This is an original action, filed in this court under the provisions of chapter 25, Sess. Laws 1921, to enjoin the collection of the 1.5 mill rate, estimated by the State Board of Equalization to be the rate necessary to meet the expenses of state government for the fiscal year ending June 30, 1921. Two decisive questions are involved in the case, viz.: First, whether this court has original jurisdiction over the controversy; second, whether the levy is valid.
The plaintiff contends that this court has original jurisdiction, and that the levy is invalid. Defendant contends that this court does not have original jurisdiction, and that the levy is valid.
As to the qualification of original jurisdiction, section 1, chapter 25, Sess. Laws 1921, provides: *Page 142
"The Supreme Court of this state shall have original jurisdiction of actions brought therein to enjoin the enforcement or collection of any illegal tax, charge or assessment made or levied for any state purpose and to enjoin the collection of any such tax, if it shall be found by the court that the same is illegal. Any number of persons against whom any such tax is levied or whose property is affected by any such tax may unite in the petition filed to obtain such injunction and, after any such petition has been filed by any person or persons, other persons similarly situated may, at the discretion of the court, upon permission granted it, join in such petition and become parties plaintiff in such action. Any such action may be brought against any officer or officers of the state or any officer or officers of any county or counties of the state charged with the duty under the statute of enforcing or collecting such tax."
If the foregoing provisions of statute are not in conflict with constitutional provisions, then this court has original jurisdiction.
Section 2, article 7, of the Oonstitution provides:
"The appellate jurisdiction of the Supreme Court shall be co-extensive with the state, and shall extend to all civil cases at law and in equity, and to all criminal eases until a Criminal Court of Appeals with exclusive appellate jurisdiction in criminal cases shall be established by law. The original jurisdiction of the Supreme Court shall extend to a general superintending control over all inferior courts and all commissions and boards created by law. The Supreme Court shall have power to issue writs of habeas corpus, mandamus, quo warranto, certiorari, prohibition, and such other remedial writs as may be provided by law, and to hear and determine the same; and the Supreme Court may exercise such other and further jurisdiction as may be conferred upon it by law."
From the last provision above it is clear that the Legislature may confer other and further jurisdiction by law. Chapter 25, Sess. Laws 1921, at the most, cannot be said to do more than confer other and further jurisdiction. Therefore, the passage of the act was within the legislative power, and was a valid exercise of such power.
By this we are not to be understood as holding that the Legislature is unlimited in its power to confer original jurisdiction upon this court. The primary purpose of the Constitution in creating this court was to create an appellate court, a court of last resort by appeal, and the Legislature could not so burden it with original jurisdiction as to destroy its primary function as a final court of appeals.
But in matters of such public interest, matters which directly affect the sovereign rights and powers of the state, as does this case, it is within the valid exercise of legislative power to confer original jurisdiction in such matters upon this court; the purpose of the act being to provide a remedy against an invalid state tax.
Section 7 of the act makes this provision:
"* * * Provided, the court shall first determine the validity of the tax levy under which any tax is sought to be restrained, enforced, collected or returned, and if said levy is found illegal the court shall enjoin the collection of said tax under said levy found illegal as to all parties affected, whether they be parties of said suit or not."
Therefore, if the court should hold the levy to be illegal in its entirety, the entire state levy should be enjoined, as this procedure is authorized only as to state taxes and every taxpayer within the state is affected.
Section 8 of the act above provides:
"The remedy herein authorized shall not be exclusive or operate to repeal any statute of this state authorizing any proceeding for the recovery of illegal taxes paid, and shall be cumulative; but shall not extend to any tax or taxes levied by any county or other municipality of the state."
The provision, "but shall not extend to any tax or taxes levied by any county or municipality of the state," precludes an original action in this court to enjoin the collection of any county or municipality tax or any tax except a state tax.
Section 6 of the above act provides:
"An action hereunder may be brought by any person or persons against whom any such tax complained of is levied or whose property is affected thereby at any time after such tax is levied. * * *"
The above provision gives any person affected by the tax the right to bring the action provided for in the act. Hence we hold that the Legislature has not exceeded its constitutional limitations in thus conferring original jurisdiction upon this court; also that, under the above provision of section 7 of the act, if this court, in any case, should determine a levy to be illegal and should enjoin the collection of same, the effect of such order would be to enjoin the collection of the entire state *Page 143 levy; also, under section 8, that the remedies provided in said act are not exclusive, but merely cumulative, and that this remedy cannot be resorted to except to enjoin the collection of a state levy, also, under section 6, that any person affected by such tax may bring the action provided for.
As to the validity of the levy, one of the grounds urged by plaintiff is that levying a tax is a legislative act, and, assuming that the Board of Equalization had itself made the levy in question, and that it received authority to do so from the Legislature, contends that the delegation of authority to the Board of Equalization to levy a tax is an unconstitutional delegation of legislative authority, and that the tax levied under such authority is void.
It is probably true that the levying of a tax is a legislative act and possibly true that the Legislature cannot delegate such authority to the Board of Equalization. It is unnecessary, however, to decide either of these questions, for the simple reason that the Legislature has not delegated such authority to the Board of Equalization, nor has the Board of Equalization made the levy in question. The Constitution and statutes settle these questions.
Section 21, article 10, of the Constitution provides:
"There shall be a State Board of Equalization, consisting of the Governor, State Auditor, State Treasurer, Secretary of State, Attorney General, State Inspector and Examiner, and President of the Board of Agriculture. The duty of said board shall be to adjust and equalize the valuation of real and personal property of the several counties of the state, and it shall perform such other duties as may be prescribed by law. * * *"
Bearing in mind the provision, "and shall perform such otherduties as may be prescribed by law," we look to sections 7374 and 7375 of the Revised Laws of 1910 to see what other duties have been prescribed by law.
