City of Jackson v. Mississippi Fire Ins. Co.

• Citation: 95 So. 845,132 Miss. 415
• Decision Date: 09 April 1923
• Docket Number: 23289
• Court: Mississippi Supreme Court
• Parties: CITY OF JACKSON v. MISSISSIPPI FIRE INS. CO

95 So. 845

132 Miss. 415

CITY OF JACKSON v. MISSISSIPPI FIRE INS. CO

No. 23289

Supreme Court of Mississippi

April 9, 1923

APPEAL from circuit court of Hinds county, HON. W. H. POTTER, Judge.

Appeal by the Mississippi Fire Insurance Company from an assessment of its property for taxation by the city of Jackson. From a judgment for the Insurance Company in the circuit court, the city appeals. Affirmed.

Affirmed.

Green & Green and Clayton D. Potter, for appellant.

Wells Stevens & Jones, for appellee.

SMITH C. J. ANDERSON, J., ETHRIDGE, J. dissenting.

OPINION

SMITH, C. J.

The Mississippi Fire Insurance Company, a corporation chartered under the laws of this state, appealed to the court below from an assessment of its property for taxation by the city of Jackson, and from a judgment there rendered in its favor the city has brought the case to this court.

The sole question presented to us for decision is the validity vel non of chapter 184, Laws of 1922, entitled:

"An act to aid and encourage insurance companies incorporated or organized under the laws of the state of Mississippi and to exempt such companies from taxation except on real estate for a period of five years,"

and which provides: "That in addition to the property already exempt from taxation, all insurance companies or associations organized or incorporated under the laws of the state of Mississippi and maintaining its domicile therein, shall be exempt for a period of five years from all taxes of whatsoever kind or character except ad valorem taxes on real estate, and privilege taxes."

The appellant's contention is that the statute is repugnant to the following sections of the Constitution of this state:

Section 14: "No person shall be deprived of life, liberty, or property except by due process of law."

Section 61: "No law shall be revived or amended by reference to its title only, but the section or sections, as amended or revived, shall be inserted at length."

Section 87: "No special or local law shall be enacted for the benefit of individuals or corporations, in cases which are or can be provided for by general law or where the relief sought can be given by any court of this state; nor shall the operation of any general law be suspended by the legislature for the benefit of any individual or private corporation or association, and in all cases where a general law can be made applicable, and would be advantageous, no special law shall be enacted."

Section 90: "The legislature shall not pass local, private, or special laws in any of the following enumerated cases, but such matters shall be provided for only by general laws, viz. . . . (h) Exemption of property from taxation or from levy or sale."

Section 112: "Taxation shall be uniform and equal throughout the state. Property shall be taxed in proportion to its value. . . . Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value."

Section 181: "The property of all private corporations for pecuniary gain shall be taxed in the same way and to the same extent as the property of individuals."

Section 182: "The power to tax corporations and their property shall never be surrendered or abridged by any contract or grant to which the state or any political subdivision thereof may be a party, except that the legislature may grant exemption from taxation in the encouragement of manufacturers and other new enterprises of public utility extending for a period not exceeding five years, the time of such exemptions to commence from date of charter, if to a corporation; and if to an individual enterprise, then from the commencement of work; but when the legislature grants such exemptions for a period of five years or less, it shall be done by general laws, which shall distinctly enumerate the classes of manufacturers and other new enterprises of public utility entitled to such exemptions, and shall prescribe the mode and manner in which the right to such exemptions shall be determined."

Section 192: "Provision shall be made by general laws whereby cities and towns may be authorized to aid and encourage the establishment of manufacturers, gasworks, waterworks, and other enterprises, of public utility other than railroads, within the limits of said cities or towns, by exempting all property used for such purposes from municipal taxation for a period not longer than ten years."

And to the following provisions of the Federal Constitution:

Article 4, section 2, paragraph 1: "The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states."

The equal protection of the laws clause of section 1 of the Fourteenth Amendment.

The contention that the statute is repugnant to sections 14, 61, 87, 90, and 192 of the state Constitution are so obviously without merit that we will so declare without any special discussion thereof.

