State v. Cumberland & Pennsylvania Railroad

Alvby, J.,

delivered the opinion of the Court.

The only question intended to he presented by this appeal, and which has been argued in this Court, is, whether the Act of the Legislature of 1872, ch. 274, is constitutional or not. All other questions arising on the pleadings have been waived, and the issue of fact disposed of by agreement.

The Act in question, is entitled “An Act to regulate the taxation of Coal Mining Companies in this State, for State purposes.”

By the first section it is provided, “ That it shall not he lawful for any Coal Mining Company or association in *42this State, to transport any coal mined in this State, on any railroad, canal, or by any boat or vessel, from any mine in this State, to any place in this State or elsewhere, for sale, until a State tax of two cents per ton of two thousand, two hundred and forty pounds, on said coal, be first paid to the railroad conrpany, canal company, or transportation company, undertaking to transport the same immediately from the said mine, or payment of the same be provided for, to the satisfaction of the said company undertaking to transport the same as aforesaid.” And the second section makes it unlawful for any transportation company, doing business in this State, to receive any coal mined in this State for transportation, immediately from the mine out of which the same may be produced, to any point in this State or elsewhere for sale, until the tax of two cents per ton shall be first paid by the party mining the same, to the transportation company; and every transjjortation company receiving coal so mined for transportation, shall be liable to the State for such tax; and it is expressly made the duty of the transportation company transporting the coal, to collect the tax before receiving the coal for transportation.

The third section makes it the duty of the financial officers of the transportation companies, so receiving coal for transportation, to make returns in writing to the Comptroller of the Treasury, within thirty days after the first day of January, April, July and October of every year, stating fully and particularly the number of tons of coal mined in this State, and transported on or over their works, for the three months immediately preceding each of the above mentioned days; and it is made the duty of such transporting companies, at the time of making such returns, to pay into the treasury of the State, the tax so by them required to be collected.

The fourth, fifth and sixth sections provide penalties for failure or neglect by the transportation companies, or *43their officers, to collect and pay over the tax as directed by the Act, and as to the manner of suing, the extent of recovery, and the enforcement of the judgment.

By the seventh section, it is provided that whenever it shall appear to the Comptroller, by the returns of the officers of the transportation companies, tlmt any coal mining company in this State lias bona Jide worked its mine, and paid the tax upon the coal mined by it, in accordance with the requirement of the Act, the Comptroller shall give such company a discharge for State taxes on its capital stock for the year in which such tax on the coal mined lias been paid; it being declared to be tbe meaning of tbe Act that such mining companies shall not. be taxed at tlie same time on both their production, and their capital stock.

The eighth section clothes the Comptroller with power to examine the officers of the several transportation companies, and other persons, under oath, as to the amount of coal mined and transported, and provides a penalty for refusing to he sworn to give information.

The Act was made to take effect from the day of its passage, and was approved on the 1st of April, 1872.

The present suit was brought under this Act by the State against the appellee, the defendant; the latter being a transportation company, engaged in transporting the coal mined in Allegany Comity, directly and, immediately from the mines, thence to he put in course of transportation to the various markets of the country for sale; the amount in controversy, and for which the action is brought, being the alleged amount of tax on the coal transported by the defendant from the date of the Act, to and including the thirtieth of June, 1872, and the penalty of ten per cent, on the amount of the tax alleged to heulue.

The question of the constitutionality of the Act is raised by a demurrer, and though interposed by tbe State to the second plea of the defendant, it brings before the Court the sufficiency of the declaration as well as the plea.

*44The declaration discloses upon its face the fact that the claim of the State against the defendant, arises solely under the Act just recited, and hence the question of the validity of the Act is fully presented by the demurrer.

The validity of the Act is called in question upon two distinct grounds ; first, that it is in conflict with the Constitution of the United States; and, secondly, that it is in conflict with the Constitution of this State.

Preliminary to the consideration of these questions, it is proper to say, that the taxing power of the State is of vital importance to it; indeed, so essential is the power, that the very existence of the State dep>ends upon the right to exercise it. All persons and property, therefore, within the jurisdiction of the State are liable to it; and the' power is conferred upon the State for the benefit of the • entire body politic. The power resides in the State as an attribute of its sovereignity, and the right of the Legislature, as the representatives of the people, to exercise it, should never be questioned, except in plain cases, where, the power is relinquished for valid consideration, or where to prevent its abuse, it has been placed under restriction, either as to the subjects liable to it, or the mode and manner of its exercise.

