Sproul v. State Tax Commission

• Decision Date: 26 June 1963
• Parties: R. E. SPROUL and J. F. Walton, individually, and as representatives of all non-urban owners of real property in Grant County, Oregon, Respondents, v. State of Oregon, by and through Dean Ellis, Charles Mack and Ferdinand H. W. Hoefke, constituting and acting as the STATE TAX COMMISSION, and State of Oregon, by and through D. L. Phipps, constituting and acting as the State Forester, Appellants.
• Court: Oregon Supreme Court

Page 754

383 P.2d 754

234 Or. 579

R. E. SPROUL and J. F. Walton, individually, and as

representatives of all non-urban owners of real

property in Grant County, Oregon, Respondents, v. State of Oregon, by and through Dean Ellis, Charles Mack and Ferdinand H. W. Hoefke, constituting and acting as the STATE

TAX COMMISSION, and State of Oregon, by and through D. L.

Phipps, constituting and acting as the State Forester, Appellants.

Supreme Court of Oregon, In Banc.

Argued and Submitted at Pendleton Oct. 29, 1962.

Decided June 26, 1963.

Thomas C. Stacer and Gerald F. Bartz, Asst. Attys. Gen., Salem, argued the cause for appellants. With them on the briefs were Robert Y. Thornton, Atty. Gen., Salem, and Clarence R. Kruger, Asst. Atty. Gen., Salem.

J. R. Campbell, John Day, and Roy Kilpatrick, Canyon City, argued the cause for respondents. With them on the briefs were Yokom & Campbell, John Day.

Before McALLISTER, C. J., and PERRY, SLOAN, O'CONNELL, GOODWIN, LUSK and DENECKE, JJ.

DENECKE, Justice.

The constitutionality of a part of the legislative design for forest fire protection in eastern Oregon is the issue in this case. The statute attacked levies an assessment of one cent per acre on those lands in eastern Oregon which the legislature found present a special fire hazard. The fund raised by this levy is used for the payment of fire protection and suppression costs.

The trial court decided that the one-cent-per-acre levy was an exercise of the state's taxing power. It held that it was a property tax and it was invalid because it was not assessed upon an ad valorem basis.

The statute states that the one-cent-per-acre levy is 'a tax upon the owners of Class C forest lands for the privilege of using such lands.' ORS 477.930. The label the legislature places on a levy is an important factor to be considered in determining into what category to place the levy. However, such a label is not conclusive of the nature of the levy. Terry v. City of Portland, 204 Or. 478, 499, 269 P.2d 544, appeal dismissed 348 U.S. 979, 75 S.Ct. 571, 99 L.Ed. 762.

We hold that the levy is not an exercise of the state's taxing power. We conclude that such levy is an exercise of the state's police power.

The Oregon constitutional provision requiring uniformity of taxation does not restrict the state in its exercise of the police power, as distinguished from the taxing power. Starker v. Scott, 183 Or. 10, 15, 190 P.2d 532. This proposition is universally accepted and is grounded on the reasoning that the primary purpose of the money exaction is not to raise revenue, but to directly promote the public welfare. 4 Cooley, Taxation (4th ed.), § 1784.

In order to arrive at this conclusion the fire protection and suppression program evolved by the Oregon Legislature must be examined in detail. This is not an easy task. Forest fire protection laws originated in Oregon in 1913. Oregon Laws 1913, ch. 247, p. 483. They have grown like Topsy and apparently have never been revised.

Since 1913 the state has directed every landowner with timber to protect his land against the start and spread of fire. Oregon Laws 1913, ch. 247, p. 483. (This is apart from the landowner's liability for the tortious start or spread of fire.) Fire protection includes fire suppression. Fire protection in Oregon is carried out by: (1) the landowner, individually, or in association with other owners, (2) the state of Oregon, and (3) the United States government, the largest timber owner in Oregon. These three are authorized to enter into cooperative agreements with each other to provide and maintain a coordinated fire protection and suppression system. ORS 477.028, 477.073; Act of June 7, 1924, ch. 348, 43 Stat. 653, 16 U.S.C.A. §§ 564, 565 (1960 ed.).

The individual timber owner is deemed to have complied with the statute requiring him to protect his land against the start or spread of fire if he files with the State Forester an adequate protection plan and has the facilities to carry it out; or if he belongs to an association having such a plan and facilities. If the individual owner does neither, the state provides the fire protection. ORS 477.024. The state does this with its own personnel and funds or through private associations or the federal government by agreements with such groups.

