Dunn v. City of Indianapolis

• Decision Date: 25 June 1935
• Docket Number: No. 26147.,26147.
• Parties: DUNN et al. v. CITY OF INDIANAPOLIS.
• Court: Indiana Supreme Court

208 Ind. 630

196 N.E. 528

DUNN et al.

v.CITY OF INDIANAPOLIS.

No. 26147.

Supreme Court of Indiana.

June 25, 1935.

Action by the City of Indianapolis against Harry Dunn and others. Judgment for plaintiff, and defendants appeal.

Reversed, with instructions.

FANSLER, J., dissenting.

For concurring opinion, see 5 N.E.2d 629.Appeal from Superior Court, Marion County; John W. Kern, judge.

Louis B. Ewbank, of Indianapolis, James M. Ogden, Atty. Gen., Hugh D. Merrifield, Asst. Atty. Gen., and Harvey A. Grabill, of Indianapolis, for appellants.

Ed. H. Knight, James E. Deery, H. M. Spencer, and H. Nathan Swaim, all of Indianapolis, for appellee.

TREMAIN, Judge.

This action was filed by the city of Indianapolis, as plaintiff below, to enjoin the auditor and treasurer of Marion county, in making up the tax duplicates and collecting taxes upon property within the city, from reducing by two cents the ordinance tax of the city as it had been ordered reduced by the state board of tax commissioners upon an appeal to said commissioners pursuant to the provisions of section 200 of chapter 95 of the Acts of 1927 (page 248) being section 64-1331, Burns' 1933. By petition, the state board of tax commissioners, Zoercher, Showalter, and Wolfard, were made parties defendant to said action.

The complaint is in two paragraphs, the allegations of which recite the necessary statutory steps required to be taken by the officials of the city of Indianapolis in the preparation and determination of the tax levy for the year 1932. It is alleged that ten or more taxpayers of said city filed with the auditor of said county their objections to the city tax levy upon the ground that it provided for the collection of more taxes than the government thereof economically administered would warrant, and asked that the question be certified to the state board of tax commissioners as provided by said act; that pursuant thereto the same was so certified and passed upon by said board of tax commissioners, which board reduced the tax levy one cent on $100 in each of two funds, viz., the general fund and the park department fund, which reduction had the effect to and did reduce the total tax levy of the city from $1.08 to $1.06 on each $100 of the taxable property of said city.

It is alleged that the order of the state board of tax commissioners in making said reduction is illegal and void, and that section 200 of said act (Acts 1927, pp. 248-251) is unconstitutional, both as to giving the state board of tax commissioners authority (1) over municipal activities in regard to those matters affecting the inhabitants of that community and (2) as authorizing such state board to exercise both legislative and judicial power in matters of taxation. It is specifically alleged that the action of the state board of tax commissioners is unconstitutional and void as being in conflict with the following provisions of the Constitution of the state of Indiana: Section 1 of article 1 of the Bill of Rights; and section 1 of article 3, section 1 of article 4, section 1 of article 7, and section 1 of article 10, of the Constitution.

Issues were closed and the cause was tried by the court and judgment rendered enjoining the appellees from extending upon the tax duplicates the reduced tax levies, as fixed and determined by the state board of tax commissioners.

For the purpose of this decision it will be assumed that all facts are alleged in the complaint necessary to present the question; likewise facts were introduced in evidence relative to all the taxable property of the city and the amount necessary to be raised for the use of the various departments and funds; that the budget provided for by statute was in due form and complete; that all jurisdictional notices were given and a compliance shown with all laws pertaining to the assessment and levy of taxes upon the property of the taxing unit.