Section 7374:
"There is hereby levied annually an ad valorem tax upon all property in this state which may be subject to taxation upon such basis, a tax sufficient in addition to the income from all other sources, to pay the expenses of the state government for each fiscal year ending on the thirtieth day of June, and to pay the deficiency, if any, for the year next preceding; Provided, however, that the total amount of such levy shall not exceed the maximum amount provided by the Constitution that may be levied on an ad valorem basis for state purposes, including one-fourth of one mill for common school purposes to be levied, collected and distributed as other school money. For the purpose of computing the amount of the levy hereby made, the State Board of Equalization shall, at its annual meeting on the third Monday in June of each year, or as soon thereafter as the total valuation of all the property in this state subject to taxation under the provisions of this chapter shall have been ascertained, and from day to day thereafter, until such time as they shall compute the amount appropriated to pay the expenses of the state government for the period aforesaid with twenty per cent. added thereto as an allowance for delinquent taxes. From the actual amount thus computed shall be deducted the estimated income of the state from all sources other than from the levy hereby made. The amount so ascertained shall be certified by the State Auditor to the clerks of the several counties in this state, and shall be entered upon the tax rolls thereof."
Section 7375:
"The amount of the levy so computed by the State Board of Equalization shall specify distinctly the purpose for which tax is levied and shall in no case exceed the amount appropriated by the Legislature for such purpose."
It must be observed that section 7374, supra, does not delegate to the Board of Equalization the authority to make a tax levy, nor impose upon it the duty to make a levy, nor contemplate that it will make a levy, and that the Board of Equalization did not make the levy. The levy is made by the Legislature itself, and is a perpetual annual levy sufficient to defray the state's expenses for each year.
The opening lines of section 7374, supra, read:
"There is hereby levied annually an ad valorem tax upon all property in this state which may be subject to taxation upon such basis, a tax sufficient in addition to the income from all other sources to pay the expenses of state government for each year ending on the thirtieth day of June, and to pay the deficiency, if any, for the year next preceding. * * *"
Therefore, neither the actual making of the levy complained of nor the actual making of any tax levy is performed by the Board of Equalization. The actual making of the levy was by the Legislature itself, and was made pursuant to express provisions of sections 2 and 3, article 10, of the Constitution, which provides:
Section 2: *Page 144
"The Legislature shall provide by law for an annual tax sufficient, with other resources, to defray the estimated ordinary expenses of the state for each fiscal year."
Section 3:
"Whenever the expenses of any fiscal year shall exceed the income, the Legislature may provide for levying a tax for the ensuing fiscal year, which, with other resources, shall be sufficient to pay the deficiency, as well as the estimated ordinary expenses of the state for the ensuing year."
Thus the Legislature not only acted within its authority, but acted under the express command of the Constitution.
Now, bearing in mind that the levy itself was made by the Legislature by the passage of the act, and not by the Board of Equalization, and bearing in mind, also, that the Legislature is authorized, by section 21, article 10, of the Constitution, to prescribe additional duties for the State Board of Equalization, let us see just what duty has been prescribed for such board by sections 7374 and 7375, Revised Laws 1910, supra, these being the sections which prescribe such additional duties. It will be observed that, after making the levy which is made in said section 7374, supra, and making a perpetual annual levy, the section further provides:
"* * * For the purpose of computing the amount of the levy hereby made, the State Board of Equalization shall, at its annual meeting on the third Monday in June of each year, or as soon thereafter as the total valuation of all property in this state subject to taxation under the provisions of this chapter shall have been ascertained, and from day to day thereafter, until such time as they shall compute the amount appropriated to pay the expenses of the state government for the period aforesaid with twenty per cent. added thereto as an allowance for delinquent taxes. From the actual amount thus computed shall be deducted the estimated income of the state from all sources other than from the levy hereby made. The amount so ascertained shall be certified by the State Auditor to the clerks of the several counties in this state and shall be entered upon the tax rolls thereof."
As a limitation upon the rate estimated, as above provide, section 7375 provides:
"The amount of the levy so computed by the State Board of Equalization shall specify distinctly the purpose for which tax is levied and shall in no case exceed the amount appropriated by the Legislature for such purpose."
The only duties prescribed for the Board of Equalization by the above statutes, the only powers conferred upon such board by said statute, are merely administrative and clerical duties. They are not legislative in any sense of the term, and are therefore not an invalid delegation of legislative authority. The board has merely the duty to ascertain by mathematical calculation the total valuation of all property in the state; the total amount appropriated by the Legislature for the expenses of state government for the period; to add 20 per cent. to such amount as an allowance for delinquent taxes. This gives the board the gross amount of revenue to be raised. It then becomes the duty of the board to make an estimate of the amount expected to be collected from unpaid taxes, and also to estimate the amount expected to be derived from all other sources than the rate which is about to be estimated or computed, and if there be a surplus balance in the treasury, over and above all legal requirements for the preceding year, to add such unexpended balance to the amount expected to be derived from all other sources and subtract their sum from the aforesaid gross amount to be raised, and upon the remainder to estimate the rate of levy to be made upon the total amount of assessed valuation within the state. When this is done and the estimates are certified, as provided by the above statutes, the duties of the Board of Equalization, as such, are ended so far as a particular levy is concerned.
