STATE v. U. S. & CANADA EXPRESS CO.
State of New Hampshire, Merrimack
December, 1880
60 N.H. 219
Judgment for the defendants.
FOSTER, J., did not sit: the others concurred.
MERRIMACK.
STATE v. U. S. & CANADA EXPRESS CO.
Taxation is an equal division of public expense.
Chapter 63 of the General Laws is a provision for an unequal division of public expense, and is not authorized by the constitution.
DEBT, on
E. B. S. Sanborn, for the defendants. I. Chapter 63, of the General Laws, is one of the fourteen chapters found under “Title 8, of Taxation.” The various chapters under this title treat of the following subjects:
Chapter 53—Of persons and property liable to taxation.
Chapter 54—Where and to whom to be taxed.
Chapter 55—Of the annual invoice of polls and estate.
Chapter 56—Of the appraisal of taxable property.
Chapter 57—Of the assessment and abatement of taxes.
Chapter 58—Of the collection of taxes of residents.
Chapter 59—Of the collection of taxes of non-residents.
Chapter 60—Of taxes in unincorporated places.
Chapter 61—Of the state board of equalization and their duties.
Chapter 62—Of the taxation of railroads and telegraph lines.
Chapter 64—Of the taxation of legacies and successions, to defray the cost of probate courts.
Chapter 65—Of the taxation of bank stock, and deposits in savings-banks.
Chapter 66—Of extents.
Chapter 63 means taxation as surely as do all the chapters under title 8. Its license machinery is manifestly introduced to conceal a provision which in effect raises revenue by taxation, and its presence betrays a doubt of the constitutionality of the act unless the police power of the state can be invoked. Nevertheless, chapter 63 provides, in substance, for the taxation of a class of citizens. It is in conflict with every provision of the constitution for the raising of revenue. The
The statute under consideration imposes a tax which is not “proportional.” It singles out a small number of persons and a single occupation, and exacts two per cent. of the gross receipts of that one occupation. To be “proportional,” it should require two per cent. of the gross receipts of all occupations to be paid into the treasury. To be “proportional,” it is not enough that it is levied upon one entire class of citizens, but it should be upon all classes. The constitution does not require “proportional assessments, rates, and taxes” to be imposed upon individuals in the different classes of citizens, but “upon all the inhabitants of and residents within the said state, and upon all estates within the same;” that is, the rates shall be “proportional” among all individuals, and among all individual estates. The danger of unjust discrimination of individuals of the same class could not have been the evil sought to be avoided,—e. g., taxing one express company two per cent. and another express company ten per cent. on gross receipts,—for no such evil ever existed under any civilized government. No system of taxation ever singled out an individual, and assessed him as such to the exemption of all others. Discrimination in assessing taxes always consists in taxing one class or several classes of citizens more than other classes. It was an evil which could exist, and not one which it was morally certain could not exist, that the constitution aimed to avoid; and a plain, common-sense construction is, that a tax upon one entire
Nor is the tax imposed by chapter 63 “reasonable.” The word “reasonable” cannot refer to the amount of tax to be raised. It is absurd to believe that the constitution attempted to limit the amount of tax which the people, through their representatives, should impose upon themselves. Reasonable, in this connection, must refer to an equal distribution of the burden of taxation. But we already have a judicial rendering of this clause of the constitution: “The equality here intended is, that the same tax shall be laid on the same amount of property in every part of the state, so that each man‘s taxable property shall bear its due proportion of the tax according to its value.” “The word ‘reasonable,’ in this clause, seems to be used as having the same meaning with the word ‘just,’ and the sense of the clause to be, that taxes shall be laid not merely proportionally, but in due proportion, so that each individual‘s just share, and no more, shall fall on him.” 4 N. H. 565.
In another sense, this law does not levy “proportional and reasonable” taxes. It establishes varying rates of taxation. The constitutional method of valuation is ignored by it, and an arbitrary standard established, which cannot conform always to the rate deduced from valuation. The defendants are assessed upon the property they own and use for the transaction of their business according to its valuation, and upon their gross receipts of money an arbitrary sum, without regard to their real value, even if such receipts can be deemed property. As well might a tax be assessed upon the wagons of the defendants according to their value, and upon their horses ten dollars each without regard to their value. The result of this law is, therefore, not only to assess the defendants for that which no other persons are assessed, but to impose on them different rates in their own taxes, as well as rates differing from those of all other “inhabitants” of the state.
The tax is not “proportional and reasonable” in its operation upon the different express companies. The gross receipts of one person doing express business may be very large, but wholly expended in carrying on his business, while the gross receipts of another expressman may be much smaller, but largely profit.
In other states, under constitutional provisions requiring proportional, uniform, or equal rates of taxation, enactments like chapter 63 have been pronounced unconstitutional. In Wisconsin, under a constitutional provision that “the rule of taxation shall be uniform,” a law compelling railroads and plank roads to pay a tax of one per cent. upon gross earnings was held unconstitutional. Attorney-General v. Winnebago Co., 11 Wis. 35. In Ohio, Louisiana, California, and Missouri, under constitutional provisions requiring uniformity in the modes of assessing taxes, laws requiring railroads, express companies, telegraph companies, etc., to pay
In some other states, where laws similar to chapter 63 are held valid, no constitutional limits exist,—notably in South Carolina and Iowa. The law of South Carolina taxing express companies was enacted prior to the Iowa statute for the same purpose, yet the Iowa law is a better guide for us in determining the validity of our own enactment, first, on account of its similarity to our own statute, and, secondly, from the holding of the Iowa court regarding it. Our own law taxing express companies is probably compiled from the Iowa statute. It is interesting to learn what the court of Iowa, which encountered no stumbling-block in holding their law constitutional, thought of the propriety of such an enactment in other states whose constitutions require uniformity of taxation. In U. S. Express Co. v. Ellison, 28 Iowa 370, the court say,—“It must be borne in mind that we have not in this state, as they have in Wisconsin, a constitutional provision declaring that ‘the rule of taxation shall be uniform;’ nor, as in Ohio, declaring that ‘laws shall be passed taxing by uniform rule all moneys, credits,’ &c.; nor, as in Louisiana and California, ‘that taxation shall be equal and uniform throughout the state;‘—and hence the decisions in those states, in respect to the constitutionality of certain taxing laws therein respectively, have no necessary bearing upon the question before us. And though we recognize the distinguished ability of those courts, and concede the correctness of their conclusions, yet they are not rules of decision applicable here, since they rest upon entirely different constitutional provisions.”
