Ludlow-Saylor Wire Company v. Wollbrinck

• Decision Date: 15 July 1918
• Citation: 205 S.W. 196,275 Mo. 339
• Parties: LUDLOW-SAYLOR WIRE COMPANY, Appellant, v. LOUIS WOLLBRINCK, Assessor
• Court: Missouri Supreme Court

205 S.W. 196

275 Mo. 339

LUDLOW-SAYLOR WIRE COMPANY, Appellant, v. LOUIS WOLLBRINCK, Assessor

Supreme Court of Missouri

July 15, 1918

Appeal from St. Louis Circuit Court. -- Hon. Wilson A. Taylor Judge.

Affirmed.

Joseph W. Folk and Spencer & Donnell for appellant; Alexander G Cochran of Counsel.

(1) Although the Missouri statute is taken almost bodily from the Federal Act of 1913, the fact that the validity of the Federal Act has been affirmed does not affirm the validity of the Missouri statute. Brushaber v. Railroad, 240 U.S. 1; Pollock v. Farmers' Loan & Trust Co., 157 U.S 429, 557; License Tax Cases, 5 Wall. 462, 471; Knowlton v. Moore, 178 U.S. 41; State v. Frear, 148 Wis. 456; Campbell v. Shaw, 11 Hawaii 112; Alderman v. Wells, 85 S.C. 507. (2) The Missouri Income Tax is a tax on property. (a) Income is property. Stratton's Independence v. Howbert, 231 U.S. 415; Opinion of Justices, 220 Mass. 624. (b) The Supreme Court of the United States has expressly decided that, so far as a tax is levied on income derived from either real estate or personal property as distinguished from income derived from professions and vocations, it is a tax on property, to-wit, a tax on the real estate or personal property from which the income is derived. Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 158 U.S. 601; Brushaber v. Railroad, 240 U.S. 1; Knowlton v. Moore, 178 U.S. 41; Flint v. Stone Tracy Co., 220 U.S. 107; Opinion of Justices, 220 Mass. 613; State v. Frear, 148 Wis. 456. (c) The Missouri law applies, not only to income from professions and vocations, but also to income from real estate and from personal property, and is therefore a tax on property. Sec. 2, p. 525, Laws 1917; Sec. 7, p. 528, Laws 1917. (3) Inasmuch as the Missouri income tax is a tax on property, the statute is unconstitutional because it violates Section 4 of Article 10 of the Constitution of Missouri, which provides that "all property subject to taxation shall be taxed in proportion to its value." Life Association v. Assessor, 49 Mo. 512; Hamilton v. County Court, 15 Mo. 3; State v. Bengsch, 170 Mo. 81; Parker v. Insurance Co., 42 La. Ann. 428; State v. O'Brien, 89 Mo. 631; Sec. 30, Declaration of Rights, Constitution of 1865; Constitutional Debates of Missouri, 1875, proceedings of 56th day, pp. 14, 15, 16, 24, 41, 45, 55, 58, 86, 87, 93, 142, 149, 178, 179, 184, 186, 187, 203, 204, 217; 57th day, pp. 27, 32; Sec. 8, p. 529, Laws 1917; Sec. 32, p. 538, Laws 1917; Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 158 U.S. 601; State v. Frear, 148 Wis. 45, 26 Am & Eng. Ann. Cas. 1147; Constitution of Wisconsin, Art. 8. (4) Inasmuch as the Missouri income tax is a tax upon property, the statute is unconstitutional because it violates Sections 6 and 7 of Article 10 of the Constitution of Missouri, which strictly limit the power of the Legislature to exempt property