That the State’s power of taxation has been restrained and made subject to limitation by the Federal Constitution, as to certain subjects, is clear, and it is equally clear, that, with respect to the mode and manner of exercising the power by the Legislature, it has been restrained by the Constitution of the State.

1. Proceeding then to consider the questions immediately involved in this case, the first is, whether the tax upon coal, imposed by the Act of 1872, chapter 274, is repugnant to, or in violation of that provision of the Constitution of the United States, which declares that Congress shall have power to regulate commerce with foreign nations, and among the several States.”

*45With respect to this question, it is .to be observed that the Act imposes the tax of two cents per ton upon all coal mined in the State, and transported by any of the ways enumerated, to any point in the State or elseiohere, for sale. By the regular course of the coal trade of the State, as is well known as matter of public concern and notoriety, much the larger portion of all the coal mined in this State is transported without change of ownership directly from the mines, either to points beyond the State, or to points within the State, to be shipped for markets beyond the State limits. The Act, however, imposing the tax, makes no discrimination between that portion of the coal that may be transported to places within the State for sale, and that portion transported beyond the State for sale. All coal mined in the State and transported, whether in or beyond the State, is taxed alike.

Of course, it is not pretended that the clause referred to of the Constitution of the United States has any application, or creates any restriction, as to the tax imposed on the coal transported for sale exclusively within the State. The internal commerce of the State is exclusively within her control, and is liable to such taxation as the Legislature may think proper to impose upon it, provided there be no restriction in the State Constitution. But, in regard to the tax now under consideration, it is imposed directly upon the coal transported, and only that transported for sale; and as to all such portion of the coal as may be transported directly from the mines to places or markets beyond the limits of the State for sale, the tax would plainly appear to be an interference with and a restriction on inter-State commerce, and hence in contravention of that provision of the Federal Constitution which gives to Congress the power to regulate commerce among the several States.

Indeed, we are not left to construction or speculation as to this question. It has been recently before the Supreme *46Court of the United States, and has been there decided in a case so entirely analogous to the present, that we are relieved from doing more than to state the nature and ruling of that case.

The case referred to is that of The Reading R. Co. vs. State of Pennsylvania, 15 Wall., 232. There the Act of the' State of Pennsylvania inrposing the tax, contained many of the provisions that are found in the Act now under consideration. The Pennsylvania Act required the officers of the transportation companies of that State, to make returns to the auditor-general of the number of tons of freight carried over, through, or upon the works of such companies, for the three months immediately preceding the first days of January, April, July and October of every year; and the several companies were required, at the time of making such returns, to pay to the State treasurer, for the use of the State, certain rates of tax per ton on each ton of freight carried ; the rate on coal being two cents per ton, the same as ju’escribed by the Act before 'us. The Act of Pennsylvania, in an action by the State for the recovery of the tax, was held to be valid and in all respects constitutional, by the Supreme Court of that State, notwithstanding it imposed a tax upon freight, taken up within the State, and carried out of it, or taken up without the State and brought within it. But on writ of error, the Supreme Court of the United States decided otherwise, and held the Act to be repugnant to the provision of the Constitution of the United States which we have before referred to, so far as it operated to tax interstate commerce; and it was held that the transportation of freight, the subjects of commerce, is a constituent of commerce itself, and that a tax upon freight, transported from State to State, is a regulation of commerce among the States.

In that case, a question was made and much discussed, as to the nature of the tax, and upon what it was really and *47substantially imposed. On the one side, it was contended that it was simply a tax upon the franchises of the carrying companies, or upon their business, measured by the number of tons of freight carried. While on the other side it was contended, that the tax was laid upon the freight carried, and not at all upon the carrying companies ; and in accordance with this latter proposition was the opinion of the Court. The question arose from the ambiguity of the statute. But in the case before us there is no such question. The Maryland Act has made plain what the Court had to arrive at, in deciding upon the Pennsylvania Act, by inference and construction. Here the tax, by the very terms of the Act, is imposed upon the coal transported, and only upon such as may be transported for sale, and the carrying companies are, in terms, made tax collectors for the State.

