State ex rel. Atwood v. Johnson

• Decision Date: 17 November 1919
• Citation: 175 N.W. 589,170 Wis. 218
• Parties: STATE EX REL. ATWOOD v. JOHNSON, STATE TREASURER, ET AL.
• Court: Wisconsin Supreme Court

170 Wis. 218

175 N.W. 589

STATE EX REL. ATWOOD

v.JOHNSON, STATE TREASURER, ET AL.

Supreme Court of Wisconsin.

Nov. 17, 1919.

Action by the State, on relation of David Atwood, against Henry Johnson, State Treasurer, and others. Demurrer to complaint sustained, and action dismissed.

This action was originally brought in this court to test the constitutionality of chapter 667, Laws of 1919, known as the Soldiers' Bonus Act, and, if found unconstitutional, to restrain the enforcement of the act. The Attorney General declined to commence the action, and upon application the court granted leave to the relator here to institute the action in the name and behalf of the state. The defendants are charged with the administration and enforcement of the act.

The complaint is as follows:

“Now comes the plaintiff in the above-entitled cause, pursuant to leave of said honorable court, and for a complaint against the above-named defendants respectfully shows to the court:

I. At its last session the Legislature of the state adopted an act which is numbered and known as chapter 667, Laws of 1919. The act was approved on July 30, 1919, and, at a special election held on September 2, 1919, a majority of the electors of the state voted in the affirmative upon the question embraced in section 9 of the act. Pursuant to section 1 of the Act, the Governor of the state has appointed W. F. Lorenz as one of the members of the service recognition board, which board has been organized pursuant to the act, and consists of Emanuel L. Philipp, Governor, Orlanda Holway, adjutant general, and W. F. Lorenz. Substantial doubt and controversy has arisen as to the validity of said act and as to the right of the service recognition board, the tax commission of Wisconsin (now Nils P. Haugen, Thomas E. Lyons, and Carrol Atwood), the secretary of state (now Merlin Hull), and the state treasurer (now Henry Johnson) to estimate, determine, assess, or collect the taxes provided for by the act, to certify or audit for payment or make any payments thereunder, or otherwise to proceed with the administration or execution of the act.

II. Plaintiff is advised and believes that the act is subject to the following, among other, infirmities affecting its constitutionality, and that by reason thereof it is not a valid law:

(1) The act provides for the assessment and collection of taxes and the expenditure of the funds thereby collected for other than the estimated expenses of the state, and for purposes which are not public, thereby violating the provisions of sections 2 and 5 of article 8 of the Wisconsin Constitution and of the Fourteenth Amendment to the federal Constitution, and transcending the limitation, inherent in constitutional taxation, that taxes may only be levied and collected for public purposes.

(2) The act violates the provision of section 3 of article 8 of the Constitution, which inhibits the giving or loaning of the credit of the state in aid of any individual.

(3) The act provides for extraordinary expenditures, not within the purview of the expenses which the Legislature is, by section 5 of article 8 of the Constitution authorized to provide for by current taxation.

(4) The act provides for the payment, from moneys raised by taxation, of what is designated by the Legislature as a ‘bonus' to Wisconsin soldiers, sailors, marines, and nurses who served in the armed forces of the United States. Such forces were the forces of the United States, and not of the state. The Congress of the United States, pursuant to the exclusive power vested in it by section 8 of article 1 of the federal Constitution, has by numerous laws made provision for compensating its armed forces during their service, for allotments to their families, for additional compensation to them or their dependents in case of disability or death, for vocational training of those disabled, for insurance in case of disability or death, and for the payment of a bonus upon discharge from service. The granting of benefits such as those provided for in said act is a matter of federal power exclusively, and the exercise of such power by the Congress has excluded its exercise by the state, even though the purpose were otherwise public.

