46 Cal. 415 | Cal. | 1873
Lead Opinion
In these cases, the defendant, who is Tax Collector for the City and County of San Francisco, appeals from an order refusing to dissolve an injunction obtained by the plaintiffs, enjoining the defendant from the collection of certain State and county taxes, assessed to the plaintiffs for the current fiscal year. The validity of these assessments is assailed on the several grounds to be hereafter noticed; one of which involves the question of the legality of the entire assessment of taxes for State purposes for the current fiscal year. If this should be decided for the plaintiffs, it may be unnecessary to determine the other questions discussed by counsel; and it will, therefore, be first considered.
The Political Code, adopted at the last session of the Legislature, establishes a State Board of Equalization, whose powers and duties are minutely prescribed. As its title imports, the purpose for which the Board was established, was to equalize the, assessment of taxes in the several counties, so as to cause them to approximate as nearly as possible to the equality and uniformity enjoined by the Constitution. It had become apparent in this, as in many other of the States, that when the value of property for the purposes of taxation was to be ascertained and finally determined by the local Assessors, subject only to a limited control by the County Boards of Supervisors, the grossest inequality frequently existed in the valuations in different counties,
It was to remedy this great evil, that the State Board of Equalization was established; and on which is devolved the duty of supervising the assessments in the several counties, so as to approximate as nearly as possible to equality and uniformity in the imposition of the burden of taxation upon the property of the citizen in proportion to its value. The dominant idea of the Constitution on the subject of taxation is, first, that it “shall be equal and uniform throughout the State;” and second, that “all property in the State shall be taxed in proportion to its value, to be ascertained as directed by law; ” and, as a part of the system for producing equality and uniformity, it provides that “Assessors and Collectors of town, county, and State taxes, shall be elected by the qualified electors of the district, county, or town in which the property taxed for State, county, or town purposes is situated.” The argument for the plaintiffs is, that at the time of the adoption of the Constitution, the term “Assessor” had a definite and well understood meaning, importing that he is an officer appointed or elected to ascertain and determine
Whatever weight may be due to this argument, it can hardly be deemed of such conclusive force as to preclude an examination of other provisions of the Constitution in order to determine whether the construction now contended for would not or might not be subversive of one of its fundamental principles. As already stated, the governing rule ordained by the Constitution—the central idea which pervades that instrument in respect to taxation—is that it shall be equal and uniform, and that property shall be taxed in proportion to its value.
As one of the necessary steps towards ascertaining its value, local Assessors must be elected, who shall make the primary valuation. But there is nothing in the instrument to indicate that this valuation was intended to be final. On the contrary, it is expressly provided that the valuation is to be ascertained “as directed by law”—which is an explicit
2. But the validity of the assessments now under consideration is assailed on the further ground that by section three thousand six hundred and ninety-six of the Political Code the Legislature delegated to the State Board of Equalization the power to fix the rate of taxation, and it is claimed that the act is, pro tanto, unconstitutional and void. That section is in these words:
“At the same time the Board must determine and transmit to the Board of Supervisors of each county the rate of the State tax to be levied and collected, which, after allowing for delinquency in the collections of taxes, must be sufficient to' raise the specific amount of revenue directed to be raised by the Legislature for State purposes.”
