Leonardson v. Moon

• Decision Date: 05 March 1969
• Docket Number: No. 10376,10376
• Citation: Leonardson v. Moon, 92 Idaho 796, 451 P.2d 542 (Idaho 1969)
• Parties: R. D. LEONARDSON, Virgil King, Emmett Bennett, John H. Pino, Phil E. Batt, and Marion Davidson, Plaintiffs-Appellants, v. Marjorie MOON, Treasurer of the State of Idaho; Marjorie C. Jonasson, Treasurer of the County of Ada; Deloy Giles, Treasurer of the County of Bannock; Clarence Planting, Ada County Auditor; Emmette Spraker, Bannock County Auditor, all State of Idaho, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 542

451 P.2d 542

92 Idaho 796

R. D. LEONARDSON, Virgil King, Emmett Bennett, John H. Pino, Phil E. Batt, and Marion Davidson, Plaintiffs-Appellants, v. Marjorie MOON, Treasurer of the State of Idaho; Marjorie C. Jonasson, Treasurer of the County of Ada; Deloy Giles, Treasurer of the County of Bannock; Clarence Planting, Ada County Auditor; Emmette Spraker, Bannock County Auditor, all State of Idaho, Defendants-Respondents.

No. 10376.

Supreme Court of Idaho.

March 5, 1969.

Rehearing Denied March 10, 1969.

Samuel D. Eismann, Caldwell, for appellants.

Robert M. Robson, Atty. Gen., and Thomas C. Frost, Asst. Atty. Gen., Wilfrid W. Longeteig, former Deputy Pros. Atty., for Ada County, Boise, for respondents. Iver J. Longeteig, III, of Hawley, Troxell, Ennis & hawley, Boise, amici curiae Idaho Retailers Ass'n et al.

SPEAR, Justice.

This is an action instituted by the appellants, seeking to have declared unconstitutional certain portions of Chapter 116, 1967 Session Laws, beginning at page 229. This was H.B. No. 243 of the Thirty-Ninth Session of the Idaho Legislature, and was commonly referred to as the 'Inventory Tax Phase-out Law.' After a trial on the merits in the lower court, resulting in judgment for the defendants-respondents, the plaintiffs-appellants have appealed. We conclude the judgment of the lower court should be affirmed.

As findings of fact, the trial court adopted the stipulations of fact submitted by the parties to that court, which facts may be summarized as follows:

1. That each of the parties appellants were and are citizens of the United States, residents of the State of Idaho and residents of their respective counties;

2. That each of the parties appellants was a taxpayer of the State of Idaho, all of them paying sales and use taxes, income taxes, real and personal property taxes to the county, city and other taxing district in which he resides, and excise taxes levied on various products by the State of Idaho, and that others of the plaintiffs-appellants additionally paid personal property taxes on property used in his trade or business;

3. That each of the parties respondents held their respective official positions, and action was brought against them in such positions because of their duties to make distribution from the 'sales tax fund' as provided in H.B. No. 243;

4. That the effect of H.B. No. 243 will be to exempt the personal property set forth ('business inventory') from ad valorem taxation at an increasing proportion of 25% each year from 1968 through 1971 until the exemption becomes complete, resulting in a loss of revenue to local units of government and a replacement of such local revenue loss by the use of an increasing proportion at the rate of 5% of the total sales and use tax revenues collected each year until a total of 20% of the sales and use tax revenue collected by the State will be paid to the local governments in 1971;

5. That there are sheep in Idaho held for the production of wool, dairy cows in Idaho held for the production of milk, breeding cattle held for the production of calves, horses held for the purpose of pulling plows, wagons, etc., and horses held for rental for riding purposes; that there are also sheep, cattle, and horses in Idaho which are held for sale;

6. That the tax commission has for many years scrutinized local mill levies to determine if they comply with the statutory limitations or purporses for which such levies may be made;

7. That the exemption of certain items defined as 'business inventory' from taxation by H.B. No. 243 benefits the economic welfare of the State of Idaho.

The parties also stipulated into the record some statistical exhibits as follows:

Exhibit 'A': 'Percent average amount of taxes charged-business inventory-by county' shows the percentage of sales tax fund going to each county based upon the average amount of taxes charged on inventories within the county limits.

Exhibit 'B': 'Summary (average amount and per cent of tax charges on business inventory).' This exhibit identifies and shows the percentage that each taxing entity within the respective counties will receive of the sales tax funds which will be distributed to that entity's county pursuant to H.B. No. 243, if no other taxing entities are added, if none is discontinued, and if no changes are made in the percentage figures.

