The Legislature is empowered under the Constitution of this state to classify property *Page 186 for the purpose of taxation (section 2, art. 11), and it is permissible to constitute agricultural lands a separate class for the purpose of school taxation (section 15, art. 8). This legislative power is not limited or restricted, except that the tax must be uniform on the same class of property and shall be collected for a public purpose only. Thus a broad discretion is vested in the Legislature in the matter of the classification of properties for taxation, and classifications resting upon some reasonable consideration of differences do not contravene the equal protection clause of the Fourteenth Amendment. It has been frequently stated in federal decisions that classification for purpose of taxation "must be reasonable not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike." Louisville Gas E. Co. v. Coleman, 277 U.S. 32, 48 S.Ct. 423, 425, 72 L.Ed. 770, and cases cited. The difference need not be great. State Board Tax Commissioners v. Jackson, 283 U.S. 527, 51 S.Ct. 540, 75 L.Ed. 1248, 1256, 73 A.L.R. 1464. The fact that we are here concerned with the question of subjection to a tax and not an exemption cannot be ignored. As stated in Louisville Gas E. Co. v. Coleman, supra: "But classification good for one purpose may be bad for another; and it does not follow that, because the state may classify for the purpose of proportioning the tax it may adopt the same classification to the end that some shall bear a burden of taxation from which others under circumstances identical in all respects save in respect of the matter of value, are entirely exempt."
This court in Simmons v. Ericson, 54 S.D. 429, 223 N.W. 342, fell into the error of assuming that classification depends on differences in the physical nature or condition of the subjects selected or of placing undue emphasis thereon. An examination of decisions reveals that classification is not necessarily based upon any such differences, but upon a variety of considerations. A distinction for taxation purposes between express companies which owned their own means of transportation and those who engaged for hire a railroad or steamship company to transport their merchandise has been sustained. Pacific Express Co. v. Seibert, 142 U.S. 339, 12 S.Ct. 250, 35 L.Ed. 1035. A distinction made in *Page 187 the taxing system of the state between tracts of one thousand acres or less and those of more than that number of acres has been held sufficient. King v. Mullins, 171 U.S. 404, 18 S.Ct. 925, 43 L.Ed. 214. A tax graduated according to the amount and Value of the property, measured by miles, which was in lieu of taxes levied directly on the property, has been held valid. Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 15 S.Ct. 268, 360, 39 L.Ed. 311. The Federal Constitution does not prevent a state from making a separate class of railroad property and levying a tax thereon at a rate not applicable to other property. Michigan Central R. Co. v. Powers, 201 U.S. 245, 26 S.Ct. 459, 50 L.Ed. 744. A statute which imposed an ad valorem tax upon telephone companies with annual earnings of $500 or more, while exempting others whose earnings were less than that amount, were sustained in Citizens' Telephone Co. v. Fuller, 229 U.S. 322, 33 S.Ct. 833, 834, 57 L.Ed. 1206. Mr. Justice McKenna, speaking for the court in that case, said: "The difference, therefore, between the taxpaying and nontaxpaying companies or individuals is that the former, as said by the district court, belong to commercial corporations or enterprises, organized and conducted for the purpose of earning and paying profits as or in the nature of dividends; the latter, the untaxed, or cooperative or farmers' mutual associations, usually unincorporated, conducted at estimated costs, and organized primarily to get for the association cheap telephone service. It is manifest, therefore, that there are marked differences between the taxed and nontaxed companies, and the differences might be pronounced arbitrary if the rule urged by appellant should be applied; that is, that in the taxation of property no circumstance should be considered but its value; or, to use appellant's words, `each dollar's worth should be treated alike.' But such rigid equality has not been enforced."
The validity of a tax upon those engaging in the business of refining sugar and molasses, but exempting planters and farmers grinding and refining their own sugar and molasses, was upheld in American Sugar Refining Co. v. Louisiana, 179 U.S. 89, 21 S.Ct. 43, 45 L.Ed. 102. The owners and operators of anthracite mines who were required to pay a tax upon the value of coal when prepared for market were unsuccessful in their contention that they *Page 188 were unconstitutionally discriminated against by reason of the fact that owners and operators of bituminous mines were not required to pay a corresponding tax. Heisler v. Thomas Colliery Co., 260 U.S. 245, 43 S.Ct. 83, 85, 67 L.Ed. 237. Sustaining an exemption as to vehicles used exclusively in the transportation of agricultural and dairy products in a motor carrier act, the court in Æro Mayflower T. Co. v. Georgia Pub. Serv. Comm.,295 U.S. 285, 55 S.Ct. 709, 711, 79 L.Ed. 1439, said: "We think a classification thus designed to ameliorate the lot of the producers of farm and dairy products is not an arbitrary preference within the meaning and the condemnation of the Fourteenth Amendment. The plight of the * * * farmer has been pictured by the state court. * * * To free him of fresh burdens might seem to a wise state-craft to be a means whereby to foster agriculture and promote the common good."
