Diefendorf v. Gallet

• Citation: 10 P.2d 307,51 Idaho 619
• Decision Date: 11 March 1932
• Docket Number: 5859
• Parties: BEN DIEFENDORF, Tax Commissioner of the State of Idaho, Plaintiff, v. E. G. GALLET, State Auditor of the State of Idaho, Defendant
• Court: Idaho Supreme Court

10 P.2d 307

51 Idaho 619

BEN DIEFENDORF, Tax Commissioner of the State of Idaho, Plaintiff, v. E. G. GALLET, State Auditor of the State of Idaho, Defendant

No. 5859

Supreme Court of Idaho

March 11, 1932

TAXATION-INCOME TAX-CONSTITUTIONAL LAW-LEGISLATIVE ENACTMENT-REGULARITY OF PROCEDURE.

1. Term "property," within constitutional provision requiring all "property" to be taxed uniformly by value, must be taken in commonly accepted significance (Const., art. 7, secs. 2, 5).

2. It must be presumed that members of constitutional convention were aware of contemporary definition and construction of income tax as not tax upon "property" (Const., art 7, secs. 2, 5).

3. Court takes judicial notice that income as such was never assessed or taxed as "property" in Idaho (Const art. 7, secs. 2, 5).

4. "Excise tax" in modern sense is any tax not falling within classification of poll or property tax, and embraces every form of burden not laid directly upon persons or property.

5. Income tax is an "excise" (Laws 1931 [Ex. Sess.] chap. 2; Const., art. 7, secs. 2, 5).

6. Court must construe statute so as to avoid absurdity and effect legislative intent.

7. Income tax held not tax on "property" within provision requiring "property" to be taxed uniformly by value (Laws 1931 [Ex. Sess.], chap. 2; Const art. 7, secs. 2, 5).

8. Court must respect reasonable exercise by legislature of powers expressly delegated to it by Constitution and cannot interfere with such exercise (Const., art. 2, sec. 1).

9. State legislature's power to classify, define and exempt for taxation purposes is plenary and exclusive (Const., art. 7, secs. 2, 3, 5).

10. Legislative definition and classification of income as not "property" for taxation purposes held not so arbitrary or discriminatory as to offend either Constitution (Laws 1931 [Ex. Sess.], chap. 2, sec. 78; Const. Idaho, art. 7, secs. 2, 3, 5; Const. U.S. , Amend. 14).

11. That legislature, at same session at which income tax law for state purposes only was passed, submitted constitutional amendment to authorize income taxes for state, county and municipal purposes, held not admission that income was "property" within constitutional provision (Laws 1931 [Ex. Sess.], chap. 2; Joint Resolution, see Laws 1931, Ex. Sess., p. 63; Const., art. 7, secs. 2, 3, 5).

12. Ad valorem property tax, poll taxes and license taxes on business, provided by Constitution, held not exclusive means for raising state revenues, and legislature could enact income tax law (Laws 1931 [Ex. Sess.], chap. 2; Const., art. 7, secs. 2, 3, 5).

13. State Constitution is instrument of limitation, not of grant.

14. Legislative, judicial and executive branches of state government are separate and cannot interfere with one another (Const., art. 2, sec. 1).

15. Determination whether there is "extraordinary occasion," justifying convening legislature in special session, is for Governor alone, and cannot be interfered with by co-ordinate branches of government (Const., art. 2, sec. 1; art. 4, sec. 9).

16. Question whether urgency existed, justifying passage of statute without reading on three separate days and without printing, held exclusively for legislature (Const., art. 2, sec. 1; art. 3, sec. 15).

17. State income tax statute held not invalid as "duplicate taxation of property" within constitutional inhibition (Laws 1931 [Ex. Sess.], chap. 2; Const., art. 7, sec. 5).

18. Inhibition against "duplicate taxation of property" is against duplicate direct property taxes for same purpose for same year, and extends no further than inhibitions contained in uniformity clause of same section and in equal protection clause of federal Constitution (Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

19. State's power to classify for purposes of taxation is limited only by rule that classification must be reasonable and founded upon differences between the parties (Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

20. Legislative classifications will be upheld where they rest upon differences having logical relation to subject sought to be regulated or burdened, and are not palpably arbitrary and capricious (Const. U.S. , Amend. 14).

21. Statute imposing progressively graduated income tax held not to violate uniformity of taxation, due process and equal protection clauses (Laws 1931 [Ex. Sess.], chap. 2; Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

22. Income tax statute held not to violate uniformity of taxation, due process and equal protection clauses, though allowing greater exemptions to married than to single persons (Laws 1931 [Ex. Sess.], chap. 2; Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

23. Income tax statute held not to violate uniformity of taxation, due process and equal protection clauses, though withholding from corporations credits allowed to individuals (Laws 1931 [Ex. Sess.], chap. 2; Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

24. Income tax statute held not to violate uniformity of taxation, due process and equal protection clauses, though directing that funds derived from income tax be applied toward reduction of state ad valorem levy (Laws 1931 [Ex. Sess.], chap. 2; Const. Idaho, art. 7, sec. 5; Const. U.S. , Amend. 14).