Exhibit 'C': 'Certificate of county levies for year 1967'-This exhibit shows the amount of mill levy made by the counties, cities and other taxing districts sharing in the distribution under (I.C.) 63-3638(G)(g) and (f)(f) for the particular purposes authorized by the Code. The counties' and cities' levy for police, public buildings, welfare, etc., is included under the levy for general fund.

It must be noted that the foregoing exhibits A, B and C are documents relating to all forty-four counties in the State of Idaho and of various taxing districts therein.

It was further stipulated by the parties that selected city and county ordinances and annual financial reports were to be admitted as part of the record and identified as exhibits A-1, B-1 and C-1 and D through W. It was additionally stipulated that those documents 'are genuine, relevant material and admissible for all purposes in the trial of this matter.' (Ostensibly for the purpose of showing the nature and amount of disbursements by the various bodies indicated.)

The parties also stipulated into the record Exhibit X, consisting of certain statistical data concerning the forty-four counties of the State of Idaho, and in substance being a table of the relationship between population and the amounts and percentages, per county and per person, of the sales tax distribution which will go to the counties.

The legal issues upon which this cause was submitted to the trial court are as follows:

1. Whether or not H.B. No. 243 is invalid because it unlawfully permits disbursement of State monies for local purposes contrary to the provisions of Article VII, section 6 of the Idaho Constitution.

2. That H.B. No. 243 is invalid because it is an unlawful delegation of legislative power to make appropriations of state funds. Appellants' principal objection is that the particular purposes to be served or particular objects to be obtained by means of the appropriation must be more specifically stated than is done in H.B. No. 243. It is respondents' contention that the terms of H.B. No. 243 are sufficiently precise to meet every requirement of Article VII, section 13 of the Idaho Constitution, as previously interpreted by the decisions of the Idaho Supreme Court.

3. That H.B. No. 243 embraces more than one subject and therefore violates Article III, section 16 of the Idaho Constitution. This contention was abandoned by appellants in their reply brief before this court and therefore no discussion thereon is necessary.

4. That the exemption under H.B. No. 243 of all personal property consisting of living organisms (i. e., 'all livestock, furbearing animals, fish, fowl and bees.') from ad valorem taxation denies the appellants equal protection by invidiously discriminating against them without rational justification. It is respondents' contention that the act does not unconstitutionally discriminate against appellants as owners of inanimate means of production because such property, i. e., livestock, fish, etc., constitutes a different and separate class of property which the legislature has plenary authority to exempt.

5. That H.B. No. 243 violates Article VIII, section 2 of the Idaho Constitution because it loans the credit of the State to municipalities. This contention was abandoned by appellants in their brief submitted to this court accompanying their Application for Temporary Restraining Order and therefore will not be considered or commented upon.

6. That H.B. No. 243 violates Article III, section 19, Article XII, section 2 and Article XVIII, sections 1 and 5, because it destroys, in part the system of county government envisioned by the Idaho Constitution. Respondents deny this contention, responding that the act has general application to all counties and other taxing entities and that it in no way attempts to accomplish an encroachment upon the political integrity of the county or municipal system envisioned by the framers of the constitution.

7. That H.B. No. 243 violates Article IV, section 11 of the Idaho Constitution, because the bill attempts to circumvent the power of the Governor of the State of Idaho to disapprove the items in appropriation bills. This contention is merely controverted by respondents.

On the date set for trial of this cause appellants introduced the issue of whether or not the formula adopted by the legislature was arbitrary and capricious to such an extent that the act should be struck down. The court overruled respondents' objection and determined that it would hear all the issues attendant with the cause and so this issue was in fact tried in the trial court and is now in issue before this court.

After trial on its merits the trial court made findings of fact by adopting the facts as stipulated by the parties and exhibits stipulated as hereinbefore pointed out. The trial court then entered the following conclusions of law:

'I.

'It is presumed that all statutes are constitutional and that a statute will not be invalidated unless the party challenging the same clearly shows that it is offensive to either the state or federal constitution.

'II.

'The Court will not decide purely political questions or matters of legislative policy.

'III.

'The legislature has plenary power in legislative matters, except as such power may be inhibited by the constitution.

'IV.

'Unless clearly restrained by the constitution, a legislative act is valid.

'V.

'The prohibitions of Article 7, Section 6 of the Idaho Constitution are limited to ad valorem taxes or ad valorem tax funds.

'VI.

'The legislature of the State of Idaho may pass an excise tax for the...