Eliasberg Bros. Mercantile Co. v. Grimes
Citation | 86 So. 56,204 Ala. 492 |
Decision Date | 24 April 1920 |
Docket Number | 2 Div. 712 |
Parties | ELIASBERG BROS. MERCANTILE CO. v. GRIMES. |
Court | Alabama Supreme Court |
Rehearing Denied June 30, 1920
Appeal from Circuit Court, Dallas County; B.M. Miller, Judge.
Bill by W.C. Grimes against Eliasberg Bros. Mercantile Company to enjoin or restrain from certifying to the state tax officials the salary earned by said Grimes as an employé of respondent. From a decree granting the relief prayed, respondents appeal. Affirmed.
Keith & Wilkinson, of Selma, J.Q. Smith, Atty. Gen., and Lawrence E Brown and Henry P. White, Asst. Attys. Gen., for appellants.
Hugh Mallory, of Selma, R.B. Evins, of Greensboro, and Ray Rushton, J.J. Mayfield, and H.F. Crenshaw, all of Montgomery, for appellee.
The question of decisive importance presented by this appeal is whether or not the graduated tax of from 2 to 4 per centum imposed upon incomes by the Revenue Act of 1919 (Gen.Acts 1919, pp. 374-395) is in violation of section 214 of the Constitution of Alabama, which declares:
"The Legislature shall not have the power to levy in any one year a greater rate of taxation than sixty-five one-hundredths of one per centum on the value of the taxable property within this state."
The solution of the major question obviously depends upon two constituent inquiries: (1) Is income "property" in the ordinary legal sense of the word? And, (2) if so, is it embraced within the meaning of the word "property" as used in this constitutional limitation?
In his very recent work on Federal Income anti Profits Taxes, Mr. Holmes, quoting the language of the Supreme Court of Massachusetts in Tax Com'r v. Putnam, 227 Mass. 522, 116 N.E. 904, L.R.A.1917F, 806, says:
It is clear therefore that while "income" is a complex conception of elements and units which may be, and usually are, acquired, and used or disposed of at different times, its elements and units are in the most literal sense wealth and property--none the less so because their possession is transient and their identity easily and quickly lost. But instability of possession and identity cannot destroy their character as "property" merely because they render impracticable their assessment in the ordinary way as property owned or possessed at the beginning of the tax year. This was clearly pointed out by Judge Stone in Board of Revenue v. Gas Light Co., 64 Ala. 269, 275:
[italics supplied].
In its strictest legal sense the term "property" is applicable to the exclusive right of the owner with respect to the use, control, and disposition of something which is capable of ownership. But in its more general and popular sense it is applicable to the thing itself. 6 Words and Phrases, pp. 5693-5699. In this sense "property" includes everything which goes to make up one's wealth or estate. Carlton v. Carlton, 72 Me. 115, 116, 39 Am.Rep. 307. In Greene v. Knox, 175 N.Y. 432, 67 N.E. 910, it was held that the salary of an office is property within the protection of constitutional provisions; and a teacher's salary was so held in Hibbard v. State, 65 Ohio St. 574, 64 N.E. 109, 58 L.R.A. 654.
In the Opinion of the Justices, 220 Mass. 613, 624, 108 N.E. 570, 574, it was said:
In Boyd v. City of Selma, 96 Ala. 144, 148, 11 So. 393, 394 (16 L.R.A. 729), this court said:
"In its general or ordinary significance the term 'personal property' embraces all objects and rights which are capable of ownership, except freehold estates in land, and incorporeal [86 So. 58] hereditaments issuing thereout or exercisable within the same."
In section 2, Code 1852, the words "personal property" are defined as including "money, goods, chattels, things in action, and evidences of debt, deeds and conveyances." This definition, substantially unchanged, is retained in all subsequent Codes, including that of 1907.
With all due respect to the court which approved such reasoning--and we note that Judge Bleckley concurred dubitante--we are unable to appreciate its relevancy or its value. Investing, or depositing, or locking up what is received as income, changes not its character, but merely its use; and the notion that a tree is property, while its fruit is not, cannot be sustained upon any principle of logic or common sense. The opinion refers to the earlier case of Mayor, etc., of Savannah v. Hartridge, 8 Ga. 23, as holding that income is not property, but an examination of that case shows that it merely held that a legislative grant of power to the city of Savannah to raise money "by tax and assessment upon all real and personal estate within the corporate limits of the city" did not include the power to lay a tax on occupations or incomes which had never been taxed by the state. That decision was clearly correct. In both of the Georgia cases referred to above it must be noted also that the tax under consideration was an excise tax on receipts from a business or occupation, and there is a palpable confusion of thought and of terms. Practically all courts and text-writers are agreed that an excise tax, being a tax on business or occupation, however measured, is not a tax on property. Our own court in particular has always carefully distinguished these two subjects of taxation, as we shall hereafter show.
We come now to a consideration of the second question, viz., does the term "property," as used in section 214 of the Constitution, include incomes, as defined and taxed by the Revenue Act of 1919, so as to subject their taxation to the limitation therein prescribed?
The general principles which should govern courts in interpreting and construing constitutional provisions have been often stated and need not be now repeated. For present purposes it will suffice to recall what was said in W.U. T. Co. v. State Board, 80 Ala. 273, 275 (60 Am.Rep. 99), as pertinent to the present inquiry:
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