State ex rel. Lewis v. Smith

• Citation: 158 Ind. 543,63 N.E. 214
• Parties: STATE ex rel. LEWIS et al. v. SMITH, Auditor.
• Decision Date: 28 February 1902
• Court: Supreme Court of Indiana

158 Ind. 543

63 N.E. 214

STATE ex rel. LEWIS et al.

v.SMITH, Auditor.

Supreme Court of Indiana.

Feb. 28, 1902.

Dissenting opinion. For majority opinion, see 63 N. E. 25.

DOWLING, J.

After careful and impartial reflection I am constrained to withhold my assent from the reasoning and conclusions of the opinion adopted by the majority of the court. The importance of the question presented upon this appeal renders it proper to state with some particularity the grounds of such dissent. In determining the case, the court is required to interpret certain provisions of the state constitution. Those provisions relate to the highest function of government,-the power of taxation. Vital to the commonwealth, its abuse or misdirection is disastrous to the citizen. The subject occupies a conspicuous place in the organic law of the state, and the language employed concerning it is clear, forcible, and, as it seems to me, unmistakable in its meaning. The question for decision is the constitutional validity of an act of the legislature entitled “An act concerning the taxation of real estate encumbered by mortgage, and declaring an emergency,” which took effect, if valid, March 4, 1899. Acts 1899, p. 422 (sections 8417-8419 et seq., Burns' Rev. St. 1901). That portion of the act necessary to be considered is contained in the first three sections, and reads as follows:

“Section 1. Be it enacted,” etc., “that any person being the owner of real estate liable for taxation within the state of Indiana, and being indebted in any sum, secured by mortgage upon real estate, may have the amount of such mortgage indebtedness, not exceeding seven hundred dollars, existing and unpaid upon the first day of April of any year, deducted from the assessed valuation of mortgage premises for that year, and the amount of such valuation remaining after such deduction shall have been made shall form the basis for assessment and taxation for said real estate for said year. Provided, that no deduction shall be allowed greater than one-half of such assessed valuation of said real estate.

“Sec. 2. Any person desiring to avail himself or herself, of the provisions of this act shall, between the first day of March and the first day of May of each year, file with the auditor of the county wherein said real estate is situate a sworn statement of the amount of such mortgage indebtedness existing and unpaid on the first day of March of that year, giving the name and residence of the mortgagee, and shall also give the name and residence of the assignee or bona fide owner or holder of said mortgage, if known, and if not known, said person shall state that fact, and shall also state the record and page where said mortgage is recorded, and a brief description of the real estate upon which such encumbrance exists.

“Sec. 3. The county auditor with whom such statement is filed, in case the money, notes or credits evidenced by such mortgage indebtedness be liable for taxation in any county in the state of Indiana, other than the one wherein such real estate is situate, shall immediately certify and transmit a copy of such sworn statement to the auditor of the county wherein that mortgagee, assignee or bona fide holder or owner of said mortgage resides, or wherein the money, notes or credits evidenced by such mortgage is otherwise taxable.”

