State v. Birmingham So. Ry. Co.

SOMERVILLE, J.

To quote from the brief of counsel for appellant: “The question at issue is whether the Legislature has the right, under the provisions of the Constitution of this state, to fix by enactment the *479taxes on taxable property at 60 per cent, of tbe reai value, as was attempted, to be done by section 36A, p. 185, of tbe acts of tbe Legislature of 1911.” Tbe language of that section is: “The taxable property within this state shall be assessed, for the purpose of luxation, at sixty per cent, of its fair and reasonable cash value.” The constitutionality of this provision must be considered in the light of the following well-established principles:

(1) The power of taxation is an incident of sovereignty and is possessed by the government without being expressly conferred by the people.

(2) The power is purely legislative.

(3) So long as no constitutional limitations are exceeded, the Legislature is of supreme authority, and the courts, as well as all others, must obey. — Schultes v. Eberly, 82 Ala. 242, 243, 2 South. 345; Hare v. Kennerly, 83 Ala. 608, 3 South. 683; Phoenix Carpet Co. v. State, 118 Ala. 143, 151, 22 South. 627, 72 Am. St. Rep. 143; 1 Cooley on Constitutional Limitations, pp. 7, 9, 49.

If the legislative provision in question is unconstitutional, it must be because it is repugnant to one or more of the following sections of the state Constitution:

Section 211: “All .taxes levied on property in this state shall be assessed in exact proportion to the value of such property, but no tax shall be assessed upon any debt for rent or hire of real or personal property, while owned by the landlord or hirer during the current year of such rental or hire, if such real or personal property be assessed at its full value.”

. Section 214: “The Legislature shall not have the power to levy in any one year a greater rate of taxation than sixty-five one-hundredths of one per centum on the value of the taxable property within this state.”

*480Section 260: “The income arising from the sixteenth section trust fund, etc., etc., together with a special annual tax of thirty cents on each one hundred dollars of taxable property, * * * which the Legislature shall levy, shall be applied to the support and maintenance of the- public schools: * * Provided, that nothing herein contained shall be so construed as to authorize the Legislature to levy in any one year a greater rate of state taxation for all purposes, including schools, than sixty-five cents on each one hundred dollars’ worth of taxable property. *

Section 181 — (prescribing who shall be qualified to register as electors, and including) : “The owner in good faith in his own right, or the husband of any woman who is the owner in good faith, in her own right, * * * of real estate situate in this state, assessed for taxation at the value of three hundred dollars or more, or * * *” (repeating the same conditions as to personal property).

Section 211 of the present Constitution had its origin in a provision first found in the Constitution of 1819: “All lands liable to taxation in this state, shall be taxed in proportion to their value.” This rule, preserved in all succeeding Constitutions, was extended to personal property and incorporated in the Constitution of 1868 in the following language: “All taxes, levied on property in this state, shall be assessed in exact proportion to the value of such property.” And so it has been preserved unchanged in the two succeeding Constitutions of 1875 and 1901. The purpose and scope of this constitutional limitation upon the taxing power has been frequently considered by this court, and the substance of our decisions is that it was designed to secure uniformity and equality by the enforcement of an ad valorem system of taxation and to prohibit arbi*481trary or capricious modes of taxation without regard to value. — Moog v. Randolph, 77 Ala. 597, 602; W. U. Tel. Co. v. State Board, etc., 80 Ala. 273, 275, 60 Am. Rep. 99; Assessment Board v. A. C. R. R. Co., 59 Ala. 551; Mayor of Mobile v. Stonewall Ins. Co., 53 Ala. 570. This does not mean that all property must be taxed. — Moog v. Randolph, supra; State Bank v. Board of Revenue, 91 Ala. 217, 223, 8 South. 852. Nor does it prohibit exemptions from taxation or such classifications of property as are not purely arbitrary, capricious, or without the semblance of reason. — Moog v. Randolph, supra. It does, however, prohibit the Legislature from prescribing or declaring an arbitrary or artificial value of the property of individuals or corporations, and assessing taxes on such valuation.- — Assessment Board v. A. C. R. R. Co., supra. It is perfectly clear that there is nothing expressed or implied in the language of this limitation which prohibits the Legislature from fixing as a basis for taxation any percentage of the actual value of property, whether greater or less than 100 per cent, thereof, provided only that such rule is applied without discrimination to all property of the same nature.

