Moeller, McPherrin & Judd v. Smith

• Decision Date: 18 June 1934
• Docket Number: 29255
• Citation: 255 N.W. 551,127 Neb. 424
• Parties: MOELLER, MCPHERRIN & JUDD, PLAINTIFF, v. WILLIAM H. SMITH, STATE TAX COMMISSIONER, ET AL., DEFENDANTS
• Court: Nebraska Supreme Court

255 N.W. 551

127 Neb. 424

MOELLER, MCPHERRIN & JUDD, PLAINTIFF, v. WILLIAM H. SMITH, STATE TAX COMMISSIONER, ET AL., DEFENDANTS

No. 29255

Supreme Court of Nebraska

June 18, 1934

Original action, under the uniform declaratory judgments act to determine the validity of chapter 156, Laws 1933 pertaining to taxation of personal property. Judgment for plaintiff.

JUDGMENT FOR PLAINTIFF.

Syllabus by the Court.

1. Any taxpayer who has an actual and justiciable controversy with other parties in volving his status or rights, as affected by any Nebraska law, is entitled, under the Uniform Declaratory Judgments Act, to have determined such questions, involving his legal relations, as relate to the validity or construction of said law.

2. This court will take judicial notice of the proceedings of the constitution conventions of this state, and also of the journals of the Senate and House of our Legislature.

3. An act must not be broader than its title, and where the subject of the legislation is not clearly expressed in the title, the act will be in contravention of section 14, art. 3 of the Constitution.

4. Where the title to a bill is to amend a particular section of an act, no amendatory legislation, not germane to the subject of the section proposed to be changed, is permissible.

5. Classifications for taxation purposes must be based on a real and substantial difference having a reasonable relation to the subject of the particular legislation.

6. House Roll No. 9 (Laws 1933, c. 156) violates section 1, art. 8 of the Constitution (as amended in 1920), which provides that taxes shall be levied by valuation, uniformly and proportionately, upon all tangible property, and thereby discriminates between taxpayers.

7. When sections of a legislative act are unconstitutional, and such sections were an inducement to the passage of an act in its entirety, then the entire act is void, notwithstanding a saving clause therein.

8. The Legislature has the power and authority to define words used in any act to clarify the meaning and purpose of the act.

9. This power is, however, limited, and subject to a reasonable construction. It cannot be used to nullify and circumvent provisions of the Constitution by the simple expedient of defining terms used therein in an arbitrary, wrong and improper manner not in accord with standard dictionaries, or common usage.

10. A saving clause, providing that, in case any part shall be found unconstitutional, it shall not affect the validity of the remaining portions of the act, is simply a declaration of legislative intent as to separability. This is an aid to judicial interpretation, but is not in any sense an inexorable command.

11. Where the title states that the subject of an act is to amend one section of a former statute, the act cannot be extended to the amendment of other sections.

12. Where the title of a bill is to repeal certain sections of a statute, the Legislature cannot by said bill re-enact the substance of the sections so declared repealed in the title, nor can amendments be made to the sections declared to be repealed.

13. It is admitted that the penalty provided in section 11 of the act is not mentioned in the title of the act. This, we have held, is not a defect unless the penalty covers the punishment of matters not indicated, nor within the contemplation of anything set out in the title of the act, which is true of section 11 herein.

Original action by Moeller, McPherrin & Judd, a copartnership, against William H. Smith, State Tax Commissioner, and another.

Judgment for plaintiff.

Shotwell, Monsky, Grodinsky & Vance, for plaintiff.

Paul F. Good, Attorney General, Daniel Stubbs and Henry J. Beal, for defendants.

Jessen & Dierks, Robert G. Simmons, Hall, Cline & Williams and Clarence T. Spier, amici curiae.

Heard before GOSS, C. J., ROSE, GOOD, EBERLY, DAY and PAINE, JJ., and LIVINGSTON, District Judge. Good and EBERLY, JJ., concur in the result.

OPINION

PAINE, J.

This is an original action, brought in this court under the uniform declaratory judgments act, as approved April 24, 1929, and found in chapter 75, Laws 1929, sections 20-21,140 to 20-21,155, Comp. St. 1929.

It was instituted, upon leave granted by this court, by Moeller, McPherrin & Judd, a copartnership, of Omaha, against William H. Smith, state tax commissioner, and Sam K. Greenleaf, county assessor of Douglas county, and an order for service required defendants to answer within ten days.