By the constitution of Massachusetts, power is given “to impose and levy proportional and reasonable assessments, rates, and taxes upon all the inhabitants of and persons resident and estates lying within said commonwealth;” and the court of that state, in Com. v. Bank, 5 Allen 431, referring to this clause in discussing a bank tax, says,—“Viewed as a tax assessed under this clause, it would be contrary to its provisions, because it is not proportional on all persons and estates in the commonwealth, but is assessed on a certain class selected by the legislature for the specific purpose of imposing a tax.” See, also, Lowell v. Hadley, 8 Met. 191; Morse v. Stocker, 1 Allen 150; Boston v. Shaw, 1 Met. 130; Goddard, Petitioner, 16 Pick. 504. But the constitution of Massachusetts granted the further right “to impose and levy reasonable duties and excises upon any produce, goods, wares, and merchandise and commodities,” and much of the tax assessed in that state was under this power.
The fundamental theories of taxation in our constitution, besides the poll tax, are property and equality. Twice we find it asserted therein that taxes shall be laid upon estates, and shall be proportional or equal. Recognizing that equality of taxation must be based upon uniformity of valuation and uniformity of the methods of assessment, provision is made for periodical valuation of estates, in order that the paramount idea shall be perfectly wrought out in results. Provisions so plainly limiting upon what the public charges of government “or any part thereof” shall be assessed; reasserting and redeclaring that such charges shall be borne equally, proportionally, reasonably; pointing out the method by which such equality can be attained, and making that one method mandatory upon the general court to the exclusion of all other theories or means of raising revenues adopted by many other states,—after having been so long lived under, acquiesced in, understood, and followed, ought not now to be open to any new construction. Practice under our constitution is our common law. It is enough to say, that we have no taxation laws like this one. It is not necessary to suggest, that if the gross receipts of an express business are taxable in this way, the gross receipts of any other business are taxable in the same way; that if the gross receipts of one business only are taxable, then the gross receipts of any other business may be singled out for taxation. To-day, a part of the public charges may fall upon the gross receipts of the expressmen; five years hence, this tax may be shifted to the manufacturers, because manufacturers would pay a vastly larger amount of revenue into the treasury if taxed upon gross receipts; and later, it may be placed upon some other class,—and so be
Tested by all rules of taxation known to our constitution, this law, I repeat, violates all. It does not tax “estate;” it is not “proportional” nor “reasonable;” it is not based upon “valuation;” it destroys the theory of equality of taxation of all inhabitants, residents, and estates, not through the subtle medium of exemption, nor by reason of the varying standards of municipal assessments, but by deliberate legislative enactment. This law is of importance to the expressman; it is of vastly more importance to the “inhabitants” and “residents” of the state;—for if it can be sustained, it must be upon some theory which commits to the will of the legislature the questions of who shall be taxed, and how much any person or class shall be assessed: in other words, the property of the minority is held at the mercy of the majority, under a constitution illuminated and inspired in every part with the idea of equality.
The Attorney-General, for the plaintiff. It is claimed that c. 63 of the
If this tax is unconstitutional, we do not see why every peddler‘s license, every itinerant merchant‘s license, and every other license which is now or ever has been required by the laws of this state to be taken out, are not also unconstitutional. They are taxes on business, or for the privilege of carrying on particular kinds of business, and do not come within what is claimed by the other side as the only and exclusive mode of raising revenue. It would seem, however, rather late in the day to raise a constitutional question over such kind of taxes. There probably are jurisdictions in this country, owing to some peculiarity in the phraseology of the organic law, where such taxes are not upheld; but generally this is one of the frequent modes which the legislative power, in its wide discretion in such matters, lays hold of for the purpose of raising revenue for the support and maintenance of the government. We think it is very clear that there is no constitutional inhibition in this state against raising revenue in this way, whenever the public good or the necessities of government may require it.
The provisions of our constitution on this subject will be found, on examination, identical with those of the Massachusetts constitution, from which they were copied; and the courts there have on several occasions given a construction to them which, from the ability and high character of the court, and the thoroughness with which the subject has been considered, entitle their adjudications to great weight, if they are not authority binding upon us.
In their constitution there is a provision authorizing “the general court to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities whatsoever, brought into, produced, manufactured, or being within the same.”
These provisions of the Massachusetts constitution were first considered and construed in Portland Bank v. Apthorp, 12 Mass. 252. The statute then under consideration was one requiring “all banks within the commonwealth to pay to the treasurer of the commonwealth, for the use of the same, a tax of one half of one per cent, on the amount of capital stock actually paid in.” The
The subject was again considered in Com. v. Savings Bank, 5 Allen 428, on a bill in equity to enforce the payment of three fourths of one per cent, on the deposits in the defendant bank; and the court, Bigelow, C. J., say, “While the power to impose taxes is an inherent and essential power of government, and is conferred on the legislature, yet it is a power to be exercised carefully, and within the exact limits prescribed in that clause of the constitution which creates and defines it.” In speaking of the validity of the tax, he says, “Viewed as a tax [assessed under the clause in their constitution similar to our own], it would be contrary to its provisions, because it is not proportional on all persons and estates in the commonwealth, but is assessed on a certain class selected by the legislature for the specific purpose of imposing a tax.” The question again arose, in Lowell v. Oliver, 8 Allen 247; and the court, by Bigelow, C. J., say (page 253), “The power of the legislature as to the imposition of taxes is clearly defined, but the delegation of authority, although ample, is subject to three restrictions: first, that the taxes imposed must be proportional and reasonable; second, that they must be laid according to a valuation on all estates in the commonwealth, made within the current decade [in this state every five years]; and third, that they shall be levied for objects which are within the general purposes enumerated in the clause of the constitution, for which public money may properly be expended.”