It is equally clear, however, that section 214, which limits the rate of taxation to .65 of 1 per centum on the value of taxable property, does, by necessary implication, forbid a legislative basis of assessment in excess of 100 per cent, of the value of the property, for otherwise the express limitation on the rate might be made wholly ineffectual by the simple legislative device of an excessive valuation of the property.

The Supreme Court of Illinois has given very thorough consideration to this subject. Under a constitutional provision that all persons should pay a tax in proportion to the value of their property, the Legisla*482ture enacted a statute requiring assessors to ascertain and set down the fair cash value of property and to apportion and compute all taxes upon one-fifth of such valuation. The statutes was held not violative of the Constitution, and the court said: “But it is urged by counsel for appellants that the word ‘value/ used in the Constitution, must mean actual value; that any attempt of the Legislature to direct assessing officers to take one-fifth of such value as the assessed value is void; and that, inasmuch as the statute provides for a determination of such actual value, it must be held to be a basis of the limitation. The central and dominant idea of the Constitution in the assessment of property for taxation and in the payment of taxes is uniformity and equality; but we find no provision which prevents the Legislature from fixing the assessed value at less than full value. Justice and uniformity between taxpayers may be as well secured by a proportionate basis, and, while the value cannot be fixed by the Legislature, it is within the legislative power to enforce the provision for uniformity by any proportional rule. Assessors had always assessed property at a part only of the full value, and we see no reason why the Legislature may not prevent the varying- methods by which property was assessed unequally between different counties and municipalities of the state by enforcing a fixed and uniform rule. So long as the correct proportion between the different subjects of taxation is maintained, there is nó language of the Constitution Avhich limits the legislative poAver to prescribe a basis for the action of the assessors.” — City of Chicago v. Fishburn, 189 Ill. 367, 377, 59 N. E. 791, 793.

Similar legislation under similar provisions of the Constitutions of Tennessee, Nebraska, and West Virginia has been held to be valid. — Railroad & Telephone *483Companies v. Board of Equalizers (C. C.) 85 Fed. 315; State ex rel. Young v. Osborn, Assessor, 60 Neb. 415, 83 N. W. 357; C. & S. Bridge Co. v. Kanawha County Ct., 41 W. Va. 658, 24 S. E. 1005. See, also, Lively v. M., K. & T. Ry. Co., 102 Tex. 545, 120 S. W. 852. We believe that no court has ever taken a contrary view.

Our conclusion is that, so far as sections 211 and 214 of the Constitution are concerned, the Legislature ¡may prescribe as a basis for the levy of the general state tax of .65 of 1 per centum any percentage of the actual value of taxable property which it may deem expedient, not in excess of 100 per cent, thereof.

Section 260 of the present Constitution, as quoted above, is an imperative mandate to the Legislature to levy for the support of the public schools of the state “a special annual tax of 30 cents on each $100 of taxable property,” and expressly reduces the total maximum rate of .65 of 1 per centum, as fixed by section 214, to .35 of 1 per centum for all other public purposes. This constitutional mandate has been executed by the enactment of subdivision “a” of section 2082, Code of 1907, which reads: “There is hereby levied for the purposes named, upon the property hereinafter named, in lieu of all taxes heretofore levied, annual taxes as follows, to wit: (a) For the maintenance of the public schools of the state, thirty cents on each hundred dollars of the assessed valuation of taxable property; (b) - * *; (c) * *

We agree with counsel for the state that the phrase “taxable property,” as repeatedly used in the several sections of the Constitution and of the Code relative to taxation, means, and can only mean, property which the Legislature has not constitutionally exempted from taxation. It is clearly so used in section 36A of the revenue act itself, and hence it would be a palpable contra*484diction of its terms to say that by that section the Legislature undertook to exercise its undoubted power to exempt property from taxation. So there is here no question of such an exemption. Section 260 contains no express inhibition upon the legislative power to adopt such a percentage of valuation for assessment as it may deem expedient. Does it inhibit that power by necessary implication? Or, to expand the question to its full significance, is it the clear purpose of that, provision to prescribe and provide an approximately fixed amount (as distinguished from rate) of revenue for the support of the public schools; and, if so, is that purpose clearly inconsistent with the legislative power to indirectly and incidentally reduce its amount by the adoption of a reduced percentage of valuation for assessment? Was the quantum of the levy, as here commanded, fixed with a vieAv to assessments made upon the statutory basis of full, actual value, as consistently maintained in this state ever since it was first definitely established by section 391 of the Code of 1852; or was it fixed with a view to assessments made upon partial valuations ranging in practice, as common knowledge must have informed the Constitution makers, between 10 and 100 per cent, of actual value, and averaging perhaps less than 50 per cent., and in contemplation of the perpetuation of such assessments either by general local practice or by future legislative sanction? The gist of the argument for the taxpayer is that this special tax was created wholly without reference to any scheme of valuation for assessments, and that the rate thus fixed was intended to be applied to values as actually assessed upon whatever percentage of value the Legislature might in its discretion prescribe ; that the intention was merely to set aside for public school education a fixed proportion of the general revenue of *485the state; and that, if there had been any intention to limit the Legislature to assessment based npon actual value, it could and would have been easily expressed by language appropriate to that end.

For the state it is argued, on the other hand, that the Constitution does not merely set aside a fixed proportion of the general revenue for the support of the public schools, but in fact provides for a distinct and independent tax in that behalf; that it was intended to 'fix a limitation downward as well as upward; and that the theory of a limitation downward is wholly inconsistent with the retention of the legislative power to prescribe as a basis for assessment any scheme of valuation other than the actual value of the property, for it is urged, the power to limit the assessment to 60 per centum of the actual value necessarily assumes the power to limit it also to 50, 40, 20, or even 1 per centum, and thus to actually nullify the levy completely for all practical purposes. It must be conceded that these arguments are both weighty and forcible; so much so, indeed, that they might well perplex the wisdom and divide the counsels of the bench in the ascertainment of the general constitutional intent, as manifested by the several provisions germane to the present inquiry.

We have given very full and earnest consideration to the merits of the controversy as above impartially outlined, and we are not convinced that any of the constitutional provisions above quoted are so clearly repugnant to the legislative power exercised in the enactment of section 36A of the revenue act as to authorize the sentence of judicial nullification here invoked by the state. We will state some of our reasons for this conclusion :

*486(1) While the makers of the new Constitution knew that the actual value of property had been the nominal statutory basis for assessments since the adoption of the Code of 1852, they must have known also (what all intelligent people know) that in practice assessed values have rarely exceeded 60 to 75 per cent, of actual values, and that the total average of assessed values has rarely, if ever, exceeded 50 per cent, of actual values. Hence they knew the impotence of legislation to achieve, except by graduated progress, the ideal of assessments at actual values.

(2) Knowing these things, as we must assume they did, they must have understood and appreciated the gross inequalities resulting from the practices in this regard prevailing throughout the state; inequalities not merely between different localities, but between taxpayers in the same locality. And we may further assume that they understood, what we believe must be apparent to every student of the subject, that the only rational and practicable method of equalizing taxation between localities and between individuals would be by the general approximation of some attainable level of valuations. And of course they knew that the very key-note sounding through the tax provisions of the Constitution is equality, as nearly as it is practically attainable, and security against excessive taxation.

(3) Under these conditions, when they prescribed the levy of the special school tax they could not have anticipated that it would yield anything like 30 cents on every $100 of taxable property, and must have known that it would in fact yield scarcely more than half such an amount. The Legislature had never shown any disposition to reduce tax revenues by minimizing assessment valuations, but quite the contrary, and that was an evil (if it may be so termed) neither existing in fact *487nor apparently to be feared in the future, especially in view of the patent fact that the general tax revenues of tbe state, without which it could not exercise its governmental functions, would always necessarily depend upon a basis of substantial and adequate property valuations.

