115 S.E. 202 | S.C. | 1922
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *160 June 17, 1922. The opinion of the Court was delivered by Plaintiffs seek by action brought in the original jurisdiction of this Court to enjoin defendants, as members of the South Carolina Tax Commission, from enforcing the provisions of an Act entitled "An Act to raise revenue for the support of the State government by the levy and collection of a tax upon income," approved March 13, 1922. The complaint avers that the Santee Mills is a domestic corporation, owning manufacturing plants and doing business in this State; that the other plaintiffs are foreign corporations, owning and operating manufacturing plants in this State, but dependent in large measure upon business operations in other States, involving the carrying on of interstate commerce, for their corporate incomes; and that the said Act, which will be referred to herein as "the Act" or the "State Act," purporting to levy a tax upon their corporate incomes, is null and void, in that it contravenes various provisions of the State and Federal Constitutions. The answer of the defendants admits so much of the complaint as alleges that plaintiffs are subject to the payment of taxes under the provisions of said Act, but denies the legal conclusions of plaintiffs as to the invalidity of the law. The Attorney General of the State, appearing on behalf of the defendants, having raised no question as to the right of the plaintiffs jointly to maintain this proceeding for a writ of injunction, it will be assumed for the purpose of this decision that the issue made is properly before the Court.
The constitutional objections urged by plaintiffs involve two general propositions: First, that the Act is invalid as a whole, in that the General Assembly transcended the constitutional limitations upon its legislative powers (a) by attempting to give the force of Statute law to the Federal Income Tax Law and certain regulations of the United States government for its enforcement, in adopting said Federal law and regulations by a mere reference thereto in the Act, (b) by attempting to delegate the legislative powers of the State to the United States Congress and to Federal *162 officers, and (c) by attempting to delegate to the State Tax Commission legislative powers in applying the Act and in making rules and regulations thereunder. Second, that the application of said Act to such of the plaintiffs as are foreign corporations would result in the infringement of their constitutional rights, (1) by improperly burdening their interstate business, (2) by subjecting them to a discriminatory tax arbitrarily assessed, (3) and by denying to them due process and the equal protection of the laws. Certain objections which may not be fairly comprehended in the foregoing general propositions will not be adverted to specifically for the reason that in the view taken of the meaning of the Act, fairly interpreted, such objections are deemed hypercritical and groundless.
The Act is to be construed and interpreted in the light of certain fundamental principles of constitutional law and established rules of constitutional construction. Except in so far as it is limited by the State and Federal Constitutions, the taxing power of the State is general and absolute and extends to all persons, property and business within its jurisdiction or reach. 37 Cyc., 717. Within those limits the necessity, utility, and expediency of legislation are for the determination of the legislature alone. Every presumption must be indulged in favor of the constitutionality of an Act of the Legislature, and to justify a Court in pronouncing legislation unconstitutional, the case must be so clear as to be free from doubt and the conflict of the Statute with the Constitution must be irreconcilable. Ordinarily, to doubt the constitutionality of the law is to resolve the doubt in favor of its validity, or, as was stated by Mr. Justice Jones in the case of State v. Hammond,
"The Court should not declare a Statute unconstitutional unless the invalidity is manifest beyond a reasonable doubt."Pelzer v. Campbell,
It is true that the Act bears upon its face evidence of lack of careful workmanship and of cohesive construction. It is also unfortunately true that under the legislative methods of enacting laws prevailing in this and in most of the American States, the more important the legislation sought to be passed the more difficult it is generally to secure a result that is free from ambiguity and inconsistency. Such legislation in the final outcome is usually a mosaic or more or less incongruous elements contributed by many men of many minds. And so it has been said that the eyes of Courts are never limited to the mere letter of a law, but that they look behind the letter to determine its true purpose and effect." 6 R.C.L., page 81. Such considerations are properly borne in mind in subjecting this Act to the primary test of legislative intent. So subjected, we think the provisions of the Act against which plaintiffs' contentions are directed are fairly and legitimately susceptible of the following construction and interpretation: First, all persons, firms, partnerships, corporations, and trustees for persons or estates, liable to the payment of a Federal income tax, are required to pay to the State as income a sum equal to 33 1/3 per cent. of the amount required to be paid as income tax to the United States government. Second, for the purpose of graduating such tax, of determining the amount thereof, and of prescribing the method, means, and manner of its assessment and collection, the provisions of the Act of Congress of the United States approved November 23, 1921 (42 Stat., 227), relating to levy, assessment, and collection of income tax by the United States government, and Acts amendatory thereof, passed and approved prior to the approval of the State Act, together with the rules and regulations *164 of the Department of Internal Revenue promulgated by virtue of such Acts of Congress and which are not in conflict with the provisions of the State Act, are adopted and enacted as if set forth in so many words. Third, that the duties and powers of the Commissioner of Internal Revenue and the authority given to the Internal Revenue Department by said Federal Income Tax Act of November 23, 1921, and existing Acts amendatory thereof, are imposed and conferred upon the Tax Commission of this State in so far as applicable, and the State Tax Commission is authorized and empowered to make such rules and regulations "not inconsistent with law" for the enforcement of the powers and authority given under the terms of the Act as they may deem necessary. Fourth, that nonresident persons and firms and foreign corporations (construing together the several pertinent provisions of the Act) owning property within the State, or carrying on business within the State, from which a net income is derived, shall pay to the State the required tax on net income from property owned or from business operations within the State upon the same basis and subject to the same exemptions as resident taxpayers. The evident intent is to impose the State tax upon nonresident persons and foreign corporations to the extent that such nonresident and foreign corporations would be liable if their property within the State were owned, or the business done by them within the State were conducted, by residents or by domestic corporations. The liability of such nonresident persons and firms and foreign corporations is to be measured by and the tax computed upon, the separate or separable net income accruing from business done, from operations, and from other sources within the State, to be returned in the same manner and form as to such State income as is required by the government of the United States for the return of the aggregate incomes of such taxpayers under the Federal law. *165
The points raised under plaintiffs' first general proposition as to the invalidity of the Act will be considered in the order above stated.