from taxation, and provide that "all laws exempting property from taxation other than the property above enumerated shall be void." State v. Bengsch, 170 Mo. 81; State v. Casey, 210 Mo. 235. (5) The Legislature was without power to pass the Income Tax Law, which as above stated, is a tax on property, because it had previously provided for a 15-cent levy per $ 100, which exhausted its constitutional authority. Sec. 8, Art. 10, Mo. Constitution; Sec. 11415, R. S. 1909; Pollock v. Farmers' Trust Co., 157 U.S. 429, 158 U.S. 601. (6) Whether the Missouri income tax is technically a tax on property or not, it is violative of the Constitution of Missouri and therefore void because it lacks uniformity within the meaning of Section 3 of Article 10 of the Constitution. Constitutional Debates of Missouri, 1875: 56th day, pp. 6, 132, 178, 184, 185, 217, 231, 285, 286, 312, 313, 322; 57th day, pp. 2, 27, 32; Constitution of 1865, Section 30, Declaration of Rights; St. Louis v. Speigel, 75 Mo. 145; Kansas City v. Whipple, 136 Mo. 475; City of St. Louis v. Spiegel, 90 Mo. 587; Kansas City v. Grush, 151 Mo. 128; State ex rel. v. Ashbrook, 154 Mo. 375; State ex rel. v. Switzler, 143 Mo. 287; Judson on Taxation in Missouri, pp. 128, 131; Sec. 1, Art. 9, Constitution of Pennsylvania; In re Cope's Estate, 191 Pa. 21; Sec. 6, Laws 1917, p. 527; State v. Distilling Company, 236 Mo. 219; State v. Bixman, 162 Mo. 1; Gray on Limitations of Taxing Power, sec. 1608; Welton v. Missouri, 91 U.S. 275; Brown v. Maryland, 12 Wheat. 425; Opinion of Justice Field in Pollock v. Farmers' Loan & Trust Company, 157 U.S., l. c. 607 and 596; Sec. 32, Laws 1917, 538; Opinion of Justice Field in Pollock v. Farmers' Loan & Trust Company, 157 U.S. l. c. 595 and 597; State v. Miksicek, 225 Mo. 561; State ex rel. v. Plank Road Company, 11 Wis. 40; Alderman v. Wells, 85 S.C. 507, 517; St. Louis v. U. Rys. Co., 263 Mo. 449; State v. Julo, 129 Mo. 177; Campbell v. Shaw, 11 Hawaii 112; Peacock v. Pratt, 121 F. 772. (7) Whether it is technically a tax on property or not the Missouri Income Tax Law is void for the reason that the act surrenders or suspends the power to tax corporations. Sec. 2, Art. 10, Mo. Constitution. (8) Inasmuch as the Income Tax Law of Missouri is a tax on receipts from interstate commerce, it is void as a tax on interstate commerce. Leloup v. Port of Mobile, 127 U.S. 640; Galveston Ry. Co. v. Texas, 210 U.S. 217; Crew Levick Co. v. Pennsylvania, 245 U.S. 292; Oklahoma v. Wells Fargo Co., 223 U.S. 298; Minnesota Rate Cases, 230 U.S. 400; Philadelphia S. S. Co. v. Pennsylvania, 122 U.S. 326; Kansas City Ry. v. Kansas, 240 U.S. 231; Lowney v. Crane Co., 245 U.S. 178; Cooley on Taxation (3 Ed.), p. 155; Black on Income Taxes (2 Ed.), p. 251; U. S. Express Co. v. Minnesota, 223 U.S. 344; Atlantic Tel. v. Philadelphia, 190 U.S. 1; Baltic Mining Co. v. Massachusetts, 231 U.S. 83; St. Louis v. United Railways Co., 263 Mo. 387; Sections 1 and 7, Laws 1917, pp. 524, 528; Express Co. v. City of Joseph, 66 Mo. 675; Erie Railroad Co. v. Pennsylvania, 158 U.S. 431; State Freight Tax Case, 15 Wall. 232.

