Bickett v. State Tax Commission

• Decision Date: 21 May 1919
• Docket Number: 253.
• Parties: BICKETT, Governor, et al. v. STATE TAX COMMISSION.
• Court: North Carolina Supreme Court

99 S.E. 415

177 N.C. 433

BICKETT, Governor, et al. v. STATE TAX COMMISSION.

No. 253.

Supreme Court of North Carolina

May 21, 1919

Allen J., dissenting in part.

Appeal from Superior Court, Wake County; Allen, Judge.

Action for mandamus by T. W. Bickett, as Governor of the state, the State Board of Agriculture, and the State Warehouse Superintendent against the members of the State Tax Commission, to require defendants to provide for the collection of tax under Laws 1919, c. 168. Judgment for plaintiffs, and defendants appeal. Judgment affirmed.

This is an action for a mandamus instituted by the Governor of the state, the State Board of Agriculture, and the State Warehouse Superintendent against the members of the State Tax Commission to require them to provide and enforce the machinery for the collection of the tax provided by an act of the General Assembly of 1919 entitled "An act to provide improved marketing facilities for cotton," being chapter 168, Laws 1919. At the hearing before Allen, J., at chambers in Raleigh, 22d April, 1919, the "State Farmers' Union," on its own application, was permitted to intervene, and was made additional party plaintiff.

It is alleged in the complaint, and it is admitted by the answer that the defendant Tax Commissioners refused and declined to execute the statute upon the ground that it was unconstitutional and invalid. This proceeding has been brought by the Governor under authority of Rev. 5328, which makes it the duty of the Governor "to supervise the official conduct of all executive and ministerial officers," and to see that "the duties thereof are performed, or, in default thereof, apply such remedy as the law allows."

From the judgment of mandamus to proceed to execute the statute the defendants appealed.

The Legislature has all powers, as to taxation or otherwise, not forbidden by the Constitution of the state, or of the United States and may levy taxes upon any business or other sources than trades, professions, and franchises, subject to the restrictions that taxation of tangible property must be ad valorem and uniform.

The Attorney General and Frank Nash, Asst. Atty. Gen., for appellants.

James H. Pou and J. Crawford Biggs, both of Raleigh, for appellees.

Marion Butler, of Washington, D. C., for interveners the "Farmers' Union."

CLARK C.J.

The defendants having failed and refused to execute the statute this action was properly brought by the Governor. Russell v. Ayer, 120 N.C. 185, 27 S.E. 133, 37 L. R. A. 246; Rev. 5328. Section 2 of this statute provides that it shall be administered by the State Board of Agriculture through the State Warehouse Superintendent, and they have been made parties plaintiff. They are proper, if not necessary, parties. County Board v. State Board, 106 N.C. 81, 10 S.E. 1002; R. R. v. Treasurer, 68 N.C. 502. The "Farmers' Union" of North Carolina, representing a large number of the farmers of the state, largely interested in the enactment and enforcement of the statute, has been made, on its own petition, an additional party plaintiff. There has been no objection to this, and we do not see there could be any.

It is not necessary to set out the entire act, whose scope is to authorize the leasing, or aid in the construction or leasing, of warehouses for the storage of cotton throughout the state, and providing an indemnity fund in order to make the warehouse certificates collateral for loans in the banks or other financial agencies lending money upon such securities.

The allegation of unconstitutionality is based on section 5 of the act, which is as follows:

"On each bale of cotton ginned in North Carolina, in the two years ending 30th June, 1921, twenty-five (25) cents shall be collected through the ginner of the bale and paid into the state treasury, to be held there as a special guarantee or indemnifying fund to safeguard the state warehouse system against any losses not otherwise covered. The State Tax Commission shall provide and enforce the machinery for the collection of this tax, which shall be held in the state treasury to the credit of the state warehouse system."

It is an elementary principle of law, as held by the United States Supreme Court, that no act can be held unconstitutional unless it is so "proved beyond all reasonable doubt." Ogden v. Saunders, 12 Wheat. 213, 6 L.Ed. 606; Cooley Cons. Lim. (7th Ed.) 254. This is quoted with approval in Sash Co. v. Parker, 153 N.C. 134, 69 S.E. 1. To same purport, Walker, J., Johnson v. Board of Education, 166 N.C. 472, 82 S.E. 832, L. R. A. 1915A, 828; Whitford v. Comm'rs, 159 N.C. 161, 74 S.E. 1014; Hoke, J., in Bonitz v. School Trustees, 154 N.C. 379, 70 S.E. 735. All reasonable doubts must be resolved in favor of the constitutionality of legislation. Allen, J., In re Watson, 157 N.C. 347, 72 S.E. 1049. Every presumption is in favor of the constitutionality of an act of the Legislature, and all doubts must be resolved in support of the act.