We do not understand it to be seriously contended that if the Legislature had authorized the Board, on ascertaining the total value of the taxable property in the State in the
That the Legislature cannot, in a general sense, delegate its legislative authority—its power to enact laws—is a proposition which, at this day, no one will question or deny. But whilst the proposition is undoubtedly true in its more general sense, it cannot be maintained in its most restricted sense. As was observed by Mr. Justice Caton, in delivering the opinion of the Supreme Court of Illinois in The People v. Reynolds, 5 Gilman, 12:
“We may well admit that the Legislature cannot delegate its general legislative authority; still, it may authorize many things to be done by others which it might properly do itself. All power possessed by the Legislature is delegated to it by the people, and yet few will be found to insist that whatever the Legislature may do, it shall do, or else it shall go undone. To establish such a principal in a large State would be almost to destroy the Government. The Legislature may grant ferry privileges, or it may lay out roads and specify their metes and bounds; and yet, who will deny that it may delegate this power to others, either by general or*478 special laws? So, also, it may pass all the laws requisite for the government of a particular city or township or school district, and who will doubt the propriety of its authorizing this to be done by the people within the limits of the city, town, or district, by their local representatives, or even directly. This is making laws, and laws, too, of as binding efficacy as if passed directly by the Legislature. They are dependent upon the Legislature for their vitality and force, through the act of incorporation or law under and by virtue of which they are made. Necessarily, regarding many things, especially affecting local or individual interests, the Legislature may act either mediately or immediately. We see, then, that while the Legislature may not divest itself of its proper functions, or delegate its general legislative authority, it may still authorize others to do those things which it might properly, yet cannot understandingly or advantageously, do itself. Without this power legislation would become oppressive and yet imbecile. Local laws almost universally call into action, to a greater or less extent, the agency and discretion either of the people or of individuals, to accomplish in detail what is authorized or required in general terms. The object to be accomplished or the thing permitted may be specified, and the rest left to the agency of others, with better opportunities of accomplishing the object or doing the thing understandingly.”
We have quoted thus copiously from the opinion, not only because it comes from a Court of high”authority, but also because the propositions it announces appear to be particularly germane to the question we are considering. This case and the reasoning of the opinion were approved in the late case in the same Court of the People v. Salomon, 51 Ill. 54.
In Alcorn v. Hamer, 38 Miss. 654, the controversy grew out of an Act of the Legislature imposing a tax on the lands in certain counties for repairing and maintaining a levee on
It is said, however, that the question before us is not whether the statute shall take effect or may be defeated on the happening of a future contingency, but whether the : Legislature can empower the Board to exercise its judgment and discretion on a subject materially affecting the rate of taxation throughout the State. As already stated, we entertain no doubt whatever as to the power of the Legislature to provide such methods as it shall deem appropriate for equalizing and correcting the valuations in the several counties as a basis for equal and uniform taxation, during each fiscal year. It is equally clear that it is the duty of the Legislature to impose no greater burdens on the people, in the shape of taxation, than shall be reasonably necessary to meet the exigencies of the Government. To perform this duty intelligently, it must first ascertain the total value of the taxable property after the valuations have been equalized. But, as this value is constantly fluctuating, and the taxes
The plaintiffs also insist that so much of the contested tax as is sought to be collected for city and county purposes is void, because not levied in accordance with what is known as the ‘ ‘Consolidation Act” and the amendments thereto. The argument is, that the general revenue system provided in the Political Code is not applicable to the City and County of San Francisco, which, it is claimed, has been expressly or by necessary implication exempted therefrom. By section nineteen (1 Political Code, p. 10), it is provided that “nothing in either of the four Codes affect any of the provisions of the following statutes, but such statutes are recognized as continuing in force, notwithstanding the provisions of the Codes, except so far as they have been repealed or affected by subsequent laws:
“1. All Acts incorporating or chartering municipal corporations, and Acts amending or supplementing such Acts.
“2. All Acts consolidating cities and counties, and Acts amending or supplementing such Acts.”
The next preceding section provides that ‘‘no statute law or rule is continued in force because it is consistent with the provisions of this Code on the same subject, but in all cases provided for by this Code, all statutes, laws, and rules heretofore in force in this State, whether consistent or not with the provisions of this Code, unless expressly continued in force by it, are repealed and abrogated.” If these two sections stood alone and unexplained, it would be difficult to escape the conclusion that it was intended to continue in
The last, and we think the most serious question raised on \ this appeal and discussed by counsel, is, whether a tax on a solvent debt secured by mortgage presents a case of double taxation under our revenue system. If it does, it will be our duty to pronounce it void, and in violation of that clause of the Constitution which requires taxation to be equal and uniform. The question is by no means free from difficulty, and has -been several times before this Court in different phases.
