Floyd v. Miller Lumber Company

• Decision Date: 25 June 1923
• Docket Number: 83
• Citation: 254 S.W. 450,160 Ark. 17
• Parties: FLOYD v. MILLER LUMBER COMPANY
• Court: Arkansas Supreme Court

254 S.W. 450

160 Ark. 17

FLOYD v. MILLER LUMBER COMPANY

No. 83

Supreme Court of Arkansas

June 25, 1923

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor reversed.

Decree reversed and cause remanded.

J S. Utley, Attorney General, Jno. L. Carter Wm. T. Hammock, Assistants, Gordon & Combs, for appellant.

Act 118 of the Acts of 1923 does not contravene the Constitution either State or Federal. Act 681 of Acts of 1923, amending § 5 of said act 118, does not bring it into conflict with the Constitution, State or Federal. Rule for construction of. 120 Ark. 288; 91 Ark. 5; 140 Ark. 398; 150 Ark. 486; 155 U.S. 657. The act of 681 should be construed as taking the place of § 5 of act 118 rather than extending the provisions thereof, which would bring it into conflict with § 23, art. 5, Constitution of Arkansas. 29 Ark. 252; 31 Ark. 239; 61 Ark. 625; 120 Ark. 169; 89 Ark. 598; 99 Ark. 100; 132 Ark. 609; 133 Ark. 157; 141 Ark. 84; 141 Ark. 518; 141 Ark. 196; 141 Ark. 612. Act 681 can take the place of § 5, act 118, but as an addition thereto would be unconstitutional. 132 Ark. 128; 154 Ark. 218; 143 Ark. 83; 138 Ark. 459. Act No. 118 provides a privilege and not a property tax, and is a valid enactment. Section 5, art. 16, Constitution 1874. 1 Ark. 513; 4 Ark. 473; 99 Ark. 1; 49 Ark. 100; 112 Ark. 342; Cooley's Const. Lim., 587; 100 U.S. 491; Cooley on Taxation, 2d ed. 5; 176 U.S. 119; 94 U.S. 179; 211 U.S. 539; 81 Ark. 304; 169 U.S. 366; 128 U.S. 1; 43 Ark. 527; 93 Ark. 612. The tax is laid upon the privilege for severance of natural wealth for "commercial purposes" and is expressly authorized by the Constitution. 70 Ark. 549; 141 Ark. 521; 140 Ark. 320; 93 Ark. 612; 100 Ark. 175; 102 Ark. 131; 106 Ark. 321; 235 U.S. 265; 27 Ark. 265; 153 Ark. 114. Act not discriminatory in levying a greater tax on some lines of production than others since it is but a proper classification of business, the burden resting equally upon all of the same class. 70 Ark. 549; 141 Ark. 521; 102 Ark. 131; 85 Ark. 470; 217 U.S. 79; 217 U.S. 114. As authorizing a privilege tax, act is not obnoxious to equality and uniformity clause of Constitution. Act does not violate due process of law clause of Federal Constitution. Section 1, 14th Amendment to Federal Constitution; § 8, art. 2, State Constitution; 204 U.S. 241, affirming 74 Ark. 174; 95 U.S. 714; 110 U.S. 516; 134 U.S. 232; 113 U.S. 703; 101 U.S. 22; 160 U.S. 452; 115 U.S. 321; 94 U.S. 123; 214 U.S. 114. Act 681 should be held to take the place of § 5, Act 118; and the three acts, Nos. 118, 681 and 775, however construed to affect each other, lay a privilege tax, under reasonable and proper classification, without violating the State or Federal Constitution, as alleged.

W. R. Satterfield, Allen Hughes, Daggett & Daggett, Coleman, Robinson & House, for appellees.

This appeal involves the constitutionality of act 118, Acts 1923, known as the severance tax law, so far as its application to timber is concerned. The act is obnoxious to § 5, art. 16, Constitution of Arkansas. Standing timber has always been regarded by law as a part of the realty. When conveyed separate from the land, it is required to be separately assessed. C. & M. Digest, § 9940. The right of severance is a property right inseparably connected with the title itself, and without which the title would be an empty form. 99 Ark. 112; 84 Ark. 603; 91 Ark. 292; 109 Ark. 223; 143 Ark. 97. The right of severance is an incident of ownership and an attribute of title, and a tax thereon is a tax on the ownership of the timber itself. 72 So. 891; 26 R. C. L. 36. The revenue provision of the Constitution of 1836, Revenue, § 2, so far as the present question is concerned, was identical with § 5, art. 16, Constitution 1874, and construed in 2 Ark. 291; 1 Blackstone 272, Privileges; 2 Ark. 309. Clear distinction drawn between taxing power of State and its police power. 13 Ark. 752; 33 Ark. 436; 44 Ark. 138. Obviously, under Constitution of 1836 the court held that whatever was a matter of common right was not a privilege, and could not be taxed as a privilege. Under present Constitution the construction of similar provisions in Constitution of 1836 necessarily adopted with it. Occupation tax held unconstitutional. 58 Ark. 609; 70 Ark. 549; 85 Ark. 509; 93 Ark. 612. The right to cut one's own timber from one's own land is a property right and not merely a privilege. The tax levied on persons engaged in the business of severing timber from the soil for commercial purposes is a tax on such persons' occupation or business, which cannot be taxed under the Constitution for State revenue. 119 Ark. 314; 153 Ark. 114; 70 Ark. 549; 44 Ark. 137; 73 Ark. 276; 157 U.S. 429; 72 So. 891; 12 Wheat. 444; 112 Miss. 383; 73 So. 193; 255 U.S. 228. The act is, without doubt, a revenue measure and a tax on the right to sever timber, is a tax on the value of the timber, which is a tax on the timber itself. Should the court hold the right of severance to be a taxable privilege, then the act would be void as violative of the Fourteenth Amendment to the Federal Constitution. 245 U.S. 60; 217 U.S. 114.

