State v. Twin City Telephone Co.
116 N.W. 835
Minn.
1908
Check Treatment

Lead Opinion

BROWN, J.

In proceedings to enforce the payment of- delinquent taxes defendant had judgment, and the state appealed. The facts are as follows: Defendant is a telephone company organized and existing under'the laws ■of this state, and has paid the gross earnings tax imposed by chapter 314, p. 581, Laws 1897. The property sought to be taxed in this proceeding is certain real estate owned by defendant and used exclusively in the conduct and operation of its business, and by the employment of which it derived the income upon which the gross earnings tax was assessed and paid. The statute above referred to, imposing this form of taxation upon telephone companies, expressly exempts from general taxation all property of the company necessarily used and employed in furtherance of its business. In other words, the statute declares that the earnings tax shall be “in lieu of all other taxes and assessments” upon property used in connection with the operation of its telephone affairs.

It is the contention of the state that this exemption is unconstitutional, and that all property of telephone companies is taxable precisely as is the property of other citizens, whether used in the company’s business or not. This question was raised on the oral argument in the case of State v. Northwestern Telephone Exchange Co., 96 Minn. 389, 104 N. W. 1086; but, owing to the fact that it was not covered by the briefs, and the members of the court were' not agreed upon it, the question was reserved for future consideration. It now comes before us directly, and has been fully argued. Whether the exemption referred to is unauthorized and void depends upon the construction to be given the constitutional amendment of 1895 (chapter 7, p. 14, Laws 1895), authorizing the legislature to impose a gross earnings tax upon telephone and other corporations therein mentioned, and under which the statute was enacted.

The amendment proposed by the legislature, as appears from the enrolled bill on file with the secretary of state, authorized in appropriate language the legislature to impose a gross earnings tax upon such *284companies, but concluded with the following proviso: “Provided further that nothing in this act contained shall operate to authorize the assessment or taxation of any farm land or ordinary business blocks or property owned by any such corporation, person, firm, or company, except in the manner provided by the ordinary methods of taxation.” The amendment was published with the Session Laws of 1895, but by some mistake, either'of the printer or the person copying it for him, the word “farm” preceding the word “land,” as found in the original proviso, was omitted; so that the proviso as there printed does not, in respect to that word, correspond to the enrolled bill. The mistake was not noticed by the attorney general, who, in compliance with section 310, G. S. 1894, furnished the secretary of state a synopsis of the proposed change in the constitution for distribution among the voters, and the word “farm” does not appear in the document issued by him. The amendment was adopted by the people, but the proposition went upon the official ballot by a reference to its title and the section of the constitution amended, and was not bodily before the voters at the election. The governor’s proclamation announcing the adoption of the amendment referred to the act as contained in the session laws.

It is urged by the state that the amendment as published and as explained by the attorney general was the only one voted upon or adopted by the people, and that the authority of the legislature to embody in the statute enacted thereunder the exemption mentioned must be determined by the language of the amendment as so published, with the word “farm” omitted. It is an elementary rule, as respects statutory enactments, that where a discrepancy appears between the enrolled bill as filed with the proper custodian and the copy as printed for distribution the former prevails, and is conclusive of the terms and provisions of the statute actually enacted. Sjoberg v. Security Savings & Loan Assn., 73 Minn. 203, 75 N. W. 1116, 72 Am. St. 616; De Bow v. People, 1 Denio, 9; Simpson v. Union Stockyards Co. (C. C.) 110 Fed. 799; State v. Jones, 6 Wash. 452, 34 Pac. 201, 23 L. R. A. 340, and note; Epstin v. Levenson, 79 Ga. 718, 4 S. E. 328; Potter v. State, 92 Ala. 37, 9 South. 402. If this rule applies to constitutional amendments, where there is a difference in language between the enrolled amendment as proposed by .the legislature and on file with the secretary of state, and the copy thereof as published *285for distribution among the people, it would be conclusive against the position taken by the state.

