State ex rel. Bolens v. Frear

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtWINSLOW
PartiesSTATE EX REL. BOLENS v. FREAR, SECRETARY OF STATE, ET AL. WINDING ET AL. v. FREAR, SECRETARY OF STATE, ET AL.
Decision Date09 January 1912

148 Wis. 456
134 N.W. 673

STATE EX REL. BOLENS
v.
FREAR, SECRETARY OF STATE, ET AL.d1
WINDING ET AL.
v.
FREAR, SECRETARY OF STATE, ET AL.d1

Supreme Court of Wisconsin.

Jan. 9, 1912.


Appeal from Circuit Court; Dane County; E. Ray Stevens, Judge.

Original suit by the State, on relation of Harry W. Bolens, against James A. Frear, Secretary of State, and others, to restrain them, as state officers, from enforcing the income tax law. Laws 1911, c. 658. Heard on demurrer to the complaint. Action in the circuit court by Arthur Winding and others against the same defendants, in which a demurrer to the complaint was sustained, and plaintiffs appealed. Judgment for defendants in first case, and in second case judgment below affirmed.

Timlin, J., dissenting in part.

[134 N.W. 675]

Carpenter & Poss, for relator.

Flanders, Bottum, Fawsett & Bottum and Van Dyke, Rosecrantz, Shaw & Van Dyke (Geo. D. Van Dyke, of counsel), for appellants.


L. H. Bancroft, Atty. Gen., Russell Jackson, Deputy Atty. Gen., J. E. Dodge, and George G. Greene, for respondents.

David S. Wegg, Lines, Spooner, Ellis & Quarles, Miller, Mack & Fairchild, Oscar M. Fritz, and F. C. Winkler, amici curiæ.

WINSLOW, C. J.

These are actions in equity, brought for the purpose of enjoining the Secretary of State and other state officers, including the Tax Commission, from paying out any state moneys, or doing any other administrative acts, in the enforcement of the newly passed income tax law of this state, known as chapter 658, Laws of 1911, on the ground that said act is unconstitutional.

The Bolens action is an action sought to be brought within the original jurisdiction of this court, after refusal by the Attorney General to bring it. This court, upon application for leave to bring the action upon the relation of Bolens (a taxpayer), granted such leave, but expressly provided in the order that the question whether such action was an action properly within the original jurisdiction of this court should be reserved and argued with the demurrer upon the merits.

The Winding Case is an action originally brought in the circuit court of Dane County by various persons and corporations who claim that they will be injuriously affected in various different ways by the provisions of the law. A demurrer on the three grounds of want of jurisdiction, want of legal capacity to sue, and insufficiency of facts having been sustained by the circuit court, the plaintiffs appeal to this court, and all the cases were argued together; briefs being also filed by several members of the bar as amici curiæ.

The law which is attacked in these actions adds 30 sections to the statutes, and also makes very substantial changes by amendment and repeal in sections 1036 and 1038 of the existing statutes, relating to the taxation of personal property. The first section of the law is numbered 1087m1, and

[134 N.W. 676]

provides generally for the taxation of all incomes received during the year 1911, and annually thereafter.

Section 1087m2 provides:

(1) That the term “person,” as used in the act, shall include “any individual, firm, copartnership, and every corporation, jointstock company, or association organized for profit and having a capital stock represented by shares,” unless otherwise stated.

(2) That the term “income” shall include:

a. All rent of real estate, including estimated rental of residence property occupied by the owner.

b. Interest on loans or evidences of debt of any kind.

c. Wages, salaries, or fees derived from services, provided that salaries of public officers are not to be included in those cases where the taxation thereof would be repugnant to the Constitution.

d. All dividends or profits from stock or from the purchase and sale of any property acquired within three years previously or from any business whatever.

e. Royalties derived from the possession or use of franchises or legalized privileges of any kind.

f. All other income from any source, except such as is exempted by the act.

(3) That “the tax shall be assessed, levied and collected upon all income, not hereinafter exempted, received by every person residing within the state, and by every nonresident of the state upon such income as is derived from sources within the state or within its jurisdiction. So much of the income of any person residing within the state as is derived from rentals, stocks, bonds, securities or evidences of indebtedness shall be assessed and taxed, whether such income is derived from sources within or without the state; provided that any person engaged in business within and without the state shall, with respect to income other than that derived from rentals, stocks, bonds, securities or evidences of indebtedness, be taxed only upon that proportion of such income as is derived from business transacted and property located within the state, which shall be determined in the manner specified in subdivision (e) of section 1770b, as far as applicable.”

