Julian R. Clark v. City of Burlington

• Decision Date: 19 November 1928
• Parties: JULIAN R. CLARK ET AL. v. CITY OF BURLINGTON ET AL
• Court: Vermont Supreme Court

143 A. 677

101 Vt. 391

JULIAN R. CLARK ET AL. v. CITY OF BURLINGTON ET AL

Supreme Court of Vermont

November 19, 1928

October Term, 1928.

Taxation---Extent of Taxing Power of State---Presumption as to Constitutionality---Rule as to Construction of Statutes Relating to Taxation---Acts 1927, No. 15, 5---Different Method for Appraisal of Corporate Stock Not Inconsistent with General Law Prescribing Method for Valuation of Personal Property Generally---"Assessment"---Method of Assessment of Corporate Stock Prescribed by Legislature---Constitutional Law---Purpose of Requirement as to Proportional Contributions---Classification for Pur- poses of Taxation---Discretion of Legislature with Respect to Classification---Manner of Classification and Assessment of Corporate Stock Provided by Acts 1927, No. 15, 5, Not Violation of Proportional Clause of Constitution---Determination of Constitutionality of State Tax Law---Notice of Assessment Required by Due Process Clause of Federal Constitution---Sufficiency of Proceedings To Constitute Due Process---Sufficiency of Statute under Requirement of Constitution Ch. II, Section 5, Relating to Separation of Legislature and Judiciary---Unconstitutionality of Law Fair on Its Face by Effect in Operation---Matters Which May Be Taken into Consideration in Determining Constitutionality---Burden of Proof as to Constitutionality---Inequalities in Value of Property for Taxation, Resulting from Classification upon Real Differences and Not Unreasonable, Insufficient To Establish Unconstitutionality---Double Taxation.

1. The taxing power of the State extends to all persons and property within its jurisdiction not protected therefrom by federal supremacy.

2. Every presumption is to be made in favor of the constitutionality of a statute, and it will not be declared unconstitutional without clear and irrefragable evidence that it infringes the paramount law.

3. A law for the assessment and collection of taxes is to be construed with the utmost liberality, to uphold it if possible.

4. Acts 1927, No. 15, 5, providing that in fixing the appraisal of shares of stock mentioned in Acts of 1925, No. 21, 1, as amended, appraisal "shall be based on a value of which the annual dividend of the preceding calendar year is six per centum," while adopting a different manner of arriving at valuation of such personal property than provided generally in G. L. 766, is not inconsistent therewith, since G. L. 766 prescribes method and amount of valuation only "unless otherwise provided," and by Acts 1927, No 15, 7, it was provided that such act should be construed as a part of Acts of 1925, No. 21, and all inconsistent acts and parts of acts be suspended.

5. Word "assessment" is equivocal, as it may mean either the act of apportioning the burden to be borne by persons or property chargeable, or particular burden assigned to each but more commonly means the official valuation of a taxpayer's property for purposes of taxation, and as used in Acts of 1927, No. 15, 5, is synonymous with word "appraisal."

6. Word "assessment," being equivocal, its construction is to be determined by the context in accordance with the maxim "noscitur a sociis."

7. An assessment does not of itself lay the charge upon either person or property, but is a step preliminary thereto, which is essential to the apportionment.

8. By Acts 1915, No. 15, 5, relating to appraisal of shares of corporate stock, Legislature has not made the assessment, but rather has directed method by which assessment shall be made by officials thereto duly authorized; and method of assessment of corporate stock prescribed by statute is not invalid on ground that it does not determine real value of stock, since neither Constitution nor statute makes money value of property a necessary basis for appraisal, and dividends paid even during space of one year have some influence upon value of stock.

9. The constitutional requirement of proportional contributions for the support of the government (Const. of Vermont, Ch. I, Art 9), was not intended to restrict State to methods of taxation that operate equally upon all its inhabitants.

10. Limitation imposed by Constitution of Vermont, Ch. I, Art. 9, does not forbid any classification of property for purpose of taxation, or adoption of any scheme of taxation, which does not offend the federal Constitution, the equality clause of section 1 of the Fourteenth Amendment to the Constitution of the United States and uniform clause in State Constitution being in effect the same for such purposes.