A performance of the duties thus prescribed does not contravene the provisions of the Constitution nor transcend any constitutional limitations. The Legislature had power to confer such duties. It might have reserved to itself the duty of making the mathematical calculations and estimates necessary to be made, but, recognizing the impracticability and expensiveness of such a plan and taking cognizance of the fact that it is already the duty of the Board of Equalization, under the Constitution, to equalize the assessments of all counties, and that the board would thereby have a better knowledge of the total amount of assessable property in the state and a better opportunity for estimating the total amount of assessable property in the state than some other board might have or that the Legislature itself might have, and taking these things into consideration, the Legislature, instead of reserving to itself the duty of making the computations or providing for some other board to make them, as it had authority *Page 145 to do, very properly designated the Board of Equalization as the board which should be charged with the duty of estimating the amount of revenue to be raised and of computing the rate of levy, and in so doing the Legislature acted within its constitutional authority.
It is contended by defendant that this is an equitable proceeding and that plaintiff has an adequate remedy at law, and, therefore, cannot maintain this proceeding for relief. But this is not a suit in equity within the meaning of the term "suit in equity" under the common law. It is true that injunction is a character of relief which formerly was granted only by courts of equity, and, ordinarily, even under the Code, a proceeding for injunction is one which invokes the equity power of the court and is governed in the main by the principles of equity, but this proceeding is not an equity proceeding; it is a legal proceeding for a relief provided for by statute, both the procedure and the remedy being expressly provided for by statute.
Section 1 of the act under which it was brought denominates it "an action," and while it is an action in the broader sense of the term "action," in that it is a proceeding for the prevention of a wrong, yet it is not an action within the meaning of the term "action" as defined by section 4644, Revised Laws of 1910, in that it is unlike the ordinary proceeding in courts of justice. Sections 4643 to 4648, inclusive, Revised Laws of 1910, are as follows:
Section 4643:
"Division of Remedies. Remedies in the courts of justice are divided into:
"First: Actions.
"Second. Special proceedings."
Section 4644:
"Action Defined. An action is an ordinary proceeding in a court of justice by which a party prosecutes another party for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense."
Section 4645:
"Special Proceedings. Every other remedy is a special proceeding."
Section 4646:
"Kinds of Action. Actions are of two kinds: First, civil; second, criminal."
Section 4647:
"Criminal Action. A criminal action is one prosecuted by the state as a party, against a person charged with a public offense for the punishment thereof."
Section 4648:
"Civil Action. Every other is a civil action."
Therefore, while this proceeding is not an "action" within the restricted meaning of the above statutes, yet, being a proceeding authorized and prescribed by statute for the prevention of an alleged wrong, it comes within the meaning of the definition of "special proceeding," and is not a "suit in equity," but a "special proceeding." For discussion and decisions on the distinction between "actions" and "special proceedings," within the meaning of statutes which make such distinction, see Cornish v. Milwaukee, etc. (Wis.) 19 N.W. 443; In re Milwaukee Light, Heat Traction Co. (Wis.) 125 N.W. 903-4; "Action," 1 Rawle C. L. 315; "Actions," 1 Cyc. 716-17; "Action," 1 C. J. 951-2; also authorities cited under subject "Special Proceedings," 7 Words Phrases, 6587.
Hence, in our opinion, inasmuch as the remedy prescribed by the statute under which this proceeding was brought is a legal remedy and is extended to any person affected by the tax, the plaintiff, having shown himself affected by the tax has a right to maintain this proceeding in the manner in which it was instituted.
Plaintiff contends also that the levy is invalid for the reason that the Board of Equalization, in making its estimates and computations, "acted in a systematic, arbitrary, grossly excessive, discriminatory and unfair manner, and in systematic and intentional disregard of the laws of said state."
In support of the above allegation plaintiff alleges certain facts as to the amount required by the state for the fiscal year ending June 30, 1921, the amount on hand as an unexpended balance in the state treasury; the amount which should reasonably be expected from other sources than the ad valorem levy in question, and the amount estimated for deficiency expenses. Plaintiff contends that the Board of Equalization had no power to make a levy for estimated deficiencies, and that it acted without authority of law and contrary to law by including such deficiency in its estimate for the ensuing year's expenses, and, upon such allegation of facts, plaintiff contends that the amount on hand, together with the amount which should reasonably be expected from other sources than the ad valorem *Page 146 levy in question, would be more than the amount appropriated by the Legislature for the ensuing year and sufficient in amount to meet all expenses for such year without making any levy at all; that, therefore, the entire levy was unnecessary, and, such being the case, the Board of Equalization was without authority to make any levy.
Upon the issues of fact as to the amount of unexpended balance in the treasury, the amount which should reasonably be expected from other sources, and the total amount appropriated by the Legislature for the year in question, the plaintiff and defendant, through the Attorney General, have stipulated and agreed that the following are the facts in the case, to wit:
"Agreed Statement of Facts. "Comes now the parties hereto and agree that the above entitled cause shall be submitted to this court for final determination upon the following agreed statement of facts:
"1. It is agreed that paragraph 1, 2, and 3 of plaintiff's petition filed herein, as amended, are correct statements of the facts therein set forth.
"2. It is further agreed that the said defendant, J.Y. Taylor, as county treasurer of Canadian county, Okla., has extended the said state levy of 1.5 mills on the tax rolls of Canadian county, and has charged and assessed against the property of the plaintiff in said county taxes on account thereof in the amount of two hundred and five and 76/100 dollars ($205.76), which said amount the defendant is demanding that the plaintiff pay.
"3. It is further agreed that for the fiscal year ending June 30, 1920, the actual receipts of the state of Oklahoma from sources other than ad valorem taxation was $6,225,682.80.
