Utah Power & Light Co. v. Pfost

• Decision Date: 20 August 1931
• Docket Number: No. 1621.,1621.
• Parties: UTAH POWER & LIGHT CO. v. PFOST, Commissioner of Law Enforcement of Idaho, et al.
• Court: U.S. District Court — District of Idaho

52 F.2d 226 (1931)

UTAH POWER & LIGHT CO. v. PFOST, Commissioner of Law Enforcement of Idaho, et al.

No. 1621.

District Court, D. Idaho, S. D.

August 20, 1931.

COPYRIGHT MATERIAL OMITTED

Hawley & Worthwine, of Boise, Idaho, Merrill & Merrill, of Pocatello, Idaho (Geo. R. Corey, of Salt Lake City, Utah, and John F. MacLane, of New York City, of counsel), for plaintiff.

Fred J. Babcock, Atty. Gen., and Sidman I. Barber and Maurice H. Greene, Asst. Attys. Gen., for defendants.

Before SAWTELLE, Circuit Judge, and WEBSTER and CAVANAH, District Judges.

CAVANAH, District Judge.

The Legislature of Idaho at an extraordinary session enacted an act (Laws 1931 Ex. Sess. c. 3) requiring those engaged in the generation and production of electricity and electrical energy in the state for barter, sale, or exchange to pay a license tax of one-half mill per kilowatt hour on such electricity, and directed that it be measured at the place of production by recording watt hour meters or other suitable instruments. The plaintiff, Utah Power & Light Company, engaged in generating, transmitting, and distributing electrical power and energy as a public utility in the states of Idaho, Utah, and Wyoming, brings this suit challenging the constitutionality of the act on the grounds that it violates the equal protection, due process, and commerce clauses of the Constitution of the United States, and conflicts with and violates certain provisions of the Constitution of the state of Idaho, and applies for an interlocutory injunction restraining the enforcement of the act pending the decree on final hearing.

Numerous reasons are asserted by the plaintiff as to why the act should fall as contravening the provisions of the federal and state Constitutions, and among which there is first presented the question as to whether or not the act violates the Fourteenth Amendment of the Constitution of the United States and section 13 of article 1 of the Idaho Constitution, which have similar inhibitions against taking property without due process of law, as it is urged that it denies the plaintiff equal protection of the law and renders its property liable to be taken without due process of law. The penalty prescribed in the act and the exceptions provided in section 5 thereof, plaintiff asserts, furnish the basis for this claim. Generally, it has been said that the courts have no interest in the policy of the state revenue laws so long as equal protection is not denied and property is not taken without due process of law and it is reasonable and not arbitrary. The Fourteenth Amendment "only requires the same means and methods to be applied impartially to all the constituents of each class, so that the law shall operate equally and uniformly upon all persons in similar circumstances." Kentucky Railroad Tax Cases, 115 U. S. 321, 6 S. Ct. 57, 63, 29 L. Ed. 414; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 18 S. Ct. 594, 42 L. Ed. 1037; State v. Horn et al., 27 Idaho, 782, 152 P. 275; and this policy may be carried out in a revenue as well as a police measure. The constitutional provision was not intended to compel the state to adopt an iron rule of equal taxation, for it may exempt certain classes of property from taxation at all, so long as the Legislature proceeds within reasonable limits. The fact that the state, in adjusting its revenue laws, has exempted a certain class, does not deny the equal protection of the law, and this right to classify for taxation is granted to impose an occupation tax if equally applicable to all within the class. Hope Natural Gas Co. v. Hall et al., 274 U. S. 284, 47 S. Ct. 639, 71 L. Ed. 1049; Heisler v. Thomas Colliery Co. et al., 260 U. S. 245, 43 S. Ct. 83, 67 L. Ed. 237; Armour Packing Co. v. Lacy, 200 U. S. 226, 26 S. Ct. 232, 50 L. Ed. 451; Citizens' Telephone Co. v. Fuller, 229 U. S. 322, 33 S. Ct. 833, 57 L. Ed. 1206; Clark v. Titusville, 184 U. S. 329, 22 S. Ct. 382, 46 L. Ed. 569; American Manufacturing Co. v. City of St. Louis, 250 U. S. 459, 39 S. Ct. 522, 63 L. Ed. 1084. But it is urged that, as section 5 of the act exempts all electrical energy used for pumping irrigation water for Idaho lands except where the water so pumped is sold or rented to such lands on condition that the exemption which accrues to the benefit of the consumer of such electricity and the full amount of such tax which would have been used from such production, if the exemption had not been made, should be granted annually for the year in which the exemptions are made on the power bill to the consumer by the producer of such electricity, the statute takes private property for private purposes in violation of the provisions of the state Constitution and not due process of law. A similar statute of the state exempting property used for irrigation pumping purposes from a general property tax of an electrical company was held by the Supreme Court of Idaho as not contravening the state Constitution, for the reason that it did not levy a tax, but created an exemption, and that the credit of the state was not thereby extended, as there was no obligation on the part of the state created by the state, and the fact that "the transfer of the ultimate benefit of the exemption to the consumer — does not change its character as an exemption statute or require us to hold that it grants a subsidy to private individuals in a manner forbidden by the Constitution." Williams v. Baldridge, 48 Idaho, 618, 284 P. 203, 206. Accepting then the decision of the State Supreme Court in interpreting its state Constitution as controlling, the federal court will not interfere in the matter of exemption from state taxation under the Fourteenth Amendment, as such matters of classification are of state policy to be determined by the state. Florida Central & Peninsular Railroad Co. v. Reynolds, 183 U. S. 471, 22 S. Ct. 176, 46 L. Ed. 283; Bell's Gap Railroad Co. v. Pennsylvania, 134 U. S. 232, 10 S. Ct. 533, 33 L. Ed. 892.

