Redfield v. Norblad

• Decision Date: 29 January 1931
• Citation: 135 Or. 180,295 P. 461
• Parties: REDFIELD ET AL. v. NORBLAD, GOVERNOR, ET AL.
• Court: Oregon Supreme Court

295 P. 461

135 Or. 180

REDFIELD ET AL. v. NORBLAD, GOVERNOR, ET AL.

Supreme Court of Oregon, En Banc.

January 29, 1931

Appeal from Circuit Court, Marion County; L. H. McMahan, Judge.

On petition for rehearing.

Petition denied.

For former opinion, see 292 P. 813.

Wood, Montague & Matthiessen, of Portland, for appellants Scott Redfield and others.

Dey Hampson & Nelson, of Portland, for appellants Frank Kiernan and A. E. Miller.

I. H Van Winkle, Atty. Gen., and Willis S. Moore, Asst. Atty Gen., for respondents.

Arthur C. Spencer, of Portland, Ralph S. Hamilton, of Bend, A. A. Smith, of Baker, and Roy F. Shields, of Portland, amici curiæ.

ROSSMAN J.

The petition for a rehearing is accompanied with two extensive briefs which display evidence of much industry facilitated by learning. Of the one brief the Attorney General is the author, while the other represents the labors of a group of attorneys whose interest in the attacked statute arose many months ago when those attorneys, together with others, made an effort to solve the tax problem of their state by suggesting some tax legislation. The skillful argument presented in these briefs tempts us strongly to set forth our views upon the many subjects discussed by the amplified arguments, but the fact that the biennial session of the Legislature is now in progress persuades us that promptness in finally disposing of this suit will better serve the situation than a further recital of our views.

The Attorney General seems to remain convinced that chapter 429 of 1929 Session Laws, which is the act under attack, identifies itself as an income tax statute, and that our decision fails to pay sufficient heed to these identifying earmarks. However, we notice that tax legislation of other states, which presented even more evidence of being income tax statutes, have been held to be in reality property tax statutes. See, for instance, Cudahy Packing Co. v. Minn., 246 U.S. 451, 38 S.Ct. 373, 62 L.Ed. 827. In determining the nature of the tax, the practical operation of the statute and its actual effect are very important circumstances. Quaker City Cab Co. v. Pa., 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927; Shaffer v. Carter, 252 U.S. 37, 40 S.Ct. 221, 64 L.Ed. 445; and Nicol v. Ames, 173 U.S. 510, 19 S.Ct. 522, 43 L.Ed. 786. The ultimate effect of chapter 429 is to take from intangibles a part of their value. It clips from a bond a part of the interest coupons as effectively as if the state performed the physical act. That piece of tax legislation operates upon its subject matter--intangible property--more directly than the ad valorem tax on real property. It is these circumstances, together with the others mentioned in our previous decision, which have brought us to our conclusion that this statute imposes a tax upon property.

Concern is expressed in the briefs lest our previous decision was intended to overrule Standard Lumber Co. v. Pierce, 112 Or. 314, 228 P. 812. No such thought was in our minds. Quite to the contrary we referred to that decision with approval. We believe that an obvious distinction exists between the situation brought before this court in that suit and the circumstances disclosed by the instant case. The statute there in question was conceded by all to be an income tax statute, and hence this court was not called upon to determine its nature. Moreover, that act levied a graduated rate upon the net income received by the taxpayer from his various sources of income. The present act imposes a tax of 5 per cent. upon the gross income from a definite type of property only, that is, intangibles. We believe that a very substantial difference exists between the nature of a tax which takes from interest, before it has become mingled with other items of income, a portion thereof, and another tax which lumps all income into one sum, and takes a part of it only after net income has been determined by the subtraction of many allowances. The former is the situation now before us; the latter was the tax legislation disposed of by Mr. Justice McCourt's decision in Standard Lumber Co. v. Pierce. A further distinction is also worthy of notice. The case just mentioned brought before the court only one act. In our present situation we are confronted with three; the two additional acts afford evidence of the nature of the third. One of the three is obviously an income tax statute and makes no pretentions to the contrary; another expressly states that it imposes "the excise tax" and defines those words as a levy upon the privilege of doing business in this state in corporate form. This evidence we feel is worthy of consideration in determining the nature of the remaining act. These various circumstances convince us that no conflict exists between Standard Lumber Co. v. Pierce and our previous decision in this case.

Counsel also evidence apprehension lest our quotation from Portland v. Portland Ry., L. & P. Co., 80 Or. 271 156 P. 1058, which applied the sections of our state Constitution applicable to taxation as th...