*1 STATE OF MONTANA ex rel. CON SCHULTZ-LINDSAY COMPANY, Inc., Relator,
STRUCTION Plaintiff EQUALIZATION STATE BOARD OF The the State ALLEY, MORLEY Chairman, JOHN C. Montana, LORD, thereof, COOPER and HOWARD as members STATE HIGHWAY COMMISSION of the State of Mon NASS, BLEWETT, Chairman, ALEX JOSEPH N. tana, HALVORSON, A. M. and D. W. VAN S. N. SWANSON DELINDER, thereof, Re Defendants as members spondents. 10943. No. April 22, April 26,
Submitted
1965. Decided
Arnold A. for (argued), Edward Missoula, Dussault Turnage (ar- Jean gued), Poison, A. (argued), Helena, W Scribner amici curiae. Anderson, Atty. Gezz., Helena,
Forrest H. Garrity, Donald A. Atty. Gen., (argued), Helena, Asst. Douglas (ar- William A.
gued), Helena, Donald D. (argned), MaePherson Helena, respondents.
MR. CHIEF JUSTICE T. JAMES HARRISON delivered Opinion of the Court. original This is an proceeding. On March 1965, relator petition filed a requesting accept original juris- this court to declaratory judgment diction of a action to test validity Bill House Thirty-ninth Legis- enacted into law the lative Assembly of Montana, Chapter the State of 277 of the Laws of Hereafter, brevity, this will be referred to as the Act. alleged petition
Relator in its the United States of America, through its Roads, participates Bureau of Public financially in the interstate, construction of primary and sec- ondary throughout roads states; this state and other that be- cause of passage and threatened enforcement of the Act the Bureau of Public Roads ordered withdrawal of Federal *3 participating funds that other states would continue to receive such Federal participating funds and would be able to continue highway their programs but that the withdrawal of funds from Montana would cause the state to fall behind in road con- program struction and economy the entire of the state would be adversely affected; that a validity determination of the of the Act was of urgency such that this court original should take jurisdiction of controversy.
Following parte an hearing upon ex petition, such and allegations reason of the contained, therein accepted this court jurisdiction filing and ordered the of complaint, relator’s and respondents directed the appear to to answer or otherwise plead complaint April on or before 1965. There- after, by order the cause was set to argument be heard on oral April 12, 1965, on granted and was so filing heard and time for additional briefs. Such briefs have been filed and the cause has been submitted. complaint respond-
Relator in its named as defendants and Equalization members, of ents the State Board and its and the Highway members, State Commission and its and hereafter they respondents. will be referred to as alleged, alia, proceeding
Relator that it inter was a declaratory Declaratory Judgments relief under the Uniform Act; corporation constructing that relator was a North Dakota public highways engaged in that business in the State of and Montana; engage that it intended the future to continue to business; competitive highly in such that such business was highways awarded contracts the construction of are competitive bidding, compete on basis of and to it was es- advantages given artificial be to its sential that no unfair and competitors. against re- Further that the Act discriminates by requiring pay greater lator it to a different and tax than engaged constructing Montana residents in the business of public required highways pay, are that the State Board Equalization charged duty enforcing, with the and would enforce, Act; payments that in 1964 relator had received paid Highway for work for the all done State Commissionand required; Montana license taxes that under the Act would required pay paid greatly a sum excess the amounts year pay- in that that if it amount of received the same required payments for work in 1965 the license ments greatly payments under the Act would be excess of re- quired by corporation; plaintiff a resident Montana has Highway with several contracts the State Commissionand percent payments will deduct one of all due relator Commission money Equalization, and deliver such to the State Board .to damage relator; irreparable that the the severe and Act is invalid in that it violates the Constitutions of the Montana of America in that it and the United States denies *4 protection laws, imposes equal of the a tax which relator the subjects, special uniform class of is not the same and is prayed declaratory judgment legislation. Relator for a deter- obligations validity Act and the duties mining complaint as an the Act. Annexed relator under Act, as follows : copy of the which reads exhibit is a A CONTRACT- “AN FOR NONRESIDENT ACT PROVIDING FEE LICENSE OR’S BY THE LEGISLATIVE ASSEMBLY
“BE IT ENACTED THE OF MONTANA: OF STATE (1) means an used in this act: ‘Contractor’ “Section As performing corporation architec- individual, partnership or for a fed- work in Montana tural, engineering or construction government. eral, agency of state or local corporate (a) a con- “(2) contractor’ means ‘Nonresident own- tractor, fifty-five per (55%) or more of the effective cent Mon- ership persons not residents of of which is who are not tana, (b) who is a resident or an individual contractor in nonresident a stockholder a Montana or who is nonresident contractor, fifty- contractor, (c) partnership a corporate or ownership of per (55%) or more of the effective five cent or who persons not of Montana which is in who are residents corporate in a contractor. own stock nonresident receipts sources “(3) receipts’ mean all from ‘Gross shall state, money, other in the form of credits or within the whether consideration, engaging in conduct- from or valuable received business, cost of the ing a without deduction on account used, sold, the of the materials labor or service property cost paid, taxes, expense whatso- cost, losses or other interest receipts’ discounts However, ‘gross shall not include cash ever. refunds, sales, on and sales either cash allowed and taken by credit, accounts written off from time to uncollectible liquidation time, payments in final of accounts received gross receipts any previous return made in the included person. (1) privilege qualifying For the as nonresi- “Section contractor, person apply, pre- shall first forms dent equalization, and obtain a so to by the board of license scribed *5 A 3 of provided in this act. do, pay fee, a license section and op- cover its shall all to a nonresident contractor license issued regardless number of establish- in Montana of the erations ments. payment “ and renewal of a license Application for a (2) ($25.00) dollars thereon shall twenty-five
the initial fee of year. However, a January 31st of each not later than made purchased license has a contractor’s contractor who nonresident money re- have his prior of this act will to the effective date purchase license. a nonresident contractor’s funded and period of time extend- “(3) license issued for a No shall be year which ing for beyond the termination calendar issued.