Pryor & Miles, amici curiae.

J. S. Utley, Attorney General, John L. Carter, Wm. T. Hammock, Assistants, and Gordon & Combs, in reply.

Severance tax sustained in 88 So. 65; 153 N.W. 14; 152 N.W. 1088, 247 U.S. 350; U.S. Adv. Op. May 7, 1923; 141 Ark. 521; 70 Ark. 549; 217 U.S. 121.

HUMPHREYS, J. MCCULLOCH, C. J., concurs. HART, J., separate opinion. WOOD, J., dissenting.

OPINION

HUMPHREYS, J.

This suit was instituted in the chancery court of Pulaski County, and is an attack by individuals and corporations upon the constitutionality of act No. 118 of the Acts of the General Assembly of 1923, known as the severance tax law, in its application to timber.

The first section of the act levied an annual privilege tax upon each person, firm, corporation, or association engaged in the business, among other things, of severing timber from the soil, for commercial purposes. The fourth section of the act fixed a general rate of the tax at two and one-half per cent. of the gross cash market value of the severed product, except on certain natural resources specially provided for in section five of the act. The fifth section of the act fixed a special rate at twenty-five cents a ton on bauxite, one cent a ton on coal, and seven cents a thousand on timber. The fifth section of the act was amended at the same session of the Legislature by act No. 681 so as to impose a privilege tax of ten cents per ton on every shipper of manganese. The title of said act No. 118 is as follows:

"An act to levy a privilege or license tax upon all persons, firms, corporations, or associations, or persons engaged in the business of severing natural resources from the soil or water, and requiring all those so engaged to make such reports of their business as may be necessary for the proper enforcement of this act."

The following abbreviated statement of the facts alleged in the bill appears in appellee's brief:

"Each of the plaintiffs is engaged in the business of the manufacture and sale of lumber and other timber products, in the conduct of which they sever their timber from the soil on which it is growing, the severance being merely an incidental step in the process of manufacture. Some of the plaintiffs own the land and timber, while others own the timber alone, the title to the land being in some one else.

"At the present time, and at all times heretofore, the land and the timber thereon, or the timber alone where the ownership of the timber is different from the ownership of the land, is and has been treated by the taxing authorities of the State as real property, and is and has been assessed in the same manner and on the same basis as all other real property in the State. Plaintiffs have regularly paid all State and county taxes levied on such land and timber, or on the timber alone, as the case may have been, together with all other public impositions laid on such property under the laws of the State.

"None of the plaintiffs are engaged in the business of severing timber from the soil, but all are engaged in the business of manufacturing timber into lumber and other finished products, and the severance of timber is an incidental step in the conduct of their general manufacturing business.

"Notwithstanding the fact that the value of timber in this State ranges from $ 2 a thousand feet to $ 50 a thousand feet, at the place of severance, the act imposes an arbitrary tax of seven cents a thousand feet on each and every class of timber, without any reference to its value.

"Some of the timber owned by the plaintiffs is standing on island in navigable streams, and on lands bordering thereon, but which are outside of levees constructed along the streams the soil of which has no use or value except to support or sustain the growth of timber thereon, as the land is not susceptible of cultivation, or capable of any other use. The sole income from such land is, and if necessary must be, derived from the timber growing thereon, and this income cannot be realized without a severance of the timber." Appellant filed a demurrer to the bill, which was overruled by the court, and, failing to plead further, decree was rendered declaring said acts, original and amendatory, unconstitutional and void, from which is this appeal. In annulling the acts the trial court ruled that act No. 681 did not repeal and supplant section 5 of act No. 118, and appellant contends that the ruling of the court in this respect was erroneous. We do not understand that appellees have made or are making any contention in this case against the amount of the tax sought to be enforced against them, but are claiming that...