Farris v. Vannier

Thomas, J.

This action was brought by the plaintiff for the recovery of certain taxes paid by him under protest. The complaint alleges, inter alia, that plaintiff was at the time of the grievances complained of a resident of the unorganized county of Billings, and owner of real and personal property therein, and had no property in the county of Stark. That on the 12th day of March, 1885, the legislature of the territory passed an act entitled “ An act to amend section 17 of chapter 28 of the Political Code,” and, among other things, provided as follows: “ When any personal property is situated and kept in any unorganized county of this ter*190ritory, then such property shall be subject to taxation in the nearest organized county thereto, and shall be listed and assessed by the assessor of said nearest organized county ; and when said unorgan* ized county borders upon two or more organized counties, then said property shall be assessed and taxed in that organized county having the greatest extent of contiguous boundary line.”

That pursuant to said act, in the year of 1885, the officers of said Stark county, authorized by the laws of this territory to assess property in said Stark county for the purposes of taxation, and to levy taxes thereon, claimed to have the right and pretended to assess all the personal property of the plaintiff situate in said Billings county, for the purpose of taxation, and to levy certain taxes thereon, to-wit, territorial, general school, bridge, and road, and general county taxes, amounting in the aggregate to the sum of $29.20.

That the assessment, levy and collection of said taxes were illegal because —First, said property was never taxable by Stark county; second, that the act of 1885 is in conflict with the' provision of the organic act in relation to taxation, and therefore void; third, the tax is for the exclusive use of Stark county, and to be expended therein, with the exception of the territorial tax, and gives to Billings county and the residents thereof no benefit, directly or indirectly; fourth, that there was real estate in Billings county owned by plaintiff ancl others, none of which was assessed or taxed, but under said act was free therefrom ‘, fifth, that said Stark county issued its warrant to its treasurer, the defendant, to collect said taxes, who demanded the same of plaintiff, which was refused, and thei’eupon defendant levied upon plaintiff’s property, and was about to sell the same, to prevent which plaintiff, under protest, paid said taxes to said defendant, with interest and costs, amounting to $29.40.

To this complaint defendant interposed a general demurrer, which was sustained by the district court, proforma, and judgment was rendered thereon in favor of the defendant, from which said judgment plaintiff appeals to this court.

The plaintiff contends that the act of 1885 is unconstitutional for the following reasons : First, it authorizes taxation of personal property of a community for purposes not public or local to it; *191second, it discriminates in the taxation of different kinds of property in contravention of the organic act; third, it denies to persons within tlie territory the equal protection of the laws.

The material allegations of the complaint are admitted by the demurrer. It is therefore a fact of record that the taxes complained of were imposed and collected for the exclusive use and benefit of Stark county, and the moneys raised thereby were to be expended within said Stark county, except the territorial tax, and the residents of Billings county were not in any legal sense interested in any of the objects of said expenditure.

The organic act of the territory (§ 1925) declares that the legislature “ shall not pass any law impairing the rights of private property, nor make any discrimination in taxing different kinds of property ; but all property subject to taxation shall be taxed in proportion to its value.”

The questions presented are important, and of great public interest, and are therefore entitled to, and have received, our most careful consideration.

The validity of this tax mustbe determined from the organic act and such other legal principles as may be applicable.

Under the second point above named the appellant contends that the legislature of this territory has no power to exempt any property from taxation except that which is expressly exempted in the organic act; the legislature cannot declare what property shall be subject to taxation, but must tax every species of property not exempt by the organic act. We do not think that this objection is well taken, or that it is necessarily involved in this' case, and, as the legislature of the territory has frequently exercised this right, which lias been acquiesced in and recognized by all classes as a legitimate exercise of power, we do not feel authorized to call it in question here. It is a doctrine well established by the courts that the right to exempt is incident to the right to tax, and is an ordinary exercise of the power of sovereignty, and this right exists unless prohibited by some constitutional or organic provision. Railroad Co. v. Taylor, 52 Wis. 42, 8 N. W. Rep. 833; Gilman v. Sheboygan, 2 Black, 510; Cooley, Taxation, 145; 1 Desty, Taxation,. 124.

As said before, the right to exempt has been recognized and *192acted upon since the organization of this territory, and we will not now disturb or cast doubt or reproach upon it by a discussion which would in any event be mere dietum, as this question is not involved in this case, for the act in question is not, in our opinion, an attempt to exempt any kind of property from taxation.

Under this act an attempt is made to assess and tax personal property in an unorganized county, leaving the real property untaxed, and to levy this tax for the use and benefit of another organized county, regardless of the question whether the two counties are in the same judicial district, or whether said counties have been attached for judicial, revenue, or other purposes, but it is sought to be done simply upon a question of proximity.

This legislation cannot, in our opinion, be properly referable to the exercise of the power of exemption, though it may possibly have this effect when it discriminates between different kinds of property by taxing one and not the other.