“ provis- subject licensing Any contractor (4) nonresident require- as, example, regulatory ions such for of a nature commencing col- posting a business as a ment of bond before filing regular applica- agency, must, in addition to lection regulatory provisions mentioned, comply tion with above such being before entitled to a license hereunder. 3. The for nonresident
“Section license fee each contractor twenty-five plus equal ($25.00) shall be dollars a sum to one during per gross receipts (1%) of the from such business cent for year is to be issued. income which license exempt A from nonresident contractor is the con- “Section tax, provided 84, tax for license the income in Title tractor’s Chapter pro- 49, R.C.M.1947, corporation license tax and Chapter R.C.M.1947,when non- for in Title vided provisions of All contractor covered this Act. resident is tax; pay the contractor’s other contractors must license R.C.M.1947; provided Chapter 49, tax for in Title income provided 84, Chap- corporation tax license Title R.C.M.1947, applicable. ter were state, county city agency A
“Section 5. whom withhold, in performing contractor work shall nonresident per withheld, (1%) other amounts one cent addition '386 payments
all due contractor and send such amounts to the equalization. state, state board of county city Should the agency, for whom the performing nonresident contractor is performed work, work or amounts, has fails withhold such payment the contractor make shall these amounts to the equalization. payments state board of These must be sub- equalization by mitted to the state board the contractor thirty (30) days within on the date which the contractor payment performed by received each increment of for work equalization the contractor. When the state board of has col- *6 provided lected act, the tax for in of it shall Section this n refund any surplus. “Section 6. any In case of failure to make and file non- return, resident person failing contractor’s license to file such a return, upon conviction shall be fined not than one less ($1,000.00) thousand dollars or more than ten thousand dol- ($10,000.00). lars Ninety-five per 7. (95%)
“Section of cent all license fees col- deposited lected under Section of this act shall be in the ear- equalization marked revenue fund to be for used state aid .schools; per deposited (5%) five cent shall in the ear- equaliza- marked fund to revenue be used the state board of administering tion in this act. corporation incorporated
“Section 8. A law under Montana exempt provided is from the license fee of this Section act either:
“(a) (i) corporation If has it filed license tax returns for at years, (15) least fifteen
“(ii) thirty-five percent (35%) If at least the stockhold- residents; ers are or Montana
“(b) percent If fifty-five (55%) or more of the stockholders are Montana residents. 9. All contractors have not
“Section who been in business provide prior shall, request, on this act state board equalization relating ownership. with information Con- desiring exemption tractors from the license fee in Section proof residency of this act shall file with the state board of equalization. enforcing equaliza- In this act the state board of ownership, regardless tion shall determine effective of cor- porate corporation may A structure. nonresident file a state- corporation ment of intent to become resident with the board equalization. corporation’s may changed The status not be filing. to resident until If a cor- (5) years after five of such poration provisions of this has been formed to circumvent the act, may public projects. qualify bidding not on furnishing for a Any bonding company bonds
“Section equali- nonresident contractor shall file with the state board cosigning zation the bonds. party parties the names of the bonding shall, A on company failing this section to file under conviction, ($500) be fined not hundred dollars less than five nor ($1,000). more than one thousand dollars equalization hereby
“Section 11. The state board of auth- orized regulations necessary to formulate rules and for the ef- implementation provisions. fective of this act’s passage ap- “Section 12. This act is effective on its proval.”
