in view of the discussion in the briefs of counsel in the instant case with reference to the nature of the sales and use taxes and their relationship. The State of Washington prior to the adoption of the use tax act by its legislature had imposed a sales tax in the sum of 2% on retail sales of tangible personal property. The use tax act contained a specific provision that:
“If any article of tangible personal property has already been subjected to a tax by this or any other State in respect to its sale or use in an amount less than the tax imposed by this title, the provisions of this title shall apply, but at a rate measured by the difference only between the rate herein fixed and the rate by which the previous tax upon the sale or use was computed.”
The Washington statute was before the supreme court of the United States on appeal in Henneford v. Silas Mason Co., 300 U.S. 577 (1937), and was sustained. Speaking through Justice Cardozo attention was called to the fact that the exemption under the use tax was not in all cases complete because of payment under a sales tax in Washington or elsewhere, or a use tax. Commenting on the statute, Justice Cardozo concluded that
“The plan embodied in these provisions is neither hidden nor uncertain. A use tax is never payable where the user has acquired property by retail purchase in the State of Washington, except in the rare instances in which retail purchases in Washington are not subjected to a sales tax. On the other hand, a use tax is always payable where the user has acquired property by retail purchase in or from another State, unless he has paid a sales or use tax elsewhere before bringing it to Washington. The tax presupposes everywhere a retail purchase by the user before the time of use. If he has manufactured the chattel for himself, or has received it from the manufacturer as a legacy or gift, he is exempt from the use tax, whether title was acquired in Washington or elsewhere. The practical effect of a system thus conditioned is readily perceived. One of its effects must be that retail sellers in Washington will be helped to compete upon terms of equality with retail dealers in other States who are exempt from a sales tax or any corresponding burden. Another effect, or at least another tendency, must be to avoid the likelihood of a drain upon the revenues of the State, buyers being no longer tempted to place their orders in other States in the effort to escape payment of the tax on local sales.”
In the case at bar the charge is made on behalf of plaintiffs that the legislature, in the enactment of the amendment here in question in terms imposing a use tax, resorted to a “subterfuge.” Such claim is obviously based on the theory that the tax imposed by the amendment is actually a sales tax, an assumption with which we cannot agree. The language of the statute does not warrant such conclusion, and the fact that the tax is imposed on the one using, storing or consuming the goods, rather than on the retailer for the privilege of sell-
It must be borne in mind also that we are not dealing here with any attempt to raise funds for an unauthorized purpose under the guise of a legitimate exercise of the taxing power. Decisions involving situations of such character have no bearing. The legislature of this State unquestionably is endowed with authority to levy a use tax. It has exercised that authority. Where is there any element of a subterfuge in the proper meaning of that term? In view of the claim made, it may be noted that in Henneford v. Silas Mason Co., supra, a like argument was advanced in the attack made on the use tax of the State of Washington. With reference thereto Justice Cardozo said (pp 587, 588):
“Finally, there is argument that the tax now in question, though in form upon the use, was in fact upon the foreign sale, and not upon the use at all, the form being a subterfuge. The supposed basis for that argument is a reading of the statute whereby the use shall not be taxable if the chattel was manufactured by the user or received as a legacy or acquired in any way except through the medium of purchase, and a retail one at that. But the fact that the legislature has chosen to lay a tax upon the use of chattels that have been bought does not make the tax upon the use a tax upon the sale. One could argue with as much reason that there would be a tax upon the sale if a property tax were limited to chattels so acquired. A legislature has a wide range of choice in classifying and limiting the subjects of taxation. Bell‘s Gap R. Co. v. Pennsylvania, 134 U.S. 232, 237 (1890); Ohio Oil Co.
v. Conway, 281 U.S. 146, 159 (1930). The choice is as broad where the tax is laid upon one or a few of the attributes of ownership as when laid upon them all. Flint v. Stone Tracy Co., 220 U.S. 107, 158, 159 (1911). True, collections might be larger if the use were not dependent upon a prior purchase by the user. On the other hand, economy in administration or a fairer distribution of social benefits and burdens may have been promoted when the lines were drawn as they were. Such questions of fiscal policy will not be answered by a court. The legislature might make the tax base as broad or as narrow as it pleased.”
The language above quoted may well be applied to the claim of plaintiffs in the instant case in characterizing the legislative action in the manner indicated. If resorting to the use tax act as a medium for the raising of necessary funds for State purposes was actually a subterfuge because of the fact that an increase in the sales tax was inhibited by the Constitution, it is apparent that a like charge might be made with reference to the enactment of the use tax act of 1937, which, as counsel suggests, was prompted, at least in part, by the inability of the State to tax retail sales of personal property made elsewhere, but intended for use and enjoyment in Michigan, due to restrictions imposed by the Federal Constitution. The obvious answer is that accomplishing a desired purpose in a certain authorized manner is not open to criticism because of the fact that a different method might have been adopted is permissible. So far as the instant case is concerned the legislature is clothed with authority to provide for raising revenue by a use tax. Its action in so doing is not subject to attack on constitutional grounds.
“A sales tax and a use tax in many instances may bring about the same result. But they are different in conception, are assessments upon different transactions, and in the interlacings of the two legislative authorities within our federation may have to justify themselves on different constitutional grounds. A sales tax is a tax on the freedom of purchase-a freedom which wartime restrictions serve to emphasize. A use tax is a tax on the enjoyment of that which was purchased. In view of the differences in the basis of these 2 taxes and the differences in the relation of the taxing State to them, a tax on an interstate sale like the one before us and unlike the tax on the enjoyment of the goods sold, involves an assumption of power by a State which the commerce clause was meant to end.”