The suggestion made that, because the tax is not reflected in present rates, the exemption reduces its charges to its consumers for electrical energy for pumping water for irrigation purposes, and thereby results in a reduction of its rates, and would be the taking of property without due process of law, is without merit when we consider that under its powers of rate-making the Public Utilities Commission of the state takes into consideration all taxes paid and exemptions required to be allowed in fixing the rates to be charged, and, this being the case, there can be no confiscation of plaintiff's property, as this tax exemption would in effect be borne by all the consumers, thereby relieving plaintiff from paying it at all.

As to the penalty provided in the act, it is sufficient to say that it is not involved in the present suit, as there is no attempt to now enforce it. It is separate from the other provisions of the act, and the act contains a section that, if any provision of it be held unconstitutional for any reason, it shall not affect the validity of the act as a whole, or of any provision which is not specifically adjudged invalid, so therefore, in advance of an attempt to enforce the penalty, we need not pass upon its validity. Ohio Tax Cases, 232 U. S. 576, 34 S. Ct. 372, 58 L. Ed. 737; Grenada Lumber Co. v. State of Mississippi, 217 U. S. 433, 30 S. Ct. 535, 54 L. Ed. 826; Western Union Telegraph Co. v. City of Richmond, 224 U. S. 160, 32 S. Ct. 449, 56 L. Ed. 710; Louisville & Nashville Railroad v. Garrett et al., 231 U. S. 298, 34 S. Ct. 48, 58 L. Ed. 229.

Even if sections 5 and 11 of the act are unconstitutional, the court is not warranted in declaring the whole act void, unless all the provisions are connected in subject-matter and depend on each other, for it is settled that an exemption or the penalty clause in a statute may be invalid, yet the rest of the statute remains unaffected and could be carried out. Gillesby v. Board of Commissioners, 17 Idaho, 586, 107 P. 71; State v. Bird, 29 Idaho, 47, 156 P. 1140; Little Rock & Ft. Smith Ry. Co. v. Worthen, 120 U. S. 97, 7 S. Ct. 469, 30 L. Ed. 588.

Thus viewing the act, we have no doubt that, even if sections 5 and 11 are excluded, there will remain a workable statute whose provisions will not depend upon the sections excluded, and the act would be capable of enforcement.

The fact that the act failed of passage at the regular session of the Legislature without having contained in it the exemption provision, and was thereafter adopted with the exemption clause, would not justify the court in presuming that the Legislature would not have passed it without the exemption provision, for it does not appear that the act would have been passed at the regular session with the exemption provision, or that it ever came to a vote. It is evident that the primary purpose of the act was to require all engaged in the generation and production of electricity and electrical energy in the state to pay a tax, and that it operates alike upon all who are so engaged. The tax required to be paid is uniform throughout the state and equal upon the same class similarly situate, which removes from it the charge that it infringes upon the equality clause.

The charge that the act imposes a double license for the same purpose, in violation of section 5, art. 7 of the state Constitution, is not well founded when we come to consider the two statutes involved, for section 4782 of the Idaho Compiled Statutes requires the payment of an annual license tax upon the right to do business as a corporation in the state, and affects all corporations alike, while the tax imposed by the act here affects all who generate electrical energy, whether incorporated or not, and is an excise tax upon the right to engage in that particular business. The rights are not the same, as one relates to a tax upon the franchise of the corporation as a privilege for being a corporation in the state, and the other for the...