In the People v. McCreery, 34 Cal. 432, the action was to recover from the mortgagee a tax levied on the debt secured by the mortgage, and one of the defenses was, that inasmuch as the land covered by the mortgage was also taxed, i it presented a case of double taxation. But we held that if the facts presented a case of double taxation, it was only the mortgagor, and not the mortgagee, whose property had been i twice taxed, and that the latter could not complain that the property of the former had been doubly taxed. People v. Whartenby, 38 Cal. 461, was a similar case, and the same point was again decided. But in Lick v. Austin, 43 Cal. 590, it was the mortgagor who complained that his real estate had been taxed at its full value, without deducting
I come now to the point,, whether a tax on land at its full ,, value, and a tax on a debt for money loaned, secured by a mortgage on the land, is, in substance and in its legal effect, a tax on the same property. We all know, as a matter of general notoriety, that almost universally, by a stipulation between the parties, the mortgagor is required to pay the tax both on the land and mortgage, and that, practically, he is twice taxed on the same value. If he has still in his possession the borrowed money, to secure which the mortgage was made, the law taxes in his hands both the money and land, and by his stipulation he is required to pay the tax on the mortgage debt also. If the money has passed out of his hands into the possession of some other taxpayer, it is taxed in the hands of the latter; so that the money bears its share of taxation, and the land its share, in the hands of whomsoever they may happen to be. It is very true, as was said in People v. Whartenby, and in Lick v. Austin, that a voluntary agreement on the part of the mortgagor to pay the tax on the mortgage debt cannot improve his status. “ The State was no party to the contract, and is not bound by stipulation inter alios. The burdens of tax
In the briefs of counsel the question is discussed whether an injunction is the proper remedy in this class of cases. But at the oral argument the counsel united in a request that we would decide the cause on its merits, and not alone on the question of the remedy. In accordance with this request, and in view of the importance of an early decision of the questions involved in the cases, we have considered the cause on its merits. But lest our silence on the question of the remedy might be misconstrued, we deem it proper to dispose of that point also. In these cases there has been no sale of property to satisfy the delinquent tax, and the averment is, substantially, that the title of the plaintiffs to their real estate has been clouded by the assessment and supposed lien for the taxes claimed to be due and remaining unpaid; that the Collector has advertised the property to be sold for the satisfaction of the tax, and will proceed with the sale unless restrained; that if the property is sold there will be numerous purchasers, against whom the plaintiffs may be compelled to bring a multiplicity of actions to recover it back.
If the tax were conceded to be illegal, it does not necessarily follow that, for that reason alone, the plaintiffs would be entitled to an injunction. In Dows v. City of Chicago, 11 Wallace, 110, Mr. Justice Field, in delivering the opinion of the Court, says: ‘Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the. taxes, may derange the operations of Government, and thereby cause serious detriment to the public. No Court of equity will, therefore, allow its injunction to issue
This, we think, is a correct statement of the rule, as established by the weight of authority; and it only remains for us to inquire whether the plaintiffs have brought themselves within it. There is no averment that irreparable injury will ensue if the sale is allowed to proceed; but in the case of the Savings and Loan Society, they allege that if the defendant is permitted to sell, “it will cause plaintiff to have divers litigations and suits against the various purchasers at such sale, which will be attended with great expense, harassment and delay to remove the cloud thereby cast upon said real estate, and will prevent plaintiffs from selling said real estate or any part thereof at the cash value.” In the complaint in the case of Doe, there is no averment of this character; but only an allegation that by the Political Code the tax purporting to have been assessed is attempted to be made a lien” upon the real and personal property of the plaintiffs. This averment is clearly insufficient to support the injunction, as it fails to aver or show that the plaintiffs will suffer an irreparable injury, or that any cloud has been imposed on their title, or that the injunction will prevent a multiplicity of suits. Nor are the averments in the case of the Savings and Loan Society sufficient to authorize an injunction. The allegation that if the sale is allowed to proceed, they may be involved in litigation with the purchasers, is a mere speculation as to probabilities which may or may not occur. Non constat that a purchaser will be found, or
The orders refusing to dissolve the injunctions are reversed and the causes remanded.
