Ludlow-Saylor Wire Co. v. Wollbrinck

Decision Date28 June 1918
Docket NumberNo. 20788.,20788.
Citation205 S.W. 196,275 Mo. 339
CourtMissouri Supreme Court

Appeal from St. Louis Circuit Court; Wilson A. Taylor, Judge.

Suit by the Ludlow-Saylor Wire Company against Louis Wollbrinck, assessor of the city of St. Louis. A demurrer to the petition was sustained and judgment dismissing the petition was rendered on plaintiff not pleading further, and he appeals. Affirmed.

Joseph W. Folk and Spencer & Donnell, all of St. Louis (Alexander G. Cochran, of St. Louis, of counsel), for appellant. Frank W. McAllister, Atty. Gen., John T. Gose, Asst. Atty. Gen., and Charles H. Danes, City Counsellor, and II. A. Hamilton, Asst. City Counsellor, both of St. Louis (Frederick N. Judson, of St. Louis, of counsel), for respondent.



I. Plaintiff, a business corporation, during the last half of the calender year of 1917, earned a net income subject to taxation under an act of the Legislature approved April 12, 1917. Laws 1917, p. 524 et seq. Being cited to make a return of its said income, it refused, and brought this suit to enjoin the enforcement of said act as being violative of the state and federal Constitutions, making the assessor of the city of St. Louis a party defendant. A general demurrer to the petition was sustained, whereupon, plaintiff not pleading further, a judgment dismissing its petition was rendered, from which this appeal was prosecuted.

II. The federal act of 1913 (Act Oct. 3, 1913, c. 16, 38 Stat. 114), taxing incomes, was sustained after an amendment of the Constitution of the United States which excluded "taxes on incomes" however derived from the effect of a prior ruling of the Supreme Court of the United States, holding that such taxes should not be laid without apportionment among the several states. Brushaber v. Un. Pac. Ry., 240 U. S. loc. cit. 17 et seq., 36 Sup. Ct. 236, 60 L. Ed. 493, L. R. A. 1917D, 414, Ann. Cas. 1917B, 713; Pollock v. Farmers' Loan & Trust Co., 157 U. S. 581, 15 Sup. Ct. 673, 39 L. Ed. 759; Id., 158 U. S. 637, 15 Sup. Ct. 912, 39 L. Ed. 1108. The Sixteenth Amendment of the Constitution of the United States, permitting Congress to levy income taxes without apportionment, was a reversal, by organic law, of the ruling of the Supreme Court of the United States to a contrary effect, which had only been made in the first instance by a bare majority of the Justices of that court against the weight of the dissent of the present Chief Justice and three Associate Justices. The federal Income Tax, thus upheld, is the copy from which the various provisions of the act of the Missouri Legislature were "almost bodily" taken. The decision of the Supreme Court of the United States, that the act of Congress taxing incomes was (after the passage of the Sixteenth Amendment of the federal Constitution) constitutional, is not an authority touching the contention, that the act of the Missouri Legislature now under review, is in violation of the Constitution of that state; since the provisions of the two Constitutions with reference to taxation are not the same. But that decision of the Supreme Court of the United States is persuasive authority that the various provisions of discrimination and classification common to the two acts are not in and of themselves obnoxious to the "due process" clause of the federal Constitution, since it was held that the federal act did not offend that safeguard in the federal Constitution. The pivotal points presented by this appeal are, therefore, whether the act of the Missouri Legislature had overridden the Constitution of that state in the various respects claimed on behalf of plaintiff below and appellant here.

Prefatory to a discussion of these, it is well to note the true function of the Legislature as the representative of the people, in the enactment of laws for their government, and its true relation to the Constitution of the state. That it is vested, in its representative capacity, with all the primary power of the people, unless fettered by the Constitution, is a proposition which is the corner stone of our state government, and one whose stability is unquestionable, and which has been enunciated by this court whenever the relation of the Legislature to the Constitution was held in judgment. This greater power and amplitude of action is a characteristic distinction between the Legislature, having full authority as the direct representative of the primary power of the people to enact any and all laws when not re"strained by the Constitution, and the Congress of the United States, whose authority to act is confined to the terms of the grant thereof contained in the federal Constitution.