In 1953 the legislature substantially changed the method of paying fire protection costs. Oregon Laws 1953, ch. 372, p. 641. For the previous 40 years the landowner had been directed to provide fire protection; if he did not, the state did and charged the expense to the landowner. §§ 107-241, 107-243, O.C.L.A. In 1953 it was provided that the forest lands of the state would be divided into districts, termed, 'official fire districts,' or 'fire protection districts.' ORS 477.001, 477.004, 321.005(6); Oregon Laws 1953, ch. 372, § 2(3). Each district prepares an annual fire protection budget. The funds necessary to finance this budget are raised by prorating the proposed expenditures upon the acreage within the fire protection district. ¹ ORS 477.030. The statute provides that the prorated cost for grazing land shall not exceed five cents per acre per annum unless the actual cost for protection and suppression of the grazing land exceeds this amount. The pro rata cost on timber land in the district has no limitation. These per-acre assessments to finance the budget become liens on the property assessed and the amount thereof is collected by the county along with the collection of the ad valorem taxes. ORS 477.033. If the Forester's costs for the fire protection and suppression exceed the amount budgeted, the excess is added to the next year's budget of the fire protection district. ORS 477.035.

Members of a responsible private fire protection agency are not required to contribute to meet the fire protection budget of the district wherein their land lies. ORS 477.024(2), 477.037. Federal lands are not assessed unless, under a cooperative agreement between the state and the federal government, the federal land is under the fire protection of the state rather than the federal government and the agreement provides for the assessment. ORS 477.053.

Any landowner who is affected by this legislation has a right to a hearing before the State Forester 'on any subject pertaining to the activities of the forester or board affecting the land,' including the cost charged for fire protection. ORS 477.039.

This legislation is not that which is under attack in this case. However, an understanding of the operation of such legislation is necessary to understand the operation of the legislation that is under attack.

The statute which the plaintiff claims is contrary to the Oregon Constitution was enacted in 1959. Oregon Laws 1959, ch. 320, p. 468. The known legislative history of this act is ambiguous. However, with this history, added to the words of the statute itself, the purpose of the legislation can be determined with some certainty. In the interval between 1953 and 1959 certain areas of eastern Oregon had incurred very substantial fire fighting expenses; other areas had very little expense. The 1959 legislation was an attempt to partially spread the future costs of fire protection and suppression throughout all of the fire protection districts of eastern Oregon. Before the 1959 legislation, all the fire protection and suppression costs in one eastern Oregon district had to be wholly borne by that district. ORS 477.950(2), a part of the 1959 legislation, states: 'The insurance principle is recognized in providing funds for emergency forest fire control on Class C * * * forest lands.' Class C forest lands are eastern Oregon lands with a special fire hazard. A more precise definition will be set forth later.

To spread this risk the statute levied an annual per-acre assessment on all Class C forest lands in the amount of one cent per acre. ORS 477.930. The moneys were to be collected in the same manner as the amounts collected to meet the fire protection budgets of the various districts. The moneys so collected are deposited in the 'East Side Emergency Fire Cost Fund' account. ORS 477.970.

ORS 477.970(3) provides:

'* * * the moneys credited to the East Side Emergency Fire Cost Fund hereby are appropriated continuously for and shall be used by the forester, under the supervision and direction of the board, for the purpose of equalizing emergency fire suppression costs in fire protection districts containing Class C forest lands in order to safeguard the interests of the owners of such lands.'

The size of the fund is never to exceed $250,000. ² When and if the fund reaches $250,000, the levy of one cent per acre is discontinued for the next year. ORS 477.950.

In the 1953 revision of the fire protection system, procedures for equalizing fire suppression costs in western Oregon were adopted. Oregon Laws 1953, ch. 375; ORS 321.015, 321.165. A 'forest harvest tax' was levied upon all forest products harvested in western Oregon. The rate was set at four cents per thousand feet. The proceeds of this levy were deposited in the Forest Emergency Fire Cost Account. This account was to be used to equalize fire suppression costs in western Oregon. ORS 477.135. If the account reached $750,000, the levy was suspended. ORS 321.035.

Previous statutes providing for the raising of funds for fire protection have been upheld by this court. The first case so holding was First State Bank of Sutherlin v. Kendall Lumber Company, 107 Or. 1, 213 P. 142 (1923). It was contended in that case that the original fire protection act of 1913 was unconstitutional. That Act, supra, provided that if the landowner did not provide fire protection, the state would provide it at a cost not to exceed five cents per acre. The landowner contended that the legislation providing for the per-acre assessment was contrary to the Oregon Constitution in that it failed to provide for 'a uniform and equal rate of taxation' and...