The statement that the sales tax and the use tax are complementary may not be taken to mean that one may not be enacted without the other, or, more specifically, that a use tax cannot be adopted by a legislature of a State other than for the purpose of complementing a prior enacted sales tax. Counsel make no specific claim in this respect nor do they cite authorities indicating any such situation. As above noted, the Washington use tax act involved in the Henneford Case granted an exemption to the extent that a sales tax had been paid in that State on the sale of the property involved in the use, or
No claim is made that any provision of our Constitution restricts the right of the legislature to levy a use tax. The fact that, as a matter of policy, the use and sales taxes imposed in the State have heretofore been kept on a like basis as to amount does not necessitate, as a legal proposition, that such policy be continued. If by force of circumstances a departure therefrom has been found necessary or expedient what provision of our Constitution is violated thereby? The rule seems to be well-settled by authority that 2 or more excise taxes may be imposed “where the privileges or activities taxed are clearly separable and distinct.” 51 Am Jur, Taxation, § 293, p 346. Harder‘s Fire Proof Storage and Van Co. v. Chicago, 235 Ill. 58 (1908); Corn v. Fort, 170 Tenn. 377 (1936).
On behalf of plaintiffs it is claimed that the sales tax and use tax, in operation, are merged and collected as one. If such were the actual situation the constitutionality of the amendatory act of 1959 in question here would not be affected. We are concerned with the measure as enacted by the legislature, rather than with the administrative procedure followed in the collection of taxes and the handling of revenue. However, any merger of the collections made under the sales tax act and the use tax act would scarcely be permissible in view of the fact that the proceeds of the sales tax must be
As above pointed out, the arguments advanced against the constitutionality of PA 1959, No 263, are based on the claim that the tax thereby imposed is in violation of
The amendatory act of the legislature at issue in the present case does not violate the provision of
It will be noted that
It is incredible that the legislature in submitting to popular vote the proposed amendment at the general election in 1954, or that the people in voting
thereon, intended that the term “sales tax” as used in the clauses of said amendment providing for the apportionment of sales tax funds in the manner stated therein, and in inhibiting the legislature from increasing the sales tax above 3%, intended to use the term in question with different meanings. In other words, it must be assumed that the designation was used in the proviso imposing limitation on the power of the legislature with reference to the increase in the sales tax with exactly the same meaning as clearly intended in the so-called diversion clauses.
On the oral argument of the case the suggestion was made by counsel for plaintiffs that the people in adopting the Constitutional amendment at the general election in 1954 contemplated that the sales tax limitation as to amount should be applicable to an increase in the use tax over and above 3%. There is no logical basis for such claim. Certainly the language of said amendment does not indicate it, nor may it be assumed that voters in passing on the adoption of the amendment did not fully realize the natural import of the language contained therein. It is a matter of general knowledge that both the sales tax act and the use tax act were publicized, and information concerning each disseminated to the people of the State. We are not justified in assuming that the voters adopting the amendment in question did not understand fully the conditions giving rise to the enactment of the sales tax act of 1933 and of the use tax act of 1937, the necessity for such measures for the production of revenue for governmental purposes, the administration of each of said acts, аnd the litigation which led to the upholding thereof as proper exercise of legislative authority. There is nothing in the language of
It may be noted further in this connection that Michigan is said to be the only State, among the many levying a tax on the sale of tangible personal property at retail, that has imposed a limitation on the power of the legislature. It thus appears that the prohibition actually set forth in the amendment with reference to the sales tax is unique, a fact that itself suggests the impropriety of extending it beyond its specific terms. There is no tangible basis whatever for the claim that the people in adopting the Constitutional amendment intended to impose a limitation of the same kind on the power of the legislature to enact a use tax as expressly declared with reference to the sales tax. If any such meaning were to be given to the language of such limiting proviso, a like construction must also be accepted with reference to the meaning of the provisions of the amendment requiring the apportionment among school districts and municipalities of the greater part of the sales tax. If “sales tax” includes “use tax,” then the revenues derived from the latter tax would of necessity be subject to apportionment. As noted, however, such claim is not made in this case, nor has it been suggested that
This case was argued and submitted for determination Monday afternoon, October 5th. On October 9th the foregoing opinion was distributed to the members of the Court. Justice SMITH, under date of October 16th, served his opinion, indicating therein his reasons for concluding that the relief sought by plaintiffs should be granted. We are not in accord with such reasons or with the conclusion based thereon, and wish to comment briefly with reference to the issues presented.
The act in question was enacted by the legislature and was given immediate effect by more than the 2/3 vote required by the
The constitutionality of the act is challenged solely on the ground that it violates the provision of
Basically the question is: How shall the language of the constitutional inhibition against the sales tax be construed? No claim is made that the expression “sales tax” as used with reference to the apportionment of said tax was intended to apply to proceeds of the use tax as enacted in 1937 and amended by PA 1949, No 273. Neither is it claimed that the language of the amendment is ambiguous in any respect. On the contrary, it is clear and specific. The intent expressed thereby is not open to question. The rule of construction heretofore recognized by this Court and by courts of other States, as well as by the supreme court of the United States, was well expressed in Attorney General v. State Board of Assessors, 143 Mich 73, 76, 77. Involved there was the meaning of article 14, § 11, of the State Constitution of 1850, which section provided for a uniform rule of taxation and for the rate of taxation for property assessed by the State board of assessors. In connection with its conclusion that the Constitutional provisions must be interpreted in accordance with the language used therein, it was said:
“But 2 principles of construction need be referred to, both of which are well settled in this State. The first is that the legislature has power to adopt a statute, except as it is prohibited by the Constitution (Smith v. Lake Shore & M. S. R. Co., 114 Mich 460); and that a statute will not be declared in conflict with the Constitution while serious doubt exists as to such conflict. The other principle is that the first resort, in all cases where a constitutional provision is to be interpreted, is to the natural signification of the words employed in the order and grammatical arrangement in which the framers of the instrument have placed them; and, if thus regarded, the words used convey a definite meaning, which involves no absurdity and no contradiction between different parts of the same writing, then the meaning apparent on the face of the instrument is the one which alone we are at liberty to say was intended to be conveyed. In such cases there is no room for construction. Cooley, Constitutional Limitations (5th ed), pp 69, 70.”