25. Statute imposing tax upon net income held not to impose unconstitutional burden upon interstate commerce (Laws 1931 [Ex. Sess.], chap. 2; Const. U.S. , art. 1, sec. 8, cl. 3).

Original proceeding for a Writ of Mandate. Granted.

Writ made permanent. No costs awarded.

Fred J. Babcock, Attorney General, and Sidman I. Barber, Assistant Attorney General, for Plaintiff.

An income tax is not a tax on property within the meaning of a constitutional requirement that taxes on property shall be proportional to value. (Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 25 A. L. R. 748, 88 So. 4; Featherstone v. Norman, 170 Ga. 370, 70 A. L. R. 449, 153 S.E. 58; Glasgow v. Rowse, 43 Mo. 479; Ludlow-Saylor Wire Co. v. Wollbrinck, 275 Mo. 339, 205 S.W. 196; Waring v. Savannah, 60 Ga. 93.)

That it may indirectly constitute a burden on property, the receipts from which are included in gross income, does not render it a direct burden on such property. (Peck & Co. v. Lowe, 247 U.S. 165, 38 S.Ct. 432, 62 L.Ed. 1049; United States Glue Co. v. Town of Oak Creek, 247 U.S. 321, 38 S.Ct. 499, 62 L.Ed. 1135; Oliver Iron Min. Co. v. Lord, 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929; American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084; Spreckels Sugar Ref. Co. v. McClain, 192 U.S. 397, 24 S.Ct. 376, 48 L.Ed. 496; Michigan Cent. R. Co. v. Black, 100 U.S. 595, 25 L.Ed. 647; Cooley, Const. Limitations, 5th ed., 480; Pomeroy, Const. Law, p. 281; 1 Kent's Com., pp. 254, 256; 1 Storey, Constitution, p. 955; Rev. Stats. (1887), secs. 1400, 1405, 1410; Miller, Constitution, p. 237; 1 Hare, Const. Law, pp. 249, 250; Burroughs, Taxation, p. 502.)

The act does not deprive the taxpayer of property without due process of law, nor deny equal protection of the law.

The prohibitions of the due process clauses of the fifth amendments to the United States Constitution and Idaho Const., art. 1, sec. 13, are the same as imposed by the 14th amendment, so far as concerned with permissible classifications. (United States v. Yount, 267 F. 861; Leeper v. Texas, 139 U.S. 462, 11 S.Ct. 577, 35 L.Ed. 225; Giozza v. Tiernan, 148 U.S. 657, 13 S.Ct. 721, 37 L.Ed. 599; Duncan v. Missouri, 152 U.S. 377, 14 S.Ct. 570, 38 L.Ed. 485; Florida C. & P. R. Co. v. Reynolds, 183 U.S. 471, 22 S.Ct. 176, 46 L.Ed. 283; Bolln v. Nebraska, 176 U.S. 83, 20 S.Ct. 287, 44 L.Ed. 382.)

The calling of the special session was vested wholly in the discretion of the Governor. (Utah Power & Light Co. v. Pfost, 52 F.2d 226; Farrelly v. Cole, 60 Kan. 356, 56 P. 492, 44 L. R. A. 464; In re Legislative Adjournment, 18 R. I. 830, 27 A. 324, 22 L. R. A. 716.)

J. L. Eberle, A. A. Fraser and P. B. Carter, for Defendant.

The tax in question is on property within Const., art. 7, sec. 2, and in violation thereof. (Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891, 892; Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 11 A. L. R. 300, 86 So. 56; Opinion of Justices, 220 Mass. 613, 108 N.E. 570.)

By C. S., sec. 9456, it is provided that certain words, unless otherwise apparent from the context, shall have certain signification. It then defines personal property as including, "money, goods, chattels, things in action, and evidences of debt." Regardless, however, of such definition, there could be no question in the minds of the court as to what is included in personal property in the ordinary, common, practical business of life at which the court is bound to look.

It is immaterial whether in form it is a tax upon income as personal property, or in substance upon the real property itself, because, in either event, it is a tax upon property, and as such it is not levied as provided by Const., art. 7, sec. 2. (Redfield v. Fisher, 135 Ore. 180, 73 A. L. R. 721, 292 P. 813.)

The tax in question is duplicate taxation as prohibited by Const., art. 7, sec. 5. (Winton Lumber Co. v. Shoshone County, 50 Idaho 130, 294 P. 529; Re McKennan (Sherman v. State), 25 S.D. 369, 126 N.W. 611, 33 L. R. A., N. S., 606.)

There was no emergency existing either for the special session at which the act involved was passed or for the passage of the act. (Cohn v. Kingsley, 5 Idaho 416, 49 P. 985, 38 L. R. A. 74; State v. Board of Examiners, 40 Mont. 59, 104 P. 1055.)

LEEPER, J. Lee, C. J., Givens and Varian, JJ., and Babcock, D. J., concur.

OPINION

LEEPER, J.

Pursuant to a proclamation of the Governor, the legislature of Idaho was convened in special session on March 6, 1931, and thereafter enacted an income...