But conceding, for the purposes of the case, that the rule does not apply, and that the amendment as published and understood by the people when voting upon the question of its adoption controls as to language and intent, and conceding further, without stopping to consider the question, that the regularity of the election and the proceedings looking to the adoption of the amendment may be collaterally called in question in this manner, and the record of legislative enactments required to be made by the constitution and laws of the state thus impeached, we proceed to .the question whether there is in any event any practical difference between the enrolled bill •and the published copy; in other words, whether the absence of the word “farm” changes in any substantial respect the intent and purpose of the legislature and the people in the adoption of the amendment.

The general rule that statutes must be so construed as to give effect. to the legislative intent applies as well to the constitution or amendments thereof. Taylor v. Taylor, 10 Minn. 81 (107). The ■statute or section of the constitution construed must be taken by its four corners, and effect given to all its language, and the main purpose and object as thus made manifest effectuated. The history of the subject legislated upon may be considered, where the language is at all ambiguous or doubtful, and the uniform construction given 3. statute subsequent to its enactment by the tribunal or officers charged with the duty of executing it is entitled to special consideration. State v. O’Connor, 81 Minn. 79, 83 N. W. 498; O’Connor v. Gertgens, 85 Minn. 495, 89 N. W. 866. In fact, all pertinent matters bearing directly upon the object and purpose of the law, and tending' to its illumination and a disclosure of the intention of its framers, are legitimate subjects for consideration by the court in assigning to it its appropriate place among the laws of the state. In the light of these general rules we come at once to the question before us.

The subject of taxation of corporations in this state has been very prominent in the public mind for many years. Efforts in various forms have frequently been made through legislative enactments to devise means by which to compel them to contribute to the public revenues *286in harmony with their ability to pay as disclosed by the volume of business transacted or their discoverable property assets. The constitutional mandate of equality and uniformity has restricted legislation in this line for the most part to the system known as the property tax, the practical defects of which, as applied to corporations,, are obvious. Seligman, Tax. 61. These defects, particularly the difficulty of reaching property owned by corporations doing business-in and through the different counties of the state, the unsatisfactory results of taxing it wherever found, giving rise, as was often the case,, to litigation involving questions of taxable situs, the inequality of assessments made by the numerous assessors, and the failure of this method to place upon the corporations an equitable proportion of the public burden, prompted the legislature to devise as to them a new form of taxation. To accomplish this greater latitude than that given by the equality provision of the constitution was deemed necessary, and the amendment in question was proposed to the people and by them adopted.

The question is: What was intended thereby? We have had for many years a gross earnings system of taxation as to railroad companies, and it has proved on the whole satisfactory, equitable, and just, both to the state and to the corporations thus taxed. The system has always been well known and well understood by the people. It is in practical effect the substitution of a tax upon the earnings for a tax upon the property producing it. Under it all property owned, held, and used by the railroad company in the conduct of its business is and always-has been exempt from general taxation. In fact, the law imposing the tax expressly so provides. As remarked by the court in County of Ramsey v. Chicago, M. & St. P. Ry. Co., 33 Minn. 537, 24 N. W. 313: “This theory, however, necessarily rests upon the assumption that the property of the corporation will be held and used by it for those purposes for which the corporation exists, and that b'y such use an income will be derived, the percentage of which is received by the state in'place of a tax upon the property.” No attempt has ever beerr made in this state, nor in any other state in which the system has been adopted, so far as our examination has extended, to tax both the income and the property necessarily used and employed in producing it. Seligman, Tax. 216; note in 57 L. R. A. 45. As stated, the sys*287tem prior to the adoption of the constitutional amendment in question was in force in this state only as to railroad companies. The immediate question is whether by that amendment the people intended ■to extend it as heretofore existing to other corporations, or whether, as urged by the state, it was the intention to extend it in part, but with the qualification that the property, as well as the earnings therefrom, should be taxed. The solution of the question depends almost wholly upon the construction to be given the proviso appended to the constitutional amendment.