The rule announced in the language quoted has been repeatedly recognized by this Court and is in accord with the language of the opinion of the Federal supreme court in McPherson v. Blacker, 146 U.S. 1, 13 S. Ct. 3, 36 L. Ed. 869 (1892). It was there recognized by the court, in sustaining an act of the legislature of Michigan, that the framers of the Federal Constitution had employed words in their natural sense, and (p 27) that where the language used is plain and clear “resort to collateral aids to interpretation is unnecessary and cannot be indulged in to narrow or enlarge the text.”
The general rule with reference to interpretation of constitutional provisions conforms with that of this State as above set forth, and is summarized in 16 CJS, Constitutional Law § 19, pp 81 to 84, as follows:
“If the language used is clear and unambiguous its meaning and intent are to be ascertained from the instrument itself by construing the language as it is written. Unless the context suggests otherwise, words are to be given their natural obvious, or ordinary meaning. To ascertain the meaning of a Constitution, therefore, the first resort in all cases is to the natural signification of the words used, in the order and grammatical arrangement in which the framers of the original instrument have placed them. If, thus regarded, the words used convey a definite meaning which involves no absurdity and no contradiction between parts of the same writing, then the meaning apparent on the face of the instrument is the one which alone courts are at liberty to say was intended to be conveyed. There is no occasion for construction where the language is plain and definite.”
In accord is 11 Am Jur, Constitutional Law § 65, p 682, where it was said:
“The courts are not at liberty to disregard the plain meaning of words of a Constitution in order to search for some other conjectured intent.”
In the case at bar we may not interpret the clear language of the constitutional inhibition against an increase in sales tax above 3% other than by giving thereto the clear and specific meaning of the language used. We may not enlarge the scope of the restriction by indulging in speculation or by conjecturing that the people in adopting the amendment intended something not expressed therein. Justice SMITH cites in his opinion Bacon v. Kent-Ottawa Metropolitan Water Authority, 354 Mich 159, to support the theory that a constitutional provision should not be subjected by the Court to a process of “erosion” or “attrition.” By likе process of reasoning a provision of the fundamental law of the State may not be enlarged beyond the scope of its unambiguous expression by reading into it a purpose,
Justice SMITH suggests in his opinion that the reason the legislature was not limited by the constitutional amendment in the imposition of a use tax was due to a lack of need therefor at the time of the adoption of the amendment. It must be assumed that the sponsors of the constitutional amendment, and the people in voting on it, were well aware of the existing use tax and of the authority of the legislature with reference thereto. However, if it be assumed that specific reference thereto was omitted for the reason suggested, by what process of reasoning can this Court now read into the amendment a provision intentionally omitted? The Court may not broaden the clause relating to the sales tax on the theory that a like provision might have been been made, or should have been made, with reference to the use tax. Whatever the reason, the fact is that the latter limitation was not imposed and this Court may not amend the action of the people by interpolating it.
In assailing the validity of the 1959 amendment to the use tax act emphasis is placed on the method of collection. It must be borne in mind, however, that such method is identical with that employed in the use tax act as first enacted. It is also the method employed in such acts adopted in other
The differences between a sales tax and a use tax are clearly apparent. The decisions of the United States supreme court involving such question leave no doubt in this respect. The first tax is based on the privilege of selling tangible personal property at retail. The use tax is imposed on the privilege coming into being subsequent to the sale, of using, storing or consuming the property. They are alike in being excise taxes but obviously the privileges taxed are separate and clearly defined. The modification of
An order should enter sustaining the constitutionality of PA 1959, No 263, and dismissing the petition. In view of the nature of the controversy, no costs are allowed.
DETHMERS, C. J., and KELLY, J., concurred with CARR, J.
SMITH, J. The principal question in this case is the meaning of the constitutional provision that “at no time shall the legislature levy a sales tax of more than 3%.”*
The sales tax came to us in the depth of a great depression in order to provide the means for fulfilling desperate governmental needs. It was a tax easily collected and possessing the power of producing vast revenue. No meal could be consumed without its payment, no shelter built, no clothing
The sales tax, powerful though it was, was vulnerable to avoidance. If the purchase, possibly of an automobile, were made not in Michigan but in a neighboring State the Michigan sales tax would not apply. Thus not only did the State of Michigan lose the tax moneys but a Michigan merchant lost the sale. It was a double-edged sword. To meet the threat of avoidance a tax was enacted. The article purchased in another State would be taxed in Michigan by virtue of its use here, and at the same rate as if sold in Michigan in the first place. This was the use tax. Through its enactment the flight across the border was blocked, the Michigan merchant protected in his competitive position, and the State tax funds safeguarded.
These, then, in broad outline, are the 2 taxes before the adoption of the constitutional limitation. We now seek the background and the meaning of the constitutional limitation. It did not come to us as an abstract concept. There was a reason for its passage and the reason is clear from a reading of the history of the times.
The sales tax, as we have seen, was a tax of great revenue potentialities to the State, easily collectible, constantly available, and, for the bulk of our people (with respect to their day-by-day purchases), impossible to evade or avoid. It soon became our leading
Nor is it helpful that we review decisions of other jurisdictions, passing upon various phases of sales and use taxation and their relation to interstate commerce. They are not in point. Thus in the case of Henneford v. Silas Mason Co., 300 U.S. 577, 57 S. Ct. 524, 81 L. Ed. 814 (1937), relied upon by defendants, the challenge to the application of the use tax of the State of Washington to a purchase made in a foreign State was made under the interstate commerce clause of the Federal Constitution. Likewise, in McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S. Ct. 1023, 88 L. Ed. 1304 (1944), the problem involved the taxability in Arkansas of purchases made outstate. But, again, we would not be sitting in this case upon such facts. The very essence of the case before us is that the purchase was not made in a foreign State but in our own. Moreover, none of the language relied upon by defendants involves a specific State constitutional prohibition against an increase in the sales tax. Thus there is actually no precedent whatever for what has been done. What we must rule upon is actually a 3-cornered problem, involving sales tax, use tax, and specific constitutional prohibition applicable to this type of taxation.
