Power, Inc. v. Huntley

Decision Date20 August 1951
Docket NumberNo. 31825,31825
Citation39 Wn.2d 191,235 P.2d 173
CourtWashington Supreme Court
PartiesPOWER, Inc. v. HUNTLEY et al., and four other cases.

Smith Troy,

Lyle L. Iverson, Olympia, for appellants.

E. W. Anderson, Olympia, appellant, pro se.

McMicken, Rupp & Schweppe and John N. Rupp, Seattle, for respondent Power Inc.

B. E. Lutterman, Chas. F. Hanson, Seattle, for respondent Chicago, M., St. P. & P. R. Co.

Thomas Balmer, R. Paul Tjossem, Seattle, for respondent Great Northern Ry. Co.

Dean Eastman, Harold G. Boggs, Seattle, for respondent Northern Pac. ry.

Skeel, McKelvy, Henke, Evenson & Uhlmann, Seattle, for respondent Union Pac. R. Co.

HILL, Justice.

Laws of 1951, Extraordinary Session, chapter 10, having passed the Senate April 3, 1951, and the House April 4, 1951, was approved by the governor April 16, 1951, with the exception of certain items which were vetoed. The title of the act is as follows: 'An Act providing for the support of the state government, making appropriations for salaries, operations, maintenance and other expenses of state institutions, departments and offices, for the purchase, condemnation and improvement of land, the construction of buildings and improvements for the various state institutions designated and mentioned, and for emergencies, and for refunds, and for the relief of certain individuals, corporations, counties and municipalities, and for transfers, and for deficiencies, and for appropriation of revolving funds, and for sundry civil expenses of the state government, and for public assistance, and for purposes specified in certain acts of congress, and for miscellaneous purposes, for the fiscal bienium beginning April 1, 1951, and ending March 31, 1953, except as otherwise provided, imposing an excise tax upon corporations, prescribing penalties, and declaring that certain parts of this act shall take effect immediately, and that certain other parts shall take effect May 1, 1951.'

This act will be referred to throughout this opinion as chapter 10.

The act is divided into two parts. The first two sections deal with appropriations. The third section reads: 'The remaining sections of this act shall constitute a new chapter under title 82, R. C. W., and shall be headed 'Corporation Excise Tax." And all of the sections thereafter, through § 44, deal with a tax on the net incomes of corporations. Section 7 reads in part as follows: '* * * (a) Tax on Corporations and Certain Banks. Every bank and corporation other than a federal savings and loan association or national banking association, for the privilege of exercising its corporate franchise in this state or for the privilege of doing business in this state, shall annually pay to the state, in addition of annual license fees, an excise tax according to, or measured by, its net income equal to four per cent of such net income for the preceding calendar year of fiscal year computed and allocated to this state in the manner hereinafter provided. * * *' (Italics ours.)

The forty-fifth and final section states that the act is necessary for the support of the state government, and provides that the first two sections shall take effect immediately and the remaining sections May 1, 1951.

The above named respondents, as plaintiffs in the trial court, made numerous atttacks on the constitutionality of chapter 10.

The trial court contented itself with holding that §§ 3 to 44, both inclusive, of chapter 10, purport to impose a tax upon the property of the respondents and other corporations, which tax is not imposed upon the property of either partnerships or individuals engaged in the same businesses, and for that reason is discriminatory and violates the fourteenth amendment to the state constitution. Art. VII, § 1, as amended. The trial court restrained the enforcement of §§ 3 to 44, inclusive.

With this holding of the trial court we are in accord. It is no longer subject to question in this court that income is property. Art. VII, § 1, of our state constitution, as amended in 1930, see amendment 14, provides that '* * * The word 'property' as used herein shall mean and include everything, whether tangible or intangible, subject to ownership. * * *' As said in Culliton v. Chase, 174 Wash. 363, 374, 376, 25 P.2d 81, 82:

'It would certainly defy the ingenuity of the most profound lexicographer to formulate a more comprehensive definition of 'property.' It is 'everything, whether tangible or intangible, subject to ownership.' Income is either property under our Fourteenth Amendment, or no one owns it. If that is true, any one can use our incomes who has the power to seize or obtain them by foul means. There being no other classifications in our Constitution but real and personal property and intangible property, incomes necessarily fall within the category of intangible property. No more positive, precise, and compelling language could have been used than was used in those words of our Fourteenth Amendment. It needs no technical construction to tell what those words mean. The overwhelming weight of judicial authority is that 'income' is property and a tax upon income is a tax upon property. * * * 'It has been definitely decided in this state that an income tax is a property tax, which should set the question at rest here. Aberdeen Savings & Loan Ass'n v. Chase, 157 Wash. 351, 289 P. 536, 290 P. 697, 71 A.L.R. 232.'

The same section of the constitution provides: '* * * All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax * * *.' Art. VII, § 1, as amended in 1930, see amendment 14.

If the four per cent tax on corporate net incomes is a tax on property, it violates the principle of uniformity in that it levies no tax on the incomes of individuals and copartnerships which may be in competition with corporations required to pay the tax. See Aberdeen Savings & Loan Ass'n v. Chase, 157 Wash. 351, 289 P. 536, 290 P. 697, 71 A.L.R. 232; Burr, Conrad & Broom, Inc., v. Chase, 157 Wash. 393, 289 P. 551; Culliton v. Chase, supra; Petroleum Nav. Co. v. Henneford, 185 Wash. 495, 55 P.2d 1056.