Section 1087m3 provides, in substance, for the following deductions by corporations and joint-stock companies:

a. Sums paid within the year for personal services of all officers and employés actually employed in the production of the income.

b. Other ordinary and necessary expenses paid within the year in the maintenance and operation of its business and property, including reasonable depreciation of the property from which the income is derived. All bonds issued by a corporation shall be deemed an interest in the property and business of the corporation, and so much of the interest on the bonds as is represented by the ratio of the total property located and business transacted in the state to the whole property and business of the corporation as provided in subdivision 3 of 1087m2 shall be subject to taxation at the same rate as the income and shall be assessed to the bondholders under the general designation of the bondholders of the particular corporation on the property of the corporation prior to other liens, and, unless paid by the bondholders, shall be enforced against the corporation, which may deduct the amount of the tax from the next interest payment on the bonds.

c. Losses sustained during the year not compensated for by insurance or otherwise.

d. Sums paid within the year for taxes imposed by any other state upon the source from which the income taxed by this act is derived.

e. Dividends or income received during the year from stocks or interest in any firm, corporation, or joint-stock company, the income of which has been assessed under this act.

f. Interest received from bonds or securities exempt from taxation under United States laws.

By section 1087m4 it is provided, in substance, that persons other than corporations and joint-stock companies shall be allowed the following deductions:

a. Ordinary and necessary expenses actually paid in carrying on the business from which the income is derived, including a reasonable allowance for depreciation in the property from which the income is derived.

b. Losses during the year not compensated by insurance or otherwise.

c. Dividends or incomes from stocks or interest in any firm or corporation, the income of which has been assessed under this act.

d. Interest paid during the year on existing indebtedness.

e. Interest on bonds or securities exempt under United States laws.

f. Salaries received from the United States by United States officials.

g. Pensions received from the United States.

h. Taxes (other than inheritance taxes) paid during the year on the property or business from which the income is derived.

i. Devises, bequests, or inheritances received during the year upon which an inheritance tax has been paid.

j. Life insurance to the amount of $10,000 received by persons legally dependent on the decedent.

Section 1087m5 provides in substance for the following exemptions:

(1) a. To an individual, $800.

b. To husband and wife, $1,200.

c. For each child under 18 years, $200.

[134 N.W. 677]

d. For each additional person legally and wholly dependent on the taxpayer for support, $200.

e. These exemptions do not apply to nonresidents, nor to firms, corporations, or jointstock companies. In computing such exemptions and the amounts of taxes payable under section 1087m7, the income of a wife living with her husband shall be added to the husband's, and the income of each child living with its parent or parents shall be added to the parents' income.

(2) Income of mutual, savings, or loan, and building associations, and of any religious, scientific, educational, benevolent, or other association not organized or conducted for pecuniary profit.

(3) Income from property and privileges by persons now required to pay taxes or license fees into the state treasury in lieu of taxes. Such persons shall continue to pay taxes and license fees as heretofore.

(4) Income received by the United States, the state, and all counties, cities, villages, school districts, or other political units of the state.

Section 1087m6 provides, in substance, that the tax, after making such deductions and exemptions, shall be computed at the following rates:

+-------------------------------------------------+
                ¦(1)¦a. On first $1,000 or part thereof, ¦1% ¦
                +---+--------------------------------------+------¦
                ¦ ¦b. On second $1,000 or part thereof, ¦1 1/4%¦
                +---+--------------------------------------+------¦
                ¦ ¦c. On third $1,000 or part thereof, ¦1 1/2%¦
                +---+--------------------------------------+------¦
                ¦ ¦d. On fourth $1,000 or part thereof, ¦1 3/4%¦
                +---+--------------------------------------+------¦
                ¦ ¦e. On fifth $1,000 or part thereof, ¦2% ¦
                +---+--------------------------------------+------¦
                ¦ ¦f. On sixth $1,000 or part thereof, ¦2 1/2%¦
                +---+--------------------------------------+------¦
                ¦ ¦g. On seventh $1,000 or part thereof, ¦3% ¦
                +---+--------------------------------------+------¦
                ¦ ¦h. On eighth $1,000 or part thereof, ¦3 1/2%¦
                +---+--------------------------------------+------¦
                ¦ ¦i. On ninth $1,000 or part
...