(4) Although the phraseology used in fixing the school tax rate in section 260 is different from that use in fixing the maximum general rate in section 214, we see in .the change no more than the adoption of a simpler and more direct method of expressing the rate intended to be fixed. If it had been intended to do more than fix the rate, viz., to perpetuate its levy upon the hitherto unattained basis of assessment at actual values, and to abrogate and destroy the undoubted power of the Legislature to equalize taxation upon any lower level, the expression of such a purpose would have been natural, -and its accomplishment easy, by the interjection of a simple phrase. It may be argued that, if it was intended that the fixed rate should be levied upon property only as it might be required to be assessed by law, it would have been equally easy and natural to have expressed that qualification. The difference, however, lies in the nature of the qualifications in question; and, while it would be natural to express a designed limitation upon sovereign power, it is not at all needful to express an affirmance of the power itself when incidentally concerned.

(5) While the assessment of property is an indispensable element to the fruitage of any levy upon a per centum rate, and the basis for assesssment valuations will in a measure control its yield of revenue, there was with respect to the school tax levy, as we have already stated, no practical possibility of its defeat or substantial impairment by any legislative reduction of such *488valuations. So fax’ as we are advised, history records no instance of a people groaning under the evils of undertaxation, nor do we apprehend that the framers of any constitution have ever been confronted by the necessity of stimulating the duty or the diligence of the Legislature in the levy of taxes. On the other hand, the evils of excessive taxation have constantly demanded and received the watchfxxl care and the restraining power of the people in the framing of their organic law. These considerations strongly tend to confirm the view that the emphasis in section 260 is upon the rate rather than upon the basis of the assessment, and that the intended result of the whole section is merely to require the appropriation to education of 30 cents of the 65 cents maximum tax allowed by section 214 for all purposes, and to require a levy of at least that much, and that such levy should be applied to such assessed valuations as the wisdom of the Legislature might prescribe and the diligence of assessment officers might secure.

(6) Had it been intended to limit and control the Legislature in respect to the mode of assessing values, the natural, and certainly the most proper*, place to express that purpose would have been in section 211 or section 214. The failure to do so would seem to indicate the total inadvertence of the Constitution makers to such a proposition. Certainly they • must have designedly omitted to use the language customarily adopted in statutes and constitutions for such a pux*pose, as witness our own former statutes, and the Constitutions of Michigan, Nevada, New Jersey, North Dakota, and South Carolina, as quoted in 1 Cooley on Taxation (2d Ed.)

It remains now to consider the second clause of section 211 and the property qualification clause of section 181, which have been referred to as germane to our inquiry.

*489The second clause of section 211, added to that sec- Í tion by amendment in the present Constitution, forbids ’* the separate taxation of the rent or hire of property ■ where its owner has assessed the property itself “at its full value.” This was very evidently written in the light of the statutory requirements for valuation as then existing, and its clear purpose was to exempt such income from legislative selection for taxation when the property itself was already bearing the full burden of taxation imposed upon it by law. In other words, the controlling purpose was merely to prevent double taxation. Its achievement is complete when the property is assessed at its full value as that fullness is prescribed by law.

Nor do we find in the language of section 181 any purpose to restrict legislative power with respect to assessments. The suffrage qualification there prescribed is the ownership of property “assessed for taxation at the value of three hundred dollars or more,” and there is a manifest disregard for an actual value test. This provision was adopted, we must assume, with a full understanding of the low scale of valuations prevalent throughout the. state, and in plain view of the evident fact that electors who owned |300 worth of property could establish their qualifications only by assessing it at twice or thrice the proportionate values given in by or imposed upon their more opulent neighbors. The inequality is not aggravated by the legal adoption of an assessment valuation in excess of that in actual use. Moreover, there can be no doubt but that the 60 per cent, basis for assessment is intended to be a restriction upon assessment officers, and not upon property owners who may insist upon assessing their property at its actual value. But, whether those officers permit an assessment on actual valuation or make it on the *490statutory percentage, it is the assessed valuation that controls.