In Oliver v. Washington Mills, 11 Allen 268, the validity of an act of the legislature, requiring every dividend-paying corporation, organized under a charter or general laws, paying dividends in stock, scrip, or money, to reserve one fifteenth of each and every dividend, and pay the same as a tax or excise to the treasurer of the commonwealth within ten days after the dividend is payable, was considered. The court say, “If it is to be regarded as a tax, it is not within the provisions of the constitution as proportional and reasonable.” In defining what is meant by a tax under this clause of the constitution, they say, “It is a charge apportioned either among the whole people of the state, or those residing within certain districts, municipalities, or sections. It is required to be imposed so that if levied for the public charges of government it shall be shared according to the estate, real and personal,
It will be seen that the construction of this clause of our constitution, for which the defendants contend, is sustained by the unbroken current of Massachusetts decisions from 1815 to the present time.
But if it is claimed, against the force of the opinion in 4 N. H. and the Massachusetts decisions, that the power of taxation is conferred by article 2 of our constitution, which declares that “the supreme legislative power within this state shall be vested in the senate and house of representatives, each of which shall have a negative on the other,” and that this provision is not contained in the constitution of Massachusetts, it may be urged, in reply, that, granting that the power of taxation is conferred by article 2, it is limited and restricted by the provisions of articles 4 and 5, which follow. Those articles define, with great particularity, the powers which may be exercised by the general court, and would seem to confer all the power required by that body to enable it “to provide for the necessary defence and support of the government, and the protection and preservation of the subjects thereof.” If articles 4 and 5 were not understood and intended as restrictions and limitations upon the general power conferred by article 2, it is difficult to understand why they were inserted. They were unnecessary, for they do not enlarge the power of the general court as conferred by article 2, and unless they may be treated as restrictions they are useless. If they are restrictions, it might be suggested that the whole power of taxation is contained in that part of article 5 which authorizes the levy of “proportional and reasonable taxes on
In the opinion of the justices, 4 N. H. 566, the court, after referring to article 2, and quoting from article 5 the grant of legislative power, say,— “Here the power granted is a power to make all manner of laws and statutes which are wholesome, reasonable, and not repugnant to the constitution. It is, in its nature, a limited and restricted power. But the constitution has not left the power to impose and levy taxes to be exercised under this grant of power, limited and restricted as it is, but has made a special provision on the subject of taxation.” After quoting the provision of the constitution which requires that taxes shall be proportional and reasonable, the opinion proceeds : “It is a sound rule, that the different parts of an instrument shall be so expounded as to give meaning to every part, if it be possible. It is not uncommon to find a grant in indefinite general terms, limited and explained by a subsequent enumeration of particulars; and when such enumeration is clearly and explicitly made, it must be construed to control the general terms, for otherwise it will be merely idle and nugatory. Thus in our constitution it is declared, in the first place, that the supreme legislative power shall be vested in two bodies, who are to be styled the general court. But these general terms are subsequently explained and limited by the clause which gives to the general court full power to make, ordain, and establish all manner of wholesome and reasonable orders, laws, statutes, etc., not repugnant to the constitution; for if this clause be not construed to limit and control the other, it is idle and useless. So the grant of full power to make all manner of wholesome and reasonable statutes is broad enough to give the power of imposing and levying taxes. But this grant of power is limited and explained by the subsequent clause, which we have recited, on the subject of taxation. The constitution having, in express terms, given the power to impose and levy proportional and reasonable taxes, it is wholly inadmissible to deduce from any more general terms, used in other parts of the instrument, the power to impose and levy any other than proportional and reasonable taxes: because, if the clause on the subject of taxation be not construed to explain and limit the more general terms used, it will be altogether idle. The constitutional right of the legislature to impose taxes cannot, then, by any sound rule of construction, be held to extend further than to impose proportional and reasonable taxes.”
It may also be urged, as is said in Oliver v. Washington Mills, supra, that “in a constitution, the great purpose of which was to
In order, however, that the tax should be proportional, it is not necessary that the rate of taxation should be the same in every town or taxing district in the state. This would be practically impossible, for each town determines for itself what amount must be raised to meet its ordinary expenses, and the amount of property and the persons from whom it is to be raised are different in different towns and taxing districts: but it is required that the rate shall be the same throughout the taxing district;—that is, if the tax is for the general purposes of the state, the rate should be the same throughout the state; if for the county, it should be uniform throughout the county;—and the requisite of proportion, or equality and justice, can be answered in no other way.
In Ohio, where the constitution requires that taxation shall be uniform, the court say, “taxing by a uniform rule requires uniformity, not only in the rate, but also in the mode of assessment upon the taxable valuation. Uniformity in taxing implies equality in the burdens of taxation; and this equality of burden cannot exist without uniformity in the mode of assessment as well as in the rate of taxation; and the uniformity must be coextensive with the territory to which it applies, and it must be extended to all property subject to taxation, that all property may be taxed alike and equally.” Bank v. Hines, 3 Ohio St. 1, 15.
The constitution of Wisconsin contains a similar provision; and the court there say that “the act of levying a tax on property consists of several distinct steps, such as the assessment or fixing the value and establishing the rate; and, in order to have the course of proceeding uniform, each step must be uniform, and so must the rate. Uniformity thus becomes equality; and there can be no uniform rule which is not at the same time an equal rule, operating alike on all property which is the subject of taxation.” Knowlton v. Supervisors, 9 Wis. 410, 421; Attorney-General v. Winnebago Lake Co., 11 Wis. 35. “The constitution of the state requires, as a rule in levying taxes, that the valuation must be uniform and in all cases alike or equal, operating alike on all the taxable property throughout the territorial limits of the state or municipality within which the tax is to be raised. It has fixed one unbending, uniform rule of taxation; and property cannot be classified, and taxed, as classed, by different rules. When the property is prescribed, the
The same doctrine is held in Minnesota, where the constitutional provision is similar. Stinson v. Smith, 8 Minn. 366, 372; Sanborn v. Rice Co., 9 Minn. 273;—and in Illinois—Chicago v. Larned, 34 Ill. 203; Ottawa v. Spencer, 40 Ill. 211; Holbrook v. Dickinson, 46 Ill. 285;—and in Nevada—State v. Eastabrook, 3 Nev. 173, 177; State v. Kruttschnitt, 4 Nev. 178;—and in Missouri—Crow v. The State, 14 Mo. 237.