The Supreme Court, in the case referred to, after concluding as to the nature of the tax, and that it was really, though not in terms, imposed upon the freight carried, say that beyond all question the transportation of freight, the subjects of commerce, for the purpose of exchange or sale, is a constituent of commerce itself; and that this is a proposition that has never been doubted. They then ash, “why is not a tax upon freight transported from State to State a regulation of inter-State transportation, and, therefore, a regulation of commerce among the States ? Is it not prescribing a rule for the transporter, by which he is to be controlled in bringing the subjects of commerce into the State, and in taking them out? The present case,” they continue, “ is the best possible illustration. The Legislature of Pennsylvania has in effect declared that every ton of freight taken up within the State and carried' out, or taken up in other States and brought within her limits, shall pay a specified tax. The payment of that tax is a condition, upon which is made dependent the prosecution of this branch of commerce. And as there is no limit to *48the rate of taxation she may impose, if she can tax at all, it is obvious the condition may be made so onerous, that an interchange of commodities with other States would be rendered impossible. The same power that may impose a tax of two cents per ton upon coal carried out of the State, may impose one of five dollars. Such an imposition, whether large or small, is a restraint of the privilege or right to have the subjects of commerce pass freely from one State to another, without being obstructed by the intervention of State lines.” And in concluding then-opinion, the Court say that “transportation is essential to commerce; and every burden laid upon it is pro tanto a restriction. Whatever, therefore, may be the true doctrine respecting the exclusiveness of the power vested in Congress to regulate commerce among the States, we regard it as established that no State can impose a tax upon freight transported from State to State, or upon the transporter, because of such transportation.” In other words, the State has no power to impose a tax upon inter-State transportation, such transportation being a constituent of commerce. This proposition is re-affirmed in the case of Osborne vs. The City of Mobile, 16 Wall., 479.

By the Act before us there is a positive prohibition to the transportation of coal “from any mine in this State to any place in this State or elsewhere, for sale,” until a State tax of two cents per ton is first paid, or provided to be paid. ' It is only the coal transported for sale that is the subject of this tax, and therefore it is by reason of the fact of transportation that the coal becomes liable to the tax at all; and it is quite clear that the Act contemplates the transportation of coal as freight beyond the State for sale ; and thus the payment of the tax becomes a condition precedent, and consequently an impediment to the prosecution of this branch of commerce. And though the tax be levied upon all coal transported, as well that transported to places within the State, as that transported *49beyond its limits, still, that can make no difference in the effect of the law. The State is at liberty to tax her internal commerce, but if an Act to tax inter-State commerce be unconstitutional, it is not cured by including in its provisions subjects within the taxing power of the State. This is explicitly decided by the case in 15 Wall., 276, 277.

Without saying more in regard to this question, we are of opinion, upon the authority cited, that the Act of 1872, chapter 274, so far as it affects to impose the tax upon coal transported from the mines in this State to places beyond the State for sale, is unconstitutional and void.

And having thus declared the Act so far void, as being in conflict with the Constitution of the United States, it becomes a grave question whether the Act in its entirety, irrespective of any other constitutional objection, does not fail. As a general rule, where a statute is partly void, and its provisions all relate to a single subject-matter, the question whether the other parts shall remain operative, depends in a great measure upon a consideration of the object in view in the passage of the Act, and in what manner and to what extent the unconstitutional part affects the remainder. Here we can hardly suppose that the Legislature would have passed the Act in question with a knowledge that it could only be effectual as to the coal transported to places within the State; and thus intentionally have discriminated against the citizens of the State and in favor of those beyond its limits. It would not be fair to indulge such a presumption with respect to the purpose of the Legislature. But, without deciding this question, wo shall proceed to consider the second constitutional objection urged to the Act.

2. This question is founded on the 15th Article of the Bill of Eights of this State. It is said that the Act in question is in violation of this Article of the Bill of Eights, because it imposes a specific tax, without regard to the value of the article taxed, and without regard to the prin*50ciple of equality and uniformity prescribed by tbe Bill of Rights.

