Baird v. Burke Cnty.

Decision Date11 August 1925
Docket NumberNo. 4930.,4930.
Citation205 N.W. 17,53 N.D. 140
PartiesBAIRD v. BURKE COUNTY et al.
CourtNorth Dakota Supreme Court


Syllabus by the Court.

When the courts are called upon to determine and give effect to the legislative intention, it is proper to take notice of such contemporaneous history as led up to and probably induced the passage of the law (section 7938, subd. 60, Comp. Laws 1913); to this end the court should place itself, as nearly as possible, in the situation of the Legislature, in order to ascertain the necessity and probable object of the statute.

The construction of statutes is a judicial function; the action of the Legislature of 1923, purporting to construe the statutes of 1917 and 1919 as legislative blunders, and therein attempting to give a meaning to words used by prior Legislatures contrary to their ordinary and natural import, is not binding upon the courts.

The state Constitution is a limitation, not a grant, of power; the Legislature has full power of legislation, except as limited by that instrument and the federal Constitution. Although the people have reserved legislative power, through the initiative and the referendum, the power of the Legislature to act upon all proper subjects of legislation is wholly unchanged. Through the initiative, the people have provided against nonaction by the duly constituted representatives in the legislative branch, and through the referendum, an appeal may be taken directly to the people from affirmative action by their representatives.

The initiative and referendum provisions in the Constitution have not altered or affected the principle that the fundamental purpose of legislation is to make every statute, enacted by the Legislature, speak the will of the majority of the legislative agents chosen by the people; and whether the Legislature, or the people, through the initiative, be the lawmaker, this rule is the same.

The primary purpose of the Legislature in enacting chapter 300, Sess. Laws 1923, was to facilitate the collection by county commissioners and the state tax commissioner of a contribution from banks in the state, which had not paid in conformity with the voluntary agreement referred to in the act. In this chapter, the Legislature intended to give recognition to this voluntary agreement and to put into the hands of taxing officials additional means to enforce collection from the few banks which had taken advantage of the absence of any statutory authority for levying or collecting a capital stock tax during the years in question.

The effect of striking section 2 from chapter 300, Sess. Laws 1923, through the referendum, is to strike from the act its primary purpose and to leave the remainder self-contradictory and inconsistent upon its face. The legislative purpose, unequivocally expressed in the law as passed, is completely subverted, if effect be given to what remains.

If the result of striking a certain clause, section or part of a statute, through the referendum, be to remove the inducement therefrom so that the remainder is a substantial departure from the legislative purpose, or effects an object foreign to and not within the contemplation of the lawmaking body when the law was passed, the entire statute falls.

Appeal from District Court, Burke County; John C. Lowe, Judge.

Suit by L. R. Baird, as receiver of the Citizens' State Bank of Flaxton, against Burke County and others, for an injunction. From a judgment sustaining plaintiff's demurrer to answer, defendants appeal. Affirmed.T. H. H. Thoresen, Tax Com'r, of Bismarck, and B. L. Wilson, State's Atty., of Bowbells, for appellants.

L. J. Palda, Jr., C. D. Aaker, and C. E. Brace, all of Minot, for respondent.

A. G. Divet, of Fargo, amicus curiæ.


Plaintiff brings this action to restrain the collection of certain taxes on bank stock for the years 1920 and 1921. The assessment was attempted under section 2115, C. L. 1913, as amended by chapter 61, Sess. Laws 1917, and, under section 1, of chapter 220, Session Laws of 1919, the stock is assessed at 100 per cent. of its value. It is the contention of the plaintiff that the assessments are without statutory authority and void; that bank stock was expressly exempt and the law authorizing the taxation thereof repealed by chapter 62, Special Session Laws, 1919; and that it was so held by this court in State v. Wallace, 48 N. D. 803, 187 N. W. 728.

The plaintiff demurred to the answer. The theory of the defendant, as disclosed in the answer and in the brief and the oral argument of the tax commissioner, is that chapter 300, Session Laws of 1923, validates retroactively the assessments and furnishes the requisite statutory warrant for the tax. The demurrer was sustained and the defendant appeals.