In view of these and many other federal decisions which could be cited recognizing that a state is not bound by any rigid rule of classification, but is permitted under the Federal Constitution in apportioning the tax burden to make classifications upon differences, not necessarily great or conspicuous, having some basis in reason and not in a spirit of prejudice, it would appear that the statute under review is not violative of the Fourteenth Amendment.
Prior to the enactment of the statute (chapter 194, Laws 1913) providing for the formation of independent consolidated school districts and acts amendatory, a well-defined distinction existed between enactments affecting rural schools and city or town schools; it was the general policy of the Legislature not to permit independent school districts comprising the territory of a city or town to absorb farm lands. Isaacson v. Parker, 42 S.D. 562, 176 N.W. 653; Id., 43 S.D. 142, 178 N.W. 139, 140; Alatalo v. Shaver, 45 S.D. 163, 186 N.W. 872. Under these enactments, a large number of rural or common school districts during years immediately prior to 1921 were consolidated with independent school districts. In commenting upon the change of policy, Judge Whiting in a dissenting opinion in Isaacson v. Parker said: "Thus it may be both unjust and unwise to place it within the power of a congested center of population to overrule the wishes of a majority *Page 189 of the electors of an outlying territory, yet no one would question the legislative power in this matter. We may be of the opinion that to include `independent' districts in `consolidated' districts may not have the effect of `promoting a better condition in rural schools'; but that is a matter of opinion only, and the Legislature wisely or unwisely, may have thought different." It is common knowledge that tax levies in independent consolidated school districts have been burdensome and that taxes upon agricultural lands in such districts absorbed a large percentage of farm income. The Legislature and likewise the people of this state by constitutional amendment sought to equalize the tax burden and to conserve an existing source of revenue. Discrimination in a spirit of hostility toward any group of taxpayers was not intended.
Plaintiff does not complain that others similarly situated are immune from a tax to which it is subject, but that others are treated more leniently in the levy of the tax. A slighter distinction, as before stated, is permissible by reason of a graduation than between a tax and no tax. Louisville Gas E. Co. v. Coleman, supra. We have observed that the contrast need not be between different types of taxes, but that the mode of classification may be based upon differences in subjects selected. While anthracite and bituminous coal are fuels, it was held within the decision of the supreme court in Heisler v. Thomas Colliery Co., supra, that a tax could be placed upon one and not upon the other. It was pointed out that anthracite is used only as a fuel and that on the other hand various products of utility which are "incentives to industries that the state in natural policy might well hesitate to obstruct or burden" are obtained from bituminous coal. Public policy has favored the exemption of agricultural producers from taxation of the methods employed by them to place their products on the markets. American Sugar Refinery Co. v. Louisiana, supra: Æro Mayflower T. Co. v. Georgia Pub. Serv. Comm., supra. It may be well within the power of a state to provide for the direct or indirect partial exemption of agricultural producers by the method employed in the statute under consideration. Agricultural lands, however, have inherent characteristics with respect to their use that so differentiate them as to justify their separate classification. Generally speaking, it may be said that farming is not a *Page 190 commercial pursuit, but as aptly stated in State ex rel. Stiner v. Yelle, 174 Wn. 402, 25 P.2d 91, 94, is "a way of life by means of which in more prosperous times the farmer gained a modest livelihood with security and, perhaps, some financial gain from the rise in land values which might enable him to provide a measure of comfort for his old age." It may be that there are other differences justifying the instant classification for the purpose of apportioning the tax burden, but in my opinion there is a marked difference between land utilized in an agricultural pursuit and lands incident to commercial and other pursuits, sufficient in itself to justify such classification, and that a classification designed to conserve a source of tax revenue and to foster and promote agriculture and the common good is not arbitrary.