Concurrence Opinion
I concur in the judgment and in the opinion, except that portion which holds that property of the kind mentioned in the opinion is not subject to taxation.
After a careful consideration of the able and exhaustive arguments which were had in these cases since the former opinion was delivered, I see no reason to doubt the correctness of the conclusions announced in that opinion. I adhere to the following propositions: 1st. That the plaintiffs have not made out a case which entitles them to the remedy by injunction. 2d. That the City and County of San Francisco is not exempt from the operation of the general revenue system established by the Code. 3d, That the Act establishing the State Board of Equalization is not unconstitutional on any of the grounds or for any of the reasons alleged, and is a valid and constitutional enactment. 4th. That if a debt for money lent and secured by mortgage be taxed, and if the mortgaged property be also taxed, the same value and subject matter has been twice taxed, and it presents a case of double taxation.
In respect to the first three points I do not propose to discuss them anew, having fully expressed my views upon them in the former opinion. But, as the fourth point presents a question of much difficulty and of great practical importance, I deem it proper to develop somewhat more fully the reasoning in support of the views expressed in the former opinion on this point.
In all countries the principal subject of taxation is property in its various forms, and in well regulated Governments the purpose is to impose the burden as equally as possible, so that each parcel of property shall bear its just proportion of the tax.
Having this fundamental principle in view, our Constitu
There* are, doubtless, exceptional cases, in which, from motives of friendship, or other causes, money is loaned on mortgage without interest, or at a conventional rate, having no reference to the current market rate. But, in a large majority of cases, loans are made at current market rates, which are as definite and as easily ascertained as the current market price of any merchantable commodity, and are governed by the same rule of supply and demand. If money is sometimes loaned at rates above or below the current rate, it is equally true that staple articles of merchandise are often sold above or below the current price. But this does not tend to prove that, as a general rule, the tax on the transaction is not paid in the one case by the borrower, and in the other by the purchaser.
I conclude, therefore, that a tax on loans made in the usual course of business, is paid by the borrower; and if the debt be secured by mortgage, he also pays the tax on the mortgaged property. He is twice taxed—once on the property, and once on the debt which the property represents—and
It is claimed, however, that if the mortgage debt be exempt from taxation, the effect will be to exonerate the rich money lender from taxation, at the expense of the producing classes. But, as has been already shown, the tax on mortgages for money lent is never paid by the lender, but by the borrower; and the effect of the exemption will be, not to relieve the lender from a burden, but to exonerate the borrower from an oppressive double tax. It is the borrower, and not the lender, who is aggrieved by a tax on mortgages for money lent. He has just ground of complaint, for the reason that the inevitable result of the tax is to raise the rate of interest which he is compelled to pay; and in this way the burden falls on him, and not on the lender. There is much justice in the complaint that the capitalist, whose money is loaned out on bond and mortgage, and who is protected by the laws in his person and property, virtually escapes taxation, and is not compelled to contribute his just
If we were permitted to look into the question of State policy in the levying of a tax on loans, it could be demon
Orders refusing to dissolve the injunction in these cases reversed and causes remanded.
Concurrence in Part
I do not propose to discuss at any considerable length the questions involved in these cases. On some of the questions I have heretofore fully expressed my views in the series of cases from People v. McCreery to People v. Eddy, and after the very exhaustive argument here, I. find nothing in the principles laid down in those cases, which I am prepared to retract or materially qualify. I am also well satisfied with the conclusions announced in the former opinion of Mr. Justice Crockett in these cases, on all the points discussed by him, except one, and deem it unnecessary to add any further reasons in their support. The conclusions to which I refer are: First—That the plaintiffs are not entitled, upon the facts in these cases, to an injunction. Second—That the general revenue law was intended to be operative in all the counties of the State, and that the City and County of San Francisco is not exempt from its operation. And, third— That the statute providing for a State Board of Equalization, and prescribing its duties, is not unconstitutional, on any of the grounds presented by the plaintiffs.