These sections, as I believe, are plainly and directly in conflict with three separate provisions of the state constitution, namely: First. Section 23, art. 1, of the bill of rights: “The general assembly shall not grant to any *215citizen, or class of citizens, privileges or immunities which, upon the same terms, shall not equally belong to all citizens.” Second. Section 22, art. 4: “The general assembly shall not pass local or special laws in any of the following enumerated cases, that is to say: *** For the assessment and collection of taxes for state, county, township, or road purposes.” Third. Section 1, art. 10: “The general assembly shall provide by law for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal, except such only for municipal, educational, literary, scientific, religious and charitable purposes, as may be especially exempted by law.” The act in question is subject to the following objections: (1) It violates the rule of the constitution requiring uniformity and equality in the rate of assessment and taxation; (2) the act is a special law for the assessment of taxes for state, county, township, and road purposes; (3) it grants to one class of citizens privileges and immunities which upon the same terms will not equally belong to all citizens; and (4) it exempts from taxation real estate not held for municipal, educational, literary, scientific, religious, or charitable purposes. If it shall be found upon examination that anyone or more of these propositions is true, then the statute must be held invalid. All of the constitutional provisions referred to have been in force since November 1, 1851. Carefully prepared and comprehensive statutes regulating the assessment and collection of taxes have been adopted by the general assembly from time to time; but from the taking effect of the state constitution until March 4, 1899, a period of nearly half a century, no statute exempted from assessment for taxation any real estate on the ground that it was encumbered by a lien of a mortgage. This circumstance is not conclusive, but, as evidence of a practical interpretation of the constitution by the legislature, the failure for so great a length of time to recognize mortgage liens or lands as proper deductions from the value of the lands for the purposes of taxation is entitled to some consideration. It is to be observed, too, that this practical interpretation of the constitution as prohibiting such deductions is perfectly consistent with the language of that instrument, and is reasonable and natural. Stuart v. Laird, 1 Cranch, 299, 2 L. Ed. 115;Martin v. Hunters' Lessee, 1 Wheat. 304, 351, 4 L. Ed. 97;Cohens v. Virginia, 6 Wheat. 264, 418. 5 L. Ed. 257;Bank v. Halstead, 10 Wheat. 51, 63, 6 L. Ed. 264;Ogden v. Saunders, 12 Wheat. 290, 6 L. Ed. 606;Minor v. Happersett, 21 Wall. 162, 22 L. Ed. 627;State v. State Treasurer, 23 Mich. 499;McCulloch v. Maryland, 4 Wheat. 316, 4 L. Ed. 579;Cooley v. Port Wardens, 12 How. 299, 13 L. Ed. 996; The Genesee Chief v. Fitzhugh, 12 How. 443, 13 L. Ed. 1058;Rogers v. Goodwin, 2 Mass. 475;Bingham v. Miller, 17 Ohio, 446, 49 Am. Dec. 471;Board v. Bunting, 111 Ind. 143, 12 N. E. 151. Again, an examination of the act of March 4, 1899, discloses that it did not receive the approval of the governor, but became a law without his signature. While the failure of the executive to approve a bill does not affect its validity if it becomes a law without his approval, the fact remains that one of the great departments of the state government has withheld its recognition of the statute. The nonapproval of the act by the governor is at least suggestive of doubt in the mind of the executive in the validity of the law. It is also to be noted that the act under consideration is not a part of a general statute embracing a complete system for the assessment and collection of taxes, but is sporadic in its character, and stands separate and apart from all other legislation upon the subject of taxation. Such being its nature, the inference is not strained that it probably did not receive the attention which would have been accorded to it if it had constituted a portion of a general statute regulating the assessment and collection of taxes.

But passing from these minor objections to those arising from the constitution, it will be found that, if the statute is to stand, the constitution must give way. In other words, to sustain the set the court must, in the language of Judge Story, “abrogate the text, fritter away its obvious sense, and narrow down its true limitations.” The first clause of section 1, art. 10, of the constitution, declares that “the general assembly shall provide by law for a uniform and equal rate of assessment and taxation.” By this clause the principle which must govern all legislation on the subject of the assessment and collection of taxes is announced. At the very basis of every valid statute of this kind lies the condition that the rate of assessment and taxation must be uniform and equal throughout the district or locality in which the tax is levied. An “assessment” is defined to be a valuation made by authorized persons according to their discretion, as opposed to a sum certain or determined by law. It is a valuation of the property of those who are to pay the tax, for the purpose of fixing the proportion which each man shall pay. Under our constitution the rule or ratio of valuation of real estate of those who are to pay the tax must be uniform and equal throughout the state, and the ratio of taxation must be uniform and equal throughout the district or locality affected. This is the first and paramount requirement. The second clause of section 1, art. 10, is evidently subsidiary to the first. It relates to the means by which a uniform and equal assessment is to be obtained. The general assembly is to “provide such regulations as shall secure a just valuation for taxation of all property, real and personal.” The obvious meaning of this provision*216is that competent persons shall be appointed or elected as assessors to determine the valuation to be put upon property for the purpose of taxation, and that the general mode of procedure shall be fixed by law, but none of the regulations so prescribed can change the rule of uniformity and equality of valuation immovably established by the first clause of the section. The danger and abuse against which the constitution was intended to guard was an arbitrary valuation of property by the state. Instead...