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 *Page 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,53 Vt. 254; State v. Clement National Bank, 84 Vt. 167, 78 A. 944, Ann. Cas. 1912D, 22. It was said by Chief Justice Shaw inWellington v. Petitioners, 16 Pick. (Mass.) 87, 26 A.D. 631: "Courts will approach the question with great *Page 349 caution, examine it in every possible aspect, and ponder upon it as long as deliberation and patient attention can throw any new light on the subject, and never declare a statute void, unless the nullity and invalidity of the act are placed, in their judgment, beyond reasonable doubt."
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, 71 Vt. 413, 45 A. 1039; In re Hickok'sEstate, 78 Vt. 259, 62 A. 724, 6 Ann. Cas. 578; State v.Clement Nat. Bk., supra, 191. It is enough to say for the purpose of this case, at least, that the limitation imposed by our Constitution does not forbid any classification of property for the purpose of taxation, or the adoption of any scheme of taxation, provided that they do not offend the Federal Constitution, the equality clause in the former and the uniform clause in the latter being in effect the same for such purposes.
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, 134 U.S. 232, 33 L. ed. 892, 10 Sup. Ct. 533, where it is said: "The provision in the Fourteenth Amendment that no state shall deny to any person within its jurisdiction the equal protection of the laws was not intended to prevent a state from adjusting its system of taxation in all proper and reasonable ways. It may, if it choses, exempt certain classes of property from taxation at all, such as churches, libraries, and the property of charitable institutions. It may impose different *Page 350 specific taxes upon different trades and professions, and may vary the rate of excise upon various products; it may tax real estate and personal property in a different manner; it may tax visible property only, and not tax securities for payment of money; it may allow deductions for indebtedness, or not allow them. All such regulations, and those of like character, so long as they proceed within reasonable limits and general usage, are within the discretion of the state legislature, or the people of the state in framing their Constitution. * * * * We think that we are safe in saying that the Fourteenth Amendment was not intended to compel the State to adopt an iron rule of taxation." That pronouncement of the scope of this provision as affecting the taxing power of the states has since been the polestar in cases involving that question. In Merchants' Bank v. Pennsylvania,167 U.S. 461, 464, 42 L. ed. 236, 17 Sup. Ct. 829, 830, it is said: "This whole argument of a right under the federal Constitution to challenge a tax law on the ground of inequality in the burden resulting from the operation of the law is put at rest by the decision in Bell's Gap Railroad v. Pennsylvania."
Later cases are: Traveller's Ins. Co. v. Connecticut,185 U.S. 364, 46 L. ed. 949, 22 Sup. Ct. 673; Michigan Central Railroad v.Powers, 201 U.S. 245, 293, 50 L. ed. 744, 26 Sup. Ct. 459; OhioTax Cases, 232 U.S. 576, 590, 58 L. ed. 737, 34 Sup. Ct. 372;F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415, 64 L. ed. 412, 40 Sup. Ct. 560; City of Trenton v. New Jersey,262 U.S. 182, 67 L. ed. 937, 43 Sup. Ct. 534; City of Newark v. NewJersey, 262 U.S. 192, 67 L. ed. 943, 43 Sup. Ct. 539. This Court said in State v. Clement National Bank, supra, referring to the constitutional inhibition before us: "Diversity of taxation, both with respect to the amount imposed and the species of property selected for taxation or exemption, is not inconsistent with a perfect uniformity and equality of taxation in the proper sense of the term."
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 *Page 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, 83 Vt. 218, 74 A. 1118, 27 L.R.A. (N.S.) 695, Ann. Cas. 1912A, 339; Laramie County v.Albany County, 92 U.S. 307, 311, 23 L. ed. 552; Williamson v. NewJersey, 130 U.S. 189, 199, 32 L. ed. 915, 9 Sup. Ct. 453; EssexPublic Road Board v. Skinkle, 140 U.S. 334, 35 L. ed. 446, 11 Sup. Ct. 790; New Orleans v. New Orleans Water Works Co.,142 U.S. 79, 35 L. ed. 943, 12 Sup. Ct. 142; Commissioners ofTippecanoe County v. Lucas, 93 U.S. 108, 23 L. ed. 822; Covington v. Kentucky, 173 U.S. 231, 43 L. ed. 679, 19 Sup. Ct. 383;Williams v. Eggleston, 170 U.S. 304, 42 L. ed. 1047, 18 Sup. Ct. 617; Hunter v. Pittsburgh, 207 U.S. 161, 178, 52 L. ed. 151, 28 Sup. Ct. 40; City of Trenton v. New Jersey, supra; City of Newark v. New Jersey, supra; Town of Keene v. Town of Roxbury (N.H.),126 A. 7. In Hunter v. Pittsburgh, supra, it is said: "The number, nature, and duration of the powers conferred upon these corporations and the territory over which they shall be exercised rests in the absolute discretion of the State. Neither their charters, nor any law conferring governmental powers, or vesting in them property to be used for governmental purposes, or authorizing them to hold or manage such property, or exempting them from taxation upon it, constitutes a contract with the State within the meaning of the Federal Constitution. The State, therefore, at its pleasure may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies, expand or contract the territorial area, unite the whole or part of it with another municipality, repeal the charter and destroy the corporation. All this may be done, conditionally or unconditionally, with or without the consent of the citizens, or even against their protest. In all these respects, the State is supreme, and its legislative body, conforming its action to the state constitution, may do as *Page 352 it will, unrestrained by any provision of the Constitution of the United States. * * * * * * The power is in the State and they who legislate for the State are alone responsible for any unjust or oppressive exercise of it." Although the court limited the application of what it there said concerning the absolute power of the state over the property of municipal corporations to such property as was held by them for public or governmental purposes, it was not called upon to, nor did it, decide the power of the state over property held by such corporations for, so-called, private or proprietary use.