The petition recites in detail certain personal property, such as common stock, notes, book accounts, bank deposits, owned by the plaintiff, and subject to taxation. It then sets out in detail the title and contents of House Roll No. 9, being chapter 156, Laws 1933, and alleges that many taxpayer corporations, partnerships, and individuals in the state occupy a similar position to that of the plaintiff herein, and to permit the officials of Douglas county, and of all the other counties in our state, to assess and levy such illegal taxes upon personal property, in conformity with the provisions of said House Roll No. 9, will create a multiplicity of actions to secure the removal of the clouds upon the title and property so taxed; that every county in the state is contracting and undergoing great expense to secure the returns based upon the provisions of the said House Roll No. 9, and will undergo additional expense in computing and recording the returns made under the provisions of House Roll No. 9; that it is of great public interest that the constitutionality of said House Roll No. 9 be passed upon by this court at the earliest possible moment in order that the plaintiff and other persons, partnerships, and corporations, similarly situated in the state of Nebraska, be saved from irreparable harm and injury that will be suffered by them unless the relief prayed is granted.

The plaintiff claims that, as a taxpayer whose rights, status, or other legal relations are affected by House Roll No. 9, it is entitled, under the uniform declaratory judgments act, to have determined in this action the validity, force, and effect of said law, and to obtain a declaration of its rights, status, or other legal relations thereunder. Plaintiff prays that this court decree that House Roll No. 9 is unconstitutional, null and void, and of no force and effect.

The answer of William H. Smith was filed by the attorney general, admitting certain paragraphs of the petition, and admitting that defendant will proceed to assess the property of plaintiff, and all others similarly situated, in accordance with House Roll No. 9, and that such assessment will be used by the taxing officials in making the levy for taxation purposes for the year 1934, and denies all allegations not admitted.

The plaintiff thereupon filed a motion, setting forth that the defendant by his answer admitted all of the essential allegations of fact set out in the petition, and moved the court for judgment on the pleadings, as prayed in plaintiff's petition.

This action relates to the public revenue of the state, and also of all of its governmental subdivisions. The answer filed by the defendants leaves, as the only issue to be decided by this court, the constitutionality of said House Roll No. 9.

This court has held that the uniform declaratory judgments act was applicable to actions wherein there was an actual controversy with justiciable issues presented by proper parties, such as appear in this case. Lynn v. Kearney County, 121 Neb. 122, 236 N.W. 192. In Muskegon Heights v. Danigelis, 253 Mich. 260, 235 N.W. 83, two of the principal taxpayers were drafted to defend an action brought by the city under the declaratory judgments act. See, also, Zoercher v. Agler, 202 Ind. 214, 172 N.E. 186.

All real and personal property was required to be taxed, uniformly as to rate and as to valuation, prior to the new Constitution of 1920. State v. Osborn, 60 Neb. 415, 83 N.W. 357. By an amendment in 1920, the Constitution was changed to read: "But taxes shall be levied by valuation uniformly and proportionately upon all tangible property and franchises and taxes uniform as to class may be levied by valuation upon all other property." Const. art. VIII, sec. 1.

This provision was obviously intended to separate tangible from intangible property for the purpose of taxation, and would permit a different rate of taxation upon tangibles. The high taxation on tangible property offered inducement to allow intangibles to be covered up and escape any taxation, so the constitutional convention endeavored to permit a lower taxation on intangibles.

The 1921 legislature promptly took advantage of this constitutional enactment to define tangible property as that having physical existence, excluding money, and to declare that all other personal property, including money, was intangible personal property, and fixed different rates of taxation for the two kinds. Comp. St. 1929, sec. 77-104.

In 1925 the legislature provided for the taxation of all money and bank deposits at one rate, 2.5 mills, and class B intangibles at a higher rate. Laws 1925, ch. 165. The legislature of 1929 raised class B intangibles to 8 mills. Laws 1929, ch. 168.

House Roll No. 9 raises taxation on money to 5 mills, and provides that all other personal property, except bank shares, shall be taxed at the same rate as real property. Many of the members of the 1933 legislature desired to repeal the intangible tax law then in existence, but when such a bill was before them, it failed of passage; then followed certain amendments and modifications designed to change the intangible tax law, and the result is House Roll No. 9, now under consideration. Upon its passage, several members refused to support...