I dissent from a portion of the argument and some of the conclusions of Mr. Justice Crockett, upon his fourth proposition—that in respect to the liability of solvent debts to taxation—and will briefly state some of the reasons which lead me to the conclusion that, under the Constitution, they cannot be exempted from taxation.
The words of the Constitution are so unequivocal, plain,
The mode and manner in which their value, or the value of the interest of several persons therein, is to be ascertained, are committed to the Legislature. The Constitution expressly confers that power upon the Legislature in respect to all classes of property, and it cannot be assumed by the Courts. And unless the Act of the Legislature, under the guise of providing a manner for the ascertainment of the value of property, or of equalizing the value, directly violates the constitutional requirement, that all property shall be taxed, and be taxed in proportion to its value, it is beyond the supervision or control of the judicial department of the Government. The statutes which ostensibly provided for the listing of property, but which, in fact, exempted from taxation mining claims, and debts secured by mortgage, were of the class referred to, and were unhesitatingly pronounced void. A statute will not be held unconstitutional, because it may not produce entire equality and uniformity, for exact equality and uniformity are unattainable. The Courts do not possess the power to abrogate a statute, or any of its provisions, which do, in fact, prescribe the manner in Avhich the value of property shall be ascertained, for the purpose of taxation.
Nor will a statute be declared unconstitutional and void because, under its operation, the same property is liable to be twice taxed. It is insisted that a tax on a debt for money loaned, and a tax on the property mortgaged to secure the payment of the debt, is necessarily double taxation. When a horse is sold, and a promissory note given
A debt and the property mortgaged to secure its payment are not the representatives of each other. Conceding, however, that money loaned and the note given for its payment represent the same thing—the same value—has the Court any more power to declare that the note shall not be taxed, because the money is liable to taxation, than to hold that the money shall not be taxed, because the,note is liable to taxation ?—any more power to exempt from taxation a note given on the purchase of a horse, than to exempt the horse?
It was earnestly urged by counsel, that the debt for money loaned should be exempt from taxation, because the taxes must, by the inevitable operation of the rules of trade, be paid by the borrower. Under the operation of the same rules, the consumer pays the tax imposed on all merchantable commodities; and the tenant pays the taxes directly or indirectly on the leased premises. Would that result be urged as a sufficient reason for exempting from taxation all merchantable commodities, and all lands held under lease ? Does the fact that the borrowers from a bank pay indirectly , the taxes on the bank building, afford a sufficient reason for exempting such building from taxation?
It is also urged, that the contracting of a debt adds’ nothing to the value of the property in the State, and, therefore, the debt should not be taxed. Bills, promissory
It is often said that a system ought to be devised, by which each person should pay taxes on the value of his interest in the property in his hands—that is, the value of his property less his debts, With that matter the Courts cannot deal; but the whole subject is committed to the legislative department of the Government.
In my opinion, a solvent debt is subject to taxation in the same manner as property of any other class or character; and is not entitled to exemption from taxation on the ground that some other property for which it was given, or by which its payment is secured, is liable to taxation.
Concurrence Opinion
I concur in the judgment and- in the three propositions first stated by Mr. Justice Crockett, but I do not concur in all his reasoning upon the fourth proposition. It is conceded that a solvent debt is property, and as such is subject to taxation. This being so, the only question is, whether the debts taxed to the plaintiffs, and admitted to be solvent, are doubly taxed. In my opinion, when money is deposited in a savings bank, to be loaned out for the benefit of the depositor, if it is assessed to the depositor and also to the bank, and payment of the taxes is exacted from both, it is double taxation. Nor is it any the less so if the bank has loaned the
In the case of the Savings and Loan Society, it does not appear that the taxes had been paid by the depositors on any of their deposits, and, therefore, the question of double taxation does not arise.