Such property as a municipality holds in the former capacity, in a legal sense, belongs to the State (Town of Barre v. SchoolDistrict, 67 Vt. 108, 30 A. 807; School District v. Pierce,67 Vt. 317, 31 A. 783), and therefore its taxability is unaffected by the operation of the so-called equality clause of the Federal Constitution. Judge Cooley in his work on Taxation, vol. 1, p. 82 (3rd ed.) says that this clause "secures no rights to municipal corporations of a state, as against the state, to the equal protection of the laws, which can limit legislation to charge them with public obligations; and their inhabitants, as members of such corporations have no greater immunity with reference thereto." In support of this proposition he cites State v.Williams, 68 Conn. 131, 35 A. 24, 421, 48 L.R.A. 465, affirmed in Williams v. Eggleston, supra. The learned author continues: "Nor is the amendment violated by a state statute apportioning for taxation among several townships funds of a charity the situs of which is in one town." See Northampton v. Hampshire CountyCommissioners, 145 Mass. 108, 13 N.E. 388. In Town of Canaan v.Enfield Village Fire District, 74 N.H. 517, 70 A. 250, where the constitutionality of a statute exempting from taxation property of the defendant located within the territorial limits of the plaintiff was involved, it was said, at 70 Atl. p. 254 (74 N.H. 531): "Since the defendant is an agency of the government, receiving all its powers from the Legislature and holding its water works located in Canaan for the benefit and convenience of the public, the constitutional doctrine of equal and proportional taxation, as applied to the facts in this case, has no application." It is apparent, too, that the framers of the Federal Constitution could not have intended this clause to apply to taxes assessed on state property, or property owned by municipalities, at least, such as was devoted to *Page 353 public or governmental use, since such property then was, and ever since has been, regarded as exempt from taxation, unless otherwise provided by the organic law of the state, or by legislative enactment. Stiles v. Newport, 76 Vt. 154, 56 A. 662; Dillon, Mun. Corp., vol. IV, 1396; 37 Cyc. 874; 26 R.C.L. 332. Therefore, whatever the state does concerning the taxation of its own property or that owned by its political subdivisions in their public or governmental capacity is not open to the objection that it offends this constitutional provision. It may permit all or part of its own property, or that of its subdivisions owned as above indicated, to be taxed in common with other property. Dillon, Mun. Corp., supra; Cooley on Taxation, 263; Inhabitants of Whiting v. Inhabitants of Lubec, 121 Me. 121, 115 A. 896; Town of Keene v. Town of Roxbury, supra. It may exempt from taxation the property so owned by a municipality located within the territorial limits of such municipality, and tax such property of such municipality located outside of its territorial limits. Inhabitants of Whiting v. Inhabitants ofLubec, supra; In re City of New York, 183 N.Y. 245, 76 N.E. 18;City of Amsterdam v. Hess, 157 N.Y. 42, 51 N.E. 410; City ofRochester v. Coe, 25 A.D. 300, 49 N.Y.S. 502, affirmed 157 N.Y. 678, 51 N.E. 1093; People v. Board of Assessors, 111 N.Y. 505, 19 N.E. 90, 2 L.R.A. 148; Board of Water Commissioners ofCity of Hartford v. Town of Bloomfield, 84 Conn. 522,80 A. 794; Dillon, Mun. Corp., supra. Although the constitutionality of the statutes under which the taxes in these several cases were assessed was not raised, that fact, of itself, indicates that such question was considered to be without merit. And in In reCity of New York, where property of the city used in connection with its water works but located outside the city limits was held taxable in the municipality where located, the court said: "There is neither injustice in this construction, nor any question of the legislative power. * * * To require that the properties of municipalities, not within the corporation, should be taxed, as by the enactment of the general tax law of 1896, which changed the exemption at common law, was as clearly within its power as it was clearly wise and just." And language of like import is to be found in People v. Board of Assessors and City of Rochester v.Coe.
The only difference between the statute involved in the cases last cited and the one under consideration is that those *Page 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, 81 Vt. 252, 69 A. 667, 16 L.R.A. (N.S.) 867, "darkness invites disorder and encourages crime," and consequently the value of its taxable property which constitutes part of the taxable property of the town is increased to the direct benefit of the town as well as the village, a benefit not shared in by towns of which the village is not a part. Thus it may be seen that the classification does not rest alone upon the location of the plant, as argued by the plaintiff, but upon the benefit to be derived therefrom by the village and the town of which the village is part.
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 *Page 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, 233 Mass. 190, 203, 124 N.E. 21, 26, "The fundamental question, however, is whether the classification rests upon a rational foundation or is arbitrary, oppressive, whimsical or visionary." See same case,238 Mass. 396, 131 N.E. 72.
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. *Page 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.