A careful consideration of the question leaves no serious doubt but that the legislature and the people intended by the change in the law to extend the well-known system of gross earnings taxation to other corporations without change or modification. It was practically so held in State v. Northwestern Telephone Exchange Co., 84 Minn. 459, 87 N. W. 1131, where this constitutional amendment was under consideration. Though the precise question was not there involved, the decision in that case has since been treated as correctly construing the amendment, and has been acted itpon by the executive officers of the state charged with the duty of enforcing it. That there was no intention of changing the system, and of. taking a radical, and per•haps unjust, step towards double taxation, is clear. At least, such a step should not be declared except upon specific legislative expression. No reasons are present to justify the conclusion of an intention by this amendment to inaugurate a new system. No complaints had been made of the system as theretofore existing, and, as already stated, it had proved satisfactory up to that time both to the people and to the corporations thus taxed. We are therefore fully justified by the history of the subject, the legislation' subsequent to the adoption of the amendment, and the acquiescence therein by the people and the executive officers of the state charged with the enforcement of the law, in concluding that the purpose-was to extend the gross earnings system as then existing and known to the other corporations named in the amendment.

The proviso, fairly construed, does not militate against this view. Provisos of this character are not intended to impair or destroy the main purpose, nor to enlarge the meaning or effect, of the statute tó which they are added, but, on the contrary, to exclude from the opera*288tion thereof something that might otherwise come within its scope. They are often inserted out of an abundance of caution, to preclude a possible construction at variance with the intent of the lawmakers. 2 Sutherland, St. Const. 351. Where such purpose is apparent, they are strictly construed, and their scope limited to avoid a result manifestly not in harmony with the legislative intent. Such was the purpose of this proviso. What the framers had in mind was, not affirmatively to declare that ordinary property owned by the corporations concerned and not employed in their business should be taxed, for it was then taxable under existing laws, but to preclude the possibility of the amendment being made the basis or foundation of an exemption of all their property. To make that end plain, and to preclude a possible ground of misinterpretation of the scope and purpose of the amendment, was the sole office of the proviso. It was manifestly not the intention to single out the corporations mentioned in the amendment, and impose upon them a tax both upon the income and the property producing it, in face of the fact that such taxation has never before been imposed upon any person or corporation by the laws of the state. This would be a clear departure from the uniform policy of the state, following the constitutional mandate of equality in matters of taxation, and should not be judicially declared the purpose of the people, except upon plain and explicit language. Board of Co. Commrs. of Rice Co. v. Citizens’ Nat. Bank of Faribault, 23 Minn. 280.

Our conclusion, therefore, is in harmony with that reached by the learned trial court, and its order in the premises is affirmed.





Concurrence Opinion

JAGGARD, J.

(concurring).

I am unable to find any reason why a telephone company should not pay a tax on land on general lists in addition to the tax on gross earnings, if a constitutional statute should so require. It is naturally within the legislative power, unless restricted by some constitutional provision, to enact such statute. That previous experiments in taxation on gross earnings may have been in commutation of all other taxes, in no wise restricts or tends to restrict the exercise of legislative power to tax in part on general lists and in part through a levy on gross earnings. That a wrong construction had previously been *289placed upon a particular statute by public officials would neither repeal nor avoid it. The question.here seems to me to be whether there is such a constitutional statute now in force'in this state. This turns upon the reading of the proviso referred to in the majority opinion. If that proviso reads as the telephone company contends, viz., “that nothing in this act contained shall operate to authorize the assessment or taxation of any farm land or ordinary business blocks or property owned by any such corporation, person, firm of company except in the manner provided by the ordinary methods of taxation,” it would seem quite clear that only farm lands or ordinary business blocks can be taxed on general lists. If, as the state claims, this proviso reads, not “farm lands,” but “land,” then lands generally, including ordinary business blocks, must be taxed on general lists. The enrolled bill controls. It follows that, inasmuch as the premises here sought to be taxed are not farm lands or ordinary business blocks, they were not subject to ordinary taxation on general lists.