129 A. 159 | Vt. | 1925
Lead Opinion
The plaintiff is a municipal corporation comprising part of the territory of the town of Hardwick. It was chartered in 1890. In 1894, it was authorized to purchase or construct an electric light plant, and to that end was given authority to take land and water power in the town of Hardwick and in adjoining towns under the power of eminent domain. Acts 1894, No. 180. By No. 192, Acts 1898, it was authorized to sell electricity for light and power purposes to any person, company, or corporation desiring it, in the towns of Hardwick and Wolcott; and by No. 296, Acts 1915, such authority was extended to include the towns of Woodbury, Craftsbury, and Greensboro. In 1898, it purchased a water power in the defendant town and there constructed a hydro-electric plant, and built a transmission line therefrom to within its own territorial limits, which it has ever since used in lighting its streets and public buildings, and to furnish light, heat, and power to its inhabitants. Some time later, the date not appearing, it constructed a distribution system for the purpose of lighting the streets of the village of Wolcott and of supplying the inhabitants *348 thereof with lights, and at the time of the trial below it was furnishing electricity for twenty-six street lights and for fifty-five houses in that village. Still later, it constructed a transmission line to the villages of Woodbury and South Woodbury, and another to the villages of East Hardwick, Greensboro Bend, Greensboro, East Craftsbury, North Craftsbury, and Craftsbury, for the purpose of supplying lights and electricity for "small power users" in those places. To what extent the latter lines have been used did not appear.
In 1918 and in 1919, the defendant taxed that part of the plaintiff's property located in that town; the plaintiff paid taxes under protest, and is now seeking to recover them.
G.L. 684, sub-division VI, provides that, "real and personal estate granted, sequestered or used for public, pious or charitable uses" shall be exempt from taxation. But this general exemption is limited by G.L. 687, which provides that such exemption "shall not be construed * * * as exempting municipal electric light plants when located outside the town wherein the municipality owning the same is situated."
No question is made but that that part of plaintiff's property located in the defendant town was there taxable when these taxes were assessed if the latter statute is constitutional.
The plaintiff contends, however, that this statute offends the provision of Article IX, Chapter I, of the State Constitution which requires every member of society "to contribute his proportion towards the expense" of maintaining the protection of life, liberty, and property which the Constitution guarantees to all the inhabitants of the State; and also, the provision of section I of the Fourteenth Amendment to the Federal Constitution that, "no state shall * * * deny to any person within its jurisdiction the equal protection of the law," because it effects a classification of property for taxation purposes which is not permissible under either constitution.
It is a well-established rule that every presumption is to be made in favor of the constitutionality of a statute, and it will not be declared unconstitutional without clear and irrefragable evidence that it infringes the paramount law. In re Hackett,
We first inquire concerning our own constitutional inhibition upon the classification of property for the purpose of taxation.
The only requirement of our Constitution in this matter is that every member of society shall contribute his proportion towards the expense of the governmental protection afforded him. The general scope of this provision is pointed out in Colton More
v. City of Montpelier,
This brings us to consider whether this statute violates that provision of the latter Constitution relied upon by the plaintiff.
While this provision of the Federal Constitution imposes a limitation upon all the powers of the state which touch the individual or his property, it was not its purpose to prevent the state from adopting any proper and reasonable system of taxation. It does not prohibit the classification of property by the state for the purpose of taxation so long as the classification rests upon some ground of difference having a fair and reasonable relation to the subject of legislation, so that all persons similarly situated are treated alike. Its limitation upon the taxing power of the state is nowhere better stated than in Bell'sGap Railroad v. Pennsylvania,
Later cases are: Traveller's Ins. Co. v. Connecticut,
So, the question is: Does the statute under consideration offend this constitutional provision, as construed by the courts, both state and federal? Not unless the classification thereby made must be held to be purely arbitrary — "without any distinction that bears a just relation to the purpose of its enactment."