Respondents appear by raising answer two defenses. The *7 being complaint first against that the fails to a claim state respondents upon granted. which relief can be In their second respondents defense, practically admit allega- all of the fact complaint, except tions of they deny allegations the the with respect highly competitive nature of the business of con- structing public highways, that it essential that no was advantages given unfair and artificial be relator’s com- petitors business, allegations respect in that as well as all with payments required Act, to increased under the of discrimina- tion, invalidity unconstitutionality Respondents or thereof. pray complaint that the be or that be dismissed the Act ad- judged against valid enforceable relator. challenges
The levelled at Act the relator are: (1) equal protection That it law; denies the of the (2) Imposes a tax which is not uniform the same subjects; class of
(3) special That it legislation. challenges As to these relator asserts the Act is in violation IV, of Art. of Constitution, pro- the United States which § vides :
“The Citizens of Privileges each State shall be entitled to all and Immunities of Further, Citizens in the several States.” it process that violates the due clause Four- contained teenth Amendment Constitution, to the United States which in part, provides: “No shall any State make or enforce law which abridge shall privileges or of immunities citizens of the States; deprive United nor shall any person life, of liberty, or property, process without law; due deny nor any person within jurisdiction equal protection of the laws.”; III, that it Art violates 27 of the Montana Constitu- § tion, provides: person deprived which “No life, shall be lib- erty, property process or without due of law.” and Section Article, provides: post of the same which “No ex facto law nor impairing obligation law contracts, making any ir- grant special privileges, franchises, revocable or immuni- ties, passed by legislative shall assembly.”; that vio- V, 26 prohibits lates Art. of the Montana Constitution which § Legislative Assembly passing special from local or laws in enumerated, the instances therein “In concludes: all other general applicable, special cases where a law can be made no enacted.”; XII, law shall be that it violates Art. § Constitution, Montana which reads: necessary support “The revenue for the and maintenance of provided by legislative assembly, the state shall be which levy uniform taxation, shall rate assessment and and shall prescribe regulations just as shall secure a valuation for property, except specially provided of all taxation for in
389 also'impose a license legislative assembly may article. The this upon corporations doing business persons tax, both state.” in the n arbitrary, dis- unjust, inequitable, Finally, the Act is that unreasonably criminatory legislation and restricts and class the of contract. necessary challenge
We do it to the not deem discuss each to constitutionality separately, of the Act but will turn those appear proceeding. which to us to be in this determinative presumed
It is conceded that the Act is
valid
be
constitutionality
and its
not
will
be condemned
its in
unless
validity
beyond
doubt,
is shown
a reasonable
and the burden
proving
invalidity
attacking
rests
one
the
however,
found,
statute.
If it is
that the statute
violates
pronounce
Constitution the courts will
it void.
Gate
State v.
way Mortuaries, Inc.,
156,
87 Mont.
287 P.
That the a license tax on cer occupations tain and not on others is well settled. Hale County Treasurer, Mont. P. 6.
However, arbitrary and unreasonable classifications permissible. are not rel. Greene, ex Griffin v. P.2d A.L.R. 770. apparent
It designed is that the Act is aas revenue measure it ninety-five percent since allocates fees to be collected equalization to be used for state aid schools. Section 7 of It not, therefore, licensing Act. act enacted under the police power state.
It is Act process contended violates due equal protection clauses of the Constitution in respects. two First, applies only it contractors, to nonresident secondly, applies only contracting when the agency public is a body. appear wording It would from the Act that the resi- dency of the contractor is sole criterion distinguishing one group contractors, even if we concede that such a status can this previous determined. There been have cases before
court wherein residents and discrimination between nonresi- charged. was *9 dents Refining 68, 235 Co., 428,
In v. 73 State Sunburst Mont. P. gallon imposed per gasoline tax of of was Ecense two cents for privilege in doing the of in the sale of such business Montana except products, shipped orig- into and sold in those this state inal containers. It was contended this license tax discriminated opinion In against Montana its court dealers. this stated: temerity practical say “No one the that could have to operation against the the statute does not discriminate manu- gasoline or or facturer of dealer Montana-manufactured dis- statute, sufficient, it tillate. But it is to condemn the not merely against or dealers. discriminates some distributors protection seldom, ever, obtained; if equal of the law Exact is frailty agencies, very of the authori- because of human and the govern- recognize the branch of legislative all the of ties subjects prop- of to make classifications ment reasonable Moore, 146, 56 occupation (Hilger v. Mont. 182 erty or taxes reasonable, and all 477), the P. and of if classification if treatment, are the same subjects given within class accorded anyone within legislation deny be said to to cannot though the equal protection law, even burden class upon may imposed more than that imposed him onerous Quong Wing Kirkendall, v. member another class. upon a of c., 223 56 250; 32 L.Ed. P. s. U.S. S.Ct. Notes). justify also, But such discrim (see, Rose’s U.S. legislation, avoid the condemnation Four inatory Constitution, the Amendment to the teenth classification federal n mustbe is, must be based substantial dis reasonable—that really make one class another. which tinctions from different Ry. Duncan, Co. Northern Pac. Mont. rel. ex ours.) (Emphasis P. 638.” opinion the court stated: in the same Later piace origin is made 1923 statute the sole our “Under attempted, Legislature if the classification basis place origin gasoline or distillate the sole may make the classification, may impose a license tax those basis for by the gasoline manufactured Sun- who deal distillate gaso- Refining Company, exempt who deal in burst those Refinery City Miles line or distillate manufactured Company. attempt justify But no one would a classification solely upon products made the basis that the first-mentioned pro- Falls, at while were were manufactured Great the others City. upon any duced at Miles The statute cannot be defended practical operations theory. arbitrary, In its it is such an un- just, against dealing unreasonable discrimination those gasoline deny to- Montana-manufactured and distillate as equal protection them the of the law.”