(5) The benefits provided for by the act are declared to be given as a token of appreciation of the character and spirit of the patriotic service of soldiers, sailors, marines, and nurses who served in the armed forces of the United States during the war with Germany and Austria. The amount of benefits is largely governed by time of service. They are payable only to those of the classes named who were residents of Wisconsin at the time of induction into service. Benefits are payable irrespective of manner of induction or character of service or discharge. Such classification and limitation of beneficiaries is not germane to the consideration of appreciation or gratitude which is the expressed purpose and object of the act. The act therefore denies the equality before the law which is guaranteed by sections 1, 9, and 22 of article 1 of the Constitution of the state and by section 2 of article 4 and the Fourteenth Amendment of the Constitution of the United States.

(6) The act provides for the assessment and collection of a surtax upon incomes, and for the assessment and collection by property taxation of a special tax, not exceeding three mills, and it is left to the estimate and determination of the service recognition board as to the amount, within prescribed limits, to be paid to the beneficiaries and as to the amount, within the limit of three mills, to be raised by property taxation, thereby unlawfully delegating legislative powers and violating the provisions of sections 2 and 5 of article 8 of the Constitution of the state.

(7) The act provides for the levy and collection of a property tax (the rate not to exceed three mills) only if and in so far as the prescribed surtax upon incomes may be insufficient to meet the expenditures provided for by the act. The exemptions from income taxes to be collected for the special and extraordinary purposes of the act are different from the exemptions allowed by law in the assessment of income taxes for other and general purposes. The surtax is laid upon a particular class of taxpayers. The act thus constitutes special legislation for the levy and collection of taxes, makes the burdens of taxation and the amount of exemption therefrom dependent on the purpose to which the moneys raised are to be applied, and, for the special purposes of the act, discriminates against particular classes of tax payers. This violates section 31 of article 4 of the state Constitution, prohibiting special legislation for the assessment or collection of taxes, the rule of uniformity prescribed by section 1 of article 8 of the state Constitution, and the equality and justice guaranteed by sections 1, 9, and 22 of article 1 of the state Constitution, and by the Fourteenth Amendment of the federal Constitution, and is violative of the inherent principles of constitutional taxation and government.

(8) The property taxes provided for by the act are to be levied for the current year. The surtax is retroactively laid upon incomes for the year 1918. In arriving at the surtax a large deduction is allowed to corporations and their stockholders which is not allowed to partnerships or other individuals, thereby violating the rule of uniformity prescribed by section 1 of article 8 of the Constitution of the state, and denying the equality before the law guaranteed by sections 1, 9, and 22 of article 1 of the state Constitution, and by the Fourteenth Amendment to the Constitution of the United States.

(9) The provisions of sections 3 and 4 of the act are in violation of section 2 of article 6 of the Constitution of the state, providing that the secretary of state shall be ex officio auditor, and invest in such board discretionary powers which the Legislature is without power to delegate.

(10) The act makes the levy of taxes to meet the expenditures provided for dependent upon a majority vote of the electors, thereby unlawfully delegating a power which resides exclusively in the Legislature, and contravening the provisions of sections 2 and 5 of article 8 of the Constitution of the state.

III. Many of the soldiers and sailors who served with the armed forces of the United States during the war with Germany and Austria have not yet been discharged, but are still serving as a part of the army and navy of the United States, and are receiving the compensation and benefits provided by acts of Congress, and are subject to the control and discipline provided by federal laws and regulations.

As plaintiff is informed and believes, many of the states of the Union have not adopted laws giving a bonus, gratuity, or other aid to residents of the state who served with the armed forces of the United States during said war.

The government of the United States is now actively seeking to recruit by voluntary enlistment the navy and marine corps, and measures are in contemplation looking to an increase in like manner of the army of the United States, and that such voluntary enlistments are being sought in the states which have not adopted laws giving a bonus, gratuity, or other aid to their residents who served in said war, as well as in this state.

As plaintiff is informed and believes, various measures have been introduced and are pending in Congress having for their object the granting of benefits (additional to those already provided by Congress) to those who served in the armed forces of the United States during said war. Among them is a bill providing for a bonus similar to that provided for by said chapter 667.

Among the residents of Wisconsin who served in the armed forces of the United States during said war there exists, as is judicially known to the court, differences as regards methods of induction into and discharge from service, time,...