Recurring to the general merits of the question under consideration, we suggest a line of reasoning which is, we believe, of controlling force. It is thoroughly well settled that the Legislature has the power to exempt from taxation any kinds or classes of property at its discretion, if not constitutionally restrained therefrom. • — 37 Cyc. 738-740. Our Constitution imposes no restraint in this particular, except as to uniformity and equality. — Moog v. Randolph, 77 Ala. 597; Phoenix Carpet Co. v. State, 118 Ala. 143, 22 South. 627, 72 Am. St. Rep. 143; Mayor of Mobile v. Stonewall Ins. Co., 53 Ala. 570. In fact wherever the Constitution provides for the levy of a tax, it is expressly limited to “taxable property,” which means, as we have already pointed out, property not lawfully exempted from taxation. This power is unreservedly conceded by counsel for the state. It includes, of course, the power to select for taxation only real estate, with a resulting exemption of personalty, and vice versa. — -37 Cyc. 740, and cases cited. And, if either class may be exempted, it cannot be denied that both may be exempted. And, if both are exempted, what becomes of the general tax, and what becomes of the special school tax? And, it may be pertinently asked, what becomes of the state? This demonstrates to a certainty that, so far as mere poicer is concerned, the Constitution has left in the Legislature the absolute power to nullify all taxation and to destroy all tax revenues. That such a power is left untouched and unrestrained is clearly and radically inconsistent with the theory that any of the quoted sections of the Constitution aimed at the abrogation of legislative freedom in dealing with the mere matter of valuation, for that the framers of the Constitution *491would have cautiously and suspiciously designed to close one door, while leaving others wide open, is beyond the range of rational conception. The truth is, we conceive, that then, as always, they trusted something to the honor and patriotism of the Legislatures of the state, and were content that their levy for the public schools should stand upon the same general basis of valuations as would the general levies, without any fear of substantial impairment resulting from a just equalization of assessments.

We are supported in our conclusion by the general principles of constitutional construction heretofore declared by this court. Buies of statutory construction are of limited application in the construction of the Constitution. The safe rule of constitutional construction is to regard not so much the form or manner of expression as the nature and objects of its provisions, and the end to be accomplished, giving its words their just and legitimate meaning. — Carroll v. State, 58 Ala. 396.

A new constitutional provision adopted by a people already having well-defined institutions and systems of law must not be construed as intending to abolish the former system, except in so far as it is in manifest repugnance to the new Constitution; and, in determining the real scope and meaning of the new provision, it must be read in the light of the former law and the existing system. — Taylor v. Woods, 52 Ala. 474. New provisions, having their origin in larger experience, introduced into an amended or revised Constitution, are to be construed and allowed such operation as will secure the purposes for which they were introduced; and these purposes are to be ascertained from a just consideration of the causes in which they originate. — • Mayor of Mobile v. Stonewall Ins. Co., 53 Ala. 570, 577.

*492Constitutional provisions, designed, for the preservation and security of the elementary rights of life, liberty, and property, should be construed liberally in favor of the citizen as being in accord with the genius of our institutions and the traditions of the English race. See Dorman v. State, 34 Ala. 216; Sadler v. Langham, 34 Ala. 311. Whenever it is clear that the Legislature has overstepped such limitation, its action should be declared null and void. — Sadler v. Langham, 34 Ala. 311, 322. On the other hand, where the legislative act complained of prescribes some rule of purely goveimmental policy, or relates merely to the conduct and administration of public affairs, it ought not to be declared unconstitutional unless there is some constitutional provision which forbids it by express negation, or by necessary implication. — Cooley on Const. Lim. C. 7, § 6; Commonwealth v. Moir, 199 Pa. 534, 49 Atl. 351, 53 L. R. A. 837, 85 Am. St. Rep. 801. Or, as declared by this court, unless it is repugnant to the organic law, “beyond a reasonable doubt.”- — State ex rel. Meyer v. Greene, 154 Ala. 249, 254, 46 South. 268, 270. Or “clearly, decisively, and unavoidably * ';i * without the power of the Legislature.” — City of Ensley v. Simpson, 166 Ala. 366, 375, 52 South. 61, 64.

We think we have said enough to demonstrate that the alleged excess of legislative power in the enactment of the law in question is at least too doubtful to justify us in pronouncing it unconstitutional, for, as said by Chief Justice Sharswood, “to doubt is to be resolved in favor of the constitutionality of the act.” — Commonwealth v. Butler, 99 Pa. 535.

Let the judgment be affirmed.

Affirmed.

All the Justices concur, except de Graefenried, J., not sitting.