Holzwasser v. Brady

Moss, Chief Justice:

Mary S. Holzwasser, the respondent herein, owns a tract of land with a building thereon, located in Spartanburg County, which she leases to Arrow Automotive Industries, Inc. and is used by it for manufacturing purposes.

Manufacturers and persons who own and lease property to manufacturers are required to list and return such property to the South Carolina Tax Commission for assessment and equalization for ad valorem tax purposes pursuant to Sections 65-64(17) and 65-1647.1 of the Code, as amended. All property owners other than those required to list and return their property to the South Carolina Tax Commission are required to list and return property to the county auditor of the county in which the property is taxable. Section 65-1644 of the Code. The assessment of that property is by the county tax assessor or boards that have responsibility for the assessment and equalization of property within the respective counties. Sections 65-1502 and 65-1894.

The property of the respondent, which was being used for manufacturing purposes, was listed and returned by her to the South Carolina Tax Commission for the 1972 tax year. The Commission found the fair market value of the *484property to be $288,000, and in accordance with Act No. 1266, Acts and Joint Resolutions for 1972, 57 Stats. 2467, applied a ratio of 9.5% to that value to ascertain the assessed or tax value of the property. By applying the percentage ratio above stated to the fair market value of the property, the tax value of the respondent’s property for the 1972 tax year was $27,360, and by applying the fixed millage in said taxing district, resulted in a total tax in the amount of $5,302.37.

In Spartanburg County a ratio of 4.2% is applied to the fair market value of real property that is not assessed by the Tax Commission to determine the tax value of such real property. This ratio was arrived at under the authority of Act No. 1125, of the 1966 Acts of the General Assembly, 54 Stats. 2794, as amended, by Act No. 528, Acts of the 1967 General Assembly, 55 Stats. 940, and Act No. 1253, Acts of 1968, 55 Stats. 2837. By applying the fixed millage in said taxing district, the amount of taxes that would have been levied and collected from the respondent had her property been assessed by the use of the 4.2% ratio would have been $2,344.21. The difference between the tax levy measured by the 9.5% ratio and the 4.2% ratio was in the amount of $2,958.16.

The respondent paid to Oren L. Brady, Jr., as Treasurer of the County of Spartanburg, the appellant herein, under protest, taxes for the year 1972 in the sum of $5,-302.37, this being the amount arrived at under the 9.5 ratio, but now admits that she was only liable for taxes in the amount of $2,344.21, a tax measured by an assessment ratio of 4.2% of the value of her property.

The respondent commenced this action under Section 65-2662 of the Code, to recover the sum of $2,958.16, which exceeds $2,344.21, being the tax measured by an assessment ratio of 4.2% of the value of her property. She alleges that the application by the Tax Commission of the 9.5% ratio to value in assessing her property for taxation rather *485than the 4.2% ratio used in assessing the real property in Spartanburg County by the local authority, resulted in the unequal and non-uniform taxation of properties of similar value to the detriment of the respondent, in violation of Article I, Section 5; Article III, Section 29; Article X, Sections 1, 3A and 5(1), of the South Carolina Constitution and Amendment XIV, Section I, of the United States Constitution.

The appellant demurred to the complaint on the ground that the Act providing for the assessment at a ratio of 9.5% of its fair market value of real property that is owned, leased to or used by a manufacturer and the Acts providing for an assessment at a ratio of 4.2% of the fair market value of other real property of a non-manufacturer and not assessed by the Tax Commission, were constitutionally valid legislative Acts classifying property for taxation.

The demurrer interposed by the appellant came on to be heard at the 1973 March Term of the Court of Common Pleas for Spartanburg County and was overruled. The trial judge held that so much of the Act as permits the taxation of the property of the respondent at a ratio higher than that applicable to locally assessed real property was unconstitutional, null and void, and the taxation at the 9.5% ratio abridged the requirement of uniformity and equality in taxation and thereby denied the respondent the equal protection of the laws. This appeal followed.

We are here concerned with two Acts of the General Assembly: one that property assessed by the South Carolina Tax Commission is to be taxed upon an assessment equal to 9.5% of its fair market value; and the other providing that property assessed by the Tax Assessor of Spartanburg County is to be taxed upon an assessment equal to 4.2% of its fair market value. The taxation of real property in Spartanburg County at the different ratios creates the question to be decided by this Court.

*486The respondent attacks the constitutionality of the statute under which her property was assessed and taxed. It is based on the due process and equal protection clauses of the State and Federal Constitution as well as pertinent provisions of the Constitution of this State, as follows:

Article III, Section 29:

“All taxes upon property, real and personal, shall be laid upon the actual value of the property taxed, as the same shall be ascertained by an assessment made for the purpose of laying such tax.”