Section 200 of chapter 95 of the Acts of 1927, the constitutionality of which is questioned by the complaint herein, provides that the several tax levies and rates shall be established by the proper legal officers of any municipal corporation after the formulation and publication by them of a budget on forms prescribed by the state board of accounts; that notice be given to the taxpayers; that a public hearing will be had at which any taxpayer may appear and be heard upon the question of any levy or expenditure or other matter pertaining to the several tax levies and rates; that, when the tax levies and rates are finally established by the proper legal officers of any municipal corporation, the same shall be reported to the county auditor and by him to the state board of tax commissioners as provided in sections 197 and 199 of said act (Burns' Ann. St. 1933, §§ 64-1329, 64-1330); and taht the same shall stand as the tax levies and rates of such municipal corporation for the next year succeeding, subject to the right of ten or more taxpayers of ‘any such municipal corporation,’ other than those who pay poll tax only, to file a petition with the county auditor in which ‘such municipal corporation’ is located, setting forth their objections to the levy made or to any item or to any rate thereof. Upon the filing of such petition, the county auditor is required to certify a copy thereof with such other information as will be necessary to present the questions involved to the state board of tax commissioners, ‘who shall have the power to affirm or decrease said total tax levy or any item thereof of any such municipal corporation after a hearing.’ It is provided that the hearing must be had in the county in which ‘such municipal corporation’ is located, upon notices thereof to taxpayers; that the finding of the state board of tax commissioners shall be certified to the auditor of the county, who shall thereupon certify such action to the taxing unit interested, and that the action of the state board of tax commissioners shall be final and conclusive. There is a provision in said section 200 that, if due to an emergency it should be necessary to spend more money than is provided for in the published budget or in the budget as modified by the state board of tax commissioners, such municipal officers are empowered to adopt a resolution and to give notice of intention to make additional appropriations and proceed in a manner similar to that prescribed in the first instant; that ten or more taxpayers may petition to have the question of such extra or additional appropriation or tax levy certified to the state board of tax commissioners.

The General Tax Law of 1919 (chapter 59), section 200 of which was amended by the Acts of 1927, chapter 95, defines the term ‘municipal corporation’ in section 202 thereof, as amended by Acts 1925, c. 142 (Burns' Ann. St. 1933, § 64-1333), as follows: ‘The phrase ‘municipal corporation’ as used in the five preceding sections shall be deemed to include a county, township, city, incorporated town, school corporation, or any person, persons, or organized body authorized by law to establish tax levies for any purpose.'

Both appellants and the appellee agree that the power of taxation is inherent in the state, and is a legislative power limited only by the provisions of the Constitution. Section 1, art. 10, Constitution; State ex rel. Goodman v. Halter, 149 Ind. 292, page 297,47 N. E. 665,49 N. E. 7;Beard v. People's Savings Bank, 53 Ind. App. 185, 101 N. E. 325.

The appellee contends that, when a city government is created by an act of the General Assembly, in which a common council is provided for and certain duties delegated to it, in their nature legislative, among which is to make and designate the tax levy of such municipality, such act of the common council is final, and arises to the dignity of a legislative act by the General Assembly; that therefore its power and authority cannot be curtailed or modified as provided in section 200, supra, wherein the General Assembly has delegated to the state board of tax commissioners supervisory authority over the acts of the common council in that respect, nor does such board of tax commissioners possess the power and right under the Constitution to reduce a tax levy established by the common council.

The first two objections made by appellee, that the act in question violates, (1) section 1, article 1, and (2), section 1, article 3, of the Constitution, are answered in Zoercher v. Agler, 202 Ind. 214, 172 N. E. 186, 191, 907,70 A. L. R. 1232, contrary to appellee's contention. That case also holds that the statute in question does not violate section 19, article 4, and section 6, article 6, of the Constitution, and that the statute is not violative of the principle of local self-government reserved to the inhabitants of the municipality.

Appellee further contends that said statute is in violation of section 1, article 4, of the Constitution, which provides that the legislative authority of the state shall be vested in the General Assemply, and that it violates section 1, article 7, of the Constitution, which pertains to the judicial powers of the state. These two sections may be considered together.

Under our form of government the three divisions, judicial, legislative, and administrative, are separate and distinct, each possessed of certain governmental powers. Numerous decisions of the Supreme Court hold taht neither judicial nor legislative functions can be delegated to administrative or other departments of government. Equally as many Supreme Court decisions hold that boards such as the state board of tax commissioners possess only administrative and ministerial powers delegated by acts of the General Assembly.

In Zoercher v. Agler, supra, it was held that section 200 of the Tax Law here in question, providing for an appeal by ten or more taxpayers, did not confer upon the state board of tax commissioners either judicial or legislative power, but it was held that the power and authority delegated...