In considering this question, it should be borne in mind that this statute affects the taxability of the property of *351
municipal corporations only. Such corporations, whether villages, cities, towns, or counties, are the auxiliaries of the state in the important business of municipal rule; and however great or small their sphere of action, they remain the creatures of the state, holding and exercising powers and privileges subject to the sovereign will. For the purpose of carrying on such activities as are entrusted to them, they are given power to hold and manage real and personal property. The state's control over them concerning their territorial limits, tenure of existence, power of taxation, etc., is pointed out in the following cases:Atherton v. Village of Essex Junction,
Such property as a municipality holds in the former capacity, in a legal sense, belongs to the State (Town of Barre v. SchoolDistrict,
The only difference between the statute involved in the cases last cited and the one under consideration is that those *354
statutes limit the exemption to property located within the territorial limits of the municipality owning it, while the statute before us extends the exemption to property located within the town of which the municipality owning it is a part. It makes the town instead of the village the exemption area, but it is not apparent how this difference affects the constitutionality of this statute, and for obvious reasons no other exemption area could be fixed, in this State, in view of the interrelation between villages and the town of which they are part, in the matter of taxation. Villages have no separate grand lists of their own upon which to assess taxes, nor have they any authority to make such lists. Their taxes are assessed on that part of the town grand list comprising the taxable polls and property within the village limits. Such lists are made by the town, under legislative authority, and therein are allowed all exemptions, both those declared by statute and those voted by the town, whether affecting persons or property within or without the village limits. On such lists, too, the taxable polls and property of the village are taxed in common with the other taxable polls and property of the town to defray town, county, and State expenses. Moreover, a town in which a village having an electric light plant is located may reasonably be expected to derive therefrom benefits, financial and otherwise, not enjoyed by other towns, whatever the relative location of such towns to such village may be, because such village is thereby made a more desirable place to live and do business in, for, as said in theVillage of Swanton v. Town of Highgate,
Apparently the Legislature saw the injustice of taxing the inhabitants of one municipality in order that the inhabitants of another municipality might enjoy the benefit of electric lights and power. Without the protection afforded by this statute the grand list of one municipality might be very materially reduced *355 by the acts of another municipality, without any beneficial return to the former or its inhabitants.
We think the justice of the statute is obvious from every viewpoint. It treats all municipal electric light plants alike; it exempts the property of all that is located within the town of which the municipality is part, so far as devoted to public use; it taxes the property of all that is located outside said town. The only inequality arising under its operation is due solely to the fact that one municipality is obliged to go outside its territory for power to run its plant, while another is not, and clearly that furnishes no excuse to the Legislature for visiting the misfortune of the former upon some other municipality.
While the fact, if it be a fact, that only one or two other municipalities in the State are affected by this statute is a circumstance to be considered on the question of inequality and unfair discrimination, it is by no means controlling. As is said in Mass. Gen. Hospital v. Inhabitants of Belmont,
It is unnecessary in disposing of this case to determine what part, if any, of plaintiff's property located in Wolcott is devoted to public or governmental uses, for, if the statute in question is valid, all property so located is taxable. By the statute, the Legislature undertook to subject to taxation such property of municipal electric light plants as is located outside the town wherein such municipality is located, whether such property is devoted to a public or governmental use or to a private or proprietary use, and enough has been said to show that such classification as the statute makes for that purpose does not offend the equality clause of the Federal Constitution.
The amount which plaintiff seeks to recover includes taxes assessed on two dwelling houses built by it near its Wolcott plant for the use of its employees there engaged, and thirty acres of land which is part of its original purchase, but only part of which is used in connection with its plant. Various claims concerning the taxability of these properties are made, but since our holding on the main question renders these claims immaterial, they are not considered. *356
No other question than that already disposed of affects the validity of the 1918 tax.
The grand list for 1919, so far as made up from real estate, was based on the quadrennial appraisal of 1918. In making that appraisal, the listers increased the valuation of plaintiff's property from $35,000 to $42,320. From their action the plaintiff appealed to the board of civil authority, and that board, on September 19, 1918, reduced such appraisal to $35,695. Six days later, defendant discovered that at the time such board considered and passed upon plaintiff's appeal the members thereof had not been sworn as required by G.L. 835, and immediately notified the plaintiff thereof by mail "so that you can proceed as you think best and have the matter legal." Neither party took further action in the matter. In making up plaintiff's grand list for 1919, the listers' valuation of its real estate in the 1918 quadrennial was used. The defendant contends that this was proper, since the action of the board of civil authority was void because of the irregularity already noticed. But the defendant could not take advantage in this way, of its failure to provide a legally constituted board to act upon plaintiff's appeal. Plaintiff's grand list for 1919 was illegal, and it follows that the tax assessed thereon was, likewise, illegal. This tax, which amounted to $1,218.83, was paid October 27, 1919. No question is made but that the plaintiff is entitled to recover the full amount of such tax, if entitled to recover any part of it.
