Stanley v. Gates

• Citation: 19 S.W.2d 1000,179 Ark. 886
• Decision Date: 01 July 1929
• Docket Number: 74,58
• Parties: STANLEY v. GATES
• Court: Arkansas Supreme Court

19 S.W.2d 1000

179 Ark. 886

STANLEY v. GATES

No. 74, 58

Supreme Court of Arkansas

July 1, 1929

Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor affirmed.

STATEMENT BY THE COURT.

This is a suit in equity brought by taxpayers to enjoin the State Commissioner of Revenues and the Attorney General from doing any administrative acts in the enforcement of the Income Tax Act of 1929, on the ground that it is unconstitutional. The court sustained a demurrer to the complaint, and, the plaintiffs electing to stand on their complaint, it was dismissed for want of equity. The plaintiffs have appealed.

Decree affirmed.

Horace Chamberlin, for appellant.

Hal L. Norwood, Attorney General, David A. Gates, John L. Carter, and Williamson & Williamson, for appellee.

Attorneys filing briefs as amici curiae: Frank S. Quinn; Jones & Jones Gaughan, Sifford, Godwin & Gaughan; Rose, Hemingway, Cantrell & Loughborough; Wm. H. Martin; Marsh, McKay & Marlin; Mahony Yocum & Saye; George A. Hall; Alfred J. Hall; George Vaughan F. O. Butt; Sam Rorex; Danaher & Danaher; Rowell & Alexander; Coleman & Gantt; Cecil Shane.

HART J., Justices, SMITH, HUMPHREYS and KIRBY dissent.

OPINION

HART, J., (after stating the facts).

It is first earnestly insisted that the income tax law under consideration is a property tax, and is therefore violative of the equality and uniformity clause of article 16, § 5, of the Constitution; but the court held adversely to that contention in Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720, where it was held that an income tax is neither a property tax nor an occupation tax within the meaning of the provision of the Constitution just referred to.

It is next insisted that this holding was obiter dictum, and should not be considered binding upon the court in the case at bar. We do not agree with counsel in this contention. In the first place, this court is committed to the rule that, where grave public interests are involved in a question, the court may waive every point except that of determining the constitutionality of the act. Trammell v. Bradley, 37 Ark. 374, and McClure v. Topf & Wright, 112 Ark. 342, 166 S.W. 174. In both those cases the constitutionality of local liquor laws was involved. An income tax law works a great and important change in our tax laws, and is a matter of grave public interest. Besides, we think the language used by the various judges in their opinions in that case indicate their judicial interpretation of the subject after careful study of it. The views expressed were pertinent to the subject at hand, and appropriate as indicating their reasons for the conclusions announced.

In the early case of County of Pulaski v. Irvin, 4 Ark. 473, the court said:

"The power of taxation, as has been justly said, is the greatest power that can be intrusted to a sovereign. In its exercise all the great interests of society are involved, and the government is put into operation and supported by its resources or influence. As a general principle, the right of taxation is given and belongs exclusively to the legislative department. And there is great propriety and necessity in thus lodging it; for, as it is to be exercised for the benefit and security of the State, so the whole people of the State, through the means of the elective franchise, should have the power of regulating and controlling its action."

The framers of the present Constitution, in recognition of this great principle, in § 23 of the Declaration of Rights, provided that the State's ancient right of eminent domain and of taxation is herein fully and expressly conceded. The principle was announced in Sanders v. Texarkana, 103 Ark. 529, 146 S.W. 105, as follows: "Unless inhibited by some constitutional provision, the State Legislature has full power over all matters of taxation and the collection and disbursement of taxes, and may exercise absolute control over all revenues collected by subordinate branches of the State Government. Cooley on Taxation, p. 46."

Again, in the original opinion in the case of Sims v. Ahrens, 167 Ark. 557, 271 S.W. 720, it was said: "In approaching the consideration of this question, it may be said that we do not have to search the Constitution for express authority to levy the tax. The power to levy it exists as an inherent right, unless the Constitution has denied the right to the State to levy taxes of this character."