"That for the fiscal year ending June 30, 1921, the State Board of Equalization estimated that such income from other sources would amount to $5,405,000.00.
"That at the time said state board made such estimate on September 13, 1920, there had been collected and received for the two preceding months, July and August, 1920, or for one-sixth of the current fiscal year, from sources other than ad valorem taxation, the sum of $1,982,217.06.
"That for the twelve months constituting the fiscal year ending June 30, 1921, there was actually collected and received by said state from sources other than ad valorem taxation, the sum of $8,436,349.25.
"4. It is further agreed that on June 30, 1920, there was in process of collection by said state, ad valorem taxes for the preceding year amounting to $1,809,043.58, none of which amount was included in the estimate of income for the fiscal year ending June 30, 1921, as adopted by the State Board of Equalization; that there was actually collected and received during said year on account of said delinquent ad valorem taxes the sum of $1,620,052.44.
"5. It further stipulated and agreed that the statement hereto attached marked Exhibit '1' correctly shows for each state department, and by totals the following:
"In column 1, the earnings of the state of Oklahoma accruing to the general revenue fund, from sources other than ad valorem taxes, for the fiscal year ending June 30, 1920.
"In column 2, the estimated earnings from the same sources for the fiscal year ending June 30, 1921, as computed by the State Auditor and submitted to the State Board of Equalization.
"In column 3, the estimated earnings from the same sources for said fiscal year, as computed by the State Examiner and Inspector, and submitted to the State Board of Equalization.
"In column 4, the estimated earnings from the same sources for the said fiscal year, as computed by the Governor, submitted and adopted by the State Board of Equalization.
"In column 5, the earnings from the same Sources collected for the months of July and August, 1920.
"In column 6, the actual earnings from the same sources collected during the fiscal year ending June 30, 1921, and credited to the general revenue fund for the year 1921.
"6. It is further stipulated and agreed that the statement hereto attached and marked Exhibit '2,' and made a part hereof, correctly shows the financial condition of the state of Oklahoma, as of June 30, 1920.
"7. It is further stipulated and agreed that the statement hereto attached marked Exhibit '3' and made a part hereof, correctly shows the financial condition of the state of Oklahoma, as of June 80, 1921.
"8. It is further, stipulated and agreed that Exhibit 'A' attached to petition of plaintiff herein is a correct copy of the resolution adopted by the State Board of Equalization on September 13, 1920; and that the sum of $1,721,401.44, shown therein as estimated accruing deficiencies, was included by the state board in the revenue requirements for the fiscal year ending June 30, 1921, and that no part of said sum had theretofore been appropriated by the Legislature of said state.
"(Signed) C.O. Blake, Cottingham, Hayes, Green McInnis, Kleinschmidt Grant, M.D. Green, Attorneys for Plaintiff.
"S.P. Freeling, Attorney General, C.W. King, Assistant Attorney General, Attorneys for Defendant. *Page 147
"Statement showing the earnings (column 1) of the state accruing to General Revenue, from sources other than ad valorem taxes, for the fiscal year ending June 30, 1920; the estimated earnings (column 2) from same sources for fiscal year ending June 30, 1921, as computed by F.C. Carter, State Auditor; the estimated earnings (column 3) from same sources for said fiscal year as computed by Fred Parkinson, State Examiner and Inspector; and the estimated earnings (column 4) from same sources for said fiscal year as computed by J.B.A. Robertson, Governor, Column 5 shows the amounts collected by the various named departments and institutions for the months of July and August, 1920. Column 6 shows actual earnings collected during the fiscal year ending June 30, 1921, and credited to the General Revenue Fund for 1921.
Departments and Institutions Column 1 Column 2
Secretary of State_______________________________ 331,312.02 250,000.00
State Auditor — Gross Production Tax____________3,353,104.53
4,000,000.00
Income Tax______________________ 816,212.19 750,000.00
Miscellaneous Collections_______ 58,941.42 50,000.00
Inheritance Tax_________________ 100,554.45 125,000.00
State Treasurer — Interest On Daily Balances____ 157,470.99
150,000.00
Corporation License Tax_______ 230,047.31 200,000.00
Miscellaneous ________________ 600.00 ___________
Official Depository Interest__ 77,282.13 60,000.00
Insane Support Collections____ 148.50 ___________
Examiner and Inspector, Accountancy Fees_________ 950.00 750.00
Chief Mining Inspector___________________________ 2,543.77 1,000.00
Insurance Commissioner___________________________ 541,768.82 500,000.00
Insurance Board__________________________________ 50,659.11 50,000.00
Bank Commissioner________________________________ 26,831.09 25,000.00
Corporation Commission___________________________ 55,432.73 50,000.00
Commissioners of the Land Office_________________ 47,663.75 45,000.00
State Board of Health____________________________ 12,427.37 12,500.00
State Library____________________________________ 1,115.30 1,000.00
State Mining Board_______________________________ 1,707.69 1,500.00
State Board of Public Affairs____________________ 11,357.28 12,500.00
Clerk of Supreme Court___________________________ 31,637.52 30,000.00
Normal Schools___________________________________ 1,259.28 1,250.00
State Board of Agriculture_______________________ 40,351.03 40,000.00
State Highway Department_________________________ 265,368.99 250,000.00
State Issues Commission__________________________ __________ 12,500.00
Miscellaneous Departments and Institutions_______ 8,935.53 7,500.00
----------- ------------
TOTALS____________________________________6,225,682.80 6,625,500.00
