Long v. Watts

• Decision Date: 08 March 1922
• Docket Number: 253.
• Parties: LONG v. WATTS, COM'R OF REVENUE.
• Court: North Carolina Supreme Court

110 S.E. 765

183 N.C. 99

LONG v. WATTS, COM'R OF REVENUE.

No. 253.

Supreme Court of North Carolina

March 8, 1922

Appeal from Superior Court, Wake County; Devin, Judge.

Civil action by B. F. Long to restrain A. D. Watts, Commissioner of Revenue of North Carolina, from collecting an income tax out of the official salary of the plaintiff, who is one of the superior court judges of the state. From a judgment in favor of the plaintiff, permanently enjoining the defendant from proceeding to collect said tax, defendant appeals. Affirmed.

J. S Manning, Atty. Gen., and Frank Nash, Asst. Atty. Gen., for appellant.

A. L Brooks, of Greensboro, for appellee.

STACY J.

The plaintiff in this action is now, and has been for a number of years, the duly elected, qualified, and acting judge of the superior court for the Fifteenth judicial district of North Carolina. His present term of office began on January 1 1919, and will continue for a period of eight years. The proposed tax which he calls in question is that which the defendant contends was levied by chapter 34, Public Laws 1921. The position of the defendant is that, whatever barrier may have existed heretofore against the collection of such a tax, it has now been removed by the constitutional amendment of 1920. The scope and purpose of this amendment can best be ascertained from the amendment itself:

"1. Amend article five, section 3, by repealing the proviso in said section 'that no income shall be taxed when the property from which the income is derived is taxed,' and substituting in lieu thereof the following: Provided, the rate of tax on incomes shall not in any case exceed six (6) per cent., and there shall be allowed the following exemptions to be deducted from the amount of annual incomes, to-wit: for a married man with a wife living with him; or to a widow or widower having minor child or children, natural or adopted, not less than $2,000; to all other persons not less than $1,000; and there may be allowed other deductions (not including living expenses) so that only net incomes are taxed." See Laws 1920, p. 120.

It may not be amiss to note, just here, that the preceding clause in said amended section, "The General Assembly may also tax trades, professions, franchises, and incomes," was not disturbed by the amendment, and this clause has been a part of the Constitution since 1868. Further, it may be noted that the amendment in no way changed the legislative authority to levy an income tax on salaries in general. It simply removed the prohibition against taxing incomes derived from property already taxed, and limited the maximum rate of such tax to 6 percent.

The defendant notified the plaintiff in writing that he, as "commissioner of revenue, holds that under the income tax provision of the state Constitution, and the statute enacted in pursuance thereof, all officials of the state including * * * judges of the superior courts, are required to list and pay an income tax on their salary." He further added that his department would endeavor in every legal way to secure returns and the payment of such taxes. Upon receipt of this communication the plaintiff, on January 28, 1922, caused a letter to be addressed to the defendant calling attention to the grave doubt as to the correctness of his ruling, and asked if he would agree to submit a test case for decision so that the matter might be judicially determined on or before the 15th day of March, 1922--this being the limit for the filing of said returns.

"The purpose of this letter," he wrote, "is to inquire if you will not consent that an agreed case may be made up and the matter promptly presented to the courts for determination, so that the state, and its officers as well, may know what their respective duties and rights are as to this matter."

This suggestion or request was promptly rejected, the defendant saying:

"In my opinion, these salaries are taxable, both under the state law and the Constitution, and I will endeavor through the machinery of the law to collect these taxes."

Following receipt of this letter, the plaintiff instituted the present suit, asking for injunctive relief, and again offering in his complaint to agree upon the facts and to submit this as a test case for decision. Again his offer was declined. From a judgment in favor of plaintiff, the defendant appealed.

The defendant contends that, under chapter 34, Public Laws 1921, every resident of the state is required to list and pay an income tax on his or her net income, and this, he says, by correct interpretation, includes the plaintiff's official salary, there being no express deduction allowed therefor in the statute. Defendant therefore contends that the act just mentioned contains a legislative direction and command that he collect such a tax. In reply to this the plaintiff says that the defendant's construction of the statute runs counter to article 4, § 18, of the state Constitution, which provides: "The General Assembly shall prescribe and regulate the fees, salaries and emoluments of all officers provided for in this article; but the salaries of the judges shall not be diminished during their continuance in office."

The question, then, presented for our decision is clear-cut, and it is this: Does a tax levied on plaintiff's official salary amount to a diminution thereof in derogation of the constitutional provision above quoted? If it does, its illegality must be conceded; otherwise, the injunction should be dissolved.

The case in its ultimate effect and final analysis involves the power to tax the compensation of all the judges in the state. On account of the individual relation of the members of this court to the question, thus broadly stated, we can but regret that it might not have been settled in some other way. But the issue is forced, and we must meet it. Jurisdiction can neither be renounced nor denied. The plaintiff is entitled, by clear legal right, to invoke our decision in so far as his own salary is concerned and this is a matter in which no other member of the judiciary can have any direct personal interest. There is no other appellate court to which, under the law, he or the defendant may go. This much is said not by way of apology but in recognition of the proprieties of the situation. No other choice is given to us, and we should be recreant to our duty if, when a cause is submitted by a citizen who alleges that his rights have been violated, or by an officer who wishes to know the law, we should shrink from deciding it. A majority of the members of this court are owners of real estate in the city of Raleigh, but this would not be a sufficient reason for our declining to hear a case involving a tax levy by the commissioners of said city. Allen v. Raleigh, 181 N.C. 453, 107 S.E. 463. The only course for us to pursue is to consider the cause upon its merits, and to decide it, as in other matters, according to the law appertaining to the case. For this position we have precedents from other jurisdictions and from the highest court in the land, all of which will be cited hereafter.

For what purpose did the convention of 1835 recommend that a clause be inserted in the state Constitution so as to provide that "the salaries of the judges shall not be diminished during their continuance in office"? Attorney General Batchelor, in 1856, answered this question as follows:

"The reason why this amendment was made to the old Constitution, the debates in the convention do not disclose to us; but it must have been that that body, influenced by the lessons of wisdom drawn from the experience of the past, desired to throw around the judiciary another defense and protection against any attack which might be made on it by the other branches of the government, and to secure it against all influences which might sway it from the fearless, faithful, impartial and independent discharge of its duties." Appendix, 48 N.C. 5.

The instant provision certainly could not have been incorporated in the Constitution for the personal benefit of the judges. They come and go, and, at most, hold office for but a brief period. The Constitution, on the other hand, was written for a continuing and growing state, and its provisions deal primarily with questions which affect the public weal. Whatever else may be said, it must be conceded that this clause, which forms a part of our organic law, was purposely added thereto by men of wisdom and experience, who understood the spirit and genius of our institutions, and who sought to place the independence of the judiciary beyond the field of controversy or debate. They were not ignorant of the melancholy experiences of the past and of the necessity of providing certain effectual checks and balances in this governmental framework which had been bequeathed to them by the fathers. History had also taught them the useful lesson that there is no surer way of losing the blessings of liberty than by meekly submitting to gradual encroachments, under color of law, and that no better instrument could be employed for that purpose than a weak, timid and subservient judiciary. On the other hand, they were accustomed to look upon the courts, in this government of laws, as the strongest bulwark which they could devise to stand between them and those who would oppress them.

There is another section of the Constitution which may throw some light on the question now in hand. Article 1, § 8, provides:

"The legislative, executive and supreme judicial powers of the government ought to be forever separate and distinct from each other."

This has been said to embody succinctly the judgment of the people of North Carolina in regard to "the great principle of the separation of the powers." In this country those who make...