Giragi v. Moore

• Decision Date: 01 February 1937
• Docket Number: Civil 3753
• Parties: COLUMBUS P. GIRAGI and GEORGE A. GIRAGI, Copartners, Doing Business Under the Firm Name and Style of "GIRAGI BROTHERS, PUBLISHERS," and SOUTHSIDE PUBLISHING COMPANY, a Corporation, Appellants, v. THAD M. MOORE, FRANK LUKE and D. C. O'NEIL, as Members of and Constituting the State Tax Commission of Arizona, Appellees
• Court: Arizona Supreme Court

64 P.2d 819

49 Ariz. 74

COLUMBUS P. GIRAGI and GEORGE A. GIRAGI, Copartners, Doing Business Under the Firm Name and Style of "GIRAGI BROTHERS, PUBLISHERS," and SOUTHSIDE PUBLISHING COMPANY, a Corporation, Appellants, v. THAD M. MOORE, FRANK LUKE and D. C. O'NEIL, as Members of and Constituting the State Tax Commission of Arizona, Appellees

Civil No. 3753

Supreme Court of Arizona

February 1, 1937

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. On motion for rehearing. Motion granted. Judgment reaffirmed.

Messrs Armstrong, Kramer, Morrison & Roche and Messrs. Sutter &amp Gentry, for Appellants.

Mr John L. Sullivan, Attorney General, and Mr. A. I. Winsett Assistant Attorney General, for Appellees.

Messrs. Mathews & Bilby, Messrs. Darnell, Pattee & Robertson, Messrs. Ellinwood & Ross, and Messrs. Kibbey, Bennett, Gust, Smith & Rosenfeld, Amici Curiae.

OPINION

ROSS, J.

After our opinion holding chapter 77, Laws of 1935, commonly referred to as "The Excise Revenue Act of 1935," imposed a privilege tax of 1 per cent. on the gross income of newspapers (48 Ariz. 33, 58 P.2d 1249) a motion for rehearing was filed raising for the first time the constitutionality of the act on the ground that it deprived appellants of due process of law, in contravention of the Fourteenth Amendment to the Constitution of the United States. This contention, it is asserted, finds support in the decision of the Supreme Court of the United States in Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 448, 80 L.Ed. 660, decided February 10, 1936, holding a Louisiana statute, which imposed a sales tax on the gross income of all newspapers with a weekly circulation of more than 20,000, violated the due process clause of such amendment.

At the time the Grosjean case was decided, because of the "history and... setting" of the Louisiana law, it was given very wide and general publicity but, because of the great dissimilarity of the facts and circumstances, it did not occur to us that the decision was in point and we did not discuss or consider it. Counsel did not cite it. Now, however, they insist that it rules this case.

The amici curiae identify themselves with newspaper clients and are in agreement with the appellants on the invalidity of the law. It is what the court said in the Grosjean case upon which they rely, and the argument of the amici curiae is entirely confined to an analysis of that case in an effort to show its applicability to the facts of this case. In addition to such contention, the appellants reargue the law upon which the case was decided, with a view of trying to convince us that we should change our ruling, but we are satisfied that our construction of chapter 77, supra, is correct. Since the decision we shall render hinges upon the Grosjean case, we will first give our analysis of the law as declared by the court in that case.

Under the facts and circumstances of that case, a 2 per cent. sales tax on the gross income of a certain segment of the newspapers published in Louisiana was held to abridge the freedom of the press, in contravention of the due process clause of the Fourteenth Amendment to the federal Constitution. If chapter 77, supra, is within the reason of the rule announced, we should change our opinion to conform therewith, for the decisions by the Supreme Court as to what the law is in construing the federal Constitution are binding upon us. We do not think the decision in that case, directly or by implication, goes as far as contended. In the first place, the court placed the Louisiana act side by side with legislation "hostile" to the press, naming as such the early English and Massachusetts statutes imposing stamp, paper, and advertising taxes upon the popular press for the purpose of restraining or curbing it."These duties," the court said, "were quite commonly characterized as "taxes on knowledge,' a phrase used for the purpose of describing the effect of the exactions and at the same time condemning them." Following a short review of the history of the "taxes on knowledge" the court said:

"Citations of similar import might be multiplied many times; but the foregoing is enough to demonstrate beyond peradventure that in the adoption of the English newspaper stamp tax and the tax on advertisements, revenue was of subordinate concern; and that the dominant and controlling aim was to prevent, or curtail the opportunity for, the acquisition of knowledge by the people in respect of their governmental affairs."

The court deduces that it was this kind of legislation against a free press that caused the adoption of the First Amendment to the Constitution forbidding Congress to make any law abridging the freedom of speech and of the press, and the Fourteenth Amendment forbidding any of the states to make or enforce any law depriving any person of life, liberty, or property without due process of law, and said by these provisions the national government and the states were precluded "from adopting any form of previous restraint upon printed publications, or their circulation, including that which had theretofore been affected by these two well-known and odious methods"; that is, stamp tax and tax on advertisements. The phrase "any form of previous restraint" is very comprehensive. It is not limited to the odious forms mentioned. These it certainly includes. "But," the court concludes, using Judge COOLEY'S language, it includes "any action of the government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise of their rights as citizens." 2 Cooley, Const. Lim., 8th ed., p. 886. After observing that the press is a vital force to keep the people informed as to the actions of their government, and the wisdom and necessity of its being kept free and untrammeled in the performance of its function of publicity, the court condemned the Louisiana tax law, in very strong and cogent language, as follows:

"The tax here involved is bad not because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties....

"In view of the persistent search for new subjects of taxation, it is not without significance that, with the single exception of the Louisiana statute, so far as we can discover, no state during the one hundred fifty years of our national existence has undertaken to impose a tax like that now in question.

"The form in which the tax is imposed is in itself suspicious. It is not measured or limited by the volume of advertisements. It is measured alone by the extent of the circulation of the publication in which the advertisements are carried, with the plain purpose of penalizing the publishers and curtailing the circulation of a selected group of newspapers."

Thus it is (1) "a deliberate and calculated device" to limit the circulation of newspapers, and (2) there is nothing like it in any state in the 150 years of our national existence, and (3) the tax is not measured or limited by the amount of the gross income but by circulation "with the plain purpose of penalizing the publishers and curtailing the circulation of a selected group of newspapers." We think it is apparent on the face of the opinion that the reason the court chose to place the unconstitutionality of the Louisiana law upon its contravention of the due process clause, and not upon its unnatural and unreasonable classification and consequent discrimination as was done in the lower court ([D.C.] 10 F.Supp. 161), is that it felt that no classification that has for its purpose the penalizing of the press and the curtailing of its circulation among the people will be regarded as due process, and thereby once for all foreclosed any efforts of that kind in Louisiana or elsewhere.

We will now turn to chapter 77, supra, and see how different it is in origin, purpose, and effect. It was not dictated by a dominant political ruler to limit the circulation or penalize newspapers that criticized and opposed his policies, but was the result of the calm and considered judgment of the members of the legislature of the state. Its controlling purpose was to raise revenue to help defray the current expenses of state government and state obligations and contribute to the relief of the needy and unemployed during the depression period. No hostility is shown the press, nor is any purpose or design to restrain the press apparent.

Chapter 77, supra, is a general sales tax law. It levies and directs the State Tax Commission to collect a tax upon the sales or gross income of practically every person or concern engaged in selling merchandise or services in the state. Section 2, article 2.

Section 11, Id., provides that every person engaging or continuing in a business required to pay the tax shall apply for and obtain a license from the Tax Commission, pay $1 therefor and display it in his place of business; provides that parties failing to procure such license or display it shall be punished by a fine of not less than $10 or by imprisonment for ten days or both.

Section 12, Id., makes it the duty of the assessors of the several counties to report, within thirty days after the act takes effect, the names and addresses of all persons subject to the tax in their respective counties and annually thereafter before March 15th; also to report quarterly every person who has commenced a business within...