Berdahl v. Gillis
Decision Date | 02 September 1965 |
Docket Number | No. 10266,10266 |
Parties | James O. BERDAHL, Petitioner-Appellant, v. Bruce D. GILLIS, as Commissioner of Revenue of the State of South Dakota, Respondent. |
Court | South Dakota Supreme Court |
Christopherson, Bailin, Wilds & Bailey and Mead Bailey, Sioux Falls, for petitioner-appellant.
Frank L. Farrar, Atty. Gen., John Dewell, Asst. Atty. Gen., Pierre, for respondent.
The legislature in its 1965 session broadened the base of our sales tax by extending it to certain services and professions. The petitioner, a citizen, resident and taxpayer of the state, licensed to practice law therein and engaged in the active practice thereof, claiming that such act is unconstitutional, on May 13, 1965, instituted this proceeding for a writ of prohibition to restrain the respondent from taking any action thereunder. His right to maintain the proceeding is not questioned. On June 17, 1965 the trial court held the law to be constitutional and denied his application. This appeal is from that action.
The act in question, H.B. 743, now Ch. 296, Laws of 1965, approved on March 18th and effective on July 1st provides:
His claim here is that the law is unconstitutional on its face for these reasons:
(1) It unlawfully delegates legislative power to the Commissioner of Revenue
(2) Its language is so vague as to deny due process of law
(3) The classifications thereunder are arbitrary, unreasonable and constitutionally offensive
While his reply brief mentions a letter by the Commissioner in the nature of an interpretation of the act it should be noted that nothing of this kind was before the trial court. Consequently, it is not before us. Our function is limited to a review of the case presented to the trial court.
We think it proper to first set out some of the general principles in the light of which we must approach the specific problems here presented. As was stated by this court in State of rel. Botkin v. Welsh, 61 S.D. 593, 251 N.W. 189:
'This case, of course, falls under the general rule, so axiomatic as doubtless to be unnecessary of statement, that every presumption is in favor of the validity and propriety of legislative action, and that no statute should be held unconstitutional by any court unless its infringement of constitutional restrictions is so plain and palpable as to admit of no reasonable doubt. * * * As has been so well said by Mr. Justice Holmes: * * *
'The application of this salutary doctrine to the consideration of legislation in the tax field is of peculiar importance. The taxing power inheres in sovereignty and, as we have previously taken occasion to emphasize * * * the existence and exercise of that power are absolutely essential to the preservation of the state. The exercise of the taxing power is vested, under our governmental structure, in the legislative department, and its conduct in that field should be sustained and supported by the courts to the utmost possible limits, and restricted or denied most cautiously and only in the clearest cases. No state can exist without the provision of adequate revenues, and the need for revenue and the practical possibility of securing it from various and sundry sources are conditioned by the social and economic situation of the state and not by constitutional theory. The courts should, and they do, go a great way to sustain the validity of legislative action intended to raise revenue.
* * *
As is made clear in the above quoted statements the power to tax is essentially a legislative function. However, there are circumstances under which there may be delegated to an administrative officer, goard or tribunal, some aspects of the taxing process, if, in making such delegation, the legislature retains sufficient and proper control over those aspects which are not delegable, and if a sufficient guide or standard is laid down by the legislature for the guidance of the administrative officials. 51 Am.Jur., Taxation, Sec. 144 and Sec. 148; 84 C.J.S. Taxation Sec. 8.
By SDC 57.0101(16) it was made the duty of the Secretary of Finance and he was given power:
'To construe the tax laws of the state whenever requested by any officer acting under such laws; to see that all taxes due the state, counties, municipalities, and other local subdivisions are collected, and to perform such other duties and exercise such other powers as may be provided by law.'
In SDC 1960 Supp. 57.01A05 these duties and powers were transferred to the Commissioner of Revenue.
In accordance with the general rule we have often held that the legislature may delegate to an administrative body or officer the duties of carrying out its enactments if it adopts a clearly declared legislative policy and lays down understandable standards to guide the administrative action. Affiliated Distillers Brands Corp. v. Gillis, S.D., 130 N.W.2d 597. The petitioner apparently does not claim that the act does not contain a clearly declared legislative policy, but he does urge that section 1 of the act does not contain sufficient standards as to the gross receipts which are taxable nor as to those that are exempt. From this he proceeds to argue that the Commissioner in carrying out the act would be legislating. We do not agree.
As is so common in many areas of the law the rule as to understandable guidelines is easy of statement, but more difficult in its application. In the fairly recent past we have held rather generalized and imprecise statements to be sufficiently definite standards for the administrative action authorized. The following are indicative of our attitude in applying the rule: Relieving an employer of requirements of the Workmen's Compensation Law on proof of his solvency and financial ability to pay the compensation required by the act, Utah Idaho Sugar Co. v. Temmey, 68 S.D. 623, 5 N.W.2d 486; disapproving articles of incorporation of a bank if public convenience and necessity to not justify its organization, Wall v. Fenner, 76 S.D. 252, 76 N.W. 722; permitting the issuance of revenue bonds by the Board of Regents for the construction of dormitory or apartment housing where the same are necessary and feasible. Boe v. Foss, 76 S.D. 295, 77 N.W.2d 1. In Affiliated Distillers Brands Corp. v. Gillis, supra, relied on by petitioner, we struck down the Commissioner's administrative action not because of the insufficiency of standards, but because of the absence of any standards.
Section 1 of the act imposes the tax upon 'the gross receipts of any person...
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