Departments and Institutions Column 3 Column 4
Secretary of State_______________________________ 100,000.00 200,000.00
State Auditor — Gross Production Tax____________3,550,000.00
3,354,000.00
Income Tax______________________ 800,000.00 675,000.00
Miscellaneous Collections_______ 50,000.00 50,000.00
Inheritance Tax_________________ 125,000.00 50,000.00
State Treasurer — Interest On Daily Balances____ 155,000.00
125,000.00
Corporation License Tax_______ 350,000.00 150,000.00
Miscellaneous ________________ ___________ 500.00
Official Depository Interest__ 75,000.00 50,000.00
Insane Support Collections____ ___________ ___________
Examiner and Inspector, Accountancy Fees_________ 500.00 500.00
Chief Mining Inspector___________________________ 2,000.00 1,000.00
Insurance Commissioner___________________________ 550,000.00 350,000.00
Insurance Board__________________________________ 50,000.00 40,000.00
Bank Commissioner________________________________ 25,000.00 20,000.00
Corporation Commission___________________________ 50,000.00 20,000.00
Commissioners of the Land Office_________________ 65,000.00 20,000.00
State Board of Health____________________________ 10,000.00 7,500.00
State Library____________________________________ 750.00 250.00
State Mining Board_______________________________ 1,000.00 750.00
State Board of Public Affairs____________________ 10,000.00 20,000.00
Clerk of Supreme Court___________________________ 25,000.00 25,000.00
Normal Schools___________________________________ 2,000.00 500.00
State Board of Agriculture_______________________ 24,438.80 40,000.00
State Highway Department_________________________ 250,000.00 200,000.00
State Issues Commission__________________________ __________ ___________
Miscellaneous Departments and Institutions_______ __________ 5,000.00
---------- -----------
TOTALS________________________________ 6,270,688.80 5,405,000.00
Departments and Institutions Column 5 Column 6
Secretary of State_______________________________ 44,192.18 236,896.13
State Auditor — Gross Production Tax____________1,307,082.32
5,239,297.26
Income Tax______________________ 229,842.57 916,064.25
Miscellaneous Collections_______ 9,611.40 63,881.91
Inheritance Tax_________________ 63,090.62 155,067.82
State Treasurer — Interest On Daily Balances____ 37,385.24
238,494.22
Corporation License Tax_______ 171,062.95 312,953.84
Miscellaneous ________________ __________ 816.32
Official Depository Interest__ 15,843.26 85,240.78
Insane Support Collections____ ___________ __________
Examiner and Inspector, Accountancy Fees_________ ___________ 575.00
Chief Mining Inspector___________________________ ___________ __________
Insurance Commissioner___________________________ ___________ 682,471.06
Insurance Board__________________________________ 20,807.62 91,498.94
Bank Commissioner________________________________ 3,587.55 26,379.95
Corporation Commission___________________________ 2,833.96 21,552.41
Commissioners of the Land Office_________________ 47,065.25 72,242.92
State Board of Health____________________________ 3,745.00 12,920.56
State Library____________________________________ __________ 111.62
State Mining Board_______________________________ 180.00 958.00
State Board of Public Affairs____________________ ___________ 6,376.65
Clerk of Supreme Court___________________________ 6,195.62 32,962.83
Normal Schools___________________________________ 1,182.00 3,221.33
State Board of Agriculture_______________________ 5,529.15 32,213.23
State Highway Department_________________________ 12,980.37 199,215.94
State Issues Commission__________________________ __________ __________
Miscellaneous Departments and Institutions_______ __________ 31,936.28
---------- ----------
TOTALS________________________________ 1,982,217.06 8,463,349.25
*Page 148
Exhibit "2." Financial Condition of the State of Oklahoma, June 30, 1920. Surplus over requirements, year ending June 30, 1919___________$ 979,741,11 Ad valorem taxes____________ 3,184,302.65 Earnings from other sources_ 6,225,682.80 ------------ Total collections___________ $10,389,726.56
Appropriations for fiscal year ending June 30, 1920________________ 7,295,492.21 Bond accruals_______________ 307,500.00 Deficiency for 1919_________ 112,093.31 Appropriations 1920 Legislature_____________ 491,640.19 Appropriations 1920 Legislature_____________ 4,229.30 ------------ 8,210,955.01
Deduct 1919 appropriation transferred to 1921 requirements____ 36,000.00 ------------ Total requirements__________ $8,174,955.01
Surplus over requirements, June 30, 1920___________ $2,214,771.55
Exhibit "3." Financial Condition of the State of Oklahoma On June, 30, 1921. Surplus, collections over total require- ments fiscal year ending June 30, 1920 ___________________$2,214,771.55 Ad valorem taxes for 1919, collected dur- ing fiscal year ending June 30, 1921 ___________________ 1,620,052.44 Collections, other than ad valorem taxes for fiscal year June 30, 1921 ___________________ 8,463,349.25
Total collections___________ $12,298,173.24
Appropriations made by Seventh (1919) Legislature for fiscal year ending June 30, 1921___________$6,528,036.64 Bond accruals for fiscal year ending June 30, 1921 307,500.00 Deficiency certificates issued by Gov- ernor Robertson since adjournment of 1920 Legislature to June 30, 1920 ___________________ 199,268.24 ------------- Total requirements general revenue for fiscal year ending June 30, 1921 ___________________ 7,034,804.88 ------------ $5,263,368.36
Emergency appropriations, Eighth Legis- lature, (1921) _________ 3,006,665.05 ------------ Net cash balance over all legal re- quirements at end of fiscal year June 30, 1921 (not including any proceeds of 1.5 mill levy $2,256,703.31
Amount of ad valorem taxes resulting from 1.5 mill levy collected 1,256,555.53 ------------ Total cash balance June 30, 1921, over all requirements, including 1.5 mill levy collections________ $3,513,258.84
It being agreed that the foregoing are the actual facts in the case, the court is controlled by such facts in its determination and application of the law.
