Laing v. Fox
Decision Date | 15 June 1934 |
Docket Number | 7919. |
Citation | 175 S.E. 354,115 W.Va. 272 |
Parties | LAING v. FOX, State Tax Com'r. |
Court | West Virginia Supreme Court |
Submitted May 10, 1934.
Rehearing Denied July 26, 1934.
Syllabus by the Court.
1. Subsection (i), § 2, c. 33, p. 222, Acts (First Extraordinary Session) 1933, imposing a privilege tax upon every person engaging in or continuing in any business, profession, trade occupation or calling not included in other subdivisions of the act (except persons engaged in or continuing in the business of agriculture, horticulture, or grazing), is not in conflict with the Federal or State Constitutions.
2. Subsection (i), § 2, c. 33, p. 222, Acts (First Extraordinary Session) 1933, imposing a privilege tax upon every person engaging in or continuing in any business, profession, trade occupation, or calling not included in other subdivisions of the act (except persons engaged in or continuing in the business of agriculture, horticulture or grazing), which became effective from passage, May 26, 1933, is operative from the beginning of the calendar year, 1933.
3. Subsection (i), § 2, c. 33, p. 222, Acts (First Extraordinary Session) 1933, imposing a privilege tax upon every person engaging in or continuing in any business, profession, trade occupation, or calling not included in other subdivisions of the act (except persons engaged in or continuing in the business of agriculture, horticulture, or grazing), includes persons receiving income from loans and investments.
Appeal from Circuit Court, Kanawha County.
Suit by John Laing against Fred L. Fox, State Tax Commissioner. From a decree sustaining a demurrer to and dismissing the bill the plaintiff appeals.
Affirmed.
Blue, Dayton & Campbell, Arthur S. Dayton and Wm. F. Blue, all of Charleston, for appellant.
Homer A. Holt, Atty. Gen., and Ira J. Partlow and W. Holt Wooddell, Asst. Attys. Gen., for appellee.
This is an appeal from a decree of the circuit court of Kanawha county, sustaining a demurrer to, and dismissing, the bill, in the suit of a taxpayer to enjoin the state tax commissioner from levying and collecting a privilege or gross income tax.
The statute (subsection (i), § 2, c. 33, p. 222, Acts, First Extraordinary Session, 1933) under which the tax is sought to be levied and collected follows: A tax is imposed upon the privilege of engaging in specific business activities by other parts of the act.
The bill discloses that plaintiff, during the year 1933, received income from (a) salary, (b) interest on loans, (c) rents and royalties, (d) profit on casual sales of stock, (e) dividends on corporate stock, and (f) income on gas sales; charges that subdivision (i) and related provisions of the act are unconstitutional under (1) the Fourteenth Amendment to the Federal Constitution, (2) section 1, article 10, as amended, of the West Virginia Constitution (see Acts 1932, Ex. Sess., cc. 9, 10), and (3) section 30, article 6 of the state Constitution; and alleges that subsection (i) is not applicable to income received prior to its effective date, May 26, 1933, and that it does not apply to investment receipts in the nature of interest, dividends, rentals, profits from casual sales of property, and the like.
The exemption of income from horticulture, agriculture, or grazing is the basis of the first and second constitutional objections.
Constitutional Questions.
1. Plaintiff contends that the statute, by reason of the exemption, discriminates in favor of a large class of citizens and denies to him the equal protection of the laws as guaranteed under the Fourteenth Amendment to the Federal Constitution. The state Legislatures may, without violation of the Fourteenth Amendment, select and classify the subjects of taxation so long as they do so in observance of a reasonable consideration of difference or policy. In the recent chain store tax case (State Board of Tax Commissioners v. Jackson, 283 U.S. 527, 51 S.Ct. 540, 543, 75 L.Ed. 1248, 73 A. L. R. 1464) involving the validity of an Indiana statute, imposing a graduated tax, based upon the number thereof, on stores or mercantile establishments, under a single ownership and management, the Supreme Court of the United States, speaking through Justice Roberts, stated the rule as follows: "The principles which govern the decision of this cause are well settled. The power of taxation is fundamental to the very existence of the government of the states. The restriction that it shall not be so exercised as to deny to any the equal protection of the laws does not compel the adoption of an iron rule of equal taxation, nor prevent variety or differences in taxation, or discretion in the selection of subjects, or the classification for taxation of properties, businesses, trades, callings, or occupations. Bell's Gap R. R. v. Pennsylvania, 134 U.S. 232, 10 S.Ct. 533, 33 L.Ed. 892; Southwestern Oil Co. v. Texas, 217 U.S. 114, 30 S.Ct. 496, 54 L.Ed. 688; Brown-Forman Co. v. Kentucky, 217 U.S. 563, 30 S.Ct. 578, 54 L.Ed. 883. The fact that a statute discriminates in favor of a certain class does not make it arbitrary, if the discrimination is founded upon a reasonable distinction, American Sugar Ref. Co. v. Louisiana, 179 U.S. 89, 21 S.Ct. 43, 45 L.Ed. 102, or if any state of facts reasonably can be conceived to sustain it. Rast v. Van Deman & L. Co., 240 U.S. 342, 36 S.Ct. 370, 374, 60 L.Ed. 679, L. R. A. 1917A, 421, Ann. Cas. 1917B, 455; Quong Wing v. Kirkendall, 223 U.S. 59, 32 S.Ct. 192, 56 L.Ed. 350. As was said in Brown-Forman Co. v. Kentucky, supra, 217 U.S. 573, 30 S.Ct. 578, 580, 54 L.
Ed 883: It is not the function of this Court in cases like the present to consider the propriety or justness of the tax, to seek for the motives, or to criticize the public policy which prompted the adoption of the legislation. Our duty is to sustain the classification adopted by the Legislature if there are substantial differences between the occupations separately classified. Such differences need not be great. The past decisions of the Court make this abundantly clear." A similar observation was made by this court in Hope Natural Gas Company v. Hall, 102 W.Va. 272, 277, 135 S.E. 582, 583, sustaining a tax on the privilege of engaging in "mining and producing for sale, profit, or use, any coal, oil, natural gas, limestone, sand or other mineral product, or felling and producing timber for sale, profit, or use." Judge Hatcher, writing the opinion of the court, said: In Singer Sewing Machine Co. v. Brickell, 233 U.S. 304, 34 S.Ct. 493, 497, 58 L.Ed. 974, the Supreme Court upheld an Alabama statute taxing every person, firm, or corporation selling or delivering sewing machines in person or through agents, and exempting merchants selling sewing machines at their regularly established places of business. In the...
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