Concurrence in Part
The conclusion to which the Court unanimously arrived in the first argument, and to which we all adhere—that these are not cases for equitable interposition by injunction—would seem to render the discussion of any of the other questions which have been argued unnecessary; but inasmuch as by the invitation of the Court a number of able and distinguished counsel participated in the argument, and discussed at great length, both orally and in printed briefs, the constitutionality of those parts of the Political Code prescribing the duties of the State Board of Equalization, and providing for the taxation of credits, I have thought it proper to examine and briefly to state my views on those subjects.
It is unnecessary to consider at length whether the Act, in so far as it creates the State Board of Equalization, is unconstitutional, or whether the Board might exist for some of the purposes specified in the Act without substantial interference with the revenue system of the State, for I am irresistibly driven to the conclusion that all those sections defining its most important duties—in fact, making up in the main the legislative scheme discernible in the Act—are unconstitutional: First, because the Board is invested with
The Board is not one elected by the people. Two of its members are appointed by the Governor and hold during his pleasure, the Controller of State being ex officio the third member. (Political Code, Sec. 352.) Local Assessors are required to exact from each person, among other things, a statement of ‘ ‘all other facts required by the State Board of Equalization.” (Id., Sec. 3629, subd. 6.) The assessment book in each county must show “the total value of all property after equalization by the State Board,” and “such other things as the Board of Equalization may require.” (Id., Sec. 3650, subds. 13,15.) Each Assessor is compelled to transmit a statement to the Board on the first Monday of July in each year. (Id., Sec. 3655.) The Board is directed “to prescribe rules and regulations to govern Supervisors when equalizing, and Assessors when assessing, ” to equalize the valuation of the property of the several counties in the State, and fix the rate'of State taxation, and to “personally inspect” property in the different counties and “learn the value thereof.’’ (Id., Sec. 3692, subds. 2, 6, 7.) It is authorized to raise or reduce the valuation of property for purposes of taxation in the various districts. (Id., Sec. 3693.) “If the County Auditor fails to forward to the State Board of Equalization the statement provided for in Section 3728, the Board must make the equalization from any information it can obtain.” (Id., Sec. 3694, vide Sec. 3728.) When the equalization is completed, the Clerk of the Board is to transmit to each County Auditor a statement of the “percentum to be added to or deducted from the valuation of the property of the county.” (Id., Sec. 3695.) The Board is to determine and transmit to the Board of Supervisors of each county the rate of State tax to be levied and collected, “which, after
It was contended at the argument that the State Board of Equalization was established to secure uniformity and equal taxation throughout the State, and the taxation of all property “in proportion to its value,” and therefore it was claimed that its establishment was authorized by the language of this section of the Constitution. Leaving wholly out of view for the moment the last clause of the section, it may be seriously doubted whether the action of the Board
But however this may be, the last clause of the section of the Constitution which is inseparably connected with the language to which I have just alluded is clear and decisive.
It is not necessary to refer to the peculiar condition of property rights in the State existing at the time of the formation of the Constitution, in which condition it is historically well known that this clause had its origin, for the language of the clause itself is so clear that neither argument nor illustration could make it more apparent. To hold, therefore, that in prescribing the mere manner of ascertaining the value of property for purposes of taxation the Legislature is at liberty to supersede the Assessor elected by the people and confer his appropriate functions upon an officer of its own nomination, is to wholly ignore a prominent provision of the Constitution of the State having a known reference to the peculiar local condition of the people by whom that instrument was framed and adopted.
There can be no doubt whatever as to the sense in which the word “Assessors'’ is used in the Constitution. It is used there in connection with a proposed system of taxation; but even aside from the purpose most obvious for which the word was employed, as shown by the context, the term possesses a fixed and ascertained legal signification which exactly expresses the popular understanding of its import. It is defined in various expressions, but all the definitions substantially correspond. Thus: “Those that assess public taxes.” (Jac.