It is true, there are cases where a different doctrine is held; but they are in states in which the constitution contains no provision requiring that taxes shall be proportional and reasonable, or that they shall be equal, or that they shall be assessed by a uniform rule, or any similar form of expression, limiting the power of the legislature in this respect. Such are the cases of Weber v. Reinhard, 73 Penn. St. 370; Durach‘s Appeal, 62 Penn. St. 491; Bright v. McCullough, 27 Ind. 223; Butler‘s Appeal, 73 Penn. St. 448; Grim v. School-District, 57 Penn. St. 433. In Weber v. Reinhard, the validity of the tax is placed expressly on the ground that there is no provision of their constitution requiring equality, and the inference fairly is, that if there were such provision the tax could not be upheld. In U. S. Express Co. v. Ellyson, 28 Iowa 370, the court hold a tax similar to that imposed by c. 63 valid, because there is no constitutional provision requiring uniformity or equality in taxation, and they concede that if there were, the tax could not be collected.
If, then, the construction given to the constitutional provision in 4 N. H. 565, and to similar provisions in Massachusetts and in other states, is correct, c. 63 cannot be sustained. It imposes a tax of two per cent, on gross receipts, or, in lieu of that, five dollars per mile for the number of miles of railroad over which the business is done, thus impliedly taxing those only who do express business over a railroad, and thereby excepting from its operation business no part of which is done over railroads. This is in no sense a tax on property, or on polls or estates. It does not regard the capital invested, the expenses incurred, or the losses sustained. And if by any process of reasoning it could be held a tax on property, the tax imposed is not proportional and reasonable. It is based, not on valuation, but on business; not on the amount of capital invested, but on the capacity for business of the managers or owners; not on net profits, but on gross receipts. The gross receipts of one company
The tax assessed bears no such proportion to the whole sum to be raised as the property of the tax-payer bears to the whole taxable property; and it is open to the further objection, that it is double taxation,—for not only is the property employed in the business taxed, but its capacity to earn money, as evidenced by the gross earnings, is also taxed. It is the same in principle as if all the horses or oxen in the state were taxed, and then the owners were required to pay a percentage of their gross earnings. There is no provision for deducting the amount of the tax assessed on the capital: and herein is another element of inequality. It is not imposed in proportion to the whole amount to be raised by assessment on all the property in the state. It is a fixed assessment laid on a certain class of persons regardless of the amount called for from other property, or the percentage assessed on the valuation of other property. It is the same in all cases, whether the property invested or the profits received are large or small. The amount raised is limited only by the success of the persons engaged in the business, without reference to the amount required by the state. If in any case a tax of this character could be levied on business, even then this statute could not be sustained. It is not a tax on all business alike, but one particular kind is singled out from all the others without regard to whether it is advantageous or injurious to the community, and made to bear the whole burden placed on business.
The idea of proportional and reasonable or just and equal taxation is founded on the declaration in the bill of rights, that every member of the community is bound to contribute his share in the expense necessary to the protection of his property. This proportion is wholly destroyed by fixing a tax upon value on one kind of property, and a tax on gross receipts upon another. While the amount to be raised on other kinds of property depends upon the amount required for public objects, and the rate of taxation depends upon the amount of property within the taxing district and the public necessities, under the statute in question the rate is always the same. There can be no proportion or equality between that which is fixed and that which is uncertain and fluctuating. If the legislature could legally enact such a statute, there is nothing to prevent them from placing the whole expense of the government upon any one class of business. They can effectually destroy any business which they choose. The arguments against this law regarded as imposing tax on property apply with equal force if it be regarded as an excise.
Doe, C. J. The question is of the constitutionality of chapter 63 of the General Laws, by the terms of which every railroad expressman is required to pay annually to the state, for a license, either two per cent, of the gross receipts of his business, or five dollars per mile. The unconstitutionality of an unequal division of public expense among New Hampshire tax-payers has been settled too long, and by too many decisions, to be a subject of debate or doubt. The question is, not whether an unequal division is constitutional, but whether this statute is a provision for dividing public expense among tax-payers; whether, in its operation and legal character, it is a violation of the rule of equality; and, if unequal, whether it is an exercise of some other power than that of taxation. The answer of this question requires a precise understanding of the reason and scope of the settled rule, its origin and history, and the end it is designed to accomplish. It is to be intelligently applied as a broad, fundamental, and rational principle, not as an arbitrary formula or mere technical method, and with due regard for precedents, legislative and judicial.
There have been in our taxation some inequalities merely nominal, and others not so substantially unjust as to have any weight as precedents of actual wrong, or as authorities for the introduction of exceptions to the rule. “Even after the Revolution, and the adoption of the constitution, although perhaps substantial justice was administered in most cases, little can be claimed for the courts on the score of their scientific administration of the law, according to strict legal rules. It was not in the very nature of things that legal investigations should be pursued at that day as they have been since.” Pierce v. State, 13 N. H. 536, 557, 558. In that case Judge Parker explains why we do not look with confidence to the period immediately succeeding the Revolution for judicial precedents. And the want of legal learning and skill was not confined to the courts. The people, few in number, recovering laboriously from the effects of the war, concerned themselves with practical results. With little leisure for seeking grievances in mere formal defects of their own legislation, paying little attention
Much of their operation was essentially equalized by an approximate uniformity of value, amount, and condition, that has now disappeared. Inequality of operation, gradually introduced by new subjects of taxation, and by increased differences in the values and varieties of old ones, has been met by legislative efforts to rectify the wrong. Such changes have taken place that methods of dividing the public expense, equitable enough for practical purposes in the last century, would now be good cause of complaint. A great mass of questions of constitutional administration, to be raised by the progress of society, and the enlarged and complicated industries and interests of future generations, were left for those generations to solve.
