State ex rel. Linde v. Packard

• Decision Date: 10 December 1915
• Citation: 32 N.D. 301,155 N.W. 666
• Parties: STATE ex rel. LINDE, Atty. Gen., et al. v. PACKARD et al.
• Court: North Dakota Supreme Court

32 N.D. 301

155 N.W. 666

STATE ex rel.LINDE, Atty. Gen., et al.

v.PACKARD et al.

Supreme Court of North Dakota.

Dec. 10, 1915.

Syllabus by the Court.

Action to restrain the tax commission from enforcing chapter 255, Session Laws of 1915.

Following State v. Harmon, 23 N. D. 513, 137 N. W. 427, it is held that the question here presented is publici juris, directly affects the sovereignty of the state, will prevent a multiplicity of suits, is timely brought, and therefore this court will issue its original prerogative writ of prohibition upon the relation of a private suitor.

Chapter 255, Session Laws 1915, is in contravention of section 175 of the state Constitution.

Original writ of prohibition by the State, on the relation of Henry J. Linde, Attorney General, and Henry Amerland, against Frank E. Packard and others. Writ issued.Lawrence & Murphy, of Fargo, for relator. Frank E. Packard, George E. Wallace, and H. H. Steele, all of Bismarck, for respondents.

BURKE, J.

Plaintiff brings this action to restrain the state tax commission from enforcing the provisions of chapter 255, S. L. 1915. This legislation had its origin in the popular belief that moneys and credits had in the past escaped taxation, but that the owners of said property were morally, if not legally, justified in taking some measure to avoid the payment of a 7 per cent. or 8 per cent. tax, which necessity doled out to the inhabitants of some of our cities, when the banks and other reputable depositaries would pay but 4 per cent. and 5 per cent. for the use of said money. It was therefore suggested by some of the people who interest themselves in legal reforms that, if a special and lighter rate were imposed upon money and credits, this class of property and the assessor would be able to get better acquainted. The only obstacle that presented itself was the Constitution, which, it seems, favored the theory of taxing all classes of property at the same rate, and contained several provisions inconsistent with this new theory of taxation. The reformers, however, proceeded to meet these obstacles in the very commendable manner of a constitutional amendment, and in the fall of 1914 the voters adopted a concurrent resolution (chapter 103 of the Session Laws of 1913) changing section 176 of the Constitution of North Dakota. After the amendment our Constitution read as follows:

“Taxes shall be uniform upon the same class of property, including franchises within the territorial limits of the authority levying the tax, and shall be levied and collected for public purposes only, but the property of the United States, and of the state, county and municipal corporations, shall be exempt from taxation; and the Legislative Assembly shall by a general law exempt from taxation property used exclusively for school, religious, cemetery, charitable or other public purposes, and personal property to any amount not exceeding in value $200 for each individual liable to taxation: Provided, that all taxes and exemptions in force when this amendment is adopted shall remain in force, in the same manner and to the same extent, until otherwise provided by statute.”

This section takes the place of old section 176, which provided that laws shall be passed taxing by uniform rule all property according to its true value in money. After the adoption of this amendment the Legislatureenacted chapter 255, S. L. 1915, which reads as follows:

“Section 1. Definition. Tax Rate. ‘Money’ and ‘credits' as the same are defined in section 2074 of the Compiled Laws of 1913, are hereby exempted from taxation other than that imposed by this act and shall hereafter be subject to an annual tax of two mills on each dollar of the fair cash value thereof. But nothing in this act shall apply to money or credits belonging to incorporated banks situated in this state.

Sec. 2. How Listed. All ‘money’ and all ‘credits' taxable under this act shall be listed in the manner provided in section 2095 of the Compiled Laws of 1913, but such listing shall be upon a separate blank from that upon which other personal property is listed.

Sec. 3. Tax Commission to Prepare Instructions. Form of Return. Blanks. The North Dakota tax commission shall annually prepare instructions for bringing in the lists required by the preceding section. They shall prepare and distribute through the county auditors to the assessors, a form for the return which the taxpayers are required to make by this act, and this form shall state the rate of taxation and be printed on a separate sheet, and shall be entirely distinct from the forms prepared for the returns of other classes of property. Such forms shall require only aggregate sums of credits and of moneys.