The State Board of Equalization, composed of the Controller and the executive appointees, is likened in the argument made for the defendants to the local Boards of Equalization, composed of the members of the Boards of Supervisors in the several counties, and it is claimed that
That the State Board cannot become Assessors without the warrant of the popular choice for that office is, therefore, clear under the clause of the Constitution already referred to, and which clause, it may be remarked, is in its general characteristic entirely in accord with the great principle broadly underlying the entire system of our Government, that there should be a corelation between taxation and representation. Indeed a general and persistent opposition to any invasion of that principle has always characterized the people of this country. A reference to this principle in American government will sufficiently account for the provision in our organic law, that for the purpose of taxation property shall be valued by officers elected by the qualified electors in the town, county, or district in which it is situated. It is incumbent upon the Courts to give full force and effect to that provision, and not to permit it to be frittered away under any pretexts. It may be urged, and the argument is not without force, that the Legislature might have effected a complete separation between State and local taxes, in their assessment and collection, and that so far as the revenue for the support of the State Government was concerned, the “district” mentioned in the Constitution might have been coextensive with the limits of the State. But no such legislation has taken place. State taxes are collected through local officers. Thus one system is applied to the assessment of property and the collection of revenue for all purposes; and if the system be altered in any part the entire machinery is affected. And if the State had been constituted one revenue district for the purpose of State taxation, the Assessors and officers charged with the duty of equalizing assessments within that district must
“Section thirteen of Article XI of the Constitution of the State is as follows: ‘Taxation shall be equal and uniform throughout the State. All property in this State shall be taxed in proportion to its value, to be ascertained as directed by law; but Assessors and Collectors of town, county, and State taxes shall be elected by the qualified electors of the district, county, or town in which the property taxed for State, county, or town purposes is situated.’ The requirement that the value of the property to be taxed shall be ascertained as directed by law, means that the property shall be assessed for the purpose of taxation, and that the taxes may be levied only after the property has been so assessed. An assessment, made as directed by law, is an indispensable basis for the support of the tax that may be levied upon it. The constitutional requirements are not satisfied merely by an assessment made in the manner directed by law, but it is also provided that the Assessors of town, county, or State taxes shall be elected by the qualified electors of the district, county or town in which the property to be taxed is situated—that is to say, that the assessment must be made by a person elected as an Assessor by the qualified electors of such district, county or town. A tax, in order to be valid, must rest upon an assessment made in the mode prescribed by law, and by an Assessor elected as provided for by the Constitution. This proposition requires no argument, for it arises from the plain and unmistakable import of the terms employed in the section cited.”
In People v. Sargent, 44 Cal. 430, the doctrine of the case of People v. Hastings, supra, on this point, was reaffirmed here. If, then, under the sections of the Political Code
The Board is authorized to prescribe rules for the government of Assessors in the performance of their duties, and by these rules the valuation of property may be materially affected. The mode prescribed by the Board for ascertaining the cash value of property may be entirely different from that which, but for its interference, would have been adopted by the Assessor, and thus the assessment is, or may be, practically made by the Board, and not by the Assessor. But this transfer of power is seen more conspicuously in other sections of the Code. There being but one assessment, which is the basis of both local and State taxation, the process of equalization, in the manner prescribed by the law, cannot be applied without a disturbance of local valuation. Thus, if the Assessor of San Francisco is directed to add twenty per centum to his valuation of the real property in his district, then not only does the valuation quoad that species of property become that of the Board, and not of the Assessor; but the relative valuations of different classes of property within the same assessment district are necessarily disturbed and altered, the practical result of which is that the owners of real estate will pay a higher tax by twenty per centum, as compared with the owners of personal property in the same district, than they would have paid but for the interference of the State Board. And in the process of
I am also of opinion that those parts of the law which undertake to vest in the Board the authority and duty to fix the rate of taxation amount to a delegation of legislative power, and are therefore a violation of the Constitution. The portions of the Constitution thus violated are the following :
Article III. “The power of the Government of the State of California shall be divided into three separate departments—the legislative, the executive, and judicial; and no person charged with the exercise of powers properly belonging to one of these departments shall exercise any functions appertaining to either of the others, except in the cases hereinafter expressly directed or permitted.”