In determining whether the levy in question is wholly invalid and whether any particular items in the foregoing estimate are of such character as the board has no authority to include, and whether such items, if any, are unlawfully included and therefore invalid, we must look to the constitutional and statutory provisions which govern such matters. It is agreed in the eighth paragraph of the foregoing agreed statement of facts that the sum of $1,721,401.44 was estimated as and for accruing deficiencies and said sum included by the Board of Equalization in its estimate of the revenue required for the fiscal year ending June 30, 1921; and further agreed that no part of said sum had theretofore been appropriated by the Legislature.
It appears that this item of $1,721,401.44 was intended to meet deficiencies which the board estimated would result from the then growing increase in costs of state supplies, traveling and other necessary expenses, salaries of clerks, employes, etc., and that the board made an estimate of what it thought the approximate amount of such increase in costs would be and fixed the above sum ($1,721,401.44) as an amount sufficient to meet such increase and computed a rate sufficient to cover same.
The law does not authorize the board to include such items in its estimate of needed revenue, nor authorize a rate to be computed so as to cover such an estimate.
Section 55, article 5, of the Constitution provides:
"No money shall ever be paid out of the treasury of this state, nor any of its funds, nor any of the funds under its management, except in pursuance of an appropriation by law, nor unless such payment be made within two and one-half years after the passage of such appropriation act, and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated and the object to which it is to be applied, and it shall not be sufficient for such law to refer to any other law to fix such sum."
Section 23, article 10, of the Constitution provides:
"The state may, to meet casual deficits or failure in revenues, or for expenses not provided for, contract debts; but such debts, direct and contingent, singly or in the aggregate, shall not, at any time, exceed four hundred thousand dollars, and the moneys arising from the loans creating such debts shall be applied to the purposes for which they were obtained or to repay the debts so contracted, and to no other purpose whatever."
Section 7375, Revised Laws of 1910, provides:
"The amount of the levy so computed by the State Board of Equalization shall specify distinctly the purpose for which tax is levied and shall in no case exceed the *Page 149 amount appropriated by the Legislature for such purpose."
Now, bearing in mind the provisions in section 55, article 5, supra, of the Constitution, that no money shall ever be paid out of the treasury of this state except in pursuance of an appropriation by law, and the further provision in said section that every law making an appropriation shall distinctly specify the sum appropriated and the object to which it is to be applied, and keeping these provisions in mind in connection with the provision in section 7375, Rev. Laws 1910, that"The amount of the levy so computed by the State Board ofEqualization shall specify distinctly the purpose for which taxis levied and shall in no case exceed the amount appropriatedby the Legislature for such purpose," we must conclude that the Board of Equalization had no authority to include the item of $1,721,401.44, agreed to in paragraph eight of the stipulation, as the amount estimated for deficiency expenses and for which it is agreed that no appropriation was made by the Legislature.
Under the foregoing provisions of the constitution and statutes, we see no room for controversy as to the powers of the Board of Equalization in such matters; and as to the limitations placed upon its authority in this regard, we cannot see how language could make it plainer than, "that no moneyshall be paid out of the state treasury except upon anappropriation," and that the Board of Equalization, in making its estimate of the rate, shall in no case exceed the amountappropriated by the Legislature. As to the wisdom of these limitations it is unnecessary to discuss. The conditions presented in the present case would seem to explain their wisdom, and it may suffice that such are the plain provisions of both the Constitution and the statutes.
There is but one thought conveyed by these provisions, to wit, that no money shall be paid out of the state treasuryexcept by an appropriation and that the rate estimated by theboard shall in no case exceed the amount appropriated. Hence, the levy in question is invalid as to said item of $1,721,401.44, estimated as a possible deficiency, for the reason the board had no power to include it.
In deciding whether the levy was valid in all other respects, the court should be governed by the question, whether the board had power, under the law, to do the things which it did, rather than by the question of actual necessity.
It is contended further by, plaintiff that no levy at all was necessary; that the cash balance on hand, at the time the estimate was made, plus the lowest estimated sum which might reasonably be expected from other sources than from the tax about to be levied, was sufficient to meet all expenses and every valid requirement without, making any levy at all, and, therefore, the board had no authority to add the item of 20 per cent. of the estimated expenses for the ensuing year as an allowance for delinquency in the payment of the taxes about to be levied; that the cash on hand over and above all legal requirements and outstanding claims, plus the amount expected from other sources than the levy about to be made, being sufficient to meet all legal requirements, the 20 per cent. item added to the total expenses as an allowance for delinquent taxes was purely arbitrary and fictitious; that no levy, being necessary, there would be no delinquent taxes, if no levy was made and there being no delinquent taxes there was no authority or reason for adding the 20 per cent. item as an allowance for delinquent taxes and that such 20 per cent. item was therefore arbitrary and void.
The basis of this contention Is the fact that at the end of the fiscal year 1920 and at the beginning of the fiscal year 1921, there was an unexpended cash balance over and above all legal requirements in the general fund amounting to $2,214,771.55, and that the lowest estimate made as to what might reasonably be expected from other sources than from the levy in question, the lowest estimated earnings or collections expected from other sources during the ensuing year, was $5,405,000.
