City of Idaho Falls v. Pfost, 5906

Citation53 Idaho 247,23 P.2d 245
Decision Date03 June 1933
Docket Number5906
PartiesCITY OF IDAHO FALLS, a Municipal Corporation, Respondent, v. EMMITT PFOST, Commissioner of Law Enforcement of the State of Idaho, and FRED J. BABCOCK, Attorney General of the State of Idaho, Appellants
CourtUnited States State Supreme Court of Idaho


1. Attempt to tax municipalities or their property or functions would be exception to previous custom, and not granting of an exemption not theretofore recognized or allowed.

2. General tax acts are not, without clearest words, held to include state's own property or that of its municipal corporations, although not in terms exempted from taxation.

3. Intent of statute must be gleaned from its terms, purposes and evident intent as to its scope and purpose.

4. Nature of tax determines what it really is, and not its name.

5. Notwithstanding tax imposed on production of electricity for barter, sale or exchange is "excise tax," rather than "license tax," fact that legislature called it "license tax" must be considered in determining whether statute applies to municipal corporations, since Constitution provides that "license tax" may not be imposed on municipal corporations (I. C. A., sec. 61-2201; Const., art. 7, sec. 2).

6. Judicial notice will be taken that federal tax has been added as a distinct and separate item on electric bills, and that the state tax has not been so added (Federal Electricity Excise Tax Act 1932, sec. 616 [26 U.S. C. A., sec. 3601 note]; I. C. A. sec. 61-2201).

7. Statute imposing tax on production of electricity for barter sale or exchange by "every individual, firm partnership, common-law trust, corporation, association or other organization," held not to include municipal corporations (I. C. A., secs. 61-2201 to 61-2211).

8. Levying of excise taxes on municipal corporations should not rest on surmise or conjecture as to what legislature intended.

9. Where, of two constructions, one is doubtful or leads to possible unconstitutional results, and other does not, latter construction of statute will be adopted.

10. Judgment for costs may not be allowed against commissioner of law enforcement and attorney general in action against them (I. C. A., sec. 65-2201).

APPEAL from the District Court of the Ninth Judicial District, for Bonneville County. Hon. Jay L. Downing, Judge.

Action to enjoin appellants from enforcing the provisions of sections 61-2201 to 61-2211, I. C. A. Judgment for plaintiff. Affirmed.


Fred J. Babcock, former Attorney General, Sidman I. Barber, former Assistant Attorney General, Bert H. Miller, Attorney General, and Ariel L. Crowley, Assistant Attorney General, for Appellants.

A municipality generating electrical energy for sale is a producer within the intent of the act.

A municipality is of dual character. In its governmental or public character, it acts as a sovereign, but in its private or proprietary character it is a corporate individual exercising its powers for the private advantage of the community. (1 Dillon, Munic. Corp., 5th ed., sec. 109; Vilas v. Manila, 220 U.S. 345, 31 S.Ct. 416, 55 L.Ed. 491, 495; South Carolina v. United States, 199 U.S. 437, 26 S.Ct. 110, 50 L.Ed. 261; Flint v. Stone Tracy Co., 220 U.S. 107, 172, 31 S.Ct. 342, 55 L.Ed. 389, 416, 421; Home Title Ins. Co. of New York v. Keith, 230 F. 905, 908; Davoust v. Alameda, 149 Cal. 69, 72, 84 P. 760, 9 Ann. Cas. 847, 5 L. R. A., N. S., 536; In re Board of Rapid Transit R. R. Commrs., 197 N.Y. 81, 90 N.E. 456, 18 Ann. Cas. 366, 36 L. R. A., N. S., 647.)

In its proprietary activities it is subject to liabilities not imposed with regard to the exercise of governmental functions. (Feil v. City of Coeur d' Alene, 23 Idaho 32, 53, 54, 129 P. 643, 43 L. R. A., N. S., 1095; Strickfaden v. Greencreek Highway Dist., 42 Idaho 738, 751, 248 P. 456, 49 A. L. R. 1057; Carson v. City of Genesee, 9 Idaho 244, 252, 255, 74 P. 862, 108 Am. St. Rep. 127.)

The tax imposed is an excise, but not a license tax.

The designation given by the legislature is not controlling; its nature is determined by its substantial effect and operation. (Independent School Dist. v. Pfost, 51 Idaho 240, 4 P.2d 893; Educational Films Corp. v. Ward, 282 U.S. 379, 51 S.Ct. 170, 75 L.Ed. 400.)

The act imposes an excise not a property tax. (Utah Power & Light Co. v. Pfost, 52 F.2d 226, 230; Diefendorf v. Gallet, 51 Idaho 619, 10 P.2d 307, 311.)

Ralph L. Albaugh for Respondent.

