Smith v. Dirckx

• Citation: 283 Mo. 188,223 S.W. 104
• Decision Date: 31 May 1920
• Docket Number: No. 22002.,22002.
• Parties: SMITH v. DIRCKX, County Clerk.
• Court: United States State Supreme Court of Missouri

223 S.W. 104

283 Mo. 188

SMITH v. DIRCKX, County Clerk.

No. 22002.

Supreme Court of Missouri, in Banc.

May 31, 1920.

Rehearing Denied June 19, 1920.

Appeal from Circuit Court, Cole County; John G. Slate, Judge.

Action by Charles F. Smith against Clem A. Dirckx, County Clerk of Cole County, Mo. From judgment sustaining demurrer to plaintiff's petition, plaintiff appeals. Reversed and remanded, with directions.

This is an appeal from the judgment of the circuit court of Cole county, sustaining a demurrer to the plaintiff's petition.

The suit involves the construction and validity of a portion of an amendment to the income tax law of this state, approved May 6, 1919. See Laws of Missouri, 1919, p. 718 et seq. The petition omitting caption and signature is as follows:

"Comes now the plaintiff herein for himself and in behalf of all other persons similarly situated, and files this, his bill in equity, alleging:

"First. That he is now, and at all times herein mentioned, was a citizen and resident and taxpayer of the city of Jefferson, county of Cole and state of Missouri.

"Second. That defendant, Clem A. Dirckx, is the duly elected, constituted, and acting county clerk of said Cole county, Mo.

"Third. That plaintiff is now, and was at all times hereinafter mentioned, engaged in the real estate business in said city of Jefferson, in Cole county, Mo.; that he is now, and was at all times herein mentioned, the owner of real and personal property in said city of Jefferson; that during the calendar year, 1919, he earned and received a net income from his said property and business in the amount of $3,000, and that one-half thereof, to wit, the sum of $1,500, was earned and received on and prior to the 7th day of August, 1919; that after deducting the amounts permitted by law there remained of said net income of $3,000 a balance of $800 upon which an income tax was due the state for the year 1919, to be assessed and paid during the year 1920; that on the day of February, 1920, plaintiff made out and filed with the assessor of Cole county, Mo., a return of the total net income of plaintiff for the year 1919 in pursuance of the requirements of the act of the General Assembly of the state of Missouri approved April 19, 1917 (Laws Mo. 1917, pp. 524 to 538, inclusive), entitled, `An act providing for the assessment, levying, collecting and paying of income tax, and amendment thereto approved May 6, 1919 (Laws Mo. 1919, pp. 718 to 721, inclusive); that said assessor duly entered said return upon his income tax book as provided by law, and hen certified the result to the defendant for the purpose of computation of the income tax thereon and the entry thereof upon the tax books for collection from plaintiff herein; that defendant is threatening, and has declared his intention, to compute the taxes thereon at the rate of 1% per centum upon the entire taxable income for the year 1919, and deliver the same to the county collector for collection against this plaintiff, and is threatening to expend funds of the state of Missouri derived from taxpayers, of whom plaintiff is one, in the enforcement of such unlawful and unauthorized rate.

"Fourth. Plaintiff says that the declared intention and threats of defendant to tax his entire taxable income for the year of 1919 at the rate of 1½ per centum of said income is based upon defendant's interpretation of section 1, Laws of 1919. pp. 718, 719; that said interpretation so, placed by defendant upon said law is unauthorized by, and in violation of, said law; and that said section as so construed by defendant would be unconstitutional, null, and void; in that said section so construed would be in direct violation of sections 15 and 30 of article 2 and section 19 of article 12 of the Constitution of Missouri, and the Fifth Amendment of the Constitution of the United States, because, so construed, it is retrospective and retroactive in its operation, and imposes upon plaintiff and the people of each county of this state a new liability in respect to transactions or considerations already past, and takes the property of plaintiff, and those similarly situated, without due process of law.

"Fifth. That, notwithstanding said interpretation so placed upon said law by defendant is unauthorized by and in violation of said law, and notwithstanding the unconstitutionality of said section of said income tax law as construed by defendant, he has declared his intention and is now threatening to proceed under such construction to compute and enter income taxes thereunder against many and divers and numerous individuals and corporations in said Cole county, Mo., at the rate of 1½ per centum upon the entire net income for the year 1919, and that unless this court interferes by injunctive process, a multiplicity of suits to collect taxes so computed and certified for collection will of necessity result.