It is contended by plaintiff that this act provides for the taxation of a community for purposes not public or local to it. If this proposition be true, this tax can hardly be sustained. Cooley, Taxation, 105; 1 Desty, Taxation, 285.

It is a fact admitted of record that this tax was for the exclusive use and benefit of Stark county, and that the money raised by it was to be expended within Stark county, and that the county of Billings did not and will not receive any benefit from said tax, either directly or indirectly, but it was to be expended for objects entirely local to Stark county, and foreign to Billings county. If this be so, how can this tax be sustained ? It is a well-established doctrine that taxation in order to be valid must be of a public nature, or for a public purpose, and must also be local. “ It is the essence of taxation that it should compel the discharge of a burden by those upon whom it rests.” An attempt to compel one county or municipality to pay a charge properly resting upon the inhabitants of another separate and distinct district or community would be an arbitrary and unauthorized exercise of power. It would be taking private property for private uses, and in no proper sense could it be regarded as taxation, but rather in the nature of confiscation. Cooley, Taxation, chap. 5, pp. 144, 145; 1 Desty, Taxation, 26, 27; Hammett v. Philadelphia, 65 Pa. St. *193146, 151; Dorgan v. Boston, 12 Allen, 223 ; In re Town of Flatbush, 60 N. Y. 398.

It is true that it is not necessary that the money raised by taxation should always be expended within the district where it is levied and collected, but it may be expended for objects outside of the district in which the residents of the district have in a legal sense an interest. District interest is the test whether an object is or is not a proper subject of taxation. Cooley, supra ; 1 Desty, supra.

It seems to us that this law is an attempt on the part of the legislature to tax one community for the benefit of another, and is therefore void from the fact that all taxation must be public and local, and for objects iu which those who pay the tax have, in a legal sense, some interest, and from which they may receive some benefit.

As said before, it is admitted of record in this case that the tax collected of the residents of Billings county was to be used and expended in matters entirely local to the county of Stark; and to sustain such a tax would not only be unjust and inequitable, but would be to hold that the legislature, uuder color of exercising the power of taxation, might appropriate private property for private uses.

"While equal, uniform, and just taxation is hardly attainable under any system of human government, yet in this country most of the states have incorporated into their constitutions express provisions that taxation shall be equal and uniform; and, while this language is not used in our organic act, we think that the prohibition contained therein against discrimination in taxation can hardly be effectually enforced without the adoption of some system that shall be equal and uniform. Can it be said that a system of taxation which taxes one community for the exclusive use and benefit of another is in anywise equal or uniform as to these communities ? There are some fundamental principles which must be observed in every system of taxation. They should not only be for public purposes, but for purposes in which the party taxed has an interest, and from which he can and may receive some benefit. 1 Desty, Taxation, supra; Cooley, Taxation, supra. It is need less to discuss at length a possibility of Billings county or the plain*194tiff receiving any benefit from, or being in any manner interested in, the tax collected under this law, when the fact of record here is contrariwise by reason of the allegation in the complaint, and the effect of the demurrer thereon.

"We are, therefore, of the opinion that under the record as it appears in this case the county or local tax collected of the plaintiff was for purposes local to Stark county, and in which the plaintiff had no interest, and was, therefore, wrongfully and illegally collected of him.

But, it is contended by the respondent, the plaintiff and Billings county were interested in this tax, and benefited by it, because of the extension over this county of the civil and criminal jurisdiction of the justices of the peace of Stark county, and the service of process in the former county by the officers of the latter. Vide Laws 1881, p. 110, § 15.

A reference to this statute will disclose that in the execution of this law the county of Stark is subjected to no burden or expense growing out of the exercise of such jurisdiction, nor is the county of Billings benefited except from the contributions from the territorial treasury.

It is further contended by the respondent that the legislature has the right to create taxing districts without regard to pre-existing political subdivisions. This we readily concede; but it does not follow that the act in question should be construed as an exercise of such power, in the absence of any thing to indicate that such was the purpose or intent of such legislation.

Taxing districts are organized and created to subserve the common interest and welfare of the communities embraced within their limits, and not arbitrarily to work inequality, injustice and oppression, and when a law cannot be sustained without referring it to the exercise of power in a particular direction, and for a certain purpose, and such assumption exposes the legislature to the charge of injustice, it were better to relieve it of such imputation and hold the law void. Cooley, Const. Lim. 614 et seq.

But if we say that the effect of this law is to create taxing districts embracing the organized and unorganized counties, and can see no possible reason for the creation of such districts, but, on the contrary, can only attribute it to the exercise of an unjust and *195arbritrary power, entailing gross injustice and oppression on a portion of tbe district, we should the rather deny such effect to the law, and decline to sustain it as the exercise of the power to create taxing districts.

