Dickinson v. Porter

• Decision Date: 10 February 1948
• Docket Number: 47072.
• Citation: 31 N.W.2d 110
• Parties: DICKINSON v. PORTER, State Comptroller, et al.
• Court: Iowa Supreme Court

31 N.W.2d 110

DICKINSON v. PORTER, State Comptroller, et al.

No. 47072.

Supreme Court of Iowa

February 10, 1948

Appeal from Dubuque District Court; John G. Chalmers, Judge. [Copyrighted Material Omitted]

Clewell & Cooney, of Dubuque, for appellant.

Robert L. Larson, Atty. Gen., Jas. A. Lucas, First Asst. Atty. Gen Oscar Strauss, Asst. Atty. Gen., of Iowa, Wisdom & Wisdom, of Des Moines, and F. H. Becker, Co. Atty., of Dubuque, for appellees.

MULRONEY Chief Justice.

Plaintiff the owner of a three acre tract of land, used solely for agricultural purposes, in Epworth School District, in Dubuque County, filed her petition challenging the constitutionality of the Act of the 51st General Assembly of Iowa, known as the Agricultural Land Tax Credit law (Chap. 192, Laws of the 51st G.A., Chap. 426, Code, 1946), and asking the court to enter a declaratory judgment declaring said act unconstitutional and void on the following grounds: (1) That said act violates the provisions of Sec. 6, Art. I and Sec. 30, Art. III of the Constitution of the State of Iowa, in that the law is of a general nature, but not of uniform operation, throughout the State of Iowa; (2) that the Act is in violation of Sec. 6, Art. I of the Constitution of Iowa, and Sec. 1 of the Fourteenth Amendment to the Constitution of the United States, in that it grants to citizens and classes of citizens privileges and immunities upon terms not equally granted to all citizens of the state, and denies to certain persons the equal protection of the laws; (3) that plaintiff is being deprived of money and property without due process of law and in violation of Sec. 9, Art. I of the State Constitution and Sec. 1 of the Fourteenth Amendment to the Constitution of the United States.

Defendants, the state and county officers charged with duties under the act, assert the act is not violative of the above constitutional provisions. The evidence consisted largely of tabulations, which will be referred to later. The trial court declared the act constitutional and plaintiff appeals.

The act in question set aside $500,000 for the fiscal year commencing July 1, 1946, and the same amount annually thereafter from the General Fund of the state to be used to pay all of the general school fund taxes in excess of 15 mills on agricultural lands. If said fund was insufficient the act provides for payment on a pro rata basis. The term 'Agricultural lands' is defined in the act to 'mean and include all tracts of land of ten acres or more, and not laid off into lots of less than ten acres or divided by streets and alleys into parcels of less than ten acres, lying within any school corporation in this state and in good faith used for agricultural or horticultural purposes.' Code 1946, § 426.2.

We have often expressed the rule which guides a court in determining whether or not a certain statute violates some constitutional provisions. In Santo v. State of Iowa, 2 Iowa 165, 63 Am.Dec. 487, this court first stated the rule as follows:

'For some time after the establishment of the state government it was doubted whether the judiciary possessed authority to declare and hold an act of the legislature unconstitutional and void and the exercise of the power was declined by some courts. And now, although the power is universally admitted, its exercise is considered of the most delicate and responsible nature, and is not resorted to, unless the case be clear, decisive, and unavoidable.'

There has been no departure in the expressions of this court from the rule first stated in the Santo case.

I. The act in question is a plain tax exemption statute. It frees certain land from a tax burden. The fact that the property is relieved of the burden after assessment and levy is immaterial. It is the result, not the method that determines the character of the act. It is no less a tax ememption statute because the burden is assumed by the state. The point is that the agricultural property in some of the school districts of the state is relieved of part of the tax burden by this law. As to such property the act is a tax exemption statute. There is no special limitation of power as to tax exemption in the Iowa constitution, as there is in many state constitutions. But that does not mean the power of the state to exempt property from taxation is unlimited. The power to tax includes the power to exempt, and in the absence of constitutional restrictions on exemptions the state's power to exempt is subject only to the limitation that the exemption shall serve some public purpose. The right to exempt property from taxation is to be exercised on reasons of state policy and presumptively such exemptions must contribute to the general public benefit.

The theory upon which the grant of an exemption must rest if its constitutionality is to be upheld is that it will benefit the body of the people and not upon any idea of lessening the burdens of the individual owners of property. 51 Am.Jur. Taxation, sec. 504; Boss v. Polk County, 236 Iowa 384, 19 N.W.2d 225; 61 C.J. Taxation, sec. 382.

II. Since a tax exemption statute is an exercise of the power to tax, the constitutional provisions with respect to tax laws are applicable. Art. III, sec. 30, of the Iowa constitution provides that the legislature shall not pass local or special laws 'for the assessment and collection of taxes.'

Art. I, Sec. 6, provides that 'all laws of a general nature shall have a uniform operation; the General Assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms shall not equally belong to all citizens.' The last constitutional provision, when applied to tax legislation, means, in its first part, that laws that impose taxes must operate uniformly. In its second part, the general assembly is prohibited from granting tax exemptions (privileges or immunities) to any citizen, or class of citizens, unless the law makes the tax exemption applicable upon the same terms to all citizens.

In 16 C.J.S., Constitutional law, § 465 d, the rule is stated:

'Where, however, an exemption from taxation is not for a public purpose, it is peculiarly within a constitutional provision forbidding the grant of special privileges or immunities.'

In Nathan v. Spokane County et al., 35 Wash. 26, 76 P. 521, 524, 65 L.R.A. 336, 102 Am.St.Rep. 888, whether the court had before it the constitutionality of an act that allowed a tax deduction to an itinerant tax payer, paying a second year's tax on the same property, it was held under a constitutional provision much like ours:

'Coming now to the consideration of the constitutionality of the proviso contained in the above statute, we think that the Legislature was without power or authority to enact any law providing that, after the payment of such taxes, the person paying them should be allowed certain deductions from the next regular assessment of such property. Article 1, § 12, of the state Constitution, provides: 'No law shall be passed granting to any citizen, class of citizens, or corporation, other than municipal privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations.''

See also City of Winchester v. Winchester Waterworks Co., 149 Ky. 177, 148 S.W. 1, Ann.Cas.1914A, 1258, and Purcell v. City of Lexington, 186 Ky. 381, 216 S.W. 599.

Actually our problem under the two constitutional provisions is narrowed to two inquiries that are closely related. (1) Is the purpose of the tax exemption statute a public purpose? (2) Is the classification reasonable and designed to carry out that purpose? If the purpose of the tax exemption act be not public, it violates both constitutional provisions, for in granting a tax exemption to some citizens and not to others for a purpose that is not public, it raises up a special class to receive the tax immunity grant, and the balance of the public who are excluded, who always bear the burden of all tax exemption, must bear an increased tax burden to accomplish this special nonpublic purpose. Presumably, all citizens paying a certain tax have an equal interest in any reduction of that tax, unless it be that the reduction of the tax, as to some, serves some interest, which benefits others excluded, as a part of the public. If the public interest or benefit be not found, then a grant of tax reduction or exemption has been made to some without extending it to others equally entitled to the tax reduction. The tax legislation is therefore special for it does not operate upon all having an equal interest in the reduction. The rule is stated in City of Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845, 847, as follows:

'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; * * *.'

III. What is the purpose of this tax exemption law? We turn to appellees' brief and argument. There we are told...