"Sixth. Plaintiff further states that defendant's threatened unlawful, wrongful, and unauthorized action is the result of misinterpretation of said section 1 of the Laws of 1919, pages 718 and 719; that said amendment of the Income Tax Law of 1917 (Laws of 1919, pp. 718, 721), of which said section 1 is a part, was approved May 6, 1919, and became effective August 7, 1919; that said section of said law, when properly and rightfully construed, causes said rate of 1½ per centum to be applied only to that part of the income of 1919 earned and received on and subsequent to August 7, 1919, and that the balance of said income, to wit, that earned and received on "and prior to August 6. 1919, is taxable at the rate prescribed by the original act of 1917, to wit, the rate of one-half of 1 per centum; that for defendant to compute and certify to the collector for collection the entire net taxable income of plaintiff for the year 1919 at the rate of 1½ per centum as defendant has declared his intention, and is now threatening to do, is in violation and unauthorized by said law, and is an impairment of plaintiff's vested right, an imposition upon him of a new liability in respect to transactions and considerations already past, and the taking of his property without due process of law.

"Seventh. Plaintiff has no adequate redress or remedy by suit at law, and is without adequate remedy except by writ of injunction in n court of equity.

"Wherefore, by reason of such wrongful, unauthorized, and unlawful interpretation of said law so construed by defendant in violation of said law, and by reason of the unconstitutionality of said income tax law as construed by defendant, and by reason of his declared intention and threat to unlawfully, wrongfully, and without authority of law compute and extend the tax upon plaintiff's entire income for the year 1919 at the rate of 1½ per centum, and by reason of each and every of the facto hereinbefore set out, plaintiff prays the court to permanently enjoin and restrain defendant from computing and entering upon his income tax book, for delivery to the collector of Cole county, for enforcement against plaintiff, a tax upon his entire net income for the year 1919 at the rate of 1½ per centum, and to limit and restrain the computation and entering of said income tax at the rate of 1½ per centum to that part of plaintiff's taxable income for the year 1919 earned and received on and subsequent to the date of the taking effect of said amendment, to wit, August 7, 1919, and to permanently enjoin and restrain sell defendant from computing and entering upon his income tax book that part of plaintiff's income earned and received, to wit, the sum of $400, prior to the date of the taking effect of said amendment, at a greater rate than one-half of one per centum thereon, and for such other and further relief as may be just and equitable, and for his costs in this behalf expended."

The Income Tax Act as originally passed in this state (Laws of 1917, p. 524) provided the rate of taxation upon net income for the last half of the calendar year of 1917, and each calendar year thereafter at one-half of one per centum.

This law was amended by an act approved May 6, 1919 (Laws 1919, p. 718), providing that the rate of taxation upon net incomes for the calendar year of 1919, and in each calendar year thereafter, should be 1½ per centum.

A. L. McCawley and Adolph McGee, both of Carthage, for appellant.

Frank W. McAllister, Atty. Gen., and John T. Gose, Asst. Atty. Gen., for respondent.

Jamison & Thomas, of St. Louis, amicus curiæ.

WILLIAMS, J.

(after stating the facts as above). I. There are but two questions presented upon this appeal. They are purely legal ones, and may be stated as follows:

First. Did the General Assembly by the amendment of 1919 (Laws, 1919, p. 718) undertake to apply the increased rate to the net income received during the entire calendar year of 1919?

Second. If the above amendment did so provide, does that portion of the amended rate which was an increase over the old rate operate retrospectively, in violation of article 2, § 15, of the Missouri Constitution, as to that portion of the net income received by appellant during the calendar year 1919, and prior to August 7, 1919, the date upon which the amendment became effective? These questions will be treated in their order.

II. We are of the opinion that the General Assembly intended that the amendment of 1919 should apply to the net incomes for the entire year of 1919. Section 1 of the amendment reads as follows:

"There shall be levied, assessed, collected, and paid annually upon the entire net income received. in the calendar year nineteen hundred nineteen from all sources by every individual, a citizen or resident of this state, a tax of one and one-half per centum upon such income; and a like tax shall be levied, assessed, collected, and paid annually upon the entire net income received in the year nineteen hundred nineteen from all sources within this state by every individual, a nonresident, including...