It is further insisted, so far as the county tax is concerned, that this act is void because it discriminates in the taxation of different hinds of property, contrary to the provisions of the organic act.

By the organic act two things are required in regard to all taxation : Fwst, that there shall be no discrimination in taxing different hinds of property; second, taxation in proportion to value. It is claimed that the act in question violates the first of these requirements. What is meant by discrimination ? Does not discrimination involve some unequal selection of property which is subject to taxation, or some apportionment of the rate or rule by which the different hinds of property are required to bear an unequal or a non-uniform portion of the tax imposed ? By the act under discussion only one hind or class of property is taxed in the unorganized counties; all other hinds, including real estate, are left untaxed. Is not this discrimination within the meaning of the organic act ? If the legislature must tax all property, both real and personal, which is made subject to taxation, under what circumstances can any particular hind be taxed while some other hind is left untaxed ? By what authority can the personal property in unorganized counties be taxed, and the real estate go untaxed? Will it be said that this law fixes the situs of personal property for taxation in tbe organized counties, and in such counties all property is taxed, and so there is no' discrimination ? If so, we reply that while the sittis of personal property for taxation may be fixed by the legislature either in the county where the owner resides or where the property is kept, we know of no authority for holding that such situs may be fixed regardless of this qualification, as would be done in this case ; for this personal property is neither hept in the organized county, nor does the owner reside there, but, per contra, both are in the unorganized county.

What is the present case? The plaintiff was a resident of the unorganized county of Billings, and owned therein both real and personal property at the time of the assessment, levy and collection of the taxes of which complaint is made. This unorganized *196county was nearer to Stark county than to any other organized county. The two counties, with others, were in the same subdivision of the sixth judicial district, and, at the time, attached to the county of Morton for judicial purposes.

Now, if it were conceded that these taxes were local so far as Billings county was concerned, and that the effect of the law was to create a taxing district, yet we have remaining the fatal objection that in any aspect of the case it is in conflict with that provision of the organic act which prohibits discrimination in taxation of different kinds of property; for certainly the taxation of personal property and the non-taxation of real estate under similar conditions, when both under the general law have been made the subject of taxation, is obnoxious to this charge.

While we have discussed the several different phases of this question, we are, however, clearly of the opinion that the act in question attempts to levy and collect taxes from the inhabitants of Billings county for purposes not public or local to it, and for this reason the tax is invalid. We have arrived at this conclusion notwithstanding the fact that we recognize and fully appreciate the fact that it is a well and firmly established doctrine that “ the power of taxation is a great governmental attribute with which the courts have very wisely shown an extreme unwillingness to interfere.” But when this power is abused, or sought to be extended beyond its proper sphere, and under its guise property is taken for private uses, the abuse should share the fate of all otherusurpations. Cooley, Const. Lim. chap. 14, pp. 615, 616.

The supreme court of Iowa, in the case of Morford v. Unger, 8 Ia. 92, makes use of the following language, which we deem pertinent to the case at bar, to-wit: “If there be such a flagrant and palpable departure from equality in the burden imposed; 'if it is imposed for the benefit of others, and for purposes in which those objecting have no interest, and therefore are not • bound to contribute,— it is no matter in what form the power is exercised, whether in the unequal levy of the tax, or in the regulation of the boundaries of the local governments, which results in subjecting the party unjustly to local taxes, it must be regarded as coming within the prohibition of the constitution designed to protect private rights against aggression, however made, and *197whether under the color of recognized power or not.” The above is vigorous language, and, in our opinion, correctly draws the line in reference to the exercise of the power of taxation, and is equally applicable to taxation under our organic act.

It will be observed that up to this time we have not discussed directly the question of the validity of the territorial tax, but from the force of our reasoning supra we of necessity reach the conclusion that it is also illegal and void by reason of the fact that the law discriminates in the taxation of different kinds of property in unorganized counties, and therefore in conflict with the organic act on this subject.

In doing this we do not mean to be understood as holding that the general law of taxation must provide for the collection of taxes in unorganized counties in order to render it legal as to the organized counties of the territory. We do not so hold, but, on the contrary, we think it does not affect the general law in regard to taxation. We do not think it is incumbent upon the legislature to provide machinery for the collection of taxes in these sparsely-settled and unorganized communities. The laws of taxation are not made for deserts, wild wastes, and bleak and unsettled prairies, but for organized communities. In other words, the legislature is not bound to set in motion machinery for collecting taxes in unorganized and sparsely-settled communities when in its judgment the expense incident to its collection would be greater than the revenue thus received.