Frank W. McAllister, Attorney-General, John T. Gose, Assistant Attorney-General, Charles H. Daues, H. A. Hamilton, Frederick N. Judson, of Counsel, for respondent.

(1) The State Income Tax is not a property tax in the constitutional sense and the provisions of the Constitution relate only to ad valorem property taxation. Glasgow v. Rowse, 43 Mo. 479; Black on Income Taxes, (3 Ed.), p. 2, sec. 36; Cooley on Taxation, (3 Ed.), p. 10; 37 Cyc. 759-766; Waring v. Savannah, 60 Ga. 93; Codman v American Piano Co., 118 N. E. (Mass.) 344; Woodruff v. Oswego Starch Co., 74 N.Y.S. 961, 77 N.Y. 23; Drexel v. Commonwealth, 46 Pa. St. 31; Burlington v. Insurance Co., 31 Ia. 103; Peacock v. Pratt, 121 F. 772; Alderman v. Wells, 86 S.C. 507; State ex rel. Bolens v. Frear, 148 Wis. 456, L. R. A. 1915-B, 569; Levi v. Louisville, 97 Ky. 394; Am. Express Co. v. St. Joseph, 66 Mo. 675. (2) The State taxing power is inherent and incident to sovereignty, and is not a constitutional grant. Glasgow v. Rowse, 43 Mo. 479; American Express Co. v. St. Joseph, 66 Mo. 675; Express Co. v. Seibert, 44 F. 310, 142 U.S. 339; Hannibal & St. Joe Railroad Co. v. Board of Equalization, 69 Mo. 307; State ex rel. v. Burton, 266 Mo. 711; Mutual Reserve Life Assn. v. Augusta, 109 Ga. 73; Scottish Union Ins. Co. v. Herriott, 109 Ga. 606; State v. Philadelphia Railroad Co., 45 Md. 61; State v. North Central Railroad Co., 44 Md. 131, 37 Cyc. 732; Parker v. Insurance Co., 42 La. Ann. 429; Kansas City v. Whipple, 136 Mo. 435; R. S. 1909, secs. 10471-10480; City of St. Louis v. Sternberg, 69 Mo. 301; City of Aurora v. McGannon, 138 Mo. 438; City of St. Louis v. Baskowitz, 201 S.W. 870; City of St. Louis v. United Railways Co., 263 Mo. 439; In re Sanford, 263 Mo. 634; City of St. Louis v. McCann, 57 Mo. 307; City of St. Joseph v. Ernst, 94 Mo. 360; City of Richmond v. Creel, 253 Mo. 256. (3) "Direct Tax" and property tax distinguished. Glasgow v. Rowse, 43 Mo. 479; 37 Cyc. 714-759-766; Pingree v. Auditor General, 120 Mich. 95; Drexel v. Commonwealth, 47 Pa. 31; New Orleans v. Fourchy, 30 La. 910; Levi v. Louisville, 97 Ky. 394; Cooley on Taxation (3 Ed.), p. 10. (4) Federal and State taxation distinguished, and the rulings as to Federal taxation immaterial. Income Tax Cases, 157 U.S. 429, 158 U.S. 601; Knowlton v. Moore, 178 U.S. 41; Flint v. Stone Tracy Co., 220 U.S. 107; State ex rel. Bolens v. Frear, 148 Wis. 456. (5) The decision in Glasgow v. Rowse sustaining the constitutionality of the income tax in Missouri is decisive of the case at bar. This case has been repeatedly cited and followed as a leading case both in this State and elswhere. Glasgow v. Rowse, 43 Mo. 479; North Missouri R. Co. v. Maguire, 49 Mo. 500; American Express Co. v. City of St. Joseph, supra; City of St. Louis v. Sternberg, 69 Mo. 301; City of St. Louis v. Spiegel, 75 Mo. 146; City of St. Louis v. Bowler, 94 Mo. 630; City of St. Joseph v. Ernst, 95 Mo. 367; Kansas City v. Whipple, 136 Mo. 479; City of Aurora v. McGannon, 138 Mo. 438; State v. Bengsch, 170 Mo. 109; In re Sanford, 236 Mo. 695; City of St. Louis v. United Railways Co., 236 Mo. 449; State ex rel. v. Burton, 266 Mo. 719; St. Louis v. Green, 7 Mo.App. 473; Kansas City v. Richardson, 90 Mo.App. 456; City of Fayetteville v. Carter, 6 L. R. A. (Ark.) 509; Short v. Maryland, 80 Md. 392, 29 L. R. A. 404; Cooley on Taxation (3 Ed.), pp. 310-364-512; 37 Cyc. 732-759; Black on Income Taxes (3 Ed.), pp. 6 and 12. (6) Incidental duplicate taxation no legal objection to the income tax. 1 Desty on Taxation, p. 203; Cooley on Taxation (3 Ed.), sec. 387 et seq.; 37 Cyc. 579; St. Louis Mut. Life Ins. Co. v. Board of Assessors, 56 Mo. 506; Woodruff v. Oswego Starch Co., 177 N.Y. 28; City of St. Louis v. Baskowitz, 201 S.W. 870; Income Tax Act of 1865. (7) Income...