Judgment reversed, and judgment for plaintiff to recover$1,218.83, with interest from October 27, 1919.
Dissenting Opinion
I am unable to concur in the result reached by the majority, and specially dissent from so much of the opinion as seems to approve of the doctrine that legislation affecting municipal corporations is not subject to constitutional limitations. I am prepared to admit that the test of proper classification for purposes of taxation is the same under the equality clause of the Fourteenth Amendment and the taxation clause of our State Constitution, but I do not subscribe to the proposition that the limitation imposed by the latter permits the adoption of any scheme of taxation which does not offend the former as it may be construed by the Federal Supreme Court. In other words, a holding by that Court that a municipal corporation *357 has no standing to invoke the protection of the Fourteenth Amendment against unequal taxation would not control the question arising under the State Constitution. It may be that Court has gone so far in the Trenton and the Newark cases, cited in the majority opinion, as to hold that the Fourteenth Amendment affords a municipal corporation no protection against legislation affecting its property held in a private or proprietary capacity. If so, the Court has departed from its former holdings and ignored the distinction, recognized by it for more than a century, between the rights of a municipal corporation respecting property held in a purely governmental capacity and that held in a private or proprietary capacity. In the circumstances, it is of special importance that the distinction between the protection afforded by the two provisions should be preserved. Municipal corporations like the plaintiff are either entitled to the same protection respecting their property held in a private capacity as the Constitution guarantees to individuals, or they have no protection from legislative encroachments. If they may be subjected to taxation that does not meet the requirements of the Constitution they must equally be denied the benefit of all constitutional limitations. There is no exception in favor of tax legislation.
It is the well-established rule in most of the jurisdictions where the question has arisen that the property rights of municipal corporations (referring to property acquired in their private or proprietary capacity) are protected by the same constitutional guaranties which shield the property of individuals from legislative aggression. Many of the leading cases are collected in 19 R.C.L. 760. See, also, City of Boston
v. Treasurer Receiver General,
As I view it the only open question in the case is one of classification. I recognize the rule that statutes are not to be declared unconstitutional unless their invalidity appears beyond any reasonable doubt; but the classification on which this statute is based appears so clearly arbitrary that I am unable to entertain any doubt of its invalidity. There is no disagreement respecting the test of proper classification. It is well stated by Rowell, J., in State v. Hoyt,
The mere fact of classification is not enough. To withstand the constitutional test the classification must be reasonable, not a mere arbitrary selection, and must rest upon some real and substantial difference existing between the classes, having a fair relation to the object sought to be accomplished by the legislation, so that all persons similarly situated shall be treated alike — in short, some just and substantial reason for the difference in treatment between the two classes. The RoysterGuano Co. v. Virginia,
It was held in State v. Hoyt that classification based on a difference of residence was purely arbitrary. It seems clear that the basis of the classification in the case at bar is of the same quality. The test must be the same whether the owner of property is a municipal corporation or an individual. The effect of the classification is to exempt resident and tax nonresident owners of the same kind of property. The opinion discusses at some length the justice and reasonableness of the tax as between the plaintiff and defendant, but that is wholly beside the point. The test is not whether, as between the municipalities owning the property and the taxing districts where the property happens to be located, the exemption is just or unjust or the imposition of the tax reasonable or unreasonable. It is wholly a question of discrimination between municipalities owning the same kind of property. The question can be met only by showing that a substantial difference exists between the municipalities taxed and those exempted, making the distinction just and reasonable as between them. I have yet to discover any satisfactory explanation why two municipal electric plants in all respects alike, except that one is located within and the other without the boundaries of the town where the owner is situated, should not be treated alike where the true test of proper classification is applied. It is no answer to say that the town within which the particular village is located is specially benefited, for the test is not a difference in benefits of the taxing districts; and, besides, there is no such difference. The only difference in condition between the municipalities taxed and those exempted is the location of their property. All are engaged in precisely the same kind of enterprise and the property employed has no distinguishing characteristics except the accident of location with reference to town lines. All are engaged in a public service and are subject to supervision by the Public Service Commission. They would owe the public outside *360 their corporate limits the same duty in all respects regardless of town lines. To my mind this is not the "real and substantial difference" upon which a valid classification rests, but is an arbitrary and fanciful distinction. This should be seen when we consider how the mere change of town lines might affect the taxability of municipal property, or the situation that would exist if two municipalities, the one resident and the other non-resident, owned electric plants located in the same town.