While most the cases which have been before this court attacking constitutionality of license taxes have been with *10 respect police power to license taxes enacted under the of the- state, admittedly princi- while this license tax is one enacted pally purposes, yet holdings for revenue of this court with re- spect to discrimination would be similar whether the license regulations police power tax was one under the or for reve- taxing power. nue under the Safeway Stores, Inc., 182,
State v. 106 Mont. in- P.2d challenge constitutionality a eight-hour volved of the day law, work wherein it was contended it violated Fourteenth Amendment the United States Constitution and section of Art. Ill of the Montana Constitution. The court constitutionality law, opinion sustained the stated:
“Defendant also
deprived
contends that it has been
of the
equal protection
argued
of the laws. It is
that the statute con-
stitutes
discrimination rather than reasonable classi-
arbitra^
fication. It must be
remembered that
the matter of classifi-
cation,
Legislature enjoys
broad discretion and is not re-
quired
go
might
enacting
as far as
question
a law. The
primarily
Legislature.
of classification is
for pre-
The
sumption
distinction,
legitimate grounds
is that it acted on
364;
grounds
R.C.L., 376, p.
if
such
v.
existed.
State
§
supra
344]; Hilger Moore,
Loomis,
Mont.
242 P.
[75
Mont.
“The
every-
legislation
by
the decisions
type
of this
is well defined
reasonable,
where,
is,
must
and that
that the
be
classification
arbitrary,
ground
not
and must rest
some
of difference
object
legis-
having
and substantial relation
fair
lation,
similarly circumstanced shall
persons
so that all
97 Mont.
Equalization,
Mills v.
Board of
treated alike.
13, 31,
(Emphasis ours.)
In North Am. State v. Car. taxation, dealing solely with the statement 161, 165, a ease P.2d apropos here, as with reference to classification of this court follows: XII of the Constitution 1 and 11 of Article
“Sections respectively provide: Montana
“ support mainte- for the necessary revenue ‘1. The legislative assem- provided of the state shall be nance taxation, levy uniform rate of assessment bly, shall which just regulations secure a prescribe as shall and shall specially except that property, of all valuation for taxation article.’ provided for in this “ by general laws collected levied and Taxes shall be ‘11. upon the only. They be uniform purposes shall public the territorial limits subject within class same tax.’ authority levying the *11 provisions of the interpreting two Con these in
“This court 146, 170, Hilger Moore, 56 Mont. said, in the case of stitution of section ‘Construing the first sentence 477, 481: 182 P. reasonably taxes meaning clear: The 11 the with section property within upon class of the same uniform be levied shall for state is one district taxing The entire district. the same separate Every county is a taxes. raising state purpose the Or, taxes, city etc. taxes, every city for county for district form, 11 in different 1 and principle of sections stating the is that shall Legislature injunction to the mandatory the a as shall secure mode of assessment uniform prescribe such property, that all taxes shall taxable just valuation of all purposes public for by general laws and levied and collected class they upon the same only, shall be uniform authority levying the the territorial limits property within Constitution, by uniformity rule declared our tax. This is the aright.’ we are able determine intention of if framers against think it will be admitted that tax the same “We is not when property purposes kind used identical uniform applied valuation and a rate is to two dis- different different name, separately distinguishable only tinct in taxpayers, being imposed by taxing tax district. further be- same We disregard lieve it will be admitted that such of the uniform XII, clause of supra, sections of Article constitutes clear discrimination.
