State ex rel. Porterie v. H. L. Hunt, Inc

• Decision Date: 01 July 1935
• Docket Number: 33450
• Citation: 162 So. 777,182 La. 1073
• Court: Louisiana Supreme Court
• Parties: STATE ex rel. PORTERIE et al. v. H. L. HUNT, Inc

162 So. 777

182 La. 1073

STATE ex rel. PORTERIE et al. v. H. L. HUNT, Inc

No. 33450

Supreme Court of Louisiana

July 1, 1935

Appeal from Eighth Judicial District Court, Parish of La Salle; F E. Jones, Judge.

Suit by the State, on the relation of Gaston L. Porterie and others against H. L. Hunt, Incorporated. From a judgment rejecting plaintiff's demand, plaintiff appeals.

Annulled, and judgment ordered for plaintiff.

Gaston L. Porterie, Atty. Gen., and Justin C. Daspit, Fred. A Blanche, and E. L. Richardson, Sp. Asst. Attys. Gen., for appellant.

P. S. Gaharan, Jr., of Jena, for appellee.

ROGERS Justice. ODOM, J., dissents.

OPINION

ROGERS, Justice.

This suit involves the constitutionality of Act No. 6 of 1932, levying an excise, license, or privilege tax on the business of manufacturing or generating, selling, or using electricity for heat, light, or power. The district court held that the statute was unconstitutional and rejected plaintiff's demand. Plaintiff appealed.

The defendant, H. L. Hunt, Incorporated, an Arkansas corporation, was engaged in business in the parish of La Salle, La., from August 1, 1932, up to and including July 31, 1934. Defendant's business consisted of operating and pumping oil wells and transporting and handling oil in said parish and state. In the conduct of its business during the fiscal years ending July 1, 1933, and July 31, 1934, the defendant corporation used electrical and mechanical power of more than 10 horsepower, and, in the creation of the power, the defendant corporation operated machines or apparatus known as "prime movers," of a total capacity of 1,050 horsepower.

Ignoring the provisions of Act No. 6 of 1932, the defendant failed to make a return to the supervisor of public accounts showing the total horsepower of the machines or apparatus operated by it during the fiscal year ending July 31, 1933. Defendant filed a return for the fiscal year ending July 31, 1934, and attached to the return a check covering one-half of the amount of the tax due, in the belief, evidently, that the amendment to section 3, Act No. 6 of 1932 (Act No. 32 of 1934, § 1), reducing the tax from $ 1 to 50 cents per horsepower, became effective during the fiscal year for which the return was made. The supervisor of public accounts made a demand on defendant for the balance due on the tax for the year ending July 31, 1934, and also for a report showing the total horsepower of the machinery or apparatus operated by defendant during the fiscal year ending July 31, 1933. Defendant refused to comply with the demands, and the supervisor of public accounts executed under oath a statement of the taxes due by defendant. This statement was filed in the mortgage records of the parish of La Salle to operate as a lien against defendant's property.

The state of Louisiana, through its Attorney General and its supervisor of public accounts, then filed this suit to collect $ 1,575, as the amount of the tax due, with penalties, interest, and attorney's fees. The suit is predicated on section 3 of Act No. 6 of 1932.

Section 1 of Act No. 6 of 1932 levies an annual excise, license, or privilege tax on the business of manufacturing or generating electricity for heat, light, or power. Section 2 levies the tax on the business of selling electricity for the purposes stated. Section 3 levies the tax on any business in which electrical or mechanical power of more than 10 horsepower is used. The taxes levied under sections 1 and 2 are fixed at 2 per cent. per annum of the gross receipts of the sales. Under section 3 the rate of taxation is fixed at $ 1 per annum for each horsepower of capacity of the machinery or apparatus known as the "prime mover" or "prime movers" operated by the taxpayer. The taxes authorized by the statute are in addition to all other taxes now imposed by law.

The defendant attacks the constitutionality of Act No. 6 of 1932 on five grounds, viz.:

(1) That the tax levied under section 3 is a property tax levied on property which has borne the maximum amount of taxation permitted under article 10, § 3, of the State Constitution.

(2) That the tax, so far as it applies to defendant, is violative of section 21 of article 10 of the State Constitution, prohibiting the levying of any tax other than a severance tax on oil and gas rights.