Section 112 does not require all property to be taxed. It commits to the legislature the duty of designating and classifying property for taxation and all property not within the classes selected will be exempt from taxation. It does not deprive the legislature of the power which it has been accustomed to exercise from the inception of the state government to exempt from taxation property of a particular class embraced within a general class that is subjected to taxation. Miss. Mills v. Cook, 56 Miss. 40; Yazoo & Miss. Valley R. R. Co. v. Adams, 77 Miss. 194, 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33; Harrison County v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617. The Mississippi Mills case was overruled in Adams v. Railroad, supra, "in so far as it held that the property of private corporations for pecuniary profit was not . . . expressly directed to be taxed just as the property of individuals," but no further.

The limitation on the legislature's power under the uniformity and equality clause of this section of the Constitution to exempt property from taxation and thereby discriminate against property taxed or the owners thereof is the same as the limitation on its power to discriminate between persons and property under any other constitutional guaranty, state or federal, of the equal protection of the laws. Gray, Limitation of Taxing Power, 656. This limitation is that there must underlie the exercise of the power "some principle of public policy that can support a presumption that the public interest will be subserved by the exemption granted" (1 Cooley on Taxation [3d Ed.] 343), and the classification of the property exempted "must be based on some reasonable ground, and some real difference which bears a just and proper relation to the object sought to be accomplished." Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692; Adams v. Kuykendall, 83 Miss. 571, 35 So. 830; Adams v. Miss. Lumber Co., 84 Miss. 23, 36 So. 68; Gulf, Col. & Santa Fe Ry. Co. v. Ellis, 165 U.S. 150, 17 S.Ct. 255, 41 L.Ed. 666; Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 10 S.Ct. 533, 33 L.Ed. 892; Magoun v. Ill. Trust & Sav. Bank, 170 U.S. 283, 18 S.Ct. 594, 42 L.Ed. 1037; People ex rel. Hatch v. Reardon, 184 N.Y. 431, 77 N.E. 970, 8 L. R. A. (N. S.) 314, 112 Am. St. Rep. 628, 6 Ann. Cas. 515; People ex rel. Farrington v. Mensching, 187 N.Y. 8, 79 N.E. 884, 10 L. R. A. (N. S.) 625, 10 Ann. Cas. 101.

Constitutional limitations should be applied with caution. "Some play must be allowed for the joints of the machine." Mo., Kan. Texas Ry. Co. v. May, 194 U.S. 267, 24 S.Ct. 638, 48 L.Ed. 971. Consequently the classification need not be, and generally cannot be, scientifically accurate. "If the purpose is within the legal powers of the legislature, and the classification made has relation to that purpose (excludes no persons or objects that are affected by the purpose, includes all that are) logically speaking, it will be appropriate; legally speaking, a law based upon it will have equality of operation." Billings v. Illinois, 188 U.S. 97, 23 S.Ct. 272, 47 L.Ed. 400.

The legislature must necessarily be the judge in the first instance of the public necessity for exempting property from taxation and of the reasonableness of the classification thereof, and when it has declared that the public good will be served by exempting the property of a class of persons from taxation "its action should not be disturbed by the courts . . . unless they can see clearly that there is no fair reason for the law that would not require with equal force its extension to others whom it leaves untouched" (Mo., Kan. & Texas Ry. Co. v. May, supra), or that the exemption could under no circumstances be for the public good.

Viewed in this light, it will be impossible for us to say that the exemption violates the equality and uniformity clause of section 112 of the state Constitution. It may have appeared to the legislature that there were not a sufficient number of insurance companies doing business in the state of Mississippi to meet the needs of its people for insurance on their lives and property, or there may have been no, or only a few, domestic insurance companies therein, for either or both of which reasons the encouragement of the formation of domestic insurance companies and associations by exempting their property from taxation would be for the public good. It may have appeared that without the exemption the price charged for insurance would have to be increased to the public harm, in order for the domestic companies to continue in business, or that with the exemption the domestic companies could reduce the price of insurance to the public good. Other reasons for the exemption may be imagined. We may doubt the wisdom of, and the necessity for, the grant of an exemption; but those questions are...