Clark v. City of Burlington

• Decision Date: 19 November 1928
• Citation: 143 A. 677
• Parties: CLARK et al. v. CITY OF BURLINGTON et al.
• Court: Vermont Supreme Court

143 A. 677

CLARK et al.

v. CITY OF BURLINGTON et al.

Supreme Court of Vermont. Chittenden.

Nov. 19, 1928.

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Consolidated petitions by Julian R. Clark and others for writs of certiorari to review the decision of a Board of Appraisers, appointed by the Commissioner of Taxes, approving assessments of corporate stock by the Assessors and Board of Civil Authority of the City of Burlington. Petitions dismissed.

Argued before WATSON, C. J., and POWERS, SLACK, MOULTON, and CHASE, JJ.

Warren R. Austin and William H. Edmunds, both of Burlington, for petitioners.

Theo. E. Hopkins, City Atty., of Burlington, Erwin M. Harvey, Commissioner of Taxes, of Montpelier, J. Ward Carver, Atty. Gen. and Stanley C. Wilson, of Chelsea (Hale K. Darling, of Chelsea, of counsel), for petitionees.

MOULTON, J. This is a petition for a writ of certiorari. Originally there were ten petitions, brought by ten separate petitioners, all predicated upon the same facts, and praying for the same relief, but, by order of this court, all have been consolidated and heard as one case. The proceeding brings in question the constitutionality of section 5 of No. 15 of the Acts of 1927, which provides for the method of assessment of shares of the capital stock of corporations for purposes of taxation of the owners thereof.

The petitioners are all residents of the city of Burlington, in Chittenden county, and are the owners, in varying amounts, of shares of capital stock in different corporations. The holdings of some of the petitioners are entirely of the stock of foreign corporations; of others, of that of both foreign and domestic corporations. These securities were assessed against the petitioners, as owned by them, by the assessors of the city of Burlington, for purposes of taxation, in the manner provided by the section of the statute above mentioned. An appeal was taken to the board of civil authority of the city, which affirmed the assessment. In due season, and with due regard for the provisions of the statute, the petitioners appealed from the decision of the board of civil authority to the commissioner of taxes, who thereupon, in pursuance to the provision of G. L. 843, appointed a board of three appraisers, all residents and taxpayers in Chittenden county, and designated the chairman of the board. The appraisers so appointed took and subscribed the oath of office, which was duly filed, and the commissioner of taxes referred to them the appeal from the board of civil authority, with appropriate directions as to their duties. Notice was given and a hearing was held, at which all parties interested appeared by counsel. No testimony was taken, but an agreed statement of facts was filed, which was adopted by the appraisers "as being the facts of this matter" The appraisers decided that the proceedings of the assessors of the city of Burlington and of the board of civil authority of that city were "strictly in accordance with the statutes of the state of Vermont, and we therefore find and report that the appeal should not be sustained, [and] that the valuation fixed upon said property by the assessors and by the board of civil authority on appeal is the correct valuation of said property" Whereupon the present petition for a writ of certiorari was brought.

We commence our inquiry with full recognition of three fundamental doctrines. First, that the taxing power of the state extends to all persons and property within its jurisdiction not protected therefrom by federal supremacy State v Clement National Bank, 84 Vt. 167, 179, 78 A. 944, Ann. Cas. 1912D, 22; Shaffer v. Carter, 252 U. S. 37, 40 S. Ct. 221, 64 L. Ed. 445, 456. Second, that every presumption is to be made in favor of the constitutionality of a statute, and it will not be declared unconstitutional without clear and irrefragable evidence that it infringes the paramount law. Village of Hardwick, v. Town of Wolcott, 98 Vt. 343, 348, 129 A. 159, and cases cited; Bishop & Co. v Thompson, 99 Vt. 17, 24, 130 A. 701. Third, that a law for the assessment and collection of taxes is to be construed with the utmost liberality, and that the construction is not to be a critical one, with a view to defeat the enactment, but a liberal interpretation, so as to uphold it if possible. Union Trust Co. v. State, 116 Md. 368, 81 A. 873, 874; Turpin v. Lemmon, 187 U. S. 51, 58, 23 S. Ct. 20, 47 L. Ed. 70, 74.