The title of the tax act of Feb. 7, 1789, is “An act to establish an equitable method of making rates and taxes.” Its preamble is, “Whereas it is necessary that there should be an equitable rule established by law for making rates and taxes within this state, so that every person may be compelled to pay in proportion to his or her estate.” Its first section is, “That henceforward all public taxes shall be made and assessed in proportion to the amount of each person‘s poll and ratable estate, which shall be as follows, viz., All male polls from eighteen to seventy years of age shall be estimated at ten shillings each : horses and oxen which have been wintered five winters, three shillings each,” &c., &c. This pre-constitutional system of assessment (60 N. H. 219, 247) was continued after 1784, not because it was practically disproportional and inequitable, but for its great advantages of uniformity and convenience, and because, under the inherited customs and other circumstances of the time, it seemed to the legislature a reasonably accurate application of the rule of equality. If they had understood an equal division of public expense was not their own right and duty, and the right of their constituents, or that they were authorizing a division grievously or substantially unequal, they would have been less explicit and less urgent in their proclamation of the necessity of such an equitable assessment as would compel every person to pay in proportion to his or her estate. Their
Even if it could be shown that they who adopted the constitution understood it authorized an unequal division of public expense, we have their authority for adhering to the plain meaning of the document. The legislature exercised judicial power after the adoption of the constitution, as they did before, in reversing judgments and granting new trials: and that illegal procedure was not discontinued until it had flourished, under constitutional prohibition, for the space of thirty-four years. Merrill v. Sherburne, 1 N. H. 199. For a shorter time, the ascendency of usage over legal rights was still more conspicuous in New Hampshire slavery. By the acts of April 12, 1770, Jan. 2, 1772, and July 2, 1776, slaves were taxed, like horses and cattle, to their owners. The constitution took effect June 2, 1784. Ten days afterwards, a general tax law was passed (by the first legislature of the constitution), which repealed the act of 1776, and followed the form of that act in making slaves taxable, like other property. “All male slaves from eighteen years old to forty-five, ten shillings each; all female slaves from sixteen years old to forty-five, five shillings each; horses and oxen, four years old and upward, three shillings each; cows four years old and upward, two shillings each,” is the language of the act of 1784. This statute, and the continued taxation of slave property, show that the New Hampshire convention who copied the Massachusetts constitution, and the New Hampshire people who adopted it, did not understand that by its adoption they abolished slavery. In 1789 another general tax law repealed the act of 1784. In the list of taxable property, in the law of 1789, the item “slaves” was omitted. The cause of the omission undoubtedly was the decisions, in Massachusetts jury trials, that slavery was illegal, and the charges given to the juries by the court in those trials, that slavery was inconsistent with the declaration of freedom and equality in the bill of rights. Orr v. Quimby, 54 N. H. 590, 633. New Hampshire accepted the Massachusetts construction of that declaration, and struck “slaves” out of the list of taxable property. Our ancestors thus acknowledged that by adopting the constitution they had unintentionally abolished slavery; and that men and women, for years unconstitutionally held as slaves, had been for years unconstitutionally taxed as property. By their acknowledgment and correction of this constitutional error, a precedent was established that is entitled to consideration in other cases (if others are found), in which their practice was not consistent with the express terms and clear meaning of the constitution.
So far as this case is concerned, the constitution has not been changed since the provisions on this subject were written, in 1781
That charter authorized the general court to impose and levy proportional and reasonable assessments, rates, and taxes. This was copied by the committee of the Massachusetts constitutional convention, who made the first draft of the state constitution. The convention added this clause: “And also to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities.” Journal of the Convention 60, 198, 229; 4 Works of John Adams 283. This clause the New Hampshire convention omitted. If they omitted it because they feared it would be a pretext for an unequal division of public expense, their fear has been justified by the result in Massachusetts. Portland Bank v. Apthorp, 12 Mass. 252, 255; Com. v. P. F. C. Savings Bank, 5 Allen 428, 431; Com. v. L. G. L. Co., 12 Allen 75, 76 ; Com. v. H. M. Co., 12 Allen 298, 300 ; Com. v. P. Institution, 12 Allen 312, 313; M. Ins. Co. v. Loud, 99 Mass. 146; Att‘y-Gen. v. B. S. M. Co., 99 Mass. 148, 152, 153; Com. v. L. S. Bank, 123 Mass. 493, 495; Com. v. B. S. Bank, 126 Mass. 526, 530. These cases, and Oliver v. Washington Mills, 11 Allen 268, 274-279, Cheshire v. C. Commissioners, 118 Mass. 386, 389, and Fall River v. C. Commissioners, 125 Mass. 567, may be authorities against the validity of the act on which this suit is brought. But, as it seems to be understood in Massachusetts that the tax power of that state is granted only by the proportional tax and excise clauses, and as the tax power of New Hampshire is included in the grant of the supreme legislative power (subject to the limitation of equality on which the whole government is founded), it may be doubtful whether much light is thrown upon this case by the Massachusetts
It may be doubted whether the general grant of supreme legislative power, in the second article of the second part of our constitution, is much affected or explained by the grant of specific legislative powers, copied, in the fourth and fifth articles, from a copy of a diffuse English state paper. It may be doubted whether the supreme legislative power of article 2 does not include the specific legislative powers of articles 4 and 5, and whether the grant of the latter is not superfluous. Article 5 requires that all laws shall be not repugnant or contrary to the constitution, and again imposes the same condition upon a certain class of laws. This restriction is unnecessary, because the constitution is the supreme law. In the same article is a special grant of the power of taxation, accompanied by the limitation that taxation shall be proportional. As this grant is unnecessary, because included in the grant of the supreme legislative power in article 2, so the limitation is unnecessary, because immunity from an unequal division of public expense is reserved in the bill of rights, which, according to the testimony of its makers, “contains the essential principles of the constitution,” “is the foundation on which the whole political fabric is reared, and is consequently a most important part thereof.” Gould v. Raymond, 59 N. H. 260, 275.
The bill of rights is a bill of their equal, private rights, reserved by the grantors of public power. The reservation precedes the grant. Before they create the power of proportional taxation in the fifth article, and the supreme legislative power in the second article, and before they form themselves into a state in the first article, they lay the foundation, and therein reserve those personal liberties, which, upon the evidence of history and their own experience, they think cannot safely be surrendered to government. The definition of taxation, given in the foundation, is taken from books with which the leading statesmen of the Revolution were familiar. “The public revenues,” says Montesquieu, “are a portion that each subject gives of his property, in order to secure or enjoy the remainder.” Spirit of Laws, b. 13, c. 1. Government is formed by men for the common good, for the preservation of their lives, liberties, and estates, and the enjoyment of them in peace and safety; and “it is fit every one who enjoys his share of the protection should pay out of his estate his proportion for the maintenance of it.” Locke on Government, b. 2, c. 9, ss. 123, 124, 131; c. 11, ss. 134, 140. Government, says the bill of rights, is instituted
If the governmental expense of a state prison, county alms-house, town highway, district school, or other common benefit, is $1,000, that expense is a tax to be paid by those who, in contemplation of law, enjoy or have a right to enjoy the benefit, and who are the joint purchasers of it through governmental agency. B. Mills Co. v. W. Location, 60 N. H. 156. The benefit and the expense may be either universal or local. B. C. & M. R. R. v. State, 60 N. H. 87, 90, 95; Gould v. Raymond, 59 N. H. 260, 276, 278. In either case, the purchasers’ shares of the price cannot be ascertained without proportion. The obligation of each to contribute “his share” requires an equal division. The legal as well as the arithmetical and common meaning of “his share” is the constitutional doctrine of taxation. Every one‘s tax being his share of public expense, an unequal division of that expense is not taxation. If one contributes more than his share, some other one necessarily contributes less than his share; and if one pays less than his share, somebody else necessarily pays more than his. Each one‘s payment of his share is not merely his constitutional duty; it is the constitutional right of his neighbors. Morrison v. Manchester, 58 N. H. 538, 549; Edes v. Boardman, 58 N. H. 580, 587. And as his non-payment of his full share is a violation of their right, so his forced payment of more than his share is a violation of his right.
