Borden v. Selden, 52367

• Decision Date: 15 November 1966
• Docket Number: No. 52367,52367
• Citation: 146 N.W.2d 306,259 Iowa 808
• Parties: Robert M. BORDEN and Gail D. Borden, Charles E. Small and Margaret A. Small, and Harlan K. Peckham, Appellants, v. Marvin R. SELDEN, Jr., State Comptroller of the State of Iowa, Paul Franzenburg, Treasurer of State for the State of Iowa, William E. McCulloch, Auditor of Polk County, Iowa, Carl Bogenrief, Treasurer of Polk County, Iowa, Mary Kesler, Auditor of Hamilton County, Keith Clifton, Treasurer of Hamilton County, Iowa, Dorothy J. Elliott, Auditor of Story County, Iowa, and John A. O'Donnell, Treasurer of Story County, Iowa, Appellees.
• Court: Iowa Supreme Court

Page 306

146 N.W.2d 306

259 Iowa 808

Robert M. BORDEN and Gail D. Borden, Charles E. Small and Margaret A. Small, and Harlan K. Peckham, Appellants, v. Marvin R. SELDEN, Jr., State Comptroller of the State of Iowa, Paul Franzenburg, Treasurer of State for the State of Iowa, William E. McCulloch, Auditor of Polk County, Iowa, Carl Bogenrief, Treasurer of Polk County, Iowa, Mary Kesler, Auditor of Hamilton County, Keith Clifton, Treasurer of Hamilton County, Iowa, Dorothy J. Elliott, Auditor of Story County, Iowa, and John A. O'Donnell, Treasurer of Story County, Iowa, Appellees.

No. 52367.

Supreme Court of Iowa.

Nov. 15, 1966.

Herrick, Langdon, Sandblom & Belin, Des Moines, for appellants.

Lawrence F. Scalise, Atty. Gen., Timothy McCarthy, Sol. Gen., and Allan D. Vestal, Special Asst. Atty. Gen., for appellees.

STUART, Justice.

The one question presented by this appeal is whether an act which, by its terms, denies to nonresident owners of land in Iowa a land tax credit granted resident owners of Iowa land, violates the Constitution of the United States and/or the Constitution of the State of Iowa. The trial court held the act constitutional and plaintiffs appealed.

In 1945 the 51st General Assembly passed the Agricultural Land Tax Credit Act. (Now chapter 426, Code of Iowa) It provided for a state fund to be apportioned as a credit against the tax on each tract of agricultural land in school districts where the millage for the general school and exceeded 15 mills. The amount of such credit was to be the amount by which the school tax exceeded a tax based on a levy of 15 mills. In the event the legislative appropriation was insufficient to pay the credit in full, it was to be paid on a pro rata basis. The constitutionality of the act was upheld in Dickinson v. Porter, 240 Iowa 393, 35 N.W.2d 66.

The 61st General Assembly in 1965 amended the act to provide: 'Agricultural land tax credit computed after January 1, 1966, payable in 1967, will not be paid to any owner who is not a bona fide resident of the state of Iowa, or to any corporation which does not have a situs in the state for the purpose of paying the tax imposed upon corporations under division III, chapter four hundred twenty-two (422) of the code, if such corporation is the owner of property which would otherwise be eligible for the agricultural land tax credit.' Section 2, Chapter 356, Laws 61st General Assembly, 1966 Code, 426.3.

Plaintiffs are individual nonresident owners of agricultural land in Iowa, who, prior to the amendment received agricultural land tax credit. It is conceded such credit will be denied them in 1967 and subsequent years under the amendment solely on the basis of their nonresidence. As a consequence, they will be required to pay from $1.00 to $1.25 per acre more real estate taxes in 1967 than an Iowa resident similarly situated.

Plaintiffs claim the act violates Article IV, Section 2 of the Constitution of the United States, the privileges and immunities and due process clauses of Section 1, 14th Amendment to the Constitution and Article I, Section 6 of the Constitution of the State of Iowa in that: 'it constitutes an unlawful, unreasonable discrimination against these plaintiffs and against other nonresident owners of land in Iowa; and because the attempt of the General Assembly to classify nonresident owners of land in Iowa as persons not entitled to the agricultural land tax credit, is not a reasonable classification; and because there is no reasonable ground for the discrimination against these plaintiffs and other nonresident owners of land in Iowa in favor of owners of land who are residents of Iowa.'

I. The principles which govern our examination of constitutional questions appear to be well settled. They are set forth with supporting authority in Dickinson v. Porter, 240 Iowa 393, 35 N.W.2d 66, 71.