The provision of section 1 (I. C. A., sec. 61-2201) of the Kilowatt Tax Act that "Each and every individual, firm, partnership, common law trust, corporation, association, or other organization" must pay the tax specified in the act does not include municipal corporations or political subdivisions of the state. The word "corporation" does not ordinarily include a municipal corporation. ( Denman v. City of Idaho Falls, 51 Idaho 118, 4 P.2d 361; Donahue v. Newburyport, 211 Mass. 561, 98 N.E. 1081, Ann. Cas. 1913B, 742, at p. 744.)

General tax statutes of a state are never, without the clearest words, construed to include its own property or that of its municipal corporations, although not in terms exempt from taxation. This rule is sometimes referred to as an implied restriction on the power to tax, although in reality it would seem that it is not a limitation at all but merely a rule of construction of tax statutes. (In re Hamilton, 148 N.Y. 310, 42 N.E. 717; 1 Cooley on Taxation, 4th ed., sec. 91; 2 Cooley on Taxation, 4th ed., sec. 621.)

The works and plant of a municipality, which owns its own public utility are generally exempt from taxation. (5 McQuillin, Mun. Corps., 2d ed., sec. 1950; 3 McQuillin, Mun. Corps., 2d ed., sec. 1264.)

A tax on an essential attribute of property is a tax on the property itself. (25 R. C. L., p. 36; Thompson v. McLeod, 112 Miss. 383, 73 So. 193, Ann. Cas. 1918A, 674, L. R. A. 1918C, 893; Pollock v. Farmers Loan & Trust Co., 157 U.S. 429, 15 S.Ct. 673, at last col. p. 689, 39 L. ed., 759; Brown v. Maryland, 12 Wheat. 419, at p. 444, 6 L. ed., 678.)

GIVENS, J. Budge, C. J., Wernette, J., and Babcock and Stevens, D. JJ., concur.



Respondent instituted this action to restrain appellants from enforcing secs. 61-2201 to 61-2211, I. C. A., against the municipality, on two grounds: that the act does not apply, and was not intended by the legislature to apply to municipal corporations, and that such application, if so intended, and as attempted, violates secs. 2 and 4, art. 7, of the Constitution; thus this action does not involve the constitutionality of the statute, merely as to the second point, the constitutionality of its application.

Section 61-2201, I. C. A., [1] imposes a tax of one-half mill per kilowatt hour on the production within the state of electricity for barter, sale or exchange.

The state contends that the proper rule of construction to be applied in determining whether the act applies to respondent is that generally applied to exemptions: namely, strict construction against allowing an exemption, or the converse, application to all not expressly exempted from the scope of the enactment. [2]

On the other hand, respondent contends that the statute is to be viewed from the angle that taxation of a municipal corporation or its functions or activities is the exception; hence, unless the statute by its terms and necessary implications, clearly applies, there exists not an exemption, but failure to include; i. e., taxation is the exception, freedom from taxation the rule. [3]

Checking the above authorities, though we have by no means exhausted all available, shows that the strict rule against exemption or exception, has not been universally, or even generally followed in determining whether a statute in the absence of express declaration shall be held to impose a tax on proprietary functions or property of a municipal corporation.

Salisbury v. Lane, 7 Idaho 370, 63 P. 383; Kootenai County v. Seven-Seven Co., 32 Idaho 301, 182 P. 529, and Bistline v. Bassett, 47 Idaho 66, 272 P. 696, 62 A. L. R. 323, did not involve municipal corporations, and we note in City of Louisville v. Cromwell, 233 Ky. 828, 27 S.W.2d 377, 378, this:

"The general rule applicable to asserted rights of exemption from taxation is that the language of the instrument conferring the exemption must be strictly construed, since the right is a carved out one for the benefit of the claimant and which is not enjoyed by the inhabitants generally, and it is therefore a species of conferred special privilege which must be clearly stated and set forth before it will be given. 26 R. C. L. 313, sec. 274, and Cooley on Taxation (4th ed.), vol. 2, p. 1403, sec. 672. All other writers and courts when dealing with the subject apply the general rule as so stated, but Mr. Cooley, on page 1414, sec. 673, of his same work, says that, while some jurisdictions apply such strict construction rule to exemptions of municipal property, 'the better rule is that strict construction of exemptions statutes apply to exemptions of property held in private ownership, but not to exemptions of public property.'

"In support of the application of the strict construction rule to such property, the learned author cites the case of Board of Directors of Stinson Memorial Library v. Board of Review of Union County, 248 Ill. 590, 94 N.E. 153, and, in support of the nonapplicability of the strict construction rule to such property, he cites the cases of Pasadena v. Los Angeles County, 182 Cal. 171, 187 P. 418, State v. City of Columbia, 115 S.C. 108, 104 S.E. 337, and Commonwealth v. City of Richmond, 116 Va. 69, 81 S.E. 69, L.R.A. 1915A 1118."

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