In the cases relied upon by the majority, as stated in their opinion, the constitutionality of the statutes there in question was not involved. Consequently they are not entitled to the force given them. No case is cited, and I venture to say that none can be found, that supports the validity of the attempted classification. A similar question arose in Essex County ParkCom. v. Town of West Orange, 77 N.J. Law, 575, 73 A. 511, and it was held that classification according to location of the property could not be sustained. It was pointed out that such a classification was not according to any feature inherent in the property itself, but with reference to the mere chance of location, a circumstance entirely disconnected with the characteristics of the property.
The statement that "for obvious reasons no other exemption area could be fixed, in this State, in view of the interrelation between villages and the town of which they are a part, in the matter of taxation" adds nothing to the argument. As municipal corporations they are entirely distinct. The fact that village grand lists are made up as they are certainly would not stand in the way of limiting the exemption to that part of the property owned by a village located within its territorial limits and taxing so much of it as is located within the town outside. If it were admitted that a sufficient basis could be discovered for such a classification, though no case is found where the question has been discussed and decided, the inclusion of the whole town in the exemption area presents an entirely different question. The fact that the town grand list is made the basis for ascertaining the village grand list in no way affects the relations of the two municipalities, and affords no satisfactory reason for the classification of property to be taxed or exempted from taxation. The Legislature would doubtless have authority to provide for the uniform taxation of municipal electric plants. Such a measure would answer every valid argument advanced in support of *361 the questioned act. But, when it undertook a classification based solely upon the location of the property, its action was clearly discriminatory as between municipalities taxed and those exempted from taxation, and for that reason in contravention of the Constitution. I would affirm the judgment.
Addendum
I regret that the majority has seen fit to discuss the question of the property rights of municipal corporations, since it is wholly unnecessary to do so. I concur in what Mr. Justice Taylor says on that subject. But I cannot say that I am convinced beyonda reasonable doubt that the classification adopted in the statute here involved is without sufficient basis, and I therefore concur in the result.
The grounds of the motion are, in effect, these: (1) That the Court has overlooked the distinction between plaintiff's rights and duties when acting as a governmental agency and when acting in a private or proprietary capacity; (2) that the Court has applied to the plaintiff when it was acting in the latter capacity rules of law applicable only if it was acting in the former capacity; (3) that the Court has ignored its former decisions respecting the rights of municipal corporations when acting in a private or proprietary capacity under authority conferred by charter; (4) that in considering the question of classification, the Court has failed to give due weight to the fact that the plaintiff is furnishing the inhabitants of defendant town with electricity for private and public uses; and (5) that the Court has overlooked the distinction between a condition that might have been imposed "as part and parcel of the grant" and a condition subsequently imposed after plaintiff had accepted its charter and incurred great expense thereunder.
Subsequently, and without leave, the plaintiff amended its motion by adding the following ground: That in making use of the "equality" clause of the Fourteenth Amendment to the Federal Constitution as a measure by which to determine the *362 scope of the proportional provision of the State Constitution, the Court misapprehended the true relation between the two fundamental laws.
This case has been twice argued in this Court, and on each occasion elaborate briefs were submitted by both parties. That counsel availed themselves of the opportunity thus afforded to fully present their views touching all phases of the case then deemed essential is evidenced by their briefs; and the Court has endeavored to examine each question presented with the degree of care commensurate with the conceded importance of the case. Nor are we satisfied from anything that has been called to our attention that we have failed to do so.
Respecting the first three grounds of the motion it is enough to say that the claimed distinction between the rights of a municipal corporation when acting as a governmental agency and when acting in a proprietary capacity was fully pointed out by the plaintiff on the last hearing, and was carefully considered and weighed by the majority in arriving at the conclusion reached by them.
The same is true concerning the subject-matter of the fourth ground of the motion.
The fifth ground of the motion relates to a matter which appeared in the opinion when read but which has since been omitted; therefore, there is no occasion to consider it.
The remaining question urged upon our attention is that presented by the amended motion, which was filed without leave. A question presented in this manner stands no better than though first raised in the brief, which we have held to be unavailing.Powell v. Merrill,
Motion denied. Let full entry order go down at once.