The courts may resort to an implication to sustain an act, but not to destroy it. Connor, J., in Lowery v. School Trustees, 140 N.C. 40, 52 S.E. 267. Statutes are presumed to be valid, and every reasonable doubt must be given in favor of their validity. Merrimon, J., in Holton v. Comm'rs, 93 N.C. 434. There are many other decisions to the same effect in this court and in the United States Supreme Court. Indeed, they are uniform on this point.

The Constitution, art. 5, § 3, provides:

"Laws shall be passed taxing, by uniform rule, all moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise; and, also, all real and personal property, according to its true value in money. The General Assembly may also tax trades, professions, franchises, and incomes."

The plaintiffs concede that this is not a property tax, and rely upon it being a tax upon a trade or franchise. In Smith v. Wilkins, 164 N.C. 140, 80 S.E. 168, this court, through Allen, J., held:

"The term 'trades,' in article V, § 3, includes 'any employment or business embarked in for gain or profit'; citing State v. Worth, 116 N.C. 1010, 21 S.E. 204, wherein the court said: 'When the word "trades" is used in defining the power to tax, the broadest signification is given to it."'

In Lacy v. Packing Co., 134 N.C. 571, 47 S.E. 53, the court sustained an act taxing "every meat packing house doing business in the state $100 for each county in which such business is carried on." This case was affirmed on writ of error (200 U.S. 226, 26 S.Ct. 232, 50 L.Ed. 451), and has been cited and approved in Land Co. v. Smith, 151 N.C. 75, 65 S.E. 641, in which Hoke, J., says;

"The power of the Legislature in this matter of classification is very broad and comprehensive, subject only to the limitation that it must appear to have been made upon some reasonable ground--something that bears a just and proper relation to the attempted classification, and not a mere arbitrary selection;" citing numerous cases.

The same subject is fully discussed by Allen, J., in Smith v. Wilkins, 164 N.C. 140, 80 S.E. 168, in which he says:

"In State v. Worth, 116 N.C. 1010 , the court defines the term 'trades' as including 'any employment or business embarked in for gain or profit,' and while the Constitution, art. 5, § 3, is mandatory upon the General Assembly to levy a tax upon all property by a uniform rule, the authority to tax trades is permissive only, and no rule as to the method is prescribed."

The Constitution does not prescribe uniformity in the tax on trades, and the court decisions require only that such tax must be equal upon all persons belonging to the class upon which it is imposed. Gatlin v. Tarboro, 78 N.C. 122; Lacy v. Packing Co., 134 N.C. 571, 47 S.E. 53.

In Mercantile Co. v. Mount Olive, 161 N.C. 125, 76 S.E. 691, 49 L. R. A. (N. S.) 954, it is said:

"In Lacy v. Packing Co., 134 N.C. 572 , the above authority and others were cited, the court thus summing up the law: 'It is settled that a license tax is uniform when it is equal upon all persons belonging to the described class upon which it is imposed.' It is pointed out that the constitutional provision requiring uniformity applies only to property, but, as to license taxes, it quotes with approval the following from State v. Stephenson, 109 N.C. 734 , 26 Am. St. 595: 'It is within the legislative power to define the different classes and to fix the license tax required of each class. All he can demand is that he shall not be taxed at a different rate from others in the same occupation, as classified by legislative enactment. This is stated as a universal rule. 1 Cooley on Taxation (3d Ed.) 260."'

In Connor & Cheshire on Constitutions, 271, it is said:

"It is unquestionably in the discretion of the taxing power to graduate the tax according to the extent of the business so taxed, or to impose a single tax upon an occupation without regard to its extent."

"In Winston v. Taylor, 99 N.C. 210 , under a provision of the charter of Winston in exactly the same language as section 30 in the charter of Mount Olive, it was held that an ordinance of the town imposing a graduated tax on dealers in leaf tobacco was valid. In State v. Worth, 116 N.C. 1007 , it was held that a charter conferring the power to levy a license tax on 'trades' must be interpreted not only as embracing the occupation of mechanics or merchants, but all who are engaged in any employment or business for gain or profit." Mercantile Co. v. Mount Olive, 161 N.C. at page 126, 76 S.E. 691, 49 L. R. A. (N. S.) 954.

"The Legislature is sole judge of what subjects it shall select for taxation, other than a property tax, which must be uniform and ad valorem, and the exercise of its discretion is not subject to the approval of the...