Article IV, Section 1. “The legislative power of this State shall be vested in a Senate and Assembly, which shall be designated the Legislature of California, and the enacting clause of every law shall be as follows: ‘The people of the
These provisions of the Constitution are merely declaratory of the most essential principle and the principle most jealously guarded in the American system of Government. It would be useless to enter into an extended argument or to cite authorities in support of a proposition which has been so frequently declared and enforced by the judiciary of the American States that it has really become axiomatic. The application of the principle to the case at bar is the only point upon which anything need be said. How taxation is one of the necessary attributes of sovereignty and the power to lay taxes under our system is one of the powers of Government which does not belong to either the executive or the judicial department, but is vested in the Legislature. “The power of taxation is a necessary incident to sovereignty, and under our system of Government it pertains to the legislative department, for the levying a tax is necessarily a legislative act.” (People v. McCreery, 34 Cal. 454.) And that the right to exercise this power cannot be delegated is another proposition so self-evident that I need not delay to consider it in detail, but may confine myself to an inquiry as to whether there has been an attempted delegation of the power of taxation to the State Board. After having performed the functions of assessments (under the name, however, of equalizing assessments) that body is directed to fix the rate “of State taxation,” which, “after allowing for delinquencies in the collection of taxes, ” must be sufficient to produce the “amount of revenue directed to be raised by the Legislature for that purpose.” If the discharge of this duty involved nothing moro than an arithmetical computation based upon the total assessed value of the property in the State, it would be an act of a merely executive nature, and, in my opinion, not open to objection of a constitutional character. As for
With reference to the question of the assessment, for the purposes of taxation, of credits, or what have been termed in argument “solvent debts,” the proposition contended for by the counsel who assail the validity of the tax, seems to be that the wealth of the State is not increased by local credits, and, therefore, that such credits ought not to be included in the aggregate of the taxable property within the State. This proposition may be entirely sound in a politico-economical point of view; indeed, I am not aware that it has ever- been seriously contraverted by political economists, and so far as my investigation has extended, it has been uniformly accepted by the Legislatures of the other States of the Union.
While, however, it is doubtless true that the material wealth of the State is not increased by such credits, it by no means results that these credits are not to be dealt with as legitimate objects of taxation. So far as an argument may be drawn from the legislation of the other States, it must be acknowledged that all the precedents are in favor of treating such credits as constituting property for purposes of taxation. At the same time, in order to secure as nearly as may be equality in taxation and to prevent double taxation, it has been the practice, in some form, to allow a deduction of the amount of each crecit from the debtor’s estate— in other words, to treat each credit as the taxable property
If the system adopted by the Legislature operates injustice to any person or class of persons, we cannot for that reason interfere, unless it also appear that some provision of the Constitution has been violated in the enactment of the law; all else is mere legislative policy with which we cannot interfere; hence we have no more authority to say that that species of property known as solvent indebtedness is not taxable to the creditor, because it might amount to “double
These are the general views I entertained upon the first argument of these causes; but the pressure of the business of the Court at that time prevented me from entering upon a discussion of the questions involved in these appeals.
I am of opinion that the orders below should be reversed, because the cases here are not of equitable cognizance, nor remediable by injunction.
Concurrence Opinion
I concur in the judgment, and agree with Mr. Justice Crockett in the conclusions to which he has arrived, except the one relating to the constitutionality of the Act creating the State Board of Equalization; upon this point I concur in the opinion of Mr. Chief Justice Wallace.
Concurrence in Part
I concur in the judgment, but I dissent from the opinion of Mr. Justice Crockett, which maintains the validity of that portion of section three thousand six hundred and ninety-six of the Political Code, which provides that the State Board of Equalization shall determine the amount of delinquency likely to occur in the collection of taxes. In my opinion it is not competent to the Legislature to substitute the judgment of the Board for its own upon that matter, and I think that its exercise by the Board is substantially the exercise of legislative power in the important respect of fixing the rate of taxation to be levied for the support of the State Government.