In re Opinion of the Justices

• Decision Date: 21 May 1908
• Citation: 85 N.E. 545,196 Mass. 603
• Parties: OPINION OF THE JUSTICES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

196 Mass. 603

85 N.E. 545

OPINION OF THE JUSTICES.

Supreme Judicial Court of Massachusetts.

May 21, 1908.

Advisory opinion of the Supreme Judicial Court on questions submitted by the Senate and House f Representatives. Questions answered.

Knowlton, C. J., and Morton and Braley, JJ., dissenting in part.

On April 28, 1908, the following order was passed by the House of Representatives and on April 30, 1908, was adopted in concurrence by the Senate. On May 2, 1908, it was transmitted to the justices of the Supreme Judicial Court, who on May 21, 1908, returned the answers which are subjoined:

House of Representatives, April 28, 1908.

Ordered, that the opinion of the justices of the Supreme Judicial Court be required upon the following important questions of law:

First. Is it within the power of the Legislature, under that clause of article 4, section 1, chapter 1, part 2, of the Constitution, which gives the Legislature power and authority to impose and levy proportional and reasonable assessments, rates, and taxes upon all the inhabitants of, and persons resident, and estates lying, within the commonwealth, to enact a law imposing a tax on all sales of shares or certificates of stock in any domestic or foreign association, compnay, or corporation?

Second. Is it within the power of the Legislature, under that clause of said article 4 which gives the Legislature power to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities whatsoever brought into, produced, manufactured, or being within the commonwealth, to enact a law imposing such a tax?

Third. Is it within the power and authority of the Legislature under any other provision of the Constitution to enact a law imposing such a tax?

These questions are propounded with a view to consideration of a pending bill, the same being House Bill No. 84, to provide for a tax upon transfers of stock, a copy of which is herewith submitted.

To the Honorable the Senate and the House of Representatives of the Commonwealth of Massachusetts:

We, the undersigned justices of the Supreme Judicial Court, having duly considered the three questions stated in the order of the honorable Senate and the honorable House of Representatives, dated April 28, 1908, respectfully submit the following answers:

The three questions put to us are propounded with a view to the consideration of a pending bill, being House Bill No. 84, a copy of which accompanies the questions. Briefly, this is a bill to impose a duty or excise upon all transfers and all agreements for transfer, made in Massachusetts, of shares in the capital stock of corporations, unincorporated associations or companies, domestic or foreign.

1. To the first question we answer no, because (if for no other reason) a tax on property must be proportional, and the proposed duty or excise is not proportional.

2. An answer to the second question involves the construction of that clause of article 4, § 1, c. 1, pt. 2, of the Constitution of the commonwealth which gives to the Legislature power and authority to ‘impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities, whatsoever, brought into, produced, manufactured, or being within the same,’ to wit, the said commonwealth.

This clause of the Constitution was not included in the original draft submitted to the constitutional convention of 1779-80. The only power or authority in the matter of taxation given to the General Court by the original draft was in these words: ‘To impose and levy proportional and reasonable assessments, rates and taxes, upon the persons of all the inhabitants of and residents within the said commonwealth, and upon all estates within the same.’ See Journal of Convention, 1779-80, p. 198.

When this paragraph of the draft Constitution was reached for consideration by the convention, the words ‘duties, excises,’ were inserted after the word ‘rates,’ and then the whole paragraph was referred to a committee consisting of Mr. Pickering, Mr. Lowell (afterwards judge of the District Court of the United States for the district of Massachusetts), and Judge Lincoln. Journal of Convention, p. 60. This committee changed to some extent the wording of the clause as to proportional taxes without changing its meaning, and added the clause now in question, to wit: ‘Also to impose and levy reasonable duties and excises upon any produce, goods, wares, merchandise and commodities whatsoever brought into, produced, manufactured or being within the same.’ This was adopted by the convention. Journal of Convention, p. 62.

The question to be answered by us then is: What was intended by the constitutional convention when it added this clause to the clause giving power and authority to impose and levy proportional taxes?