“In Ry. the case of State ex rel. Northern Pacific Co. v. Dun can, 638, 639, railway company P. com plained county taxing of discrimination officials where improvements on railroad land had been classified taxation purposes taking higher a class rate under section 2000 [R.C.M.1921, R.C.M.1947, 84-302], now improve than like § taxpayers similarly ments of granted other situated. The court opinion the writ asked for and in the course of its said: “ improvements ‘It is asserted that the mentioned class 4 of section 1999 R.C.M.1947, Codes now 84- [Revised § apply only upon land, town, city lots, and, those 301] improvements question not city lots, are town or roadway, and not land because within a therefore im- provements question do not come within class and so * * * inevitably must come within class
“ respondent’s ‘If contention were correct we should have property. different valuations for the same kind of If a mer- *12 394 upon
chant owned a warehouse
a tract
adjoining
of land
the
right way,
railroad
of
the warehouse
be in
4,
would
class
and
upon
per
30
taxed
the
basis. An adjoining
cent
precisely
and
similar
upon
warehouse owned
right
railroad
way
of
within
7,
upon
would be
class
and be
per
taxed
the 40
cent
*
* # By
basis.
such construction we should have two classes
improvements
of
precisely similar,
anything
without
to dis
tinguish
another, except
one class from
the property
belonged
one class
to a
and
railroad
the other to an individual.
“ ‘
must be based
substantial distinction
“Classification
from,
which makes one class really
another. Northwest
different
ern Mut.
Wisconsin,
Life Ins. Co. v.
132,
U.S.
[State of]
444,
Ry.
S.Ct.
L.Ed. 1025.” Northern Pac.
Co. v. Sanders
”
County,
608,
(Emphasis
66 Mont.
In the court before it had the case Brackman v. Kruse, 199 P.2d an which was action for a declaratory judgment respect licensing pro- with to a statute quarter viding per a of $250 fee on wholesale dealers quarter oleomargarine per dealers, and retail $100 where- challenged being in the was statute unconstitutional be- prohibitive confiscatory cause the license fees were and prohibited carrying legitimate effect on of a business in violation the Fourteenth Amendment to the Constitution of States and of United sections and 27 of Article III and 11 of XII Sections 1 and Article of the Montana Constitution. majority opinion Then Adair wrote the Chief Justice of the court discussed the difference between license fees enacted police power and power under the those enacted the taxing under measures, from 53 quoting as revenue Licenses C.J.S. those § words:
“ solely primarily Tax. Where the fee exacted ‘When purposes payment gives revenue fee occupation performance carry the business or without on conditions, is not fee further license but a tax im- ” * * power taxation, posed under opinion continued: The power pro-
“Obviously legislature was and is without monopoly in favor of or to legitimate hibit a business create products against industry handling food one branch of industry handling equally wholesome ar- another branch cases.)” (Citing of food. ticles authorities, opinion
Following many stated: a review of *13 Liebmann, “In U.S. S.Ct. New State Ice Co. ‘Plainly, regulation said: a 374, 76 L.Ed. the court denying unreasonably curtailing which has effect of or the the right engage private business, such as common to a lawful review, upheld with the Four that under cannot be consistent amendment, nothing that is more teenth Amendment. Under clearly beyond power state, that it “un settled than is the of a guise protecting public, arbitrarily (to) der the the inter private prohibit occupations fere with business or lawful or impose unnecessary upon unreasonable and restrictions # * * them.”
“ protect against monop- ‘The control here asserted does not oly, encourage compe- but to tends foster it. The aim is not to tition, prevent it; regulate business, but to not to the but to preclude persons engaging from in it.’