11. Legislature possesses a very wide, but not unlimited, discretion in matter of classification for purposes of taxation, and it is only when classification adopted conflicts with either or both federal and State Constitutions that court can interfere.

12. All that is required to make valid any classification that the Legislature is pleased to adopt is that it shall be based upon a rational ground---some difference that bears a just relation to the purpose to be served.

13. Although by Acts 1927, No. 15, 5, corporate stock alone, of all the varieties of intangible property mentioned in such act, is singled out for assessment on basis of "a value of which the annual dividend of the preceding calendar year is six per centum," subject to the deductions specified in section 4 of the Act, held that statute was not so palpably arbitrary or unreasonable, either as to classification of corporate stock for purposes of taxation, or as to method it prescribes for ascertaining value of such stock, as to violate proportional clause of State Constitution (Const. of Vermont, Ch. I, Art. 9).

14. A State tax law will not be held to conflict with due process clause of federal Constitution (Const. U.S., 14th Amendment, section 1), no conflict with federal power being involved, unless it proposes, or clearly results in, such flagrant and palpable inequality between the burden imposed and the benefit received as to amount to arbitrary taking of property without compensation.

15. Where statute itself makes an assessment of property for purposes of taxation, the tax being recoverable by suit, it is not required, in order to constitute due process of law, under Section 1, 14th Amendment, Constitution of the United States, that any other notice than that contained in the statute be given the taxpayer, but, where Legislature commits to some subordinate body duty of making the assessment, due process of law requires that, at some stage of proceedings, before the tax becomes irrevocably fixed, taxpayer must have opportunity to be heard, and notice of time and place of hearing.

16. Where assessment of corporate capital stock was made by the listers in manner provided by Acts 1927, No. 15, 5, no question was made of any lack of notice of proceedings before listers, and appeal as provided by law was open to taxpayer and availed of by him, held that there had been no denial of due process of law guaranteed by United States Constitution, 14th Amendment, Section 1.

17. Acts 1927, No. 15, 5, providing for appraisal of corporate stock on basis of "a value of which the annual dividend of the preceding year is six per centum," held not to be a usurpation of judicial power in violation of State Constitution, Ch. II, section 5, relating to principle of separation of Legislature and Judiciary.

18. A law not objectionable on its face may be adjudged unconstitutional because of its effect in operation, and, if it is enforced in such a manner as to work a discrimination against a part of the community, for no lawful reason, such exercise of power will be held to be invalid, intent of Legislature, and question whether public authority administers law unequally, so as practically to make unjust and illegal discriminations, between persons in similar circumstances, material to their rights, being for consideration.

19. One who challenges the validity of taxation on the ground that it violates the equal protection clause of United States Constitution, 14th Amendment, section 1, cannot rely upon theoretical irregularities, or such as do not affect him, but must show that he is himself unfavorably affected.

20. Fact that values of corporate stock reached under manner of computation provided by Acts 1927, No. 15, 5, requiring appraisal thereof on basis of "a value of which the annual dividend of the preceding calendar year is six per centum," do not coincide with those shown by the market reports, or discovered by a consideration of other factors than amount of dividends paid, does not invalidate statute, for all stocks are assessed by same formula, all owners of such stocks are taxed according to the value thus determined, and since inequalities in values complained of result from a classification founded upon real differences and not unreasonable, any resulting discrimination is not arbitrary, or prohibited by United States Constitution, 14th Amendment, Section 1.

21. Where two realty companies owned certain real property used for theatre purposes, and paid taxes upon such tangible assets, and by virtue of that fact under G. L. 712, as amended by Acts 1927, No. 15, 4, their stock was exempt from taxation, the taxation under Acts 1927, No. 15, 5, of shares of corporate stock of two other corporations operating such theatre properties, whether as lessees or agents, does not constitute double taxation, since there may be several estates or interests, each property, in the same land, which may be taxed separately to their respective owners; and when operating company acts as agent of owners, such operating company has no interest in property, but its stock represents its right under its contract, so that rights of operating companies, whether arising under a lease or by...