Palmer v. State Bd. of Assessment and Review
| Decision Date | 17 January 1939 |
| Docket Number | 44400. |
| Citation | 283 N.W. 415,226 Iowa 92 |
| Parties | PALMER v. STATE BOARD OF ASSESSMENT AND REVIEW et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Linn County; H. C. Ring, Judge.
Action in Equity in the nature of an appeal from an order of the State Board of Assessment and Review relative to income taxes. The opinion states the facts.
Reversed.
John H. Mitchell, Atty. Gen., and Clair E. Hamilton, of Winterset for appellants.
Grimm Elliott, Shuttleworth & Ingersoll, of Cedar Rapids, for appellee.
During the year 1934, appellee, Sadie W. Palmer, a resident of Iowa received the sum of $3000 as rent from real estate owned by her in the State of Illinois. Appellee did not include this item in her Iowa State Income Tax Return for the year 1934 and paid to the State of Iowa income tax computed only upon other income, contending that rent received from real estate outside of Iowa did not constitute taxable income within the purview of the Income Tax Statute. Said State Board thereafter notified the taxpayer that she would be assessed with additional income taxes for 1934, based upon the inclusion of the rent from the Illinois real estate, and upon appeal to said board by said taxpayer, her objections to the proposed additional assessment were overruled. Thereupon the taxpayer appealed to the district court from said order and ruling of said State Board, and upon trial the district court set aside the order of the State Board of Assessment and Review and decreed that the rent from the Illinois real estate was not taxable income. From said judgment and order of the district court the State Board of Assessment and Review has appealed.
The facts were stipulated and the only proposition presented to the court was whether or not the rent received by said resident taxpayer from real estate outside of the state was subject to taxation under the Iowa Income Tax Law.
The Net Income and Retail Sales tax law of Iowa was enacted in 1934, as Chapter 82 of the Laws of the 45th G.A., Extraordinary Session, and, together with a certain amendment immaterial to this case, is known as Chapter 329-f1, section 6943-f1 et seq., Code of Iowa 1935. In 1937, the Income Tax Law was amended by Chapter 184 of the Laws of the 47th G.A. The section of the statute relating to the question in controversy is Code Section 6943-f8, which reads in part as follows:
Both parties agree that the general rule for statutory construction in tax cases is against the taxing body. Gould v. Gould, 245 U.S. 151, 38 S.Ct. 53, 62 L.Ed. 211; In re Koss Construction Company, 214 Iowa 125, 241 N.W. 495; Hawkeye Life Insurance Company v. Munn, 223 Iowa 302, 272 N.W. 85.However, appellant contends that a different rule should apply in this case under the doctrine enunciated by Pacific Company v. Johnson, 285 U.S. 480, 52 S.Ct. 424, 76 L.Ed. 893; Hale v. Board of Assessment and Review, 223 Iowa 321, 271 N.W. 168, and other authorities which hold that grants of immunity from taxation, in derogation of a sovereign power of the state, are strictly construed against the taxpayer.
The reason upon which is founded the rule of construction urged by the appellant, Board of Review, is that a proviso or exemption in any statute in derogation of its general enacting clause must be strictly construed. United States v. Dickson, 15 Pet. 141, 10 L.Ed. 689.In the case at bar, however, the claim that the out of state rent is non-taxable is not a claim of exception or exemption under a proviso or exemption provision of the statute but is based upon the contention that it was not included in the general provisions of the statute. It is, therefore, manifest that the rule argued by appellant does not apply in this case. Therefore, if the section of the statute is subject to construction, it should be construed strictly against the state taxing body.
But is this statute subject to construction? One of the canons for statutory interpretation is that a statute is not to be read as though open to construction as a matter of course. Statutory construction may be properly invoked only when the legislative acts contain such ambiguities or obscurities that reasonable minds may disagree or be uncertain as to their meaning. Hahn v. Clayton County, 218 Iowa 543, 255 N.W. 695; Smith v. Sioux City Stock Yards Co., 219 Iowa 1142, 260 N.W. 531; Metropolitan Life Insurance Co. v. Reimer, 220 Iowa 1162, 263 N.W. 826.This rule is stated in 25 R.C.L., at pages 957, 958, as follows:
With this principle in mind let us examine the portions of Code Section 6943-f8 material to this case in order to determine whether it contains ambiguities which may reasonably require clarification or explanation. Subsection 1 of this statute defines gross income as that derived from various all inclusive sources, listing among other things income from real property, also specifically listing rent and then for the evident purpose of obviating any question as to its meaning it includes, " income derived from any source whatever" . The income is not limited as to location and the subsection contains no expression nor intimation of any limitation as to space or source. On the contrary it meticulously and repetitiously sweeps aside all exceptions and apparently attempts to cover every source of income from every place. To construe these...
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