“In Co., Ky. 151, Martin v. Nocero Ice Cream 106 S.W. 64, 66, by ap 2d the court said: ‘The evidence introduced pellees conclusively corporations shows that individuals and engaged manufacturing selling in the business of and ice cream, heretofore, prosperous, operating have been at a loss July 1, 1936, since the tax on ice cream became on effective profit long and that the business cannot be at conducted so * * * powerful organization as the tax is in effect.’ A of men pursuits engaged might prevent imposition in different prohibitive respective tax callings license their or oc cupations, what political but is to become of the man without power, away means of are taken whose livelihood im position prohibitive say of a tax? Shall we still that taxing power,
amount of the tax is within the discretion of the say among rights or shall we that the inalienable inherent guaranteed by every law-abiding our to citizen is Constitution right enjoy right acquire prop- life to live rights necessarily erty, carry these with them the right gain acquire property by following a livelihood and legitimate occupation, pursuit useful or of which is opinion In injurious public not weal. our there is but deprive question: you If a man of the one answer to this livelihood, you necessarily deprive him of the means enjoy taxing power, it can his life. Great as is the live and rights guaranteed by superior to inalienable our never rise case shows that the li- As the evidence this Constitution. question prohibitive, hesitancy no cense tax in we have * * * declaring it invalid.’ Steele, 133, 14 499, 501, 38 L.Ed. “In Lawton v. U.S. S.Ct. may not, guise legislature under the court said: ‘The public interests, arbitrarily with protecting the interfere business, impose unnecessary unusual and restric private occupations; words, other its determina tions lawful proper police powers exercise of its is not tion as to what is a *14 conclusive, subject supervision but is of the final or courts.’ 201, page Law, 584, it is
“In 16 Constitutional said: C.J.S. § occupation of a in- or business is nature which is ‘Unless the public welfare, to 53 jurious or offensive the see C.J.S. 19, p. 193, 54, imposition 37 note Licenses, also C.J. the § guarantees tax contravenes the constitutional of of a license property tax person and where the is so unreasonable or arbi- property amount to a confiscation of or a trary as to denial of particular trade, engage occupation, pro- in a right to or the pursuant particularly police when it is levied to fession, the state.’ power of the People, supra, 334, 62 215,
“In v. Ill. N.E. Bessette 558, Allgeyer court said: ‘In the of Lou L.R.A. 832, it was said: 427, 41 L.Ed. 578, 17 S.Ct. isiana, 165 U.S. life is occupations of any of the common right to follow “The the under as formulated right. It was an inalienable Indepen of Declaration happiness,’ in the ‘pursuit of phrase, proposition fundamental the dence, with which commenced by their they are endowed equal; that that ‘all men are created among are these rights; that inalienable Creator with certain large right is a happiness.’ This pursuit life, liberty, of said It was also liberty citizen.” of the ingredient in the civil follow right to pursuit, the liberty of latter case: “The privileges of ordinary callings life, is one any of the * # * United States.” a citizen “ ‘ reg purpose of for the police power is exerted “When which occupation, mode in or and the ulating a useful business * # * legislature not the on, is may be carried the business just restraint judge to what a reasonable exclusive as pursue call right to his upon of the citizen the constitutional of con judgment to the manner ing, his own exercise person pursue right every ducting general it. The provided that does not way, own he calling, and to do so his away from rights others, cannot be taken encroach People, supra, 185 Ruhstrat v. by legislative him enactment.” Am.St.Rep. 30, and 181, 76 N.E. 49 L.R.A. Ill. “ ‘the to. It has also been held there referred authorities right from occupation to be free one’s is the to choose ” Id.; conduct of it.’ or control interference unlawful p. 412.’ Law, Black Const. ‘But where a license C.J., page it is said:
“In 37 § power police as a means imposed under the tax is license con- imposed such terms and not be regulation, it must prohibition of useful and virtual operate as the as to ditions has been held occupation business; and this rule legitimate tax is levied under the license regardless of whether apply, Licenses, taxing powers.’ See also C.J.S. police or the 17. §
“In Flynn Horst, supra, 356 Pa. 56 in A.2d holding legislative unconstitutional a imposing act a license year fee of $500 a on per and $100 wholesalers annum on retail dealers in oleomargarine, the court said: ‘For all the fiscal years between 1931 and the amount collected from oleo margarine ranges licenses from two to five times the amount expended by the Bureau of Chemistry Foods and in the en forcement laws, of all the charged enforcement of which is # * * to that Bureau.
“ ‘No principle is more firmly established in the law * # [*] than principle that a revenue tax cannot be constitution ally imposed upon a guise police regu business under the of a lation, and that if the amount of a “license fee” is grossly dis proportionate required pay sum cost the due regulation of the business the “license fee” act will be struck down. The courts interfere with legisla the discretion only ture regulations adopted matters “where the are arbitrary, oppressive, Cooley’s or unreasonable.” Constitu Limitations, tional ed., 2, p. 8th regulations Yol. The question when require judicial tested this standard inter legislative ference with creating act them.
“ agree ‘We with the court below that clearly prove the facts that so much of section challenged, of the act imposes which upon license fees of oleomargarine $500 wholesale dealers in oleomargarine, $100 retail dealers in is unconstitu- ” tional and void.’ considering In constitutionality of the license tax im- posed upon trading stamps Spot Market, Garden Inc. v. Equalization, State Board of 397-399,378 P.2d 220, 228-229,the court stated: purports grant
“The Act to merchants in the State the engage stamps the use of pay- and devices tax, ment of the license requiring performance without conditions, Act, further and that the therefore, is a reve- nue, regulatory not a measure.
