People v. Eddy

By the Court,

Rhodes, J.:

This action was brought for the recovery of the taxes which were assessed upon certain solvent debts due to the defendant upon certain promissory notes, which were secured by mortgages upon real estate. The defendant demurred to *335the complaint, on the grounds that the property was not subject to assessment or taxation under the laws of the State; and that the assessment of such property is prohibited by law. The demurrer was overruled, and the defendant appeals.

The demurrer presents the question of the constitutionality of the Act of April 1st, 1870, entitled “An Act to prevent double taxation.” (Stats. 1869-70, p. 584.) The first section of the Act of April 4th, 1870, to relieve owners of incumbered real estate from double taxation (id., p. 710) is identical with the first section of the first mentioned Act. The second section of the latter Act, which purports to make new contracts between borrowers and lenders, and the third section, which provides for the forfeiture to the State, in a certain contingency, of moneys belonging to the borrowers, are not involved in this case. The validity of only the first section of each Act is drawn in question. The section is as follows: “ifo mortgage or lien given and held upon real estate, or the debts thereby secured, or promissory notes secured by mortgage, shall be assessed upon the books of any Assessor, State, county, or otherwise.” That portion of section thirteen, Article XI, of the Constitution, by which the validity of the legislation in question is to be tested, is as follows: “ Taxation shall be equal and .uniform throughout the State. All property in this State shall be taxed- in proportion to its value, to be ascertained as directed by law.”

That the purpose of the first section of the Act was to exempt from taxation solvent debts secured by mortgages upon real estate is, we think, beyond all question. An ingenious argument is presented by the appellant to show that such is not the purpose of the Act—that it was merely to regulate the duties of Assessors. It is insisted—and correctly so—that it is within the power and is the duty of the Legislature to prescribe the mode in which all property shall be assessed; and it is claimed that this Act is only a legiti*336mate exercise of such power. But the argument is merely specious. Looking beyond the mere words of the Act—the shadow—it is seen that the Act, if enforced, effectually presents the taxation of debts secured by mortgages upon real estate. And this is the direct effect, as we have no doubt it was the purpose, of the Act. If the Constitution requires this property to be taxed, the Legislature, under the guise of regulating the duties of Assessors, can no more exempt it, from taxation than they could accomplish the same result by providing that the Collector should return to the taxpayer the amount collected on such property, under the pretense of regulating the duties of Tax Collectors. The manifest purpose of the Act is to exempt such property from taxation. Its true features are quite apparent, notwithstanding its attempted disguise.

The nature and object of the Act having been ascertained, and it having been decided in People v. McCreery, 34 Cal. 433, that a solvent debt, whether secured by a mortgage or not, is property within the meaning Of the section of the Constitution relating to taxation, already cited, and the doctrine of that case that all property in the State is subject to taxation, and cannot be exempted by the Legislature, having been repeatedly affirmed in this Court (People v. Gerke, 35 Cal. 677; People v. Black Diamond C. M. Co., 37 Cal. 54; People v. Whartenby, 38 Cal. 461), the case might well be left at this point. But as the discussion of some of the questions decided in those cases has been renewed by the defendant, a few of his positions will be noticed. It is insisted that the “ property ” mentioned in section thirteen of Article XI of the Constitution comprises only real estate and movable property—that it is limited to tangible, visible property, and does not include choses in action. The word “property” is used in that section of the Constitution in its ordinary and popular sense, and this is the general rule in the interpretation of Constitutions and statutes, unless the *337context shows that the words are used in a technical or in some arbitrary sense.

