State ex rel. Lynch v. Rhodes

• Decision Date: 13 May 1964
• Docket Number: No. 38738,38738
• Citation: 176 Ohio St. 251,27 O.O.2d 155,199 N.E.2d 393
• Parties: , 27 O.O.2d 155 The STATE ex rel. LYNCH v. RHODES et al., Ohio Sinking Fund Commissioners.
• Court: Ohio Supreme Court

Page 251

176 Ohio St. 251

199 N.E.2d 393, 27 O.O.2d 155

The STATE ex rel. LYNCH v. RHODES et al., Ohio Sinking Fund Commissioners.

No. 38738.

Supreme Court of Ohio.

May 13, 1964.

Saker & Yannon, Columbus, for relator.

William B. Saxbe, Atty. Gen., Gerald A. Donahue, Bricker, Evatt, Barton, Eckler & Niehoff, Columbus, Squire, Sanders & Dempsey and James C. Davis, Cleveland, for respondents.

PER CURIAM.

This controversy grows out of two amendments of the Ohio Constitution and legislation enacted to implement such amendments. In 1955, the voters of this state approved the addition of Section 2e to Article VIII, which authorizes the state to borrow money and issue bonds or other obligations not to exceed $150,000,000 for certain capital improvements. In pertinent part, Section 2e provides:

'* * * during such time as such bonds or other obligations are outstanding, and moneys in the capital improvements bond retirement fund are insufficient to pay all interest, principal and charges for the issuance and retirement of such bonds and other obligations, there shall be levied, for the purpose of paying interest, principal and charges for the issuance and retirement of such bonds and other obligations, an excise tax [sales and use] on * * * cigarettes * * * [one cent per pack]. The moneys received * * * from the * * * tax on * * * cigarettes * * * shall be paid into the capital improvements bond retirement fund. The general assembly of Ohio shall enact laws providing for the collection of such taxes.' (Emphasis added.) In providing for the collection of the cigarette tax, the 101st General Assembly amended the existing cigarette tax act and enacted Sections 5743.021 and 5743.321, Revised Code, effective March 5, 1956, which impose an additional tax on the sale and use of cigarettes in the amount of one cent per pack.

In 1963, the voters of this state approved the addition of Section 2f to Article VIII, which authorizes the state to borrow money and issue bonds or other obligations not to exceed $250,000,000 for certain capital improvements. In pertinent part, Section 2f provides that an excise tax on the sale and use of cigarettes of one cent per pack 'shall be levied during the period beginning with January 1, 1965, and continuing until December 31, 1972, and thereafter as long as any of such bonds and other obligations are outstanding and moneys in the separate and distinct bond retirement fund hereinafter created are insufficient to pay all interest, principal, and charges for the issuance and retirement of such bonds and other obligations.' (Emphasis added.)

Acting under the constitutional mandate of Section 2f to enact law providing for the collection of such cigarette taxes, the 105th General Assembly amended the existing cigarette tax act and enacted Sections 5743.023 and 5743.322, Revised Code which impose a new additional tax on the sale and use of cigarettes in the amount of one cent per pack beginning January 1, 1965.

As amended by House Bill No. 971, Sections 5743.021 and 5743.321, Revised Code, provide that the collection of the additional cigarette tax of one cent per pack levied in 1955 shall be continued until December 31, 1964, and that thereafter the tax will be suspended until the Director of Finance makes a proper certification of facts to the Tax Commissioner who will resume collection of the tax until the Director of Finance makes another certification of facts upon which the Tax Commissioner will again suspend collection of the tax. The number of times that the collection of the tax may be so suspended and resumed is not limited by the amended statutes.

Relator in filing his petition and demurrer to respondents' answer challenges the constitutionality of Sections 5743.021 and 5743.321, Revised Code, as amended by House Bill No. 971, on the grounds (1) that the General Assembly unlawfully attempted to delegate legislative power to the Director of Finance and to the Tax Commissioner in contravention of Section 18, Article I, Section 1, Article II, and Sections 4 and 5, Article XII, Ohio Constitution; (2) that the diversion of cigarette tax revenues pledged to the retirement of bonds and other obligations issued pursuant to Section 2e, Article VIII, Ohio Constitution, is contrary to Section 10, Article I, United States Constitution, and Section 28, Article II, Ohio Constitution, which prohibit the enactment of any law impairing the obligation of contracts; and (3) that the provisions of Sections 5743.021 and 5743.321, Revised Code, with regard to the suspension on December 31, 1964, of the one-cent-per-pack tax upon cigarettes, contravene...