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135 practice notes
  • State ex rel. Knox v. Gulf, M. & N.R. Co., 25044
    • United States
    • Mississippi Supreme Court
    • June 1, 1925
    ...806; 227 Mass. 523, 130 N.E. 99; 142 N.E. 829. Wisconsin adopted an amendment in 1908 authorizing a graduated income tax. Bolens v. Frear, 148 Wis. 456, 1915 B 569. And South Carolina has in section 1, article 10, of its Constitution the following: "That the general assembly may provide for......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...204 N.C. 365, 168 S.E. 397, 400, 90 Page 239 A.L.R. 476, affirmed 291 U.S. 642, 54 S.Ct. 437, 78 L.Ed. 1040; State Frear, 148 Wis. 456, 134 N.W. 673, 689, 135 N.W. 164, L.R.A. 1915B, 569, 606, Ann. Cas. 1913A, 4 But aside from a theoretical discussion of the nature of an income tax, we thin......
  • Colgate v. Harvey
    • United States
    • Vermont United States State Supreme Court of Vermont
    • November 14, 1934
    ...deduction as is now under discussion is in essenee a means of equalizing the burden of taxation rather than an exemption. State v. Frear, 148 Wis. 456, 134 N. W. 673, 135 N. W. 164, L. R. A. 1915B, 569, 606, Ann. Cas. 1913A, 1147, 1156. The provision is free from constitutional objections, ......
  • Massachusetts Teachers Ass'n v. Secretary of Com.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • August 4, 1981
    ...Housing: Synopsis and Commentary, 30 Nat'l Tax J. 435 (1977). The Wisconsin Income Tax Law of 1911, upheld in Income Tax Cases, 148 Wis. 456, 512-513, 134 N.W. 673 (1912), appeal dismissed sub nom. Bolens v. Wisconsin, 231 U.S. 616, 34 S.Ct. 272, 58 L.Ed. 400 (1914), included the estimated ......
  • Request a trial to view additional results
135 cases
  • State ex rel. Knox v. Gulf, M. & N.R. Co., 25044
    • United States
    • Mississippi Supreme Court
    • June 1, 1925
    ...806; 227 Mass. 523, 130 N.E. 99; 142 N.E. 829. Wisconsin adopted an amendment in 1908 authorizing a graduated income tax. Bolens v. Frear, 148 Wis. 456, 1915 B 569. And South Carolina has in section 1, article 10, of its Constitution the following: "That the general assembly may provide for......
  • Hunton v. Commonwealth
    • United States
    • Virginia Supreme Court of Virginia
    • January 16, 1936
    ...204 N.C. 365, 168 S.E. 397, 400, 90 Page 239 A.L.R. 476, affirmed 291 U.S. 642, 54 S.Ct. 437, 78 L.Ed. 1040; State Frear, 148 Wis. 456, 134 N.W. 673, 689, 135 N.W. 164, L.R.A. 1915B, 569, 606, Ann. Cas. 1913A, 4 But aside from a theoretical discussion of the nature of an income tax, we thin......
  • Colgate v. Harvey
    • United States
    • Vermont United States State Supreme Court of Vermont
    • November 14, 1934
    ...deduction as is now under discussion is in essenee a means of equalizing the burden of taxation rather than an exemption. State v. Frear, 148 Wis. 456, 134 N. W. 673, 135 N. W. 164, L. R. A. 1915B, 569, 606, Ann. Cas. 1913A, 1147, 1156. The provision is free from constitutional objections, ......
  • Massachusetts Teachers Ass'n v. Secretary of Com.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • August 4, 1981
    ...Housing: Synopsis and Commentary, 30 Nat'l Tax J. 435 (1977). The Wisconsin Income Tax Law of 1911, upheld in Income Tax Cases, 148 Wis. 456, 512-513, 134 N.W. 673 (1912), appeal dismissed sub nom. Bolens v. Wisconsin, 231 U.S. 616, 34 S.Ct. 272, 58 L.Ed. 400 (1914), included the estimated ......
  • Request a trial to view additional results

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