Has the recent “use” tax amendment, taken in conjunction with the existing sales tax, offended the constitutional prohibition? We will go at once to the core of the controversy, a retail purchase, over the counter, of tangible personal property in a Michigan community. The first matter to observe is that this purchase, made within this State, in this manner, still is subject to a 3% sales tax. Thus far nothing has been added. The constitutional limitation has been observed. But, according to the recent amendment, a “use” tax of 1% must also now be paid. Does its payment serve to protect the merchant from the competition of an outstate dealer in similar commodities? Obviously nоt. The seller is a Michigan merchant. Does its payment reimburse the State treasury for a tax payment otherwise payable but lost? Again, no. The sales tax has already been paid. This is something added. Added for what? What is being taxed, not already taxed under the sales tax?
We will look at the words of the law itself. It is contended that the amendment levies the 1% increase upon different persons, a different subject, and by a different measure than does the sales tax.
As to persons and subject, those arguing that the constitutional prohibition on increasing the sales tax does not apply, rely on the following language quoted from the 1% increase amendment:
“Sec. 3. There is hereby levied upon and there shall be collected from every person in this State a specific tax for the privilege of using, storing or consuming tangible personal property in this State, which tax shall be equal to 4% of the price of such property, except that the tax shall equal only 1% of the price of such property when acquired in a transaction on which a tax is payable under the provisions of Act No. 167 of the Public Acts of 1933, as amended, being sections 205.51 to 205.78 of the Compiled Laws
of 1948, and to such tax there shall be added penalties and interest where applicable as hereinafter provided.” “Sec. 6. Every person storing, using or consuming tangible personal property or services, the storage, use or consumption of which is subject to the tax imposed by this act, * * * shall, on or before the fifteenth day of each calendar month file with the department a return for the preceding calendar month in such form as may be prescribed by the department, showing the price of each such purchase of tangible personal property or services during such preceding month, and such other information as the department may deem necessary for the proper administration of this act. At the same time each such person shall pay to the department the amount of tax imposed by this act with respect to the purchases covered by such return. Returns shall be signed by the person liable for the tax, or his duly authorized agent if the return is prepared by any person other than the tаxpayer, said return shall also be signed by such person and show his address.”
“Sec. 7. Each consumer storing, using or otherwise consuming in this State tangible personal property or services purchased for or subsequently converted to such purpose or purposes shall be liable for the tax imposed by this act, and such liability shall not be extinguished until the tax has been paid to the department.”
This language standing alone purports to levy the increase upon every user of personal property in Michigan, and purports to require every user to make a monthly report on all purchases of personal property during the preceding calendar month showing every purchase and its price, and to accompany this report with his tax payment.
To give stated effect to this purpose would turn every citizen of Michigan into very nearly a full-
In fact, however, the amendment contemplates no such scheme. For by dint of other sections of the amendment and an exception in the sections we have quoted, inserted at the asterisk points, every requirement applicable to the user which is not likewise a requirement under the sales tax is eliminated.
In this regard, we adopt the terminology of the chief assistant attorney general, representing the defendants, in his oral argument before our Court. He termed one of the more important of those alternatives by which any use tax effect is eliminated from this amendment “an accommodation device.”
In section 6, in the sentence purporting to require users to keep records of every purchase and file a monthly report thereon, we find inserted where we have printed asterisks an accommodation device. Its language is, “when such tax was not paid to a seller.”
This would still imply that the matter was optional with the user, but we find still another accommodation device in section 5 requiring registration of every person engaged in selling tangible personal property, and stating further:
“Any person required to be registered under this act shall collect the tax imposed by this act from the consumer and in the following manner:”
And in sеction 16 we find criminal penalties provided for any seller who fails or refuses to collect the tax.
The combined effect of these accommodation devices is to convert the tax from one purportedly levied upon the user for his use of personal property, and to be reported and paid by him, into a tax to be collected by the seller at the point of sale and for the
In short, in everything but words which have deliberately been rendered meaningless, the accommodation devices inserted in this amendment, taken in conjunction with the still applicable sales tax provisions, result in exceeding the constitutional limitation of 3% by 1%.
One other distinction between the 1% increase amendment and the sales tax is cited to us. The measure is different. And, indeed, in section 5 we find:
“(2) If the tax rate of 1% is applicable, 1 cent on each dollar of the price of such property, except that where the price includes a fractional part of a dollar, the following rate of collection is applicable to such fractional part:”
“(I) Fifty cents to 99 cents, inclusive, 1 cent.”
As to the 1% increase, this would apparently mean that no tax was levied or could legally be collected on purchases below 50 cents. And in every supermarket each customer could thus save a quarter of his tax by insisting that every purchase below that figure was a separate transaction. This would indeed be a distinction, for the sales tax act allows the seller to collect and requires him to remit 3% of all gross sales. CLS 1956, §§ 205.52, 205.73 (Stat Ann 1950 Rev §§ 7.522, 7.544).
Here, too, however, we find the accommodation device which eliminates the distinction in the actual operation of the act. Section 9 provides:
“Any seller who remits to the department an amount equal to 4% or 1%, whichever is applicable, of his total taxable sale prices for the period, or the amount of tax actually collected from consumers, whichever is greater, plus penalties and interest, if
any, shall be presumed to have discharged his liability under this act.”
In these words any possible remaining differences in measure or in enforcement between the tax increase amendment and the sales tax are eliminated in favor of allowing the seller to collect from the purchaser a 4% tax on sales and discharge his obligation to the State by forwarding same. With these words present, it cannot be said that the language of the statute previously cited requires the seller to collect the 2 taxes separately and report them separately. Every practical motive demands that the seller collect the 2 taxes as 1. And we search the statute in vain to discover any enforceable prohibition against his doing so.
This plainly means that PA 1959, No 263, purporting to increase the use tax by 1%, actually results in an increase in the burden sought to be limited by the constitutional safeguard. The language of the act compels the conclusion that the use tax features of this act were inserted to accomplish what is prohibited by the Constitution, and that the practical effect of the act spelled out in the “accommodation devices” is to attempt to enact a constitutionally prohibited tax increase. We recognize, of course, that some of the language of these accommodation devices was drawn from the preceding use tax statute. It has, however, never been applied before in any manner possibly offensive to the constitutional prohibition we construe here.