The article of the Bill of Rights relied on declares that “every person in the State, or person holding property therein, ought to contribute Ms proportion of public taxes for. the support of the Government, according to his actual worth in real or personal property; yet fines, duties or taxes may properly and justly be imposed or laid with a political view, for the good government and benefit of the community.”

This is a fundamental declaration of the right of the citizen against unequal and undue assessments of taxes by the Government. It was not deemed a sufficient guarantee that no tax should be' imposed but by the representatives of the citizen in the Legislature, but, in order to prevent abuse of the power, which would otherwise be unlimited, the Legislature is required to cause all public taxation for the support of the Government to be fair and equal in proportion to the value of the property assessed, so that no class or species of property shall be unequally or unduly taxed. And this declaration of the right of the citizen is not simply directory to the Legislature, to be observed or not as that department of the Government may determine or think proper ; but it is a positive limitation or restriction on the power, and whenever it is transcended or disregarded, it becomes the duty of the Courts to declare the Act void. Hence, this Court has repeatedly declared that taxes, if imposed in violation of this fundamental rule, would be illegal and void. In the case of the Mayor & City Council vs. Balto. & Ohio R. R. Co., 6 Gill, 291, the Court, in referring to a tax on the franchise of an incorporated bank, say, if it were a special tax, technically speaking, levied for the support of the government of the State, it would be clearly unconstitutional and void, as being repugnant to the 15th Article of the Declaration of Rights. And in another part of the same opinion the *51Court say: “The argument is wholly unsound when applied to Maryland, that a franchise, if subject to taxation, may, by its excessive exercise be destroyed or rendered valueless; because by the 13th, (now 15th) Article of the Bill of Eights, the Legislature can impose no tax upon it, which is not equally borne by every other species of property in the State in proportion to its value.’' And language equally decisive, has been used in other cases; as in the case of the State vs. Sterling, 20 Md., 520; and also that of Tyson vs. The State, 28 Md., 587.

In construing this declaration of right, however, the terms employed can only apply to a direct tax on property, and not that the power of the Legislature should be limited as to the objects of taxation. The restriction is only intended to prevent an arbitrary taxation of property according to kind or quality, without regard to value. Sedg. on St. Law, 557. There are many other species of taxes that have been imposed from the foundation of the State goverment to the present time; and a power so long exercised unquestioned, could only be doubted upon the most conclusive argument against it.

What then is the character of the tax imposed by the Act in question? It is, beyond all doubt, a direct and specific tax upon coal, and therefore a tax upon property. It is not assessed with reference to any uniform value of the coal, nor with reference and in conformity to any rate of taxation imposed upon the other property of the State. It is therefore a specific, arbitrary tax levied for the support of the government, on a part of the personal property of the State, without regard to value, uniformity or equality. Upon the same principle that this tax of two cents per toil is attempted to be imposed, if legal, the State could impose fifty cents, or even a dollar per ton on all the coal mined and transported.

ISTow, the capital stock of the several mining companies of the State is liable to taxation according to a fixed and *52certain rate; and the stock being the representative of the whole property of the corporation, the payment of the tax on the capital stock exempts from taxation all the property both real and personal of the company. And although the State may elect to tax either the capital stock, or the real and personal property of the company, yet it cannot tax both; and if it elect to tax the real and personal property, and not the stock, such property must be assessed according to the same equal and uniform rate, in proportion to its value, as all other property in the State, whether owned by individuals or corporations. It is not competent to the Legislature to discriminate as between the different species of property, and to tax some by one rule and some by another. All must bear the burthen alike; for if it were otherwise, it would be impossible to observe the rule, which requires that every person in the State, or person holding property therein, shall contribute his proportion of public taxes for the support of government, according to his actual worth in real or personal property. The protection afforded by the rule, consists in the equality and. uniformity required, whereby one person shall not be taxed more nor less than another, because he may happen to own a different species of property from that owned by the other. Hence, the Legislature could not do what was attempted to be done by the Act under consideration; for although the State might elect to tax the property of the coal companies rather than their capital stock, yet the entire tax exacted from them could not be, in the shape of a special tax, laid exclusively upon one species of personal property, namely, their coal mined for transportation. Such legislation most clearly violates the Article of the Bill of Rights to which we have referred; and so declaring, we shall affirm the judgment of the Court below.

(Decided 5th March, 1874.)

Judgment affirmed.