Ludwig v. Harston

• Decision Date: 31 August 1948
• Docket Number: 2398
• Citation: 65 Wyo. 134,197 P.2d 252
• Parties: RICHARD LUDWIG, DBA LUDWIG SUPER MARKET, Plaintiff and Appellant, v. GEORGE B. HARSTON, State Commissioner of Agriculture, for the State of Wyoming, Defendant and Respondent
• Court: Wyoming Supreme Court

197 P.2d 252

65 Wyo. 134

RICHARD LUDWIG, DBA LUDWIG SUPER MARKET, Plaintiff and Appellant, v. GEORGE B. HARSTON, State Commissioner of Agriculture, for the State of Wyoming, Defendant and Respondent

No. 2398

Supreme Court of Wyoming

August 31, 1948

Action under the Uniform Declaratory Judgment Act by Richard Ludwig doing business as Ludwig Super Market, against George B Harston, State Commissioner of Agriculture for the State of Wyoming, for a declaration that the law imposing a sales tax on oleomargarine is unconstitutional. From a judgment upholding the constitutionality of the act, the plaintiff appeals.

Affirmed.

For plaintiff and appellant the cause was submitted on the brief of Loomis and Lazear of Cheyenne, Wyoming and Mr. A. M Gilbert of New York City and oral argument by Mr. Lazear and Mr. Gilbert.

POINTS OF COUNSEL FOR APPELLANT.

Oleomargarine as taxed is identical with the variety not taxed. The significant and vital point in the instant case is that all oleomargarine is identical. The product which the Legislature arbitrarily defines and calls "vegetable oleomargarine" and which it arbitrarily taxes ten cents per pound, is substantially identical with the margarine which is not taxed.

The classification must be reasonable in view of the object sought to be accomplished. The discrimination must rest upon some reasonable ground of difference between the persons or things included and those excluded, having regard to the purpose of the legislation, and within the sphere of its operation, the statute must affect all persons similarly situated. The constitutional requirement of uniformity in the case of a general law is complied with if it operates alike upon all persons or property under the same circumstances and conditions. State v. Sherman, 18 Wyo. 169, 176, 105 P. 299, 300.

The constitutional requirement merely obliges the Legislature to impose an equal burden upon all those who find themselves in the same class. State v. Willingham, 9 Wyo. 290 294, 62 P. 797, 798.

There must be a substantial distinction having reference to the subject matter of the proposed legislation, between the objects or places embraced in such legislation, and the objects or places excluded. The marks of distinction on which the classification is founded must be such in the nature of things as will, in some reasonable degree, at least, account for or justify the restriction of the legislators. Standard Cattle Co. v. Baird, 8 Wyo. 144, 156, 56 P. 598, 600. State v. LeBarron, 24 Wyo. 519, 526, 162 P. 265, 266. State v. City of Sheridan, 25 Wyo. 347, 364, 170 P. 1, 5.

There are only two state court decisions, one in Georgia decided in 1936, and one in Nebraska decided in 1945, on this proposition. The Georgia case is Coy v. Linder, 183 Ga. 583, 189 S.E. 26. And the Georgia court said: --In the testimony in this case it is shown that there is a substantial difference between oleomargarine of the taxed and untaxed varieties. The varieties are different in their spreadability, in nutrition, in their response to temperature, in their frying qualities, and their reaction to the taste, and in other respects pointed out by the witnesses.

The Georgia court had before it a record which, as the court said, showed that there was a substantial difference between the taxed articles, and the ones that were not taxed, since they differed in many important respects.

The Nebraska case Thorin v. Burke, 146 Neb. 94, 18 N.W.2d 664 was decided by the Nebraska Supreme Court on May 11th, 1945. Under the Nebraska statute, in order to be tax-free, the oleomargarine had to contain more than fifty per cent of animal fats and, furthermore, had to contain no imported fats. Under the Wyoming statute, in order to be tax-free, the oleomargarine must contain twenty or more per cent of animal fats. As the Nebraska court said a margarine containing fifty-one percent of animal fats and the balance containing domestic cottonseed oil is nontaxable. A margarine containing forty-eight percent of animal fats and the balance domestic vegetable oil, under this act, is taxable, and yet the two finished products are identical.

The record in the Nebraska case like that in the instant case finds there was no difference between that which was and that which was not taxed; and the Nebraska court said: --The record conclusively shows that the classification attempted on the basis of benefits received and objects to be accomplished does not rest upon any real differences in situation and circumstances from others within the class. In the absence of some real and substantial distinction which bears a reasonable, just and proper relation to the objects sought to be accomplished, a tax levied upon a part of those within the same class cannot be sustained. The classification and the object to be accomplished must be germane.