It appears from the pleadings and from the stipulation of facts, set out above, that three estimates were made, one by the Governor, one by the State Auditor, and one by the State Examiner and Inspector; that the Governor's estimate of what might be expected to be derived from other sources was the lowest of the three, and it is contended that taking this lowest estimate, $5,405,000, and that sum, adding the cash balance on hands, made the sum of $7,619,771.55, which sum, according to the board's own estimate, was $584,966.62 more than was necessary to meet all the legitimately estimated expenses without making any levy at all; that the legitimately estimated expenses and the amount appropriated by the Legislature amounted to $7,034,804, that the amount of cash balance on hand plus the lowest estimate of the amount expected to be collected from other sources than the levy about to *Page 150 be made, amounted to $584,966.62 more than was necessary to meet all the estimated expenses without making any levy at all. In other words, it is contended that had no levy at all been made and no 20 per cent. item been added, the state, with the amount on hand plus the amount collected during the ensuing year, would have paid all legitimately estimated expenses and had $584,966.62 left unexpended, and this contention is based upon the estimate which the board made upon the showing June 30, 1920. The stipulated facts show in Exhibit 3, supra, that the state in fact did have at the close of the fiscal year 1921, over and above all estimated expenses, the sum of $2,256,703.31, without including any revenue collected from the 1.5 mill levy involved herein. In other words, the cash balance on hand at the beginning of the fiscal year 1921, plus the amount collected during the year, was sufficient to meet, and did meet, all legitimately estimated expenses and appropriations and left an unexpended cash balance of $2,256,703.31.
Now, in consideration of the fact that under the board's lowest estimate, the cash on hand, plus the amount estimated as the amount expected to be collected during the ensuing year, they would have had over $584,000 without making any levy at all, and this fact, taken in connection with the actual facts stipulated herein and shown by the public records, to wit: That the amount collected from other sources than the levy in question far exceeded the estimate made by the Governor, and that had no levy at all been made, all legitimately estimated expenses for the year could have been met, and were met, and the state had over two million and a quarter left in the treasury, without any necessity for a levy and without using any of the new levy.
Now, these facts must be taken into consideration in interpreting the statutes which authorize the board to add 20 per cent. to the estimated expenses for delinquency in the payment of taxes for the ensuing year. Section 7374, Rev. Laws 1910, contains the following provision:
"* * * For the purpose of computing the amount of the levy hereby made, the State Board of Equalization shall, at its annual meeting on the third Monday in June of each year, or as soon thereafter as the total valuation of all the property in this state subject to taxation under the provisions of this chapter shall have been ascertained, and from day to day thereafter, until such time as they shall compute the amount appropriated to pay the expenses of the state government for the period aforesaid with 20 per cent. added thereto as an allowance for delinquent taxes. * * *"
The foregoing allowance for delinquent taxes refers to the delinquency in payment of taxes levied for the ensuing year, and not to delinquency to taxes theretofore levied. To illustrate, should the board make a levy of 2 mills, then they are authorized, under the foregoing statute, to estimate that 20 per cent. of such levy will be delinquent in payment, and they are authorized to add such 20 per cent. to the other estimated expenses in order that the state may be upon a cash basis for the ensuing year.
Now, we do not construe the above statute as a mandatory provision requiring the Board of Equalization to add such 20 per cent. item to the estimated expenses, whether it be necessary or not, but, as we view and interpret the above section, said provision for adding 20 per cent. for delinquency is made in contemplation that there will be a necessity for levying a tax, but if there be no necessity for levying a tax at all, then the board is not compelled to add the 20 per cent. for delinquent taxes, and the stipulated facts in this case show that the board, under its own lowest estimate, would have had more than $584,000 necessary to pay the year's espenses, and that as an actual fact it had over two million and a quarter dollars more than was necessary without making any levy at all.
But the foregoing is not all the undisputed evidence of arbitrariness and lack of authority of the board to make the levy in question, or to add the 20 per cent. as delinquency in the collection of same, for it is stipulated that at the time the levy was actually made, September 30, 1920, there had been collected for the two preceding months, not counting what had been collected in September, but for July and August there had been collected from other sources than ad valorem taxes the sum of $1,982,217.06. Therefore, at the time the estimate was actually completed and the rate certified there was on hand in the state treasury $2,214,771.55, and from July 1, 1921, to September 13, 1921, the time the estimate was actually completed, $1,982,217.06 had been collected, making a cash balance on hand in the treasury amounting to $4,196,988.61, which, added to the $5,405,000, the lowest estimate expected to be collected and which lowest estimate was little over half of what was actually collected, makes a sum of $9,601,988.61 actually on hands at the time the estimate was actually completed, and was $2,566,183.73 more than was *Page 151 necessary without adding the 20 per cent. item, and the sum of $1,160,222.75 more than was necessary with the 20 per cent item added.
This showing, being disclosed by the actual facts stipulated to in the record, is nothing less than conclusive that the 20 per cent. item amounting to $1,406,960.98 was purely arbitrary and without authority of law, and even with that estimate added it had on hands, including what they estimated as being able to collect, over $1,160,000 more than was necessary to run the state's expenses with the 20 per cent. item added. The stipulated facts show further that the sum of $1,620,052.44 was collected from ad valorem taxes which the board had refused to consider in its estimate of what might be collected, and the sum of $8,463,349.25 was actually collected during the year from other sources than ad valorem taxes. All these stipulated facts being taken into consideration with the stipulated fact that at the time the estimate and rate were actually computed, September 13, 1920, the amount of cash on hand in the treasury plus the amount of the lowest estimation which they expected to collect was $2,566,183.73 more than the state would need for that year's expenses, shows conclusively that the 20 per cent. item was purely fictitious and arbitrary and added for the purpose of increasing the amount of expenses to be raised in order to justify a levy.