The right of acquiring and possessing property is constitutionally reserved.
“Neither has the legislature any constitutional right * * * to raise funds for a mere private purpose. No such authority passed to the assembly by the general grant of legislative power. This would not be legislation. Taxation is a mode of raising revenue for public purposes. When it is prostituted to objects in no way connected with the public interests or welfare, it ceases to be taxation, and becomes plunder. Transferring money from the owners of it into the possession of those who have no title to it, though it be done under the name and form of a tax, is unconstitutional for all the reasons which forbid the legislature to usurp any other power not granted to them.” Black, C. J., in Sharpless v. Philadelphia, 21 Penn. St. 147, 169.
To the extent of its inequality, a disproportional division of public expense is an uncompensated and unauthorized transfer of private property, for a private purpose, from those who bear more than their shares of the common burden to those who bear less than their shares. Morrison v. Manchester, 58 N. H. 538, 550. To the extent of its inequality, it is not a division of anything, and the so-called expense is not an expense, public or private. A power thus to dispose of a part of any one‘s estate would be a power to make the same disposition of the whole of it. All the property of all may be proportionally taken as their shares of the
The contract theory of the origin and object of government having become practical law in this state in 1784, we need not inquire into its previous soundness as a matter of political speculation or historical fact. Locke‘s statement of it is, Men being, by nature, all free, equal, and independent, no one is subjected to the political power of another without his own consent: the only way whereby any one divests himself of his natural liberty, and puts on the bonds of civil society, is by agreeing with other men to join and unite into a community for the preservation, security, and enjoyment of their lives, liberties, and estates. Thus the origin of government is in mutual consent or contract, and its object is the common benefit. Men, when they enter into society, give up rights which they had in the state of nature into the hands of the society, to be exercised for the preservation of themselves, their liberty, and their property. Treatise on Government, b. 2, cc. 7, 8, 9, 11. The bill of rights declares that all men are born equally free and independent; therefore, all government of right originates from the people, is founded in consent, and instituted for the general good. When men enter into a state of society, they surrender up some of their natural rights to that society in order to insure the protection of others. Government is instituted for the common benefit, protection, and security of the whole community, and every member of the community has a right to be protected by it in the enjoyment of his life, liberty, and property. Upon this constitutional establishment of the basis and authority of society, the
In the supposed state of nature, men exercise the natural, essential, and inherent right of acquiring and possessing property as best they can. By mutual agreement, establishing an agency called government, they impose upon it various duties, including that of protecting the natural and reserved right of acquisition and possession, and the duty of enforcing every one‘s obligation to contribute his share of the expense. Equally free and independent, they do not agree to contribute disproportionally. They do not give their agent a power of dividing their public expense unequally, which would be an unlimited and unnecessary power of transferring private property from its owner, without compensation, to another person, for a use and purpose entirely private. Such a transfer would be neither a protection of life, liberty, or property, nor a collection of the public expense of protection, but a mere destruction of the right of property, by a servant, whose duty and authority are expressly limited to such protection and collection. And so long as constitutional government continues to be the execution of a written agreement, creating a limited agency for the purchase of common benefit, protection, and security, by proportional contribution, the contract can no more be executed by an unequal division of the expense, than the right of property can be protected by such an unauthorized extinguishment of it.
Government is “instituted for the common benefit, protection, and security of the whole community, and not for the private interest or emolument of any one man, family, or class of men.”
If equality were not retained by express reservations, and proportion were not expressly required by the fifth article of the grant, the contract would not authorize an unequal partition of the common burden. The people having voluntarily agreed with each other to form themselves into a body politic, the legal meaning of the written agreement is their intention and understanding, shown by competent evidence. There is no presumption of law or fact that they intended to share the expense disproportionally. An intention to subject themselves to disproportion cannot be implied from the nature of the enterprise, and can be proved only by an express stipulation of the contract, or other competent evidence. There is no such stipulation in the writing, and neither there nor elsewhere is there any competent or incompetent proof of such an intention. Sharing the expense among themselves, equally or unequally, would not be an exercise of the war power of confiscating the property of public enemies. Miller v. U. S., 11 Wall. 268, 305, 306, 315.
The supreme legislative power is the supreme power of making law. An unequal division of public expense would be a transfer of private property from its owner, without his consent and without compensation, to another person, for no purpose of public benefit. And such an act of violence, not being public belligerent confiscation, would not be law, nor the enactment or enforcement of law. Cool. Const. Lim. 175; Loan Association v. Topeka, 20 Wall. 655, 662, 663, 664. In no legal sense would it be a rule of civil conduct. 1 Bl. Com. 44. It would no more be law within the meaning of the grant of law-making power, than it would be law of the land within the meaning of the fifteenth article of the bill of rights. “The whole of a public burden cannot be thrown on a single individual under pretence of taxing him, nor can one county be taxed to pay the debt of another, nor one portion of the state to pay the debts of the whole state. These things are not excepted from the powers of the legislature, because they did not pass to the assembly by the general grant of legislative power. A prohibition was not necessary. An act of assembly, commanding or authorizing them to be done, would not be a law, but an attempt to pronounce a judicial sentence, order, or decree.” Black, C. J., in Sharpless v. Philadelphia, 21 Penn. St. 148, 168. It would not
When exactness is impracticable in the exercise or vindication of an asserted right, it does not follow that the right does not exist, or that it is incapable of judicial vindication. Slavery was abolished by the reservation of equality, notwithstanding the historical and inevitable fact of inequality. The common right of light and air cannot be correctly divided; but the whole title is not therefore vested in the strongest, or in those whose number and combination for the time being make them an effective majority. There are many rights that cannot be mathematically adjusted. Rights of property, reputation, person, and family, are generally defended by due process of law, using a measure of damages far less accurate than arithmetical computation. Equality, being practically the source and sum of all rights, and the substance of the constitution, is not abolished by the impossibility of maintaining and enjoying it with precision. Many requirements of the common law, the statutes, and the constitution, are answered by approximations, reasonably free from error, and sufficient for the practical purposes of substantial justice. The difficulty of dividing public expense into the shares which the members of the community are bound to contribute, does not insert in their contract a power of imposing the share of one man, family, or class of men upon another man, family, or class.