For the defendant and respondent the cause was submitted on the brief of Norman B. Gray, Attorney General, John S. Miller, Deputy Attorney General and Marion R. Smyser, Assistant Attorney General all of Cheyenne, Wyoming and oral argument by Mr. Miller.

POINTS OF COUNSEL FOR RESPONDENT

A law framed in general terms, restricted to no locality, and operating equally upon all of a group of objects, which having regard to the purpose of the Legislature are distinguished by characteristics sufficiently marked and important to make them a class by themselves, is not a special or local law, but a general law. Standard Cattle Company v. Baird, 8 Wyo. 144, 157; 56 P. 598; State v. Willingham, 9 Wyo. 290, 294, 62 P. 797, 52 L. R. A. 198; Unemployment Compensation Commission, v. Renner, 59 Wyo. 437, 143 P.2d 181.

The Wyoming Legislature, in enacting this statute, was using the taxing power of the State in aid of one of its basic industries. It is a matter of common knowledge that the raising of live stock is a pursuit in which many people of this region are engaged. The products of that industry are sold to produce much of Wyoming wealth.

The greatest industry in the State of Wyoming is agriculture and its kindred activity, the raising of live stock. They pay more taxes, employ more people and wield the greatest influence on our political, economic and social life. Governor's Address to the Legislature, Sen. Journal, 1945, p. 27.

It appears, that fearful of the declining use of animal products in this industry and the effect such a decline would have upon the market for a basic Wyoming commodity, the Legislature used the device of taxation to hold out to the manufacturer an incentive to continue his use of animal products at the then present ratio. This is a reasonable exercise of the Legislative function of classification for purposes of taxation. Alaska Fish Salting & By-Products v. Smith, 255 U.S. 44, 41, S.Ct. 219, 65 L.Ed. 489.

Where the public interest is served one business may be left untaxed, in order to promote the one * * * or to restrict or suppress the other. * * * The legislature may withhold the burden of the tax in order to foster what it conceives to be a beneficent enterprise. Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 81 L.Ed. 1245, 57 S.Ct. 868, 109 A. L. R. 1327.

Whatever a state may forbid or regulate, it may permit upon condition that a fee be paid in return for the privilege, and such a fee may be exacted to discourage the prosecution of a business or to adjust competitive or economic inequalities. Taxation may be made the implement of the exercise of the state's police power; and proper and reasonable discrimination between classes to promote fair competitive conditions and the equalized economic advantages is therefore lawful. Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 81 L.Ed. 1193, 57 S.Ct. 772, 112 A. L. R. 293.

The question of the propriety of a classification is largely one for the Legislature. The courts may not declare a particular classification unreasonable unless the classification made cannot be justified on any reasonable grounds. Asotszky v. Beach, 319 Mo. 810, 5 S.W.2d 22, 62 A. L. R. 95.

A safe guide to determine the validity of a taxing statute is an inquiry into contemporary condition, political, industrial and social of the community at whose suggestion the statute was promulgated. The power of the state to classify for purposes of taxation is of wide range and flexibility, provided that the classification must be reasonable, not arbitrary, and rests on some ground of difference having a fair and substantial relation to the object of the Legislature. Gray v. Florida Lumber Company, 104 Fla. 446, 140 So. 320.

RINER, Chief Justice. KIMBALL, J. and BLUME, concur.

OPINION

RINER, Chief Justice.

This direct appeal record is before us presenting the question whether the sales tax law on oleomargarine enacted by the Wyoming State Legislature in 1931 as Chapter 137, Laws of Wyoming for that year to take effect "from and after June 1, 1931" which has been operative in this state since that date and which now appears as Sections 32-2701 to 32-2706 inclusive, W.C.S. 1945, is constitutional. The district court of Albany County decided an affirmative of the question and Richard Ludwig, doing business as "Ludwig Super Market", plaintiff in that court alleging error brings the record here as the appellant for review as stated above. He will be usually referred to hereinafter as the "plaintiff". The defendant and respondent, the State Commissioner of Agriculture, charged by Section 32-2704 with the duty of enforcing the provisions of the Act, will usually be referred to subsequently as the "defendant". At the time of the institution of the suit the occupant of that office was A. D. Faville but he having since died, his successor, George B. Harston was duly substituted in his stead....