Article X, Section 1:

“The General Assembly shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe regulations to secure a just valuation for taxation of all property, real, personal and possessory, . . .”

Article X, Section 3A:

“All property subject to taxation shall be taxed in proportion to its value.”

Article X, Section 5(1):

“The corporate authorities of counties, townships, school districts, cities, towns and villages may be vested with power to assess and collect taxes for corporate purposes; such taxes to be uniform in respect to persons and property within the jurisdiction of the body imposing the same . . .”

When considering whether an Act of the General Assembly is unconstitutional, we are governed by the guidelines set forth in Cox v. Bates, 237 S. C. 198, 116 S. E. (2d) 828, as follows:

“The supreme legislative power of the State is vested in the General Assembly; the provisions of our State Constitution are not a grant but a limitation of legislative power, so that the General Assembly may enact any law not expressly, or by clear implication, prohibited by the State or Federal Constitution; a statute will, if possible, be construed so as to render it valid; every presumption will be made in *487favor of the constitutionality of a legislative enactment; and a statute will be declared unconstitutional only when its invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the Constitution. Santee Mills et al. v. Query et al., 122 S. C. 158, 115 S. E. 202; Clarke v. South Carolina Public Service Authority et al., 177 S. C. 427, 181 S. E. 481; Ellerbe v. David et al., 193 S. C. 332, 8 S. E. (2d) 518; Pickelsimer v. Pratt et al., 198 S. C. 225, 17 S. E. (2d) 524; Moseley v. Welch, 209 S. C. 19, 39 S. E. (2d) 133; Gaud v. Walker, 214 S. C. 451, 53 S. E. (2d) 316.”

The General Assembly of this State under the Equal Protection Clause of both the State and Federal Constitutions has the right to classify both persons and property for taxation. It was so held in Byrd v. Blue Ridge Rural Electrical Cooperative, 215 F. (2d) 542, certiorari denied 348 U. S. 915, 75 S. Ct. 295, 99 L. Ed. 717, as follows:

“The fundamental rule is that the State legislature has the right to make reasonable classifications of persons and property for taxation purposes. It is elementary that if the classification bears a reasonable relation to the legislative purpose sought to be effected, and if all the members of each class are treated alike under similar circumstances, the equal protection clauses of the Constitutions are fully complied with. Duke Power Co. v. Bell, 156 S. C. [299] at page 318, 152 S. E. 865.”

Article X, Section 1, of our Constitution requires “a uniform and equal rate of assessment and taxation.” In Newberry Mills v. Dawkins, 259 S. C. 7, 190 S. E. (2d) 503, we held that this requirement has been interpreted, as follows:

“Generally, within constitutional limitations, the state has power to classify persons or property for purposes of taxation, and the exercise of such power is not forbidden by the constitutional requirement that taxation be uniform and *488equal provided the tax is uniform on all members of the same class and provided the classification is reasonable and not arbitrary.” 84 C. J. S. Taxation § 36, P. 112.

Section 65-64(17), 1973 Cumulative Supplement, authorizes the Tax Commissiin to assess “to the owner thereof all real or personal property leased to or used by a manufacturer” and requires the owner of such property to make a return to the Tax Commission. We find nothing in our Constitution that prohibits the General Assembly of this State from classifying property according to its use so long as such classification is reasonable and not arbitrary, and the tax imposed is uniform on the same class of property.

It clearly appears that it was the intent of the General Assembly of this State to place in a separate classification all property used in manufacturing whether owned by or leased to a manufacturer. The property of the respondent falls within this classification and the determination of its assessed value by the application of the 9.5% ratio was proper.

Legislative classifications in tax matters are presumptively valid, the burden being on the challenger to show that such a classification does not rest upon a reasonable basis. There is no allegation by the respondent of a lack of uniformity and equality within the class to which her property has been assigned. Absent any showing that the respondent’s property has been assessed and taxed differently from other property within this classification, there is no denial of a uniform and equal rate of assessment and taxation.

The property of manufacturers or that leased to manufacturers is certainly devoted to a different use than that of other property and constitutes a reasonable basis for classification. It follows that the 1972 Act cannot be held to be unreasonable and arbitrary. We therefore conclude that the 9.5% assessment ratio applied to the property *489of the respondent for taxation purposes in Spartanburg County does not violate any of the constitutional provisions relied upon by the respondent. We conclude for the reasons stated that the trial judge was in error in overruling the demurrer interposed by the appellant.

Reversed and Remanded.

Lewis and Littlejohn, JJ., concur. Bussey and Brailsford, JJ., dissent.