Garrett Freight Lines, Inc. v. State Tax Commission

• Decision Date: 29 March 1943
• Docket Number: 6497
• Citation: Garrett Freight Lines, Inc. v. State Tax Commission, 135 P.2d 523, 103 Utah 390 (Utah 1943)
• Court: Utah Supreme Court
• Parties: GARRETT FREIGHT LINES, Inc., v. STATE TAX COMMISSION et. al

135 P.2d 523

103 Utah 390

GARRETT FREIGHT LINES, Inc., v. STATE TAX COMMISSION et. al

No.6497

Supreme Court of Utah

March 29, 1943

Appeal from District Court, Third District, Salt Lake County; A. H Ellett, Judge.

Action by Garrett Freight Lines, Inc., against State Tax Commission of Utah and others to recover an excise tax on the use of Diesel motor fuel paid under protest. From a judgment for defendants, plaintiff appeals.

Affirmed.

Louis H. Callister, Ned Warnock, and E. R. Callister, Jr., all of Salt Lake City, for appellant.

David T. Lewis, Grant A. Brown, Marcellus K. Snow and Wayne L Christoffersen, all of Salt Lake City, for respondents.

HOYT District Judge. WOLFE, C. J., and McDONOUGH and MOFFATT, JJ., concur. LARSON, J., concurs in the result. PRATT, J., on leave of absence.

OPINION

HOYT, District Judge.

In this case the appellant (plaintiff) seeks to recover certain taxes paid under protest under a provision of Section 3, Chapter 53, Laws of Utah 1941, which read as follows:

"An excise tax is imposed at the rate of four cents per gallon on the use of fuel by any user thereof on and after January 1, 1941."

The word "fuel" as defined in the act includes Diesel motor fuel and the taxes sought to be recovered were paid on account of such motor fuel used by appellant prior to the date on which the legislative act became a law. The act was passed by the Legislature February 13, 1941, and became effective May 13, 1941.

Appellant asserts that that part of the act which purports to impose a tax upon the use of Diesel fuel used prior to the effective date of the act is invalid, in that it is retroactive in effect and deprives the taxpayer of his property without due process of law in violation of Section 7 of Article 1 of the State Constitution and the 14th amendment to the Constitution of the United States.

Counsel for appellant bases his case chiefly on the contention that the tax on use of Diesel fuel imposed an entirely new tax and created a new class of taxpayer; that in making the tax apply to use of Diesel fuel during a period of four and one-half months prior to the date the law went into effect amounts to levying a tax upon a transaction already consummated and therefore constitutes a taking of property without due process of law.

If the tax should be looked upon as a fee or charge for a permit or license to do an act or carry on a business then it might be considered arbitrary and unjust to require a person to pay a fee for having done that which he at the time of the act had a right to do without a fee. But this tax imposed upon users of Diesel fuel cannot be considered a fee for a license or permit. The statute which calls for payment of this tax is a revenue measure which in effect says that the Legislature finds it reasonable to require, and therefore does require, that all those who have used Diesel fuel during the period from January 1, 1941, to date of passage of the act, or who thereafter use such fuel, shall be taxed for support of the state government, and that the amount of the tax shall be computed upon the amount of Diesel fuel used by them subsequently to January 1, 1941. The fact that the date decided upon was six weeks prior to the final passage of the bill, or four and one-half months prior to the date the act became law does not, for any reason we can perceive, make the tax arbitrary, capricious or purely fanciful so as to offend against the due process clause. The Legislature has broad power and discretion in determining classes of persons to be taxed. To include those persons or corporations who have used Diesel fuel during a recent period in a class with those who subsequently use such fuel, does not appear to be arbitrary or capricious. In imposing a tax upon some particular class or group of persons, the Legislature should not act arbitrarily and without consideration of ability to pay or benefits of government received. But unless the classification adopted by the Legislature is clearly and unmistakably arbitrary or capricious, and unjust, the enactment must be upheld. The power of the courts under the Constitution is not a veto power. With the wisdom of legislative policy the courts are not concerned. The duty of the court, when complaint is made of an act of the Legislature, is to determine whether the people have given to the Legislature the power to adopt the statute. In the matter of raising revenue for the government the court cannot set up its judgment again the Legislative judgment in determining who shall be required to contribute.