Sec. 4. Litigated Taxes. Any assessment of money and credits heretofore made, the legality of which has been placed in litigation and the collection of the tax thereon has been enjoined and is now pending in the court may be compromised and settled by payment at the rate of twenty-five mills on the assessed valuation of such moneys and credits.

Sec. 5. Emergency. Whereas, this act should be effective upon the assessment of taxes for the year 1915, an emergency exists and this law shall go into effect upon its passage and approval.”

Acting under this new law, the tax commission of North Dakota took steps looking to an assessment of the moneys and credits of our taxpayers in general and of our relator, Mr. Amerland, incidentally; whereupon this action was instituted. It is claimed by relator that chapter 255, S. L. 1915, violates clauses of the Constitution to which no amendments have been made. We will quote briefly from his brief:

“The petitioner alleges that the said legislative act violates several of the provisions of the Constitution of the state of North Dakota, all of which said alleged violations are set out in full in said petition. In said petition some ten alleged grounds of invalidity or unconstitutionality are set forth. While we respectfully insist upon the merits of each and every one of such propositions, there are, in our opinion, a limited number of questions which are so conclusive as to the invalidity and unconstitutionality of this law that we shall not discuss all of said ground of invalidity. * * * We therefore present for consideration to this court what we contend to be three unquestionable and direct violations of the fundamental law of this state: First, the act in question provides a fixed and arbitrary rate of taxation upon one class and subject of property without reference to the amount of revenue necessary to derive from the citizens of the state for public purposes; second, the act in question does not state distinctly the object of the same; third, the act in question is void and ineffective, in that it does not provide for any application, apportionment, or distribution of the revenues raised thereby.”

The tax commission and other defendants, instead of meeting this constitutional attack, dispute the right of plaintiff to maintain the action and the jurisdiction of this court to entertain the proceedings. This divides the controversy into two essential parts: First. Can the action be maintained? Second. Is the act unconstitutional?

[1] 1. The tax commission argues that: (a) The remedy of prohibition is not available under the facts disclosed by plaintiff's petition; (b) that the remedy by way of injunction is not available under the facts set forth in plaintiff's complaint; and (c) that the court has not jurisdiction to restrain a co-ordinate branch of the state government. Under (a) they urge that the tax commission has jurisdiction of the matters of the taxation of petitioner's moneys and credits, and that the same is taxable either under this new law or under the old law, and that therefore petitioner has no grievance. We do not believe this argument sound. Section 8470, C. L. 1913, provides:

“The writ of prohibition is the counterpart of the writ of mandamus. It arrests the proceedings of any tribunal, corporation, board or person, when such proceedings are without or in excess of the jurisdiction of such tribunal, corporation, board or person.”

While the tax commission may have jurisdiction of the subject of taxation, they are, nevertheless, governed by the Constitution and the laws of the state, and can only exercise their powers under legal authority. If the new law, as contended by the relator, is unconstitutional, they have no authority to act thereunder, and it is not a sufficient answer to say it might have acted legally by a return to the procedure of the old law. The mere fact that under the new law moneys and credits are to be taxed but two mills, whereas under the old law the tax would have been very much higher, does not confer any constitutional or legislative powers upon the tax commission, nor should it defeat relator's right to resist an illegal, though small, assessment. If the tax commission, therefore, is acting outside of its jurisdiction, the writ of prohibition is the proper remedy. See 32 Cyc. 606; State v. Fisk, 15 N. D. 219, 107 N. W. 191;State v. District Court, 17 N. D. 285, 115 N. W. 675, 15 L. R. A. (N. S.) 331;Bismarck Water Supply Co. v. Barnes, 30 N. D. 555, 153 N. W. 454. See, also, notes at 22 L. R. A. 699;69 Am. Dec. 198;49 Am. Rep. 287;23 Am. Rep. 622;53 Am. Rep. 110;16 L. R. A. (N. S.) 807;8 L. R. A. (N. S.) 125;7 Am. St. Rep. 484;98 Am. St. Rep. 865;105 Am. St. Rep. 122.

Defendants maintain that the complaint itself shows that the relator has another remedy, to wit, to pay the taxes and sue to recover the same. Cases cited by them, however, like Merchants' State Bank of Velva v. McHenry County, 31 N. D. ---, 153 N. W. 386, show the law under which the tax is levied constitutional.

It is claimed that the court has no jurisdiction to interfere with a co-ordinate branch of the state government. However, it is not against any lawful act of the tax commission that restraint is sought, but...