The court there considered whether the income tax was in violation of article 16, § 5, of the Constitution. The opinion of the majority of the judges was that the income tax law was in violation of that provision of the Constitution, and concludes as follows: "The State is without power to impose an income tax or occupation tax for State purposes, and the court below was therefore correct in holding that act unconstitutional, and the decree is affirmed."

Judge HUMPHREYS and myself concurred in the result announced, instead of dissenting from the opinion of the majority in affirming the decree, because we believed that a gross income tax operating upon all persons and occupations alike was unconstitutional. Because the majority opinion was placed upon the broad ground that, under art. 16, § 5, of the Constitution, the Legislature was prohibited from enacting any kind of income tax law, it became necessary for us to give our reasons for our disagreement to the conclusions of the majority; and, after a careful consideration of the question, and stating our reasons therefor, we said:

"Our conclusion in the whole matter is that the effect of our previous decisions that the proviso in art. 16, § 5, of the Constitution, giving the Legislature the power to tax certain occupations, by necessary implication precludes it from taxing other occupations for State purposes, and that if the provision had been left out of the section the Legislature might have taxed all occupations. The section contains no such restriction as to income taxes. Hence, if we are correct in holding that an income tax is not a property tax, and if it is not the same thing as an occupation tax, it necessarily follows that it is within the discretion of the Legislature to pass a properly classified net income tax law."

A motion for rehearing was filed and granted, on the votes of Justices WOOD, HART and HUMPHREYS. Judge WOOD gave his reasons for the change of views in a carefully prepared and seasoned opinion, which concludes as follows: "Therefore, for the reasons stated, I concur in the conclusion reached by Justices HART and HUMPHREYS, that 'it is within the discretion of the Legislature to pass a properly classified net income tax law, and such therefore is now the opinion and holding of the majority of the court'."

Judge SMITH wrote a dissenting opinion, concurred in by Chief Justice MCCULLOCH, which concludes as follows: "I therefore respectfully dissent from what is now the majority opinion."

Reference to the various opinions in that case will show that the court recognized that there was a division in the authorities upon the subject whether an income tax was a property tax or not, and we deliberately adopted the view that it was not a property tax. If it is not a property tax, it does not make any difference what name it is called. Whether it is called an excise tax, or a tax in the nature of an excise tax, or a personal tax, is a mere matter of definition, and does not in any wise change its character.

But it is again urged upon us that to hold an income tax unconstitutional because art. 16, § 5, of the Constitution, after saying that all property subject to taxation shall be taxed according to its value, etc., contains a provision that: "The General Assembly shall have power from time to time to tax hawkers, peddlers, ferries, exhibitions and privileges in such manner as may be deemed proper," which they claim, by necessary implication, prohibits all forms of taxation except property taxes and the occupation taxes named in the proviso. This is in application of the maxim, "expressio unius est exclusio alterius." In State v. Martin, 60 Ark. 343, 30 S.W. 421, 28 L. R. A. 153, Mr. Justice WOOD, speaking for the whole court, said that the court is thoroughly committed to the doctrine that the maxim "is not to be applied with the same rigor in construing a State Constitution as a statute, and that only those things expressed in such positive affirmative terms as plainly imply the negative of what is not mentioned will be considered as inhibiting the powers of the Legislature." The reason is that the Constitution of a State is not a grant of enumerated power, but its chief object is to impose limitations upon the several departments of government. If a contested enactment is not prohibited either by the letter or the spirit of the Constitution, it is authorized. Vance v. Austell, 45 Ark. 400.

The proviso in the section of the Constitution referred to gives the Legislature power to tax certain named occupations without regard to the equality and uniformity clause applicable to property. This by necessary implication prohibits the taxation of other occupations for State purposes; but at the same time it also impliedly recognizes that a tax on occupations is a different kind of tax to a property tax; and "it does not by inference too strong to be resisted," as the rule is stated in Neal v. Shinn, 49 Ark. 227, 4 S.W. 771, cut off the Legislature from levying other recognized kinds of taxes than those dealt with in the clause of the Constitution under consideration. In the application of this rule of construction in State v. Handlin, 100 Ark. 175, 139 S.W. 1112, the court sustained the validity of an inheritance tax law upon the ground that it was not a property tax within the constitutional...