(3) That the tax is violative of section 8 of article 10 of the State Constitution, in that the tax is arbitrarily fixed and is neither classified, graduated, nor progressive.

(4) That the statute is violative of section 1 of article 10 of the State Constitution (as amended, see Act No. 162 of 1926), requiring that taxation shall be uniform, and of the Fourteenth Amendment of the Federal Constitution, in that it denies defendant the equal protection of the law.

(5) That the statute is violative of section 2 of article 1 of the State Constitution and of the Fourteenth Amendment to the Federal Constitution, in that it deprives defendant of its property without due process of law.

We shall discuss and dispose of defendant's contentions in the order of their statement.

1. Under this ground of attack on the statute, defendant complains that the tax in dispute is a property tax, not an excise or privilege tax, and that as a property tax it exceeds the limit of 5 1/4 mills, fixed by section 3 of article 10 of the State Constitution, viz.: "The rate of State taxation on property for all purposes shall not exceed, in any one year, five and one-quarter mills on the dollar of its assessed value."

Defendant argues that, notwithstanding the declaration in the statute that the tax is levied on any business or occupation in which mechanical or electrical machines of more than 10 horsepower are used, the tax in realty is not upon the business or occupation of the user of the machines, but is a direct tax upon the only thing of value in the machines, which is their use; that, if it were not for the use to which they are put, the machines would be without any pecuniary value; that it is the value resulting from such use that determines their assessment value for the purpose of property taxation.

The answer to defendant's complaint and argument is that the constitutional limit of taxation to 5 1/4 mills on the dollar applies onlyto the ad valorem tax that is collected annually on all taxable property according to its assessed value. The tax is levied on the right of ownership. Gulf Refining Co. v. McFarland, 154 La. 251, 97 So. 433; Lionel's Cigar Store v. McFarland, 162 La. 956, 111 So. 341. The tax is levied each year based on the assessed value of the property, irrespective of whether the property is used or not.

The tax levied under Act No. 6 of 1932 is not based on the ownership and the assessed value of the machines or apparatus described in the act. It is based on their use in the user's business, whether he is the owner or not, and irrespective of their assessed value. Under the statute, no tax is due by the owner of the machines or apparatus described therein unless they are used in the conduct of his business. But the owner's nonuse of the machines or apparatus does not exempt him from the payment of an ad valorem or property tax thereon.

Act No. 6 of 1932 designates the tax levied under its provisions as an excise, license, or privilege tax. What characterizes the tax in dispute as a license or privilege tax is that it is collectible only from those who in the conduct of their businesses or occupations use electrical or mechanical power of more than 10 horsepower. The measure of the tax is the horsepower capacity, exceeding 10, of the machines or apparatus used in generating the electrical or mechanical power used in the taxpayer's business. Ownership is immaterial. The tax is not based on ownership. It is not levied or collectible from the owner of the property unless he uses it in the conduct of his business and then only in proportion to the horsepower capacity of the property.

The distinction between a property tax and an excise tax is set forth in Cooley on Taxation (4th Ed.) vol. 1, p. 131, § 45, as follows, viz.:

"Generally the answer to the question whether a particular tax is a property tax or an excise tax is so apparent that there is no room for argument; but in many phases the question has been the subject of much litigation, especially in regard to whether a tax on a corporation is an excise tax or a property tax. If the tax is directly on property itself, the tax is a property tax; but a tax is an excise tax rather than a property tax where it is not a tax on property as such, but upon certain kinds of property, having reference to their origin and their intended use. Another thing to be noted, it has been said, is that the obligation to pay an excise tax is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the excise, and the element of absolute and unavoidable demand, as in the case of a property tax, is lacking."

In the same volume and section of his work, the learned author gives as some examples of taxes which have been construed as excise taxes rather than as property taxes, inheritance taxes, taxes upon transfers of stock, taxes on the privilege of recording mortgages, taxes on the sale of gasoline, taxes on the use of vehicles.

The plaintiff cites three cases in our jurisprudence which seem to be particularly appropriate to the issue involved in this case. The cited cases are: Merriam v. City of New Orleans, 14 La.Ann. 318; Hodgson v. City of New Orleans, 21 La.Ann. 301, and State v. Heymann, 178 La. 479, 151 So. 901.

In the Merriam Case the plaintiff attacked as unconstitutional a municipal ordinance levying a...