'All presumptions are in favor of the constitutionality of this statute and it will not be held invalid unless it is clear, plain and palpable that such decision is required.'

'We have pointed out repeatedly the General Assembly has power to enact any kind of legislation it sees fit provided it is not clearly and plainly prohibited by some provision of the state or federal constitutions.'

'It is not our province to pass upon the policy, wisdom, advisability or justice of a statute. The remedy for unwise or oppressive legislation within constitutional bounds is not to be found in the courts but by appeal to the legislators.'

'The burden does not rest upon defendants (state and county officials charged with duties under the law) to convince us the act is constitutional. Plaintiff has the burden to satisfy us beyond a reasonable doubt * * * the act violates the constitutional provisions invoked and to point out the manner or respect in which it violates them. In other words, she 'must point out and state with particularity the details of supposed invalidity."

'Further, it is plaintiff's burden to negative every conceivable basis which may support this statute.'

We shall consider whether the amendment set out above violates Article IV Section 2 of the Constitution of the United States which in its pertinent parts provides: 'The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens of the several States.'

The United States Supreme Court in considering the purposes of this clause in Travis v. Yale and Towne Manufacturing Co., 252 U.S. 60, 78, 40 S.Ct. 228, 231, 64 L.Ed. 460, 469, quoted from earlier cases as follows: 'The purpose of the provision came under consideration in Paul v. State of Virginia, 8 Wall. 168, 180, 19 L.Ed. 357, 360, where the court, speaking by Mr. Justice Field, said: 'It was undoubtedly the object of the clause in question to place the citizens of each state upon the same footing with citizens of other states, so far as the advantages resulting from citizenship in those states are concerned. It relieves them from the disabilities of alienage in other states; it inhibits discriminating legislation against them by other states; it gives them the right of free ingress into other states, and egress from them; it insures to them in other states the same freedom possessed by the citizens of those states in the acquisition and enjoyment of property and in the pursuit of happiness; and it secures to them in other states the equal protection of their laws. It has been justly said that no provision in the Constitution has tended so strongly to constitute the citizens of the United States one people as this.' And in Ward v. State of Maryland, 12 Wall. 418, 20 L.Ed. 449, holding a discriminatory state tax upon nonresident traders to be void, the court, by Mr. Justice Clifford, said (p. 430): '* * * the clause plainly and unmistakably secures and protects the right of a citizen of one state to pass into any other state of the Union for the purpose of engaging in lawful commerce, trade, or business without molestation; to acquired personal property; to take and hold real estate; to maintain actions in the courts of the state; and to be exempt from any higher taxes or excises than are imposed by the state upon its own citizens."

'It was designed to insure a citizen of State A who ventures into State B the same privileges which the citizens of State B enjoy.' Toomer v. Witsell, 334 U.S. 385, 395, 68 S.Ct. 1156, 1162, 92 L.Ed. 1460, 1471.

This does not mean, however, that there is an 'iron rule of equal taxation'. Dickinson v. Porter, supra, 240 Iowa ioc. cit. 72, 35 N.W.2d 66. The following quotation from Madden v. Commonwealth of Kentucky, 309 U.S. 83, 87, 60 S.Ct. 406, 408, 84 L.Ed. 590, 593, while referring to the 14th Amendment seems equally applicable here. 'The broad discretion as to classification possessed by a legislature in the field of taxation has long been recognized. This Court fifty years ago concluded that 'the Fourteenth Amendment was not intended to compel the states to adopt an iron rule of equal taxation,' and the passage of time has only served to underscore the wisdom of that recognition of the large area of discretion which is needed by a legislature in formulating sound tax policies. Traditionally classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden. It has, because of this, been pointed out that in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which this Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.'

The amendment clearly distinguishes between owners of Iowa agricultural land solely on the basis of residence and discriminates in favor of Iowa residents and against nonresidents. This classification is not necessarily unconstitutional if there is a reasonable basis for such classification other than residence itself. Dickinson v. Porter, supra, 240 Iowa loc. cit. 71, 35 N.W.2d 66; Goodwin v. State Tax Commission, 286 App.Div. 694, 146 N.Y.S.2d 172, 179; Burge v. Marcum, Ky., 394 S.W.2d 908, 910; Berry v. State Tax Commission, Or., 397 P.2d 780, 782.

'Like many other constitutional provisions, the privileges and immunities clause is not an absolute. It does bar discrimination against citizens of other States where there is no substantial reason for the discrimination beyond the mere fact that they are citizens of other States. But it does not preclude disparity of treatment in the many situations where there are perfectly valid independent reasons for it. Thus the inquiry in each case must be concerned with whether...