“If, contend, regulatory measure, as defendants the Act is a regard, for, require- it is most unusual in that other than the fee, only regulation ment of a license other semblance of require may applicant set forth therein is that the Board application for a license to state his such facts as the Board may necessary pass application. deem to enable it to But, guise regulation whether enacted under the of a or wheth- purpose raising revenue, er made for the if the effect of a indirectly prohibit legitimate statute business, is a far so police power concerned, is a statute must be consid- light containing prohibi- ered the same as a statute a direct Kruse, supra, tion. Brackman v. 122 Mont. 199 P.2d * * * opinion “While we do not bottom this on whether the Act ambiguous is misleading, unreasonably discriminatory, or or penalty excessive, or yet factors, whether the is those taken col- lectively clearly palpably pro- demonstrate that the Act legitimate a enterprise, hibits by business as so declared Legislature. III, quoted
“Under sections and 27 of previously, Article legitimate enterprise protected against business very is this type legislation. Kruse, supra, This court in Brackman v. 91, 112, 971, pointed Mont. 199 P.2d out that under either theory Legislature cannot, directly indirectly, prohibit or * * legitimate occupation business
Recently in Stow, State ex rel. Bennett v. principle P.2d we reaffirmed the that in Montana every person operate subject has a a business applicable state, may laws of the deprived and that he not be property right process of such a guar- without due law as by anteed Section III of Constitution, Article our equal protection entitled to the of the laws of this state as guaranteed by the Fourteenth Amendment to the Constitu- tion of the United States. appears
From the above authorities it that the state power license, regulate class, can under its in this case contractors, regulation but that such must be reasonable and becomes, arbitrarily discriminatory. question not The then existing here, under the situation the members of the have Act, contractors, un- class covered nonresident been reasonably arbitrarily against? discriminated argues yes, decidedly so, in
Relator that nonresident con- pay tractors must a different license fee than resident con- they class, both tractors and are members the same treating differently no basis exists for the members of the class purposes. for tax
Respondents taxation, Montana contend that the area of separate citing always class, has treated nonresidents as a *17 process upon Secretary existing as to of differences service users, limiting right highway on of behalf nonresident public residents, to and hold office to its and other situa- vote thq import, tions of similar but none of these have to do with fishing they of taxation. It is cite field true increased fees nonresidents, only hunting and licenses for that nonresidents portion in pay income taxes on the of their income earned this state, requirement employers that nonresident withhold upon employees, and income taxes salaries of resident contend every by of these situations not statute which dis- that reason disagree against do not criminates nonresidents is invalid. We conclusion, cited, except with that based on the instances applicable to them to the situation in this case. we fail find distinguishing in each instance but There are characteristics necessary not deem it to further discuss them because we do respondents grounds. argument of is not based on those the real Legislature respondents actually contend is that the What separate tax aware of the need for treatment of non- became public works contractors and devised a scheme of resident recognize yet not which would these differences and taxation to discrimination the nonresident con- in substantial result contention, course, exactly legally oppo- This tractor. purpose Act, containing police it no of the avowed site power provisions. However, purposes of discussion we shall argument brought consider it. It out on that nonresident was corporate public in of one works contractors received excess fifty public hundred million dollars from works contracts year 1963-1964, the fiscal paid only $86,673.34to the state corporation comparing figures license taxes. That these with corporate public Legis- those resident works contractors the paid lature had been advised that the resident contractors larger percentage much gross receipts of their to the state corporation license taxes. That reason of this situation the Legislature equalize the tax determined burden as between resident and nonresident admitting contractors. Even there may be differences taxation of the nonresident, resident and respondent difficulty contends that the of collecting from taxes nonresidents justify separate is sufficient to their classifica- system tion in a of taxation.
If we were concede that tax burden un has been equal between resident and contractors, nonresident so as justify a each, different classification for could be said that imposition upon the resident contractor of a tax based profit corporation under the license tax law would not be arbitrarily unreasonably discriminatory as to a nonresident contractor whom a computed tax is on the basis of his gross receipts? It is a matter of knowledge common that there is a profit vast difference between gross receipts. In the profit expenses instance all paid, have been and it is net to *18 recipient; gross receipts as to nothing paid has been for expenses may profit. and there be no any
We cannot any observe basis under set of facts where such a classification can be creating sustained as not an arbitrary discrimination; and unreasonable in our view li attempted imposed cense tax here by the Act is arbitrar ily unreasonably discriminatory and in direct violation of III, Section of Article V, Section of Article and Section Constitution, 1 of XII Article of the Montana as well as the Fourteenth Amendment to the United Constitution. States provides part: Article in VI the United States Constitution # * * Land; supreme “This Constitution be the Law of the shall Judges every any in thereby, and the shall State be bound Thing Contrary in the Constitution Laws notwithstanding.”