At this point we take judicial notice of what every citizen of this State knows from his daily life. In actual operation of the tax, the accommodation devices are being given their intended effect. A tax of 4% upon retail sales is now being collected by retailers in every city and village and township of Michigan. The citizens of this State are under no illusion—the tax payable by them upon their retail
We have seen the situation giving rise to the constitutional enactment, and we have seen the words employed by the people. How are they to be interpreted? At this point the defendants find themselves in a dilemma. If they reply that the people were interested in self-protection, in limiting the threat, clearly visible, of taxеs on retail sales mounting as the income tax and other taxes have mounted, then they are bound to hold this tax bad for, in conjunction with the sales tax already imposed, it exceeds the 3% limitation. It is the first step in the familiar pattern of tax increases. But they may take the other horn of the dilemma. They may say that the words used, “sales tax,” means literally that, namely, the sales tax levied by the particular statute which the citizen was subject to, at the time of the constitutional limitation.
But this would freeze, for the life of the constitutional amendment, the sales tax in the precise form used at the time of the amendment, for after change, no matter how slight, it would be no longer the same statute the citizen knew at the time of the constitutional amendment. This literal construction of the words “sales tax” forces the inescapable conclusion that the people have done a futile thing: they have voted themselves a constitutional protection good only until the next session of the legislature. It is a fact readily ascertainable from the public records that the sales tax has been under constant change, both before and after the passage of the constitutional amendment.
There is no middle ground. Either we construe the constitutional limitation literally or we construe it to accomplish its manifest objective and intent. Which is to be our choice? Actually, there is no choice but one. The unanimous opinion of this
“Constitutions do not change with the varying tides of public opinion and desire; the will of the people therein recorded is the same inflexible law until changed by their own deliberative action; and it cannot be permissible to the courts that in order to aid evasions and circumventions, they shall subject these instruments, which in the main only undertake to lay down broad general principles, to a literal and technical construction, as if they were great public enemies standing in the way of progress, and the duty of every good citizen was to get around their provisions whenever practicable, and give them a damaging thrust whenever convenient. They must construe them as the people did in their adoption, if the means of arriving аt that construction are within their power.”
The thought is controlling and it is variously expressed. In People v. Barltz, 212 Mich 580, 585, we ruled that in construing the Constitution we would give it the meaning the people intended it should have. As the Barltz Case (relating to the equality of women in the exercise of certain constitutional rights) well demonstrates, the meaning taken to be intended by the people is to be found in their common experience, here of daily retail purchases, not of some unique or isolated incident.
Construing the constitutional words before us, then, in accordance with these principles, their meaning clearly emerges. In their use the people were protecting themselves from the threat of unrestrained taxation of a well-known kind, the more formidable because of the time and the occasion of its exaction. It was an economic threat they faced.
To say that we will construe the words “sales tax” literally, as described above, despite the manifest purpose of the constitutional limitation, is to open the door to the process of erosion so well described by Mr. Justice BLACK in Bacon v. Kent-Ottawa Metropolitan Water Authority, 354 Mich 159, 164, as “an attritional series of judicial decisions” rendering innocuous, and without the intervention of the electorate, a constitutional prohibition.
The literal construction of the words, without regard to their obvious purpose of protection, is to make the constitutional safeguard no more than a shabby hoax, a barrier of words, easily destroyed by other words. This canon of constitutional construc-
“If the people, in establishing their government, see fit to place restrictions upon the exercise of any privilege, it must be assumed that in their view the exercise of the privilege without the restriction would be inexpedient and dangerous, and would not, therefore, have been permitted. Every restriction imposed by the Constitution must be considered as something which was designed to guard the public welfare, and it would be a violation of duty to give it any less than the fair and legitimate force which its terms require. What the people have said they design, they have an absolute and paramount right to have respected.”
We come face to face, then, with what has been termed† “the most pressing rule for constitutional construction,” namely, that “the provisions for the protection of life, liberty and property are to be largely and liberally construed in favor of the citizen.”
The reasons behind this “most pressing rule” are clear if we will but bear in mind, with Marshall, that it is a Constitution we are construing, our basic charter of government. Here the people have erected their safeguards, not only against tyranny and brutality, but against the oppression of temporary majorities, and the rapacious demands of government itself. Here are found words that are beyond words, principles for which men have died and reckoned not the cost. It is a charter heavy with history, pregnant with the pride of a free people.
The presumption of constitutionality cloaking all the acts of our co-ordinate branch of government cannot prevail where the statute is “prohibited by the express language of the Constitution or by necessary implication.” Child Welfare Society of Flint v. Kennedy School District, 220 Mich 290. When we put these taxing acts, as we must, to the acid test of examination in terms of their “practical operation,”1 when we, again as is our duty, “look through forms and behind labels to substance,”2 what do we find?
Stripped of legalisms and the technical jargon of the tax experts, this is what finally emerges as a result of the legislative act: two taxes, one of 3 cents, and another of 1 cent, are now levied on each dollar of purchase. Both taxes are measured in the same manner, namely, the price paid for the article. Both are paid at the same time, the time of the
Thus our answer: So examined and tested, denying, as we must, “a literal and technical construction” of the Constitution (COOLEY, supra, in People, ex rel. Bay City, v. State Treasurer), we find “a taxing system clearly and palpably violat[ing] the fundamental law.” Thoman v. City of Lansing, 315 Mich 566.
A caveat should be observed: Aware, as we are, that the language of an oрinion is to be read, and interpreted, in the light of the facts the court faced when it employed the language in question, we emphasize that such construction applies with added emphasis when the subject matter is one affecting directly the validity of taxation and thus, indirectly, the financial stability of the State. Specifically, as we have observed heretofore, we are ruling upon the correlation of 3 distinct factors: a sales tax, a use tax and a constitutional limitation.
The attorney general prays for relief as follows:
“That this Court rule to be void and in contravention of
article 10, § 23 of the State Constitution (1908) those provisions of PA 1959, No 263 , which attempt to impose an additional tax of 1% upon transactions involving the collection of the sales tax levied under the provisions ofPA 1933, No 167 , as amended.”