As a result of the action of the Legislature in enacting chapter 62, Special Session Laws 1919, repealing the existing statute, there was left no law authorizing the assessment of taxes against bank stock. Chapter 62, supra, was a specific repeal, and this court so held in State ex rel. v. Wallace, supra. There was no change in this situation until the Legislature convened in 1923. It appears, however, that notwithstanding the repeal, officers in some counties of the state attempted to levy and assess taxes against bank stock for the years in question. Such assessment was manifestly illegal, in view of the specific exemption of chapter 62. On this question there is no dispute. A large number of banks felt, however, that a fair stock tax should be levied and were willing to pay accordingly. As stated by the tax commissioner in his brief:

“A majority of the banks in the state of North Dakota realized this truth and, though the bank stock was held by this court to be exempted from taxation, voluntarily paid into their respective county treasuries what they considered was a fair amount of tax against their property. These banks took the position that even though they were inadvertently exempt from taxation by the repeal of the moneys and credit law, nevertheless, they had enjoyed the benefits of protection under our government and were morally obliged to contribute their just share towards the government.”

As a result of this feeling on the part of the banks, a settlement was made whereby the banks agreed to pay a sum equivalent to 50 per cent. of the amount of the tax which had originally been assessed against them under the classification as contained in chapter 220, of the Session Laws of 1919. That is, they agreed to pay upon the same basis of valuation as live stock, agricultural implements, tools and machinery, etc., under class 2 of section 1 of said chapter. “Nearly all of the banks of the state paid according to this agreement. See section 2, c. 300, Sess. Laws 1923. The plaintiff and a few others did not, with the result that it escaped entirely the payment of any stock tax during this period. It is stated in the brief of one of the counsel that the banks thus voluntarily paid into the public treasury about $1,000,000.

This brings us to a consideration of chapter 300 of the Session Laws of 1923. The tax commissioner says that the “issues squarely before this court are as to whether or not chapter 330, Session Laws 1923, is a valid law, and whether or not the Legislature had the power and authority to validate the taxes for 1919, 1920, 1921, and 1922.”

The title to chapter 300, supra, discloses clearly the purpose of the act. It reads as follows:

“An act validating taxes assessed against bank stock in the years 1919, 1920, 1921, and 1922, authorizing boards of county commissioners and the tax commissioner to compromise such taxes upon bank stock for 1919, 1920, and 1921, as have not been paid, and confirming and ratifying such settlements as have been made.”

Chapter 300 reads:

Section 1: “All taxes levied and assessed in the years 1919, 1920, 1921, and 1922 upon bank stock are hereby validated and confirmed and shall be given full force and effect by all administrative and judicial officials notwithstanding the language contained in section 1 of chapter 62 of the Special Session Laws of 1919 and section 1 of chapter 230 of the Laws of 1917 purporting to include stock as money and credits in the exemption given to money and credits.”

Section 2: “Boards of county commissioners and the tax commissioner are hereby authorized to compromise and settle taxes assessed upon bank stock for the years 1919, 1920, 1921, which have not already been compromised, settled, and paid upon the same basis of settlement upon which nearly all of the banks of the state have paid taxes for such years. The settlement of the taxes upon bank stock for the years 1919, 1920, and 1921, heretofore made by the tax commissioner and carried into effect by boards of county commissioners is in all things hereby ratified and confirmed.”

Section 3: “It is hereby declared to be the public policy of this state, recognized for many years, that all classes of property owners possessing a considerable amount of taxpaying ability shall contribute to the expense of government in proportion to their relative abilities to pay, and that owners of bank stock constitute a class of property owners possessing such tax-paying ability, and that the inadvertent inclusion in the legislative enactments of the 1917 session and the 1919 special session of a misstatement of the law and of fact in that it is therein inferentially stated that corporate stock is a credit, does not and did not indicate a deliberate departure from established legislative policy, and it is further declared to be in harmony with sound public policy that bank stock of the several banks should be assessed upon and should be taxed upon a uniform basis, and that such stockholders as have not paid taxes for the years in question should be required to pay taxes upon the same basis as those who have already complied with the terms of the settlement above referred to, and that this exercise of the limited power...

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    ...prohibited by the Constitution of the state or the nation. State ex rel. Gaulke v. Turner, 37 N.D. 635, 164 N.W. 924; Baird v. Burke County, 53 N.D. 140, 205 N.W. 17; State ex rel. Rausch v. Amerada Petroleum Corp., 78 N.D. 247, 49 N.W.2d 14. The courts will presume in favor of the constitu......
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