It is contended that the enactment of the Federal Income Tax Law and the regulations for its enforcement by mere reference thereto in the State Act was in violation of Article 3, § 18, of the Constitution of South Carolina, requiring that no Bill or Joint Resolution shall have the force of law until it shall have been read three times and on three several days in each House, etc., and further providing that each branch of the General Assembly may provide by rules for a first and third reading of any Bill or Joint Resolution by its title only. Rule 39 of the Senate provides that the first and third reading of each Bill shall be by its title only, and Rule 47 of the House of Representatives provides that the second reading of a Bill shall be Section by Section and line by line and word by word. The contention is that the constitutional requirement and the rules of the two branches of the General Assembly in conformity thereto were not complied with, in that the Federal law rules and regulations referred to in the State Act were not incorporated ipsissimis verbis in the Act itself, and that, not having been so incorporated and read word by word, the Act was not properly enacted. While the dangers of such a method of legislation are not open to serious question, we are clearly of the opinion that the constitutional inhibition here invoked does not apply. The "reading" contemplated by Section 18, Article 3, of the Constitution, is the reading of the bill as drafted.
"In the reading of the Bill it seems to be sufficient to read the written document that is adopted by the two Houses; even though something else becomes law in consequence of its passage, and by reason of being referred to in it." Cooley'sConstitutional Limitations, page 200, citing Dew v.Cunningham,
See Baird v. State,
The general rule is that —
"The provisions of one Statute may be made applicable to another by reference to the former in the latter, in the absence of constitutional restriction." 36 Cyc., 969, and cases cited; 25 R.C.L., page 875.
In such cases this method is as effectual as though the whole Statute were re-enacted verbatim. Turney v. Wilton,
"To the extent that the General Assembly in any Act refers to the provisions of a repealed Statute and adopts them, the repealed Statute is re-enacted, and to that extent is as much the law as if its provisions were fully set out in the new Statute" — citing Houston T.C. Ry. Co. v. State
(Tex.Civ.App.); 39 S.W. 390; Chenango B. Co. v. Binghampton *167 B. Co., 3 Wall, 51;
General Statutes of South Carolina, 1882, § 2738, enacted the common law of England in so far as same was not altered by the said General Statutes nor inconsistent with the Constitution of the State, etc. In the absence of express constitutional inhibition, therefore, we see no reason why a Federal Statute and rules and regulations of the United States government having the force and effect of law cannot be made a part of the Statute law of this State by adequate reference thereto as fully and effectually as a pre-existing Statute of the State could be so adopted. The Federal Income Tax Law referred to in the State Act is as fully effective in the State of South Carolina for the purposes of the national government as if it had been re-enacted to tidem verbis by the General Assembly of South Carolina. Judicial notice is taken of the public Acts of Congress, and Federal Statutes need not be pleaded in the State Courts. 25 R.C.L., 955. The reference in the State Act to the Act of Congress and to the public rules and regulations adopted would seem to be sufficiently definite to enable the provisions proposed to be enacted to be ascertained with reasonable certainty. To the extent that the United States Income Tax Law and the rules and regulations promulgated for its enforcement are susceptible of definite determination for the purposes of enforcing liability to the Federal government, such law would seem to *168 be susceptible of definite determination in its application to the liability of taxpayers under the State law, which provides for the payment to the State of a sum equal to a fixed proportion of the Federal income tax. It cannot be concluded, therefore, that the State Act is thereby rendered so uncertain in its meaning, scope, and effect as to render it nugatory.
The next contention to be noticed is that the Act incorporated by reference laws made and to be made by Congress and regulations made and to be made thereunder by Federal officers, and that it thereby contravenes Section 1 of Article 3 of the State Constitution, and Section 4 of Article
The contention that duties and powers conferred by the Act upon the State Tax Commission amount to an unconstitutional delegation of legislative power is also untenable. The State Tax Commission has no power delegated to make any rules or regulations inconsistent with the law enacted or for any other purpose than to carry out the legislative will expressed in statutory form. It is elementary that, while the Legislature may not delegate its power to make laws, it may vest in administrative officers and bodies a large measure of discretionary authority, especially to make rules and regulations relating to the enforcement of the law. 12 C.J., 844-853; Port Royal Min.Co. v. Hagood,
The second general proposition advanced by plaintiffs involves broadly the contention that the enforcement of the Act will necessarily work discrimination and entail burdens that amount to an infringement of rights secured by various provisions of the State and Federal Constitutions. Where the question is whether a State taxing law contravenes constitutional rights "the decision must depend, not upon any mere question of form, construction, or definition, but upon the practical operation and effect of the tax imposed." Shaffer v. Carter,
For the reasons indicated, the temporary injunction is dissolved, the prayer for a permanent injunction denied, and the complaint dismissed.