The constitutional limitation before us compels the grant of such relief.
Mandamus will, accordingly, issue to the defendants, their servants, agents and employees commanding them to desist and refrain from levying, assessing or collecting the additional 1% tax imposed under the provisions of
No costs, a public question.
BLACK, EDWARDS, VOELKER, and KAVANAGH, JJ., concurred with SMITH, J.
BLACK, J. (concurring). Mr. Justice Holmes, writing at the time in another politically momentous “great case” (Northern Securities Co. v. United States, 193 US 197 [24 S Ct 436, 48 L ed 679]), has provided an appropriate introduction to this consequential showdown between an emergency-tagged statute and a restrictive provision of our Constitution. We refer to this writing of more than a half century ago (pp 400, 401):
“Great cases, like hard cases, make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend. What we have to do in this case is to find the meaning of some not very difficult words. We must try, I have tried, to do it with the same freedom of
natural and spontaneous interpretation that one would be sure of if the same question arose upon an indictment for a similar act which excited no public attention and was of importance only to a prisoner before the court.”
Some recent history is in order. Last winter, and at least until it became too late to submit to the people today‘s constitutional question, everything debated in this case of Lockwood was seemingly clear throughout the legislative halls of the Capitol. This is evident from the journals of House and Senate, to which reference shall presently be made. No one seems then to have doubted that the people were possessed of right to regard this constitutional tax limitation* as remaining in fully understood effect unless and until, acting at the polls, they should choose to repeal or modify its terms. The limitation prohibits legislation designed to increase the original rate of taxation upon and against what people know for what it really is: the ordinary transaction of purchase and sale, at retail, of tangible personal property. But Michigan‘s financial crisis grew to alarming proportions. Election day passed without legislative agreement upon any one of the suggested ways of obtaining relief—at the polls—from the limitation. The legislature thereupon decided to and did levy an additional tax of 1% on all such transactions by amendment of the use tax law, not the sales tax law. Its action is shown by
As in the Northern Securities Case, what we have now to do is to find the meaning and purpose of some not very difficult words; words appearing in the Constitution—not the statute before us. Once that meaning and purpose is ascertained, the remainder of our task presents but little difficulty. Our judgment then becomes the determination, not of a great case but of a case the decision of which should have been (and must yet be if it is to be decided as thе legislature would have it) referred to the people on general election day.
The real question in this case—the decisive question—is not the brilliantly argued yet irrelevant point that there was and is a known difference between sales and use taxes. Of course there is a difference. Legislation hitherto effective in our State makes the distinction clear, and so we tug not at that oar, which at best would turn us around and about in aimless circles. Rather, our task as primary guardians of the Constitution is to determine whether the legislature may—the quoted restriction considered and interpreted—impose the present sales tax levy and a use tax levy upon each transaction of retail sale without offending this simply written and pointed restriction on the power of taxation of such transactions.
Phrasing the question so—and it seems the only honest way of phrasing it unless we are to shut our eyes to and see not that which all of the people of our State have clearly perceived and understood—
Mr. Justice SMITH has considered and lucidly covered the strict legal phases of the case. But more remains to be said concerning the actual reason for our present disagreement. That we now undertake. We shall also here and there insert a few observations in defense of all constitutional limitations against erosion or defeat by judicial as well as legislative misconception or misunderstanding of settled rules of constitutional law.
Why the Divisive Opinions in this Case?
Prior to the people-initiated amendment of 1939,* judges and justices of Michigan courts of record were nominated and elected as partisan party candidates. The amendment purposefully changed all this, yet by continued inaction of the legislature, members of this Court—even though elected by the nonpartisan “separate judicial ballot“—are still nominated as partisans at partisan party conventions. Naturally, this situation has brought to our Court judicial officers the nomination or successive nominations of whom have been made by different political parties. Until corrected it continues to bring up a subject we would open and dwell upon before it is re-opened after the opinions in this case are handed down.
We divide in this case. Our veteran Brothers adhere to the ways of metaphysical, rather than understandable, interpretation of constitutional restriction upon the legislative power of taxation.
These words are not addressed to partisans, who will no doubt fulminate despite this message, but are addressed solely to the people, to those whose honest interest is that of appraising our divergent views and ascertaining the real reasons for the divergence.
Whatever the ensuing noisy clamor of politics and the forthcoming arguments of necessity grounded on Michigan‘s acknowledged financial emergency, we do not consider the one and cannot consider the other. Necessity is the “argument of tyrants, the creed of slaves.” Like the fabled judge of the old West, it knows no law. And an emergency can never create legislative power. It may, at best, call into exercise “a living power already enjoyed.” (Home Building & Loan Association v. Blaisdell, 290 US 398, 426 [54 S Ct 231, 78 L ed 413, 88 ALR 1481].) In this case no such power lives. It was slain by the Constitution.
Each provisiоn of a State Constitution is the direct word of the people of the State, not that of the scriveners thereof. It is the State‘s voice of democracy. So, when called upon as we now are to expound the meaning and effect thereof in the instance of a tax controversy, our single concern—our undeviating inquiry—is easily refined to and defined by simple questions. We proceed to ask some of them. What meaning and purpose did the people themselves have in mind when they considered and ratified the provision in question? What did the people, having ratified it, have a right to expect from it in the way of protection from further taxation? What meaning did the words “naturally convey to the popular mind“? What is the sense, of the words in question, “most obvious to the common understanding at the time of its adoption“? Of the diverse interpre-
As Mr. Justice SMITH has persuasively demonstrated, questions such as these speak clear answer in favor of supremacy of the Constitution over this 6-weeks-old act of 1959. Doubtless our Brothers would agree with us on that score, could they agree that the simple questions themselves are proper. But, in effect, say they (and here comes the real point of our total disagreement), “the questions are not right; our teaching, our legal philosophy, our settled convictions, lead us to examine the Constitution by other and more technical modes of test, just as we have done in the past, and we listen more to the voice of the legislature than to the voice of the people as we confront a case like this.” In opposition we in effect reply: “But our teaching, our legal philosophy, our settled convictions, lеad us to examine the Constitution by other precepts for we hear only the voice of the people in determining the construction and applicability of its terms.”