In answering that question it must be remembered that in 1780, when the Constitution of the commonwealth was adopted, Massachusetts had declared herself to be an independent commonwealth, and that she, in confederation with the oher colonies, was then engaged in a war to make good that declaration. The primary object of the constitutional convention was to establish a strong government, able to meet the financial demands of that war. And in 1780, when the Constitution was adopted, the financial stress was intense under which Massachusetts (together with the other colonies) was suffering and was likely to suffer.

Again, the Constitution then adopted was the Constitution of a sovereign state no subject to higher authority with respect to its affairs, external or internal.

Lastly, in construing this addition to the power of taxation given in the original draft of the Constitution, we must take the words there used (‘duties and excises') in the sense in which they were used then. In other words, we must strip them of the meaning which has come to be attached to them in more recent years. ‘Duties,’ as that word is ordinarily used in the United States today, mean duties imposed by Congress on goods imported into the United States. But in 1780 no Constitution of the United States had been thought of. Doubtless the word ‘duties' (in the added clause now in question) was intended to authorize duties on goods imported into Massachusetts. But the word ‘duties' is not necessarily confined to an impost laid on the importation of foreign goods, and was not so confined in 1780. It included (as we shall see hereafter more at length) imposts on domestic goods as well as on goods imported from foreign countries.

The word ‘excise,’ as the name implies, means something cut off. In the accurate use of the word it means something cut off from the price paid in a sale of goods, as a contribution to the support of the government. 2 Dowell, History of Taxation and Taxes in England, pp. 8, 9. It now has come (in the United States at any rate) to have a more generic meaning, and to include any impost which is not a tax on property.

Coming then to the question put above, namely: What power of taxation did the constitutional convention intend to give to the General Court when it added the clause now being considered?

To that question we cannot give a satisfactory answer until we have laid before you the system of taxation then in use in England and in the province of Massachusetts Bay under the province charter.

The system of taxation then (to wit, in 1780) in use in England consisted of two parts: One, a proportional tax laid on property; he other, duties and excises, laid (first) on the importation of foreign goods and (second) on domestic goods, privileges, or transactions.

With duties on the importation of foreign goods Massachusetts to-day has nothing to do. That power was unquestionably included in the addition to the Constitution now under consideration, which went into effect in 1780. But that power passed to Congress on the adoption of the Constitution of the United States, eight years later. We have to do here with the system of laying duties and excises on domestic property, privileges and transactions.

This was a new system taken from Holland, and was begun by an ordinance of Parliament in 1643, being chapter 14 for that year. The terms of this ordinance are not given in Scobell's Ordinances of the Parliament During the Time of the Commonwealth. All that is stated there is, ‘Cap. 14. New Impost laid on several Commodities mentioned in a Schedule.’ 1 Scobell, 49. Dowell, in his ‘History of Taxation and Taxes in England’ (volume 2, p. 9), says that the new impost was laid ‘upon a variety of articles of consumption, specified in a schedule, including ale and beer, cider and perry, strong waters, and several other articles.’ On November 28, 1643, another ordinance was enacted by Parliament, being chapter 26. All that Scobell gives of that is: ‘Additional Articles to the Ordinance of Excise.’ 1 Scobell, 59. On January 9, 1643, Parliament passed another ordinance (chapter 29) entitled ‘An Excise on Flesh, Victuals, and Salt’ (1 Scobell, 60), and on July 8, 1644, an ordinance (chapter 41) was passed, entitled: ‘A New Excise set upon Allom, Copperas, Monmouth Caps, Hats of all sorts, Hops, Saffron, Starch, and all manner of Silks or Stuffs, and several other Commodities made or growing in England not formerly charged with Excise.’ 1 Scobell, 73. These excises were modified and continued by ordinances passed in 1644 and 1645 (1 Scobell, 68, 74, 75, 98), and finally, by an ordinance enacted on August 14 and September 20, 1649 (which is chapter 26, and is given in full in 2 Scobell, 130), these ‘Rates and Charges by way of New Impost or Excise’ were established and commissioners were appointed to collect all sums due and payable ‘for the excise of any goods, wares, merchandises and manufactures, imported or made, or growing or put to sale, or consumed were established and commissioners Berwick upon Tweed.’ Afterward, by Ordinance 1656, c. 19 (2 Scobell, 452), there was a...