We, government, judicial as members of the branch of uphold provisions must of the Constitution of the United Montana, States and the Constitution of and to do so we must and do hold that the Act is invalid and unconstitutional. provisions many
There exist the Act which could be dis- uncertainties, pro- arbitrary cussed which reflect conflicts and visions, holding stated, but as we have and as before we do not it necessary deem comment further thereon. say,
All however, this is not to that we either condone or approve escape legal by contractors, from taxation nonresident attempt by Legislative Assembly nor do we condemn the remedy inequities clearly appear which rather from the arguments presented to us in this cause. The attack method, effort has been to the and it is the method that meets objection requires the constitutional us to strike it down. We have been favored with extensive and exhaustive briefs by counsel, in this matter as well as amicus curiae which permitted by appear were the court to and brief this cause. briefing arguments commend counsel for their We and oral preparation was since time short their and we extend our thanks for their efforts. fine every opportunity
Mr. Adair at Justice this cause has con jurisdiction tended this court has no in this matter because it originally was not filed the district court. In his dissent to our April 26, 1965, he cites the Kruse, order case of Brackman v. 91, 199 971, apparently P.2d authority posi for his case, others, tion. That like hundreds of was filed the dis appealed to court. authority trict court and this It is not
403 application court to position, there was no to this Ms because accept jurisdiction emergency original nor immediate request which such a to be made. would cause jurisdiction However, authority accepting of a declara- tory judgment Carey, in action is to be found the case State McFatridge, 278, 229, 115 142 in which Treasurer v. Mont. P.2d majority A. then Chief Justice Howard Johnson wrote opinion court, opinion for the and the stated: declaratory judgment action,
“This is a of which this court accepted jurisdiction necessary proper original has complete appellate jurisdiction, in exercise view of emergency presented consequent inadequacy ordinary appellate procedure.”
Mr. Justice Adair was a member of the court at that time opinion dissenting holding and filed a in that case to the court, challenge but nowhere his dissent did he accept original jurisdiction, the court to and was on the authority case, prior decisions, original of that and other jurisdiction accepted in was this cause. quotes
Mr. 2 Justice Adair from Section of Article VHI of Constitution, disregards the Montana but be what is said in power Section 3 of Article that this court VIII shall have in its original discretion to issue such other and remedial writs as may necessary proper complete ap exercise of its pellate jurisdiction. provision Under this of the Constitution original jurisdiction injunc the court assumed as to a writ of Sawyer Stores, Mitchell, tion Inc. v. 103 Mont. 62 P.2d 342; proceeding in Palagi of a mandamus in State ex rel. v. Regan, 818; declaratory judgment P.2d Mitchell, action in Gullickson v. 1106; Mont. 126 P.2d injunction pertaining general of an in a matter to a election Anderson, ex rel. Greene Mont. P.2d precedents
The court not act without accepting did jurisdiction original Finally, in this matter. the Uniform De Judgments Act, claratory 93-8901,R.C.M.1947,under which § brought provides: of record within this action was “Courts power respective jurisdictions to declare their shall have rights, status, legal or not further and other relations whether court a court of record. relief is or could be claimed.” This unchallenged Additionally, long this court’s own rule of *20 standing provides IV, in Rule subd. as follows: appellate court but it is em- Accepted. This is an
“When powered by the of Montana to hear and determine Constitution original may necessary proper or and remedial writs as appellate jurisdiction. complete to The insti- exercise proceedings original in this Court is sometimes tution of such justified emergency nature, a by circumstances of an as when making cause of action or a has arisen under conditions appeal in the trial courts and a due to this due consideration inadequate remedy, supervision or when of a trial an Court by appeal necessary proper.” court other than is deemed or cause, emergency an re This is such a where situation accept oxiginal jurisdiction, ren quires this court to and thus justice. in public a service the interest der HARRISON, MR. DOYLE and JUSTICES JOHN CONWAY concur. CASTLES ADAIR:
MR. JUSTICE
I dissent. Montana, in of Article VIII of the Constitution
Section supreme court, except otherwise part, that: “The declares jurisdiction provided constitution, appellate in this shall have only.” Supreme Montana, this, the Court of
The action now before declaratory judgment seeking and such action is an action commenced ixxa district court of this state should have been Supreme Kruse, Brackman not in the Court. See v. 94, 199 91, pp. 93 and P.2d 971. Mont. at Supreme 31, 1965, Court’s order of March I filed a On the that, my opinion I stated “In written dissexxtwherein the Su- preme in jurisdiction is without this cause Court of Montana brought which has at no time district court been filed state, brought appeal. and which is not to court on this this attempting For the I to above reasons dissent this court’s jurisdiction exercise herein.” Kruse, supra, opening
In paragraph Brackman opinion reads: declaratory
“This is an action judgment commenced the district court to have determined and declared consti- tutionality of section 2620.46, 2620.45 and Revised Codes Montana, 1935.” properly
To necessary jurisdiction confer the upon this court instant cause the action should brought have been the district court and appeal after decision there the could have Supreme been taken by any Court party dissatisfied the action.