If this opinion does no more than to reveal fully and for all to see the actual ground and cause for today‘s division, it will have served its purpose. Through the quodlibets of Mr. Justice CARR the veteran members of this Court have explained their past and present philosophic and legal reasons for approaching decision of this case. The value of their presentation and ours will have to be appraised over the years by society as well as by the profession.
Mr. Justice Story:
“Constitutions are not designed for metaphysical or logical subtleties, for niceties of expression, for critical propriety, for elaborate shades of meaning, or for the exercise of philosophical acuteness or judicial research. They are instruments of a practical nature, founded on the common business of human life, adapted to common wants, designed for common use, and fitted for common understandings. The people make them, the people adopt them, the people must be supposed to read them, with the help of common sense, and cannot be presumed to admit in them any recondite meaning or any extraordinary gloss.” (1 Story, Constitution [5th ed], § 451, p 345.)
Mr. Justice COOLEY:
“Constitutions do not change with the varying tides of public opinion and desire; the will of the people therein recorded is the same inflexible law until changed by their own deliberative action; and it cannot be рermissible to the courts that in order to aid evasions and circumventions, they shall subject these instruments, which in the main only undertake to lay down broad general principles, to a literal and technical construction, as if they were great public enemies standing in the way of progress, and the
duty of every good citizen was to get around their provisions whenever practicable, and give them a damaging thrust whenever convenient. They must construe them as the people did in their adoption, if the means of arriving at that construction are within their power. In these cases we thought we could arrive at it from the public history of the times.” (People, ex rel. Bay City, v. State Treasurer, 23 Mich 499, 506.) “And in seeking for its real meaning [
Const 1850 ] we must take into consideration the times and circumstances under which the State Constitution was formed—the general spirit of the times and the prevailing sentiments among the people. Every Constitution has a history of its own which is likely to be more or less peculiar; and unless interpreted in the light of this history, is liable to be made to express purposes which were never within the minds of the people in agreeing to it. This the Court must keep in mind when called upon to interpret it; for their duty is to enforce the law which the people have made, and not some other law which the words of the Constitution may possibly be made to express.” (People v. Harding, 53 Mich 481, 485.)
Mr. Justice CAMPBELL (Mr. Justice COOLEY concurring):
“The cardinal rule of construction, concerning language, is to apply to it that meaning which it would naturally convey to the popular mind, in all cases where the propriety of such construction is not negatived by some settled rule of law. In all instruments which are submitted for confirmation to the people themselves, and which derive all their validity from a popular vote, such a construction is peculiarly necessary; for otherwise they would be defrauded of the right to frame their own government according to their own will.” (People v. Dean, 14 Mich 406, 417, 418.)
“A Constitution is made for the people and by the people. The interpretation that should be given it is that which reasonable minds, the great mass of the people themselves, would give it. For as the Constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark or abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that that was the sense designed to be conveyed.” (Cooley‘s Const Lim 81**).
United States supreme court (modern declarations):
“If we remember that it is a Constitution we are expounding,’ we cannot rightly prefer, of the possible meanings of its words, that which will defeat rather than effectuate the constitutional purpose.” (United States v. Classic, 313 US 299, 316 [61 S Ct 1031, 85 L ed 1368].)
“Ordinarily courts do not construe words used in the Constitution so as to give them a meaning more narrow than one which they had in the common parlance of the times in which the Constitution was written.” (United States v. South-Eastern Underwriters Asso., 322 US 533, 539 [64 S Ct 1162, 88 L ed 1440].)
General text-statements:
“The question in interpreting a Constitution is not so much how it was understood by its framers
as how it was understood by the people adopting it.” (11 Am Jur, Constitutional Law, § 84, p 707.) “Words or terms used in a Constitution, being dependent on ratification by the people voting upon it, must be understood in the sense most obvious to the common understanding at the time of its adoption, although a different rule might be applied in interpreting statutes and acts of the legislature. This gives rise to the universally recognized and incontrovertibly established rule of construction that it is presumed that words appearing in a Constitution have been used according to their plain, natural, and usual signification and import.” (11 Am Jur, Constitutional Law, § 65, pp 680, 681.)
We shall now proceed to demonstrate from our decided cases why some of our members undertake constitutional construction with the wrong rules. For illustration let us recall the sad history of judicial evisceration of another tax-limitational provision—the so-called 15-mill amendment.*
That amendment was, when it was adopted by the people, trustingly regarded as having limited to the constitutional rate of 1-1/2% the “total amount of taxes assessed against property in any one year.” Yet when the right of protection against “special” assessment was asserted under the amendment, our predecessors seized upon the technical distinction (just as they again do here between sales taxes and use taxes) between general taxes and special assessments (Graham v. City of Saginaw, 317 Mich 427). They then proceedеd to tell the people that by their amendment they had succeeded only in protecting themselves from higher general taxes; that the amendment did not include “special” assessments within its protective scope, and that the respective legislative bodies of the State remained free to levy,
Now it has always been clear to us that special assessments are “taxes” and that ordinary people by common understanding of their Constitution had an amendment which protected them from additional property taxation, no matter the brand name which any legislative act or judicial decision might stamp on the particular impost or levy against such property. (One‘s home can be lost just as quickly and finally for nonpayment of “special” assessments as for nonpayment of “general” taxes.) By the same token, and if the defendants are right in the case before us, an ordinary citizen can be denied the right to purchase groceries or, say, a motor car, should he refuse to pay this 1959 imposed tax on that which he would purchase at retail.
Here, then, is the old game of cat with mouse the defendants would have us play with the people when similar constitutional limitations are before us. If the Constitution restrict the amount of “taxes” levied against property, we are presumably to tell the com- plaining taxpayer—“Ah, yes, but these are special assessments.” If the Constitution restrict the amount of taxes levied on purchases and sales at retail, we are to say to the appealing taxpayer—“Sure, you are right, but these are use taxes” (and so on). Thus, by the doctrinaire notions of our Brothers, the people cannot prevail, no matter what they may write into their Constitution for the purpose of limiting the power of taxation, unless, possibly, they go about the task of writing and adopting a limitational provision in the fine print form—with at least as many words of an insurance policy. This is something Marshall tells us does not belong
What then is our essential difference of opinion in this case?