The organization of counties and clothing them with the habiliments of the law is somewhat in the nature of a political question, and largely in the discretion of the legislature, and its exercise will not be interfered with by the courts, unless grossly abused; but when the legislature attempts to reach one of these unorganized counties by setting in motion the machinery of the law for collecting taxes therein, we are of the opinion that it must provide for taxing and collecting the taxes on all kinds of property subject to taxation under the general law, and a failure to do this will operate as a discrimination forbidden by the organic act, and therefore illegal. It seems to us that this conclusion is in harmony not only with the law, but with sound reasoning. If this be not true, what is there to prevent the legislature from doing the same *198thing as regards the wealthiest and most populous counties in the territory? We apprehend it will not be contended that it could indirectly or otherwise relieve the real estate of the rich and populous counties of Cass, Yankton, and Minnehaha from taxation, and only tax the personal property therein, by failing to provide machinery for the collection of the real estate tax, while it taxed all of the other counties on both real and personal property. If so, the provision in the organic act against discrimination and in favor of uniformity of taxation is of but little effect.

We have not overlooked the case of Francis v. Railroad Co., 19 Kan. 303, relied on by respondent, decided in 1877 by the supreme court of that state, and which at first blush,” or from a casual reading of it, would seem to sustain the act here in question. That case was an injunction suit brought by the railroad company against the state treasurer to enjoin the collection of a tax levied for state purposes. The railroad company had about one hundred and six miles of its road in four of the unorganized counties of the state on which taxes were levied under a state law, which imposed upon the auditor of the state the duty of levying for state purposes a tax upon any railroad property located outside of the limits of organized counties, which tax should be the same as that levied upon other property, etc.

The constitutionality of this law was questioned under the section of the state constitution which required all laws of a general nature to have a uniform operation throughout the state, and prohibited special legislation when general laws could be made applicable, and also provided that the legislature should provide a uniform and general rate of assessment and taxation. The constitutional question considered by the court was whether the taxation of railroad property only in unorganized counties for state purposes was a non-uniform and unequal rate of assessment and taxation.

It must be observed that the case differs from the one at bar in several particulars: First, the Kansas tax was only for state purposes; second, it was enforced through state machinery; third, the constitution of the state did not expressly prohibit discrimination, as does our organic act.

The opinion of the court is pronounced by an eminent jurist, *199Judge Brewer, and concludes in the following language: The case has been before us for several months, and the subject of repeated consultations and frequent examinations. The conclusions which we have reached are by no means entirely satisfactory to us. We hold the section to be constitutional and valid, not because it is clear to us that it is so, but because it is not clear to us that it is not; and the benefit of the doubt must be given to the law. The question would be different if discrimination was attempted between property in organized counties, or if the constitution did not contain but a single provision, which seems to imply and rest upon the assumption of organized communities.” The court also say in this opinion : “ The freedom from taxation of property other than railroad property in the unorganized counties under the act of 1876 arises in the same manner as the freedom of all property in such counties under prior statutes, and that is, through the failure to provide machinery for reaching it. The question, therefore, is whether the failure to provide machinery for collecting taxes on all the property in the unorganized counties renders unconstitutional the means employed to collect taxes on a portion of said property, and invalidates the tax attempted to be collected by such means.”

The court admits the question is difficult, and that an answer either way is hardly reconcilable with common justice, or the history of the state’s system of taxation. We entertain a high respect for the court which sustained this legislation of Kansas, and especially for the eminent judge who rendered the opinion; but the reasoning of the court is not clear or satisfactory to us, and we are not prepared to yield assent to the conclusions reached.

If the failure on the part of the state to provide machinery for reaching one class of taxable property within its limits, while other classes are taxed, cannot be criticised by the courts, what is there to prevent a state from doing in this way indirectly, though effectually, what we apprehend will be universally conceded it cannot do directly ? If failure to provide machinery for taxing one kind of property, while ample machinery is given by which to tax another kind, is constitutional, any omission to impose upon officials the duty of taxing all property uniformly and without discrimination would be unassailable in the courts.

*200We venture this criticism of this opinion with less hesitancy than we otherwise would, had not the learned court itself expressed its own want of satisfaction in the conclusions reached. It seems to us that the honorable and learned court permitted itself to be jostled from the legal highway by reason of the dire and serious consequences which seemed to crowd around the decision adverse to this law, and which they seemed to apprehend would likely interfere with the entire system of taxation in the state.

In the case at bar, however, the system of taxation of the territory is not involved, but the law under discussion is, in our opinion, in conflict with the organic act of the territory which forbids in Km verba discrimination. Ample machinery existed for the taxation of real as well as personal property, but was authorized under this act to leave the real property untaxed while taxing the other.

It is proper to say that the judgment of this court only reverses this case as to the local tax on the ground that it is taking private property for private uses, but holds the territorial tax to be valid, for the reason that they regard it as levied for a public purpose, and not a discrimination within the meaning of the organic act.

Hence what we have said in regard to territorial tax, the reasoning of which holds said tax invalid, is in the nature of a dissenting opinion on our part. The case is reversed.

All the justices concurring.