Hager v. Walker

• Decision Date: 23 January 1908
• Citation: 128 Ky. 1,107 S.W. 254
• Parties: HAGER, STATE AUDITOR, v. WALKER ET AL.
• Court: Kentucky Court of Appeals

107 S.W. 254

128 Ky. 1

HAGER, STATE AUDITOR, v. WALKER ET AL.

Court of Appeals of Kentucky.

January 23, 1908

Appeal from Circuit Court, Kenton County.

"To be officially reported."

Action by Ed E. Walker and others against S.W. Hager, State Auditor to enjoin the collection of a license tax imposed on complainants as real estate agents. From a decree for complainants, defendant appeals. Affirmed.

N. B Hays, Atty. Gen., and C. H. Morris. for appellant.

M. H McLean and Hines, Chandler & Norman, for appellees.

CARROLL J.

This action was brought by the several appellees, who were engaged in carrying on the business of real estate agents in the cities of Covington and Newport, both of which are cities of the second class, and in the city of Ludlow, a city of the fourth class, to enjoin the collection of a license tax imposed upon real estate agents by the revenue act of March 15, 1906. Acts 1906, p. 88, c. 22. Subdivision 4, art. 12, § 1, of this act contains this provision: "Before engaging in any occupation or selling any article named in this subdivision of article 12 of this act, the person desiring to do so shall procure a license and pay the tax thereon, as follows: * * * On each real estate agent in cities of the first, second and third class, twenty-five dollars; same, in each city or town of the fourth, fifth or sixth classes, ten dollars."

The validity of this statute is assailed principally upon the ground that, although a state tax, it is not uniform throughout the state, as real estate agents outside of cities and towns are not required to pay any license, and the tax upon agents in cities is graduated by the class of the city in which they do business. The statute in question is a revenue measure. This point is admitted by the Attorney General, and there can be no doubt about its correctness. The occupation taxed is essentially a harmless one. It has none of the features requiring police regulation, and there is no reason why the police power should be invoked concerning it, so that, in inquiring into the validity of the statute, we will treat it as enacted for revenue purposes.

The sections of the Constitution that are directly involved in the consideration of the questions before us are section 171, declaring that "the General Assembly shall provide by law an annual tax, which with other resources shall be sufficient to defray the estimated expenses of the commonwealth for each fiscal year. Taxes shall be levied and collected for public purposes only. They shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax; and all taxes shall be levied and collected by general laws"--and section 181, reading in part: "The General Assembly may by general laws only provide for the payment of license fees on franchises, stock used for breeding purposes, the various trades, occupations and professions, or a special or excise tax, and may by general laws delegate the power to counties, towns, cities and other municipal corporations to impose and collect license fees on stock used for breeding purposes, on franchises, trades, occupations and professions."

We do not agree with counsel for appellee that the direction in section 171 that "taxes shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax" applies directly or specifically to the license fees that may be levied on franchises, stock used for breeding purposes, trades, occupations, and professions mentioned in section 181. Yet it is entitled to serious consideration as indicating a purpose that all laws imposing taxes shall operate in a uniform manner, to the end that no favoritism can be shown or discrimination be practiced. Section 171 authorizes the imposition of an ad valorem tax upon all the property in the state for state purposes, and in counties, cities, towns, and taxing districts for local purposes. This ad valorem property tax, whether imposed or levied for state, county, municipal, or local purposes, must be uniform within the territory in which it is imposed. If it be for state purposes, it must be exactly the same in all parts of the state; and uniformity must exist when it is authorized to be levied by local authorities for local purposes. It is very clear that the Legislature has no power to select, classify, or discriminate in the imposition of what we may term a property or ad valorem tax--that is, a tax levied upon all the property in the state--as lack of uniformity in this respect would be a direct violation of section 172, providing in part that "all property not exempted from taxation by this Constitution shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale," as well as of section 174, providing in part that "all property whether owned by natural persons or corporations shall be taxed in proportion to its value, unless exempted by the Constitution; and all corporate property shall pay the same rate of taxation paid by individual property." We will therefore proceed to inquire whether or not, and to what extent the rule of uniformity applies to the imposition of license fees on franchises, stock used for breeding purposes, trades, occupations, and professions.

The authority to tax under this section is as far-reaching and as sweeping as language could make it. It would be difficult to find three words that cover wider fields of employment than trades, occupations, and professions. Under its authority to tax them the General Assembly has the power and the right to tax every business and every individual in the state--the merchant, trader, and banker; the lawyer, minister, and doctor; the mechanic and farmer. Indeed, it would be difficult to mention a person who has not some trade, occupation, or profession, and, if he has, the authority to tax him is granted, and this without respect to the nature or character of the trade, occupation, or profession, or whether it be humble or great, large or small. Nor does the Constitution undertake to place any limitation upon the amount of tax that may be imposed, although it may be conceded that, if it should be so unreasonable or arbitrary as to amount to a confiscation of property or a denial of the right to engage in a particular trade, occupation or profession, the courts would interpose to protect the class of persons affected from this oppressive burden, on the ground that it was a violation of the principles recognized and established in the Bill of Rights, declaring that all men have "the right of seeking and pursuing their safety and happiness" and "the right of acquiring and protecting property."

The General Assembly may also grant to counties, towns, cities and other municipal corporations the authority to exact license fees, and within the territory affected the discretion is as far-reaching as when exercised by general laws for state purposes. And it also seems that, if the power is delegated to those local subdivisions to impose the taxes authorized by this section, the local authorities are invested with the discretion to fix the license fees at any sum, always subject to the limitation that it must not be unreasonable or arbitrary. We also think that in each class of these local subdivisions, as in the first, second, third, fourth, and fifth class cities and towns, the local authorities are not required to impose the same amount of tax. Cities of the first class may, to illustrate, charge a license fee to lawyers of $25 a year, and cities of the second class a license fee of $10; and so cities of the third class may charge architects a license fee of $15, and cities of the fourth class a license fee of $5. And this right to impose different fees in cities of different classes may be put upon the ground that the cities and towns of the state are divided by the Constitution into six classes, each class being governed by a set of laws applicable alone to the cities within that class and constituting a separate and distinct governmental agency with a set of laws applicable alone to it. But the license fees imposed upon any particular trade, occupation, or profession in any class of cities must be uniform in the sense that the same fee must be charged every person engaged in the particular trade, occupation, or profession that is taxed. We doubt if it would be seriously contended that the governing authorities in cities of the first class might impose a license tax of $50 upon doctors residing or doing business in one part or locality of the city, and a tax of $25 upon doctors living or doing business in another part or locality. The rule of uniformity in this respect applies equally and alike to every trade, occupation, and profession that is singled out for taxation. We also believe that it is competent for the Legislature under this section by general laws for state purposes, as well as by a general law delegating the power to the municipalities mentioned, to divide trades, occupations, and professions into classes, and to impose a different license fee upon each class that the trade, occupation, or profession may fairly and reasonably be divided into. To illustrate: Dealers in hardware might be divided into wholesale and retail dealers. And trades, occupations, and professions may be further classified according to the volume of business done by them. Nor is the General Assembly, either by general laws for state purposes or general laws in aid of or for the benefit of municipalities, required to impose the license fees that may be levied upon all trades, occupations, and professions. Any one or more trades, occupations, or professions may be singled out for taxation, and all the others not thus...