Our minority still stands, despite Bacon‘s recent about-face on construction of constitutional tax limitations, just as it did before. From the pre-Bacon record of the past, such limitations seem to have been looked upon by them “as great public enemies standing in the way of progress.” Indeed our Brothers still appear to regard it the “duty of every good citizen” to give such limitations “a damaging thrust whenever convenient.”*
Our majority, on the other hand, stands for a people‘s construction of such limitations, a construction which perforce is of greater breadth by the might of popularly understood intention at the time of adoption.
Our view stands for the people‘s understanding of tax limitations that are created by the people. The other view stands for the legislators’ and lawyers’ interpretation of a tax limitation created by the people. This is where we part.
And so our good Brothers would in effect say to the legislature: You may with our blessing levy any tax on the transaction of retail sales, in any amount, so long as you call it by some other name than a sales tax and are careful not to levy it by amendment of the sales tax law. Thus may you get around the Constitution. We say to the legislature, on the other hand: Your membership like our own should always inquire (before enacting or approving tax legislation scrutinized under a constitutional tax limitation) what the people by popular understanding
In these portentous days of October we are not just deciding this case of Lockwood. We are declaring again, in the same language and according to the identical convictions of 88 years ago, a great principle of constitutional law for the guidance of legislators, governors, judges and lawyers. The people‘s intent is supreme. When the constitutionality of legislation is challenged here the Constitution is our first line of inquiry. And we obtain the answer when we look to the laws and the usages, and to the popular knowledge thereof as of the time of adoption of the provision in question. Here the popular conceptiоn of retail sales taxation, theretofore created by law and painfully ingrained into the people‘s comprehension by the retail practices of the years leading to adoption of this amendment, must lead “all reasonable minds” to the inevitable conclusion that the legislature has erred in the present instance.
The Question of Legislative Motive
Defendants rely in their brief to great extent on the established rule that constitutionally questioned legislation comes into court armed with a conclusive presumption of “proper motive” on the part of the legislature. Here again there is no disagreement. We may and do look upon the legislature as consisting of 144 dedicated apostles of the people intent always on ascertaining and carrying out the people‘s will (in spite of that which appears in the legislative journals)*.
Sure, all members of the legislature are honorable men. But all that is quite irrelevant to the present problem. The legislature, good intent and all, has made a mistake. We may concede it was an honest one. Doubtless it was partly encouraged to enact the legislation in question by faith and reliance on past decisions of this Court in similar cases, an abrupt halt of which was called in Bacon. Such reasoning is fully consistent with that which defendants’ counsel themselves point out (by quotation from People v. Gibbs, 186 Mich 127, 135 [Ann Cas 1917B, 830]):
“Bad motives might inspire a law which appeared on its face and proved valid and beneficial, while a bad and invalid law might be, and sometimes is, passed with good intent and the best of motives.”
Upon these premises we may attribute to the legislature the loftiest motives and yet find that it should have pursued one or more of its earlier proposed resolutions to obtain from the people the desired relief; that it should not in lieu thereof have enacted a bill which, if given effect, would amount to a constructive fraud on the right of the people
We would pursue this point of good motive further. The legislature may have assumed that this Court would continue its inhospitable attitude toward constitutional limitations of tax rates, evidenced by its treatment of the 15-mill amendment during the past 15 years. The Court visibly and admittedly has looked with jaundiced eye on efforts of the people to restrict taxation by constitutional means. So this case is not one for suggestion of “bad motive” on the part of the legislature. Rather, it is one for recognition of that which has been the post-1933 policy of the judicial branch (until the halt was called in Bacon); for advising the legislature that the present Court turned in Bacon from the disproved doctrines Mr. Justice CARR has again written, and that a majority of this Court will, in the future, continue adherence to the rules of constitutional interpretation which this Court followed for more than 60 years, beginning in COOLEY‘S time. We seek not to change constitutional interpretation but only to return to the hallowed and time-tested doctrine of our great predecessors.
Conclusion
Even an appellate court judge, living as he must in a measure of social detachment, must on occasion get down to the earthy level where groceries and other necessaries of mortal sustenance are sold and bought at retail, for even judges must eat. Lined up with his fellow purchasers at the checkout station, Mr. Justice gets the same look—from the point
No member of this Court is unaware of the temporary yet dismaying consequences that are due to attend a determination that
If a judge could have his own way, if his personal predilections might lawfully be brought into play
This illusion that from our cloistered heights we are unable to perceive what every citizen knows from his daily experience, namely, that he now is paying—by purpose and administration of this enactment—a tax of 4% instead of 3% on the necessities of life, is still another example of that which Mr. Justice VOELKER has recently dubbed “judicial somnambulism.”
By the quoted constitutional proviso the people enjoined the legislature, firmly, this way:
You may proceed to levy sales taxes or sin taxes, use taxes or abuse taxes, privilege taxes or personal taxes, special assessments or general assessments, duties, imposts and excises. But you shall not levy, directly or indirectly, taxes on the transaction of retail sales at a rate or sum of rates greater than 3%.
The Supreme Court, too, advises and consents. We advise the legislature in this instance that it has transgressed and that we consent to the enactment of challenged legislation only when it passes muster under the Constitution.
We agree that the writ should issue.
VOELKER, J., concurred with BLACK, J.
Notes
We held in National Bank of Detroit v. Department of Revenue, 334 Mich 132, 138, that: “It is, therefore, clear that it was the intention of the legislature that the general sales tax is a tax whose economic burden falls chiefly on the consumer.” To precisely the same effect was our holding in C. F. Smith Co. v. Fitzgerald, 270 Mich 659, 677, wherein we said:
“The sales tax is a tax imposed upon consumption, a tax upon commodities sold, a tax which is usually and ordinarly paid not by the person who operates the business, but by the customer who purchases and pays for merchandise.”