Such a power could have been inserted in 1784. “All men are equally free; but some may be involuntarily bound to the service of bearing others’ shares of the common burden. All men have the natural, essential, and inherent right of acquiring and possessing property; but, in dividing public expense, this right may be violated by transferring any one‘s property to some other person or persons, for no public purpose, and without compensation. Government is instituted for the common benefit, protection, and security of the whole community, and not for the private interest or emolument of any one man, family, or class of men; but, in the division of public expense, the ends of government may be perverted by classification. Every member of the community has a right to be protected by it in the enjoyment of his life, liberty, and property; he is therefore bound to contribute his share in the expense of such protection: but this obligation is not a constitutional one; the share which one member is bound to contribute may be collected from another member; and all the property of one man, family, or class of men may be taken by taxation to protect the untaxed property of another man, family, or class. No subject shall be deprived of his life, liberty, or estate but by the judgment of his peers or the law of the land; but, without fault, trial, notice, or compensation, his estate may be taken from him and given to his neighbors, for a private purpose, by a classifying method of dividing public expense; and making such a transfer
An act entitled an act of taxation may be valid, although not an exercise of the power of collecting the constitutional shares of expense. The title may be an immaterial misnomer and error of form only, and the act may be an exercise of some of the other powers which provide for the common benefit, protection, and security, and which may be conveniently grouped under the name of the protective power. A fine, imposed by this power, is practically as useful to the government as a tax of equal amount; and a protective law is not invalid merely because it produces public revenue. Vice, pauperism, and crime may be suppressed and prevented by a variety of measures. In behalf of property, health, life, and morals, the social contract may be performed by destroying buildings, burglars’ tools, gambling and counterfeiting implements, and intoxicating liquors. The spread of fire, and physical, mental, and moral disease, may be stopped by vigorous action. Destruction may be protection. Peirce v. State, 5 How. 504, 589. For the common security, by the judgment of his peers and the law of the land, an offender may be deprived of his estate, liberty, and life. Wrong may be obstructed and repressed by methods less severe than capital punishment. The protective power may seek, by mild courses, to lessen an evil, or check its increase. Instead of destroying the life, liberty, or property of wrong-doers, it may discourage their noxious business, and restrain it within certain bounds.
In 1715 it was enacted, that “to prevent nurseries of vice and debauchery” there should be a limitation of taverns and ale-houses, and that the general sessions should license no more than eighteen in the province. Laws, ed. 1771, p. 59. The constitution did not abolish the right to restrain the sale and use of intoxicating liquor. Pierce v. State, 13 N. H. 536, 571, 572. A license or excise law tending to control and hinder the consumption of such liquor may be an act of the protective power. Cool. Const. Lim. 581-584; State v. Cassidy, 22 Minn. 312. The power that can destroy an article because its use is hostile to the common welfare, may endeavor to diminish the use by an excise increasing the price. In 1787, one of Hamilton‘s arguments for the adoption of the federal constitution was, that by a federal duty on imports the single article of ardent spirits might be made to furnish a considerable revenue; that at a shilling per gallon it would produce £200,000; that it “would well bear this rate of duty; and if it should tend to diminish the consumption of it, such an effect would be equally favorable to the agriculture, to the economy, to the morals, and to the health of society.” The Federalist, No. 12. The protective operation of such a law was put forward as an argument in its
Notwithstanding the omission of the excise clause in our copy of the Massachusetts constitution, the power that can destroy liquor can put upon it an excise as a discouragement of its existence. It may be subjected to a depressing and destructive excise by the same statute that authorizes its extirpation by the ordinary mode of abating nuisances. And if the excise thus imposed is called a tax, it may nevertheless be protection. The constitutional question is not so much of the names as of the substance of things. The preambles of the liquor excise laws of 1781 and September 28, 1787, indicated that revenue was the sole object of those laws; and the title of the latter was “An act to raise a revenue to this state by excise.” Whether any statute, evidently understood and intended by the legislature to be an act of the tax power, can be sustained as an act of the protective power, is a question that need not now be considered. But it is material to observe that if an excise or license law, enacted solely for a protective purpose, has a practical tendency to accomplish that purpose, its production of revenue is no more unconstitutional than the derivation of revenue from fines in criminal cases.