The statute (section 5, No. 15, Acts 1927) which is attacked by this proceeding reads as follows:

"The commissioner of taxes shall advise the board of listers of any town upon request as to the appraisal valuation of any moneyed security; and in fixing the appraisal of shares of stock mentioned in section 1 of No. 21 of the Acts of 1925, as hereby amended, the same shall be based on a value of which the annual dividend of the preceding calendar year is six per centum. Said commissioner of taxes may require such reports as he shall deem necessary."

The statute is said to be (1) objectionable on its face, and (2) objectionable because of its effect in operation. As to the first ground of claimed invalidity, it is urged that the valuation of corporate stock by the Legislature by the mere mathematical calculations of dividends paid into a capital sum at the rate of 6 per cent is an arbitrary, whimsical, capricious, erroneous, and oppressive valuation, because it applies the same fixed single factor to diverse and differing properties, and thus deprives the taxpayer of the rights secured to him by chapter 1, article 9, of the Constitution of Vermont, which, to the extent here material, is as follows:

"That every member of society hath a right to be protected in the enjoyment of life, liberty, and property, and therefore is bound to contribute his proportion towards the expense of that protection. * * *"

It is further urged that, by the statute, the taxpayer is deprived of his right to due process of law and equal protection of the law, under section 1 of the Fourteenth Amendment of the Constitution of the United States, and of his right to have the legislative department separate and distinct from the judiciary department, so that neither exercises the powers properly belonging to the other, as provided in chapter 2, section 5, of the Constitution of Vermont. These objections will be considered in their order.

Article 9 of chapter 1 of the Constitution of Vermont, above quoted, is the only provision of that instrument which deals with the principle that taxes must be proportionately assessed. In speaking of the language therein used, Judge Yeazey, in Barnes v. Dyer, 56 Vt. 469, 473, said:

"This is less restrictive than the constitutions of many states; but the cases which have' established the rule that the statute authorizing an assessment must fix the legal standard to which it shall be made to conform, have not turned on the phraseology of constitutional provisions. It is everywhere treated as a general constitutional principle that no member of society shall be compelled to contribute more than his proportion. Unless this is so, there is no protection against arbitrary injustice in the imposition of taxes. To secure this protection courts have held that legislative enactments must set up a standard, fix a rule, to be conformed to as a guide in all cases, an uniform, certain rule, so far as reasonably practicable, and not susceptible to different applications to different individuals of the class to which it applies. If the enactment fails in this regard, it is deemed fatally defective. The proposition is sound, because it is an adherence to the fundamental principles which in a constitutional government are designed to protect the individual against injustice and op-, pression."

We have no constitutional provision as to the method of assessment of property for purposes of taxation. G. L. 766, provides that:

Taxable personal property "shall, unless otherwise provided, be appraised by the listers at its value in money on the first day of April; and the listers shall appraise each item of such property at such sum as they would appraise the same in payment of a just debt due from a solvent debtor, having regard to the current value of such property and the sales thereof, other than auction sales, in the locality where it is situated."

The appraisal prescribed by section 5 of No. 15, Acts of 1927, adopts a different manner of arriving at the valuation of the personal property therein mentioned; i. e., shares of corporate stock. But there is no inconsistency between the two statutes, for G. L. 766, prescribes the method and amount of valuation only "unless otherwise provided," and section 7, No. 15, Acts of 1927, provides that:

"This act shall be construed to be a part of No. 21 of the Acts of 1925, and all acts and parts of acts inconsistent with the provisions of this act are hereby suspended."

It is the claim of the petitioners that without appraisal the Legislature, in the act in question, fixes the "proportion" which the owners of corporate stock are obliged to pay, and that for this reason there is no valid assessment or valuation of the property taxed. It is said in State v. Clement National Bank, 84 Vt. 167, 182, 78 A. 944, 950 (Ann. Cas. 1912D, 22):

"The word 'assessment' ordinarily implies an official listing of the persons and property to be taxed, and a valuation of the property of each person as a basis of apportionment. This is usually done by officials specially appointed for the purpose. But in the case of taxes laid upon solvent securities, certificates of deposit, mortgages, undivided profits, or the like, the nominal or face value of which is identical with the actual value, the assessment may be made by the Legislature without the intervention of assessing officers."

It is urged, that capital stock is not a class of property as to which legislative assessment is sufficient without a special valuation, because the nominal or face value...