"The taxing power of the state is lodged absolutely in the legislature, and, as the responsibility of enacting laws devolves exclusively upon that branch of the government, whether the right of taxation has been exercised justly or unjustly, wisely or unwisely, it is not for the judiciary to inquire. That is a matter between the people and their representatives. So, even though in some instances there be an abuse of the taxing power. Unless such laws are in conflict with some constitutional provision, either expressly or by implication, the courts have no authority to prevent their execution. On this subject Mr. Chief Justice Marshall in McCulloch v. [State of] Maryland, 4 Wheat. 316, 428 [4 L.Ed. 579], says: 'The power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the government may choose to carry it. The only security against the abuse of this power is found in the structure of the government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation.

"'The people of a state therefore give to their government a right of taxing themselves and their property, and, as the exigencies of government cannot be limited, they prescribe no limits to the exercise of this right, resting confidently on the interest of the legislator, and on the influence of the constituents over their representative, to guard them against its abuse.'

"And again, he speaks of it as unfit for the judicial department to inquire 'what degree of taxation is the legitimate use, and what degree may amount to the abuse of the power.' In [Providence] Bank v. Billings, 4 Pet. 514, 562, , the same eminent jurist observes: 'The power of legislation, and consequently of taxation, operates on all the persons and property belonging to the body politic. This is an original principle, which has its foundation in society itself. It is granted by all for the benefit of all. It resides in the government as part of itself, and need not be reserved where property of any description, or the right to use it in any manner, is granted to individuals or corporate bodies. However absolute the right of an individual may be, it is still in the nature of that right that it must bear a portion of the public burdens; and that portion must be determined by the legislature. This vital power may be abused, but the interest, wisdom, and justice of the representative body, and its relations with its constituents, furnish the only security against unjust and excessive taxation, as well as against unwise legislation.'

"Accepting this as sound doctrine, as we safely may, would not the judicial department itself be guilty of transcending its constitutional power were it to inquire into the expediency, wisdom, or justice of the legislation in question in this case?" Opinion by Bartch, C. J., in Kimball v. Grantsville City et al., 19 Utah 368, 384, 57 P. 1, 5, 45 L. R. A. 628.

It is well settled that a tax does not necessarily violate the Federal Constitution merely because it contain retroactive features. Milliken v. United States, 283 U.S. 15, 21, 51 S.Ct. 324, 75 L.Ed. 809; Billings v. United States 232 U.S. 261, 34 S.Ct. 421. 58 L.Ed. 596; Welch v. Henry, 305 U.S. 134, 59 S.Ct. 121, 125, 83 L.Ed. 87, 118 A.L.R. 1142. The last mentioned case involved a statute, adopted March 27, 1935, by the Legislature of Wisconsin, Laws 1935, c. 15, which imposed a tax on corporate dividends received in the year 1933 at rates different from those applicable in that year to other types of income. Mr. Justice Stone, in writing the majority opinion, discusses the question of constitutionality as follows:

"The objection chiefly urged to the taxing statute is that it is a denial of due process of law because in 1935 it imposed a tax on income received in 1933. But a tax is not necessarily unconstitutional because retroactive. Milliken v United States, 283 U.S. 15, 21, 51 S.Ct. 324, 326, 75 L.Ed. 809, and cases cited. Taxation is neither a penalty imposed on the taxpayer nor a liability which he assumes by contract. It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens.

"Since no citizen enjoys immunity from that burden, its retroactive imposition does not necessarily infringe due process, and to challenge the present tax it is not enough to point out that the taxable event, the receipt of income, antedated the statute.

"In the cases in which this Court has held invalid the taxation of gifts made and completely vested before the enactment of the taxing statute, decision was rested on the ground that the nature or amount of the tax could not reasonably have been anticipated by the taxpayer at the time of the particular voluntary act which the statute later made the taxable event. Nichols v. Coolidge, 274 U.S. 531, 542, 47 S.Ct. 710, 713, 71 L.Ed. 1184, 52 A. L. R 1081; Untermyer v. Anderson, 276 U.S. 440, 445, 48 S.Ct. 353, 354, 72 L.Ed. 645 (citing ...