There is no good reason to believe that the word was used in that section in a sense materially differing from that which it has in other sections of that instrument. There is a manifest propriety in giving a word the same definition in each of the sections in which it occurs, unless there is something in the context in one section showing that it has a different meaning there, from what it has in another section. The section following the one under consideration (section fourteen) provides that “All property, both real and personal, of the wife, owned or claimed by her before marriage, and that acquired afterwards by gift, devise, or descent, shall be her separate property.” It is apparent that the purpose of that section was to abrogate the common law rule in respect to the right which the husband acquires by marriage in the property of the wife. At common law the husband had the right to sue for, recover, and reduce to his possession, for his own use, the choses in action of his wife; and in case of her death, before he has reduced them to his possession, he may still proceed, as her administrator, but for his own use, to recover the same. Suppose the wife, at the time of her marriage in this State, had owned Government bonds, shares of stock, certificates of deposit, promissory notes, etc., can the husband, under the provisions of’ our Constitution, collect the money due thereon for his own use? Had she collected, just previous to her marriage, the amount of one of her bonds in gold, it is admitted that the gold would have remained her separate property, because gold is tangible and visible; and it would require an unusual amount of hardihood to assert that the bond, had she retained it, would not have remained her separate property, merely because it was a chose in action. It would almost *338revolutionize the law regulating the rights of husband and wife to hold that the “all property” in that section, or the sections of the statute in respect to common property, does not comprise choses in action. But the cases in this Court which hold that the choses in action of the wife are her separate property are too numerous to require citation. It may safely be asserted that in no section of the Constitution is the word “property” employed as comprehending only visible and tangible property, and excluding choses in action. In the first section of the declaration of rights it is declared, among other things, that all men have the inalienable right of “acquiring, possessing, and protecting property.” Will it be contended, in the face of this declaration, that a man has not the same right to acquire, possess, and protect choses in action as property of any other description?

In the eighth section of the same Article it is provided that no person shall be “ deprived of life, liberty, or property, without due process of law;” and that private property shall not be taken for public use without just compensation. Should the Government attempt arbitrarily to seize the debt on which the tax in this case was levied, or to confiscate a State bond, the owner could confidently rely upon those provisions of the Constitution for his protection.

Section nineteen of the same Article declares that “foreigners who are, or may hereafter become, bona fide residents of this State, shall enjoy the same rights in respect to the possession, enjoyment, and inheritance of property as native born citizens.” The foreigner who, after having been protected by the Constitution in the enjoyment of his lands, should find that he was liable to be plundered of the bill of exchange which he had received on his sale of the land, because the bill was only a chose in action—only the evidence of a debt—and, therefore, not under the protection of the Constitution, might well conclude that those who *339framed that instrument, instead of being statesmen, as we have been accustomed to regard them, were only savages, whose untutored minds were incapable of entertaining the idea of any property, except such as they could both see and touch.

If legislation of this character can be sustained, why may not the exemption proceed until the whole burden of taxation is cast on one species of property? . Debts secured by mortgages have now the benefit of the exemption; but by a change in the tone and temper of the Legislature they might be made to bear the whole burden of the taxes. It was not intended by the framers of the Constitution that the Legislature, whether actuated by honest or corrupt motives, should have the power to exempt any kind of property from taxation. The exercise of the power would be dangerous. The Legislature of this State, even in full view of the unmistakable injunctions of the fundamental law, have repeatedly exempted certain species of property; and it is notorious that for years one kind of property, which during a portion of the time was probably of greater value than that of any other kind, was by the power of a numerical majority exempted altogether from taxation.

There is another and a very serious objection to the Act. Under the provision of the general revenue law solvent debts over and above indebtedness are subject to taxation. It is impossible to conceive of any law which is more imperatively required by the principles of good government and the just rules of political economy to be equal and uniform than a revenue law. That the burdens of taxation should rest equally upon all property within the State ought to be axiomatic, not only in theory but in practice. To enforce this rule the Constitution has provided that “taxation shall be equal and uniform throughout the State.” Is any argument needed in order to make it apparent that where the general law subjects all solvent debts to taxation, that *340another law which singles out one class of debts—whether the classification is based on the circumstance that their payment is secured by mortgages, or that they are owing to savings banks, or to a particular bank, corporation, or person, or are owing by a particular person, whether natural or artificial, or a particular class of persons—and exempts such debts from taxation, -is repugnant to the Constitution? If this Act, with the manifest inequality which it produces when put in operation along with the general revenue law, can be upheld, no discrimination which the Legislature might devise, for the purpose of relieving a particular species or parcel of property from its proper share of the burdens of taxation, would conflict with the organic law.

Judgment affirmed.

[The foregoing opinion was rendered at the January Term, 1872, when the Court consisted of Justices Wallace, Crockett, Rhodes, and Hiles. Mr. Justice Hiles having been of counsel did not participate in the opinion. A rehearing was granted, and at the April Term, 1872, the following decision was made. Mr. Justice Hiles being disqualified did not sit in the case.]

By the Court,

Rhodes, J.:

We adhere to the opinion which was heretofore delivered in this cause and order that the judgment be affirmed.