The congress of the confederation of 1778-1789 had no power to levy taxes or to raise revenue. 1 Story Const., ss. 232, 240, 253-258; 1 U. S. Charters and Consts., p. 7, art. 2; p. 8, arts. 5, 6 ; p. 9, arts. 8, 9. Our state constitution was substantially a national one from 1784, when it took effect, to 1789, when the federal government went into operation. And it is national now, except in those matters in which national power has been granted to the Union. Before the supreme legislative state power of laying duties on imports was suspended by the federal constitution, we had state tariff laws. The preamble of the New Hampshire tariff act of 1786 was, “Whereas the laying duties on articles of the produce and manufacture of foreign countries will not only produce a considerable revenue to the state, but will tend to encourage the manufacturing many of those articles in the same.” That was an express avowal of the double purpose of revenue and encouragement of home manufactures. Nails were among the articles named in the
Another act of 1786, entitled “An act to encourage the manufacturing of linseed oil within this state,” reciting in a preamble that “the manufacturing of oil from flax-seed within this state will furnish employment for poor persons, have a happy influence on the balance of trade, and greatly contribute to the wealth of the good subjects of this state,” exempted linseed oil mills from taxation for ten years. By an act of 1787, mills for slitting, rolling, and plating iron, and shops for making nails, were exempted from taxation for ten years. The owners of such mills were to have annual abatements for seven years in their taxes for as many poll-taxes as they employed of proper workmen in such mills. A bounty of £100 was offered for the erection and completion of such a mill within one year, being the first of that kind in the state; and the first mill, with its mill privilege, was exempted from taxation so long as it continued to be occupied in the business. In 1789, by a similar act, the manufacture of sail-cloth was encouraged. In 1792, a ten-years act, entitled “An act to encourage the manufacture of malt liquors,” subsidized brewers by exemption from taxation, for the alleged reason (stated in the preamble) that “the manufacture of malt liquors in this state will tend to promote agriculture, diminish the use of ardent spirits, and preserve the morals and health of the people.” An act of 1786, reciting in a preamble that the importation of certain articles would greatly promote the manufactures of this state, allowed those articles to be imported free from duty. Another act of 1786 exempted gold and silver from import duties, on the ground (stated in the preamble) that the importation of gold and silver into this state, to exchange for produce or manufactures thereof, would much more promote the interest of the good subjects of the same than the importation of foreign luxuries. In 1816, “An act for the encouragement of manufactures” exempted from taxation for two years an amount not exceeding $10,000 of “capital stock employed in each and every manufactory now established in this state, for the manufacturing of cotton yarn and cotton cloth, of woollen yarn and woollen cloth, and of salt.”
The payment of a bounty or subsidy out of the public treasury, by the protective power, may be made in the form and under the name of a tax exemption. “A law which subjects all real estate to taxation except houses of public worship and parsonages, thus subjecting all other estates to direct contribution to the public
The dog tax, so-called (
An act of Massachusetts, in force here during the last fifteen years of our union with that colony, gave a reason for taxing itinerant merchants and peddlers in any month of the year. Mass. Anc. Ch., c. 21, s. 5. The New Hampshire act of 1718, entitled “An act against hawkers, peddlers, and petty-chapmen,” had the following preamble: “Whereas complaint is made of great hurt to
In some important respects the defendants are not the equals of men in general. They have voluntarily enlisted, as common carriers, in the public service. Others, in other occupations, may sell their services to some, and refuse to sell to others; may refuse to sell to any except for an exorbitant price; and may sell to one for more, and to another for less, than a reasonable price. The defendants have not this liberty. As public servants, they are bound to render equal service to all, for an equal and reasonable compensation. McDuffee v. Railroad, 52 N. H. 430. But the difference between their public business and the private employments of others is not authority for binding them to the involuntary private service of bearing others’ shares of public expense. The protective power can make provision for ascertaining and fixing the reasonable amount of their compensation in some more convenient mode than a multiplicity of suits between them and their employers. There have been statutes requiring the reasonable compensation of the proprietors of ferries, canals, and toll-bridges, and others voluntarily engaged in the public service, to be established in judicial proceedings. Act of Feb. 28, 1783 (Laws, ed. 1789, p. 233) ; Laws 1863, c. 2,805, s. 4; Laws 1878, c. 150, s. 3. But for a provision on this subject, in the case of railroad expressmen or other common carriers, an unequal division of public expense is not a constitutional substitute.
The reasonable rates of such expressmen not being fixed by legal process, a railroad-express tax law, so called, might be
A railroad-express tax law might be designed to be an act of taxation, laying upon railway-express transportation a burden to be equally distributed, by natural law, among the purchasers of such transportation and their customers, as a tax laid on any articles of property is distributed among the consumers or users of the article. The object might be to make the expressmen mere collectors of the tax. Crandall v. Nevada, 6 Wall. 35, 39, 40; Railroad v. Pennsylvania, 15 Wall. 284, 294, 298; Henderson v. Mayor, 92 U. S. 259, 268; W. U. T. Co. v. Richmond, 26 Grat. 1, 27; Judge Cooley, in 4 Southern Law Rev. (N. S.) 185, 196; Morrison v. Manchester, 58 N. H. 538, 554, 555. But there is nothing in the language of this statute, the nature of the business, or the history of the times, having any tendency to show that the legislature had such an object in view. And before examining the validity of the statute as an act of discouragement or encouragement, or an imposition upon the whole community of a self-distributing tax to be collected by railroad expressmen in addition to their reasonable compensation, we ought to have some evidence rebutting the presumption that the legislature did not intend to authorize such expressmen either to add to their charges as much as this statute requires them to pay to the state, or to raise their charges above the reasonable standard of the common law. It does not appear that their charges were so low in 1878 as to make it probable that the legislature intended to increase them; and a construction authorizing an increase of them beyond a reasonable compensation would be more likely to thwart than to carry out the legislative purpose.
In its original draft the act had the title of a tax law. Report of Tax Commissioners of 1878, p. 186. In the Laws of 1878, c. 51, it had the title of a license law. In the
In no view that has been suggested, and in none that occurs to us, can this statute be held to be an act of the protective power. As an act of taxation increasing the charges of railroad expressmen beyond a reasonable compensation for their services, and employing them as collectors of a tax laid upon the general public by whom express charges are directly or indirectly paid, it lacks necessary evidence of such a legislative design. As a taxation of such expressmen, it makes an unequal division of public expense, and binds them to the private service of paying their neighbors’ shares. Expressmen are subject, by general law, to the uniform taxation of the whole community. In addition to that, this special law puts upon railroad expressmen a tax which is put upon nobody else. Whether it is a tax imposed upon person, property, income, business, gross receipts, profits, or earnings, is immaterial. It is a tax which one class of men are required to pay, and from which all others are exempt. It is a perfect example of unequal division of public expense. It does not tend towards equal right by any degree of approximation, but is as distant as possible from it, and diametrically opposite to it. It is inequality, pure and simple. There are other objections which need not be considered, because this one is decisive. If a special, discriminating tax of two per cent, could be taken from one class of men alone, a similar tax of one hundred per cent, could be taken from any man, any family, or any class of men; one man, one family, or one class could be singled out, and compelled to pay all the expense of the common benefits of government, and all others could thus be discharged from their constitutional obligation to contribute their shares. The action cannot be maintained.
Case discharged.
FOSTER and SMITH, JJ., did not sit: the others concurred in the result.