The government of this state is a representative republic, in which all the power to make laws in the name and with the authority of its constituent elements—its citizens en masse—is lodged in the temporary Legislature, subject only to the restraining clauses of the Constitutions of the state and nation. Upon this principle is founded the inherent power of that body to legislate at will on any subject and to any extent when, in so doing, neither the state nor the national Constitution is overridden. Unitea States Glue Co. v. Town of Oak Creek, 247 U. S. 321, 38 Sup. Ct. 499, 62 L. Ed. 1135; Pitman v. Drabelle, 267 Mo. loc. cit. 84, 183 S. W. 1055; Harris v. Bond Co., 244 Mo. loc. cit. 687, 149 S. W. 603; McGrew v. Paving Co., 247 Mo. loc. cit. 570, 155 S. W. 411; Ex parte Roberts, 166 Mo. loc. cit. 212, 65 S. W. 726; State ex rel. v. Pub. Serv. Com., 270 Mo. loc. cit. 559, 194 S. W. 287.

As an obvious sequence of the power thus vested in the Legislature, the rule is established, in dealing with constitutional restrictions, that they shall not be held to apply, if any reasonable doubt as to their repugnancy to the act under review, can exist in the judicial mind. Under the guidance of these principles, it becomes necessary to inquire in what manner and to what extent the Constitution has restrained the power of the Legislature in the vital matter of providing by taxation for the support of the government of the state. The particular provision of the Constitution relied on to support the errors assigned on this appeal are sections 2, 3, 4, 6, 7, 8, art. 10, pp. 117, 118, 119, of the Constitution of 1875.

The appellant contends that the act under review (Laws 1917, p. 524 et seq.), in taxing incomes, thereby imposed a tax on property in contravention of section 4, supra, in that by the terms of the act the tax was not laid in proportion to value. This precise point, under a substantially similar provision of the Constitution then in existence, was presented for adjudication in Glasgow v. Rowse, 43 Mo. 479, and thus dealt with by Wagner, J., in an opinion concurred in by Bliss and Currier, JJ. In disposing of it the court said:

"The power to tax rests upon necessity, and is inherent in every sovereignty. The Legislature of every state possesses it, whether particularly specified in the Constitution as a grant of power to be exercised or not. In reference to taxation, the Constitution is not so much to be regarded a grant of power as a restriction or limitation of power. * * * There are three general classes of direct taxes: Capitation, having effect solely upon persons; ad valorem, having effect solely upon property; and income, having a mixed effect upon persons and property. The argument of the plaintiff's counsel proceeds on the hypothesis that every species of tax comes within the constitutional prohibition. This is a mistake. The whole practice of the state has been different, and it has never been challenged, nor could it be, on legal principles. The statutes provide for a poll tax, which is in violation of the ad valorem rule, and is unequal, yet it is clearly within the Constitution. A license is imposed on shows, peddlers, auctioneers, dramshops, and billiard tables, all of which taxes are in violation of the ad valorem principle, but not therefore unconstitutional. The taxes imposed are uniform as to the particular classes, but not in proportion to the taxes assessed on other property. The Constitution enjoins a uniform rule as to the imposition of taxes on all property, but does not abridge the power of the Legislature to provide for a revenue from other sources. It was intended to make the burdens of government rest on all property alike—to forbid favoritism and prevent inequality. Outside of the constitutional restriction, the Legislature must be the sole judge of the propriety of taxation, and define the sources of revenue as the exigency of the occasion may require. The income tax was uniform and equal as to the classes upon whom it operated; it did not come within the meaning of the term `property' as used and designated in the Constitution, and I think it was not in conflict with any provision of that instrument." Glasgow v. Rowse, 43 Mo. loc. cit. 489, 490, 491.

The reasoning and conclusion of the court in the above case has never been disapproved in this state, and has been extensively cited and approved in other states and in text-books, as shown in the brief of respondent. It is predicated upon a distinction made by the court as to the application of the term "property" used in the Constitution.

In law and in the broadest sense "properey" means "a thing owned," and is, therefore, applicable to whatever is the subject of legal ownership. It is divisible into different species of property, including physical things, such as lands, goods, money; intangible things, such as franchises, patent rights, copyrights, trade-marks, trade-names, business good will, rights of action, etc. In short it embraces anything and everything which may belong to a man and in the ownership of which he has a right to be protected by' law. The court held, in effect that in directing, as the Constitution does, that taxes on property...

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