It is contended, also, in justifying the addition of the 20 per cent. item, that inasmuch as the statute reads:
"For the purpose of computing the amount of the levy hereby made, the State Board of Equalization shall, at its annual meeting on the third Monday in June of each year, or as soon thereafter as the total valuation of all the property in this state subject to taxation under the provisions of this chapter shall have been ascertained. * * * with 20 per cent. added thereto as an allowance for delinquent taxes * * *"
— that the board is compelled to add the 20 per cent. item for delinquent taxes in order to estimate the total expenses, or as a means of estimating the total expenses, and that the statute requires it to be done in order to complete the estimate of the total expenses. With this contention we cannot agree. We find nothing in the statute to warrant or support such contention. Beginning with the first part of the above quotation, this 20 per cent. item is authorized, as we interpret it, for the purpose of computing the amount of the levy to be made, and is authorized only when a levy is necessary, and if no levy is made and no levy necessary and there is plenty of money in the treasury to pay the expenses of the state for the ensuing year without making any levy, then and in such event there is no authority for adding the 20 per cent, as delinquent taxes in a levy that is not going to be made. In other words, the authority for adding the 20 per cent. item is coupled with and depends upon the necessity for making a levy.
In view of this contention and these facts it appears to us that the 20 per cent. item was fictitious and unnecessary and that the board was without authority to make it. This being true, no levy at all was necessary and the 1.5 mill levy thus made was an unnecessary and unauthorized burden upon the taxpayers of the state and was void.
It is contended also that the board was not required to take into consideration the amount of surplus balance on hand in making its estimate. It is even contended that the board had no authority to do so, and that it exceeded its authority by doing so. And it is further contended, as the amount of surplus balance on hand exceeded the amount of said deficiency item, and that if the board had not included said surplus balance in its estimate, but had left it as an unexpended balance in the treasury, there would have been sufficient funds to take care of the deficiency item, and for this reason the deficiency item should be sustained and the levy held valid as to such item, although the board had no authority to include such item in its estimate. But this logic seems too flimsy to constitute a basis for the validity of a deficiency item. We cannot understand how two wrongs may make a right, nor how two violations of the law may make a compliance with the law. We cannot comprehend how the fact that the board violated the law by including the deficiency item can be justified in so doing by violating the law as to the cash balance item, nor how the deficiency item can be made valid by violating the law as to the cash balance item.
Section 7375, supra, plainly and positively enjoins, "That the tax so levied shall in no case exceed the amount appropriated by the Legislature." This being the plain provision of the statute, we feel it our duty to construe the law as it is. But in our opinion neither the Constitution nor the statutes support the theory that the board was without authority to include the surplus cash *Page 152 balance in its estimate. The clear intent of the law refutes such theory. The clear purpose of the law is that if the expenses of state government should have been less than was expected during the preceding year and the amount of revenue collected during such year was greater than was expected, thereby leaving a cash balance in the treasury over and above all legal requirements and outstanding indebtedness, that such cash balance should serve toward lessening the burden of the taxpayer for the ensuing year; otherwise the very condition would be brought about which plaintiff claims was intended to be brought about by the Board of Equalization, namely, the creation of a large surplus fund for the purpose of exploitation.
The proposition is too simple to need further discussion. In our opinion the Board of Equalization not only had authority to include the surplus cash on hands, but it was its duty, under the law, to do so in order thereby that the rate upon the taxpayer would be lessened for the ensuing year.
It has been moved by defendant for judgment on the agreed statement of facts on the ground that, as contended by defendant, the Legislature having made emergency appropriations amounting to $3,006,665.05, thereby ratifying and confirming the act of the board in making the aforesaid deficiency estimate, such deficiency estimate should be sustained. This contention we cannot sustain. The fact that the Legislature made emergency appropriations greater than the amount of said deficiency items does not establish the validity of such deficiency item. Both the Constitution and statutes say that such character of items shall not be included, and there is nothing in the emergency bills, passed by the Eighth Legislature, which either repeals or attempts to repeal any existing constitutional or statutory provisions on the subject, nor is there anything in said emergency appropriations which attempts expressly to validate such deficiency item.
It is further sought to sustain the entire levy, including said deficiency item, on the ground that to hold a portion of the levy invalid will work a hardship on taxpayers who have already paid their taxes for the year in question, but the court is not responsible for such condition, nor for the law being as it is. The law says the board has no authority in any case to make a rate greater than for the amount appropriated. And if there be an amount on hand sufficient to pay all expenses for the ensuing year, then no levy is necessary and no authority for adding the 20 per cent. item unless a levy is necessary.
It is contended, though, that the entire levy should be sustained because of such condition; contended that smaller taxpayers were unable to employ counsel to protect them, while larger taxpayers have paid their taxes under protest and will thereby be enabled to recover the amount of taxes they have paid and the smaller taxpayer left to bear the burden; but the answer to this contention is that such condition would not have existed had not the Board of Equalization exceeded the positive injunction of the law in including such deficiency item in its estimate, and we indulge the hope that this clear statement of the law may serve to prevent its violation in the future.
In our opinion the entire levy was void and plaintiff is entitled to the relief prayed for. The defendant is hereby enjoined from collecting the tax herein involved.
MILLER, ELTING, KENNAMER, and NICHOLSON, JJ., concur. McNEILL, J., dissents. KANE, J., desires to express his views in a separate opinion. JOHNSON, J., not voting.