Appellants urge that this is not a tax on property, but that it is an excise tax on every corporation '* * * for the privilege of exercising its corporate franchise in this state of for the privilege of doing business in this state,' and that, as an excise tax, it is not subject to the constitutional requirement of uniformity.

The legislature has labeled the tax in question a corporate excise tax. Appellants, in all honesty, concede that a tax is not necessarily an excise tax because the legislature has so labeled it, and they say on p. 36 of their brief: 'The validity of the corporate tax depends upon whether the tax is, in fact, an excise or privilege tax, or a mere property tax masquerading as in excise.'

We dealt with a similar question in Jensen v. Henneford, 185 Wash. 209, 53 P.2d 607, 608, when the 1935 legislature had provided for a three per cent tax on the net incomes of all residents in the state, with a surtax of four per cent on all net incomes in excess of $4,000 which tax, the legislature had declared, was 'for the privilege of receiving income * * * while enjoying the protections of its [the state of Washington's- ] laws.' Answering the contention that that was an excise tax and not subject to the rule of uniformity, this court said, 185 Wash. at page 217, 53 P.2d at page 610: 'It is true that the Legislature has so labeled the 1935 act. But the legislative body cannot change the real nature and purpose of an act by giving it a different title or by declaring its nature and purpose to be otherwise, any more than a man can transform his character by changing his attire or assuming a different name. The Legislature may declare its intended purpose in an act, but it is for the courts to declare the nature and effect of the act. The character of a tax is determined by its incidents, not by its name. Aberdeen Savings & Loan Ass'n v. Chase, 157 Wash. 351, 289 P. 536, 290 P. 697, 71 A.L.R. 232; Culliton v. Chase, 174 Wash. 363, 25 P.2d 81; Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 41 S.Ct. 272, 65 L.Ed. 638; Macallen Co. v. Massachusetts, 279 U.S. 620, 49 S.Ct. 432, 73 L.Ed. 874, 65 A.L.R. 866; Educational Films Corp. v. Ward, 282 U.S. 379, 51 S.Ct. 170, 75 L.Ed. 400, 71 A.L.R. 1226; Stewart Dry Goods Co. v. Lewis, 294 U.S. 550, 55 S.Ct. 525, 79 L.Ed. 1054.'

A study of the Laws of 1935, chapter 180, §§ 159 to 210, both inclusive, another four per cent tax on corporate net incomes, declared unconstitutional in Petroleum Nav. Co. v. Henneford, supra, reveals many parallels. That tax, too, was to be levied, as by § 7 here, against practically every corporation, '* * * for the privilege of exercising its corporate franchise in this state or for the privilege of doing business in this state * * *.' Laws of 1935, chapter 180, § 161. We there said, 'The determinative question is whether the tax imposed is an excise or a property tax.' We concluded that it was a property tax, and that the property of corporations may not be subjected to a tax that is not imposed upon the property of copartners and individuals.

We have no hesitancy in saying that an analysis of the present act convinces us that the tax is a mere property tax 'masquerading as an excise.' It is geared throughout to the Federal income tax legislation as it relates to corporations. It has no reference to income from the various business activities on which the business and occupation tax, a true excise tax, is based, but taxes almost any income from almost every source. After studying this act in its entirety, we conclude that the tax is levied because the corporation has net income, not because it does any business in this state or exercises its corporate franchise; conversely, if it has done a million dollars worth of business in this state but has no net income, it...

To continue reading

Request your trial
47 cases
  • Adams v. Hinkle, 34132
    • United States
    • Washington Supreme Court
    • February 27, 1958
    ...and Articles Statute Held Unconstitutional, 9 Ohio St.L.Jour. 346.14 Olsen v. Delmore, 48 Wash.2d 545, 295 P.2d 324; Power, Inc., v. Huntley, 39 Wash.2d 191, 235 P.2d 173; Ralph v. City of Wenatchee, 34 Wash.2d 638, 209 P.2d 270; In re Hendrickson, 12 Wash.2d 600, 123 P.2d 322; Manos v. Cit......
  • California Co. v. State
    • United States
    • Colorado Supreme Court
    • December 21, 1959
    ...523, 130 N.E. 99; Opinion of the Justices, 95 N.H. 537, 64 A.2d 320; Kelley v. Kalodner, 320 Pa. 180, 181 A. 598; Power, Inc. v. Huntley, 39 Wash.2d 191, 235 P.2d 173. Massachusetts and Washington have adhered to this view consistently, Washington because of a constitutional provision. Othe......
  • Washington Federation of State Employees v. State
    • United States
    • Washington Supreme Court
    • August 31, 1995
    ...legislation that was in separate bills that were not enacted, such history could indicate logrolling. 6 In Power, Inc. v. Huntley, 39 Wash.2d 191, 235 P.2d 173 (1951), for example, the court examined the legislative history of an act and found that the two portions of the act had separately......
  • Washington State Grange v. Locke
    • United States
    • Washington Supreme Court
    • January 20, 2005
    ...combine their interests both can be enacted. See Pierce County, 150 Wash.2d at 430, 78 P.3d 640; (citing Power, Inc. v. Huntley, 39 Wash.2d 191, 198-99, 235 P.2d 173 (1951)). Another closely related purpose is to prevent the attachment of an unpopular bill to a popular one on an unrelated s......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT