State v. Andersen

• Decision Date: 27 March 1968
• Docket Number: No. 36241,36241
• Citation: 208 So.2d 814
• Parties: STATE of Florida, Appellant, v. Martin ANDERSEN, Appellee. STATE of Florida, Appellant, v. Martin ANDERSEN, as Trustee for Jeannette Andersen, Appellee. STATE of Florida, Appellant, v. Martin ANDERSEN, as Trustee for Marcia Andersen Murphy, Appellee.
• Court: Florida Supreme Court

Page 814

208 So.2d 814

STATE of Florida, Appellant, v. Martin ANDERSEN, Appellee.

STATE of Florida, Appellant, v. Martin ANDERSEN, as Trustee for Jeannette Andersen, Appellee.

STATE of Florida, Appellant, v. Martin ANDERSEN, as Trustee for Marcia Andersen Murphy, Appellee.

No. 36241.

Supreme Court of Florida.

March 27, 1968.

Rehearing Denied April 30, 1968.

Earl Faircloth, Atty. Gen., Fred M. Burns and Edward D. Cowart, Asst. Attys. Gen., for appellant.

Lawrence E. Dolan, of Akerman, Senterfitt, Eidson, Mesmer & Robbinson, Orlando, for appellee.

ERVIN, Justice.

Martin Andersen, individually and as Trustee for Jeannette Andersen and also as Trustee for Marcia Andersen Murphy, brought suits in the Ciruit Court of Orange County, Florida to enjoin the collection of Class D intangible personal property taxes for the year 1966 upon certain promissory notes, as follows:

(1) Fifteen notes of a series executed by the Sentinel Star Company in favor of Martin Andersen, twelve of which are in the principal amount of $584,522.00, each. These twelve mature consecutively, the first on August 31, 1968 and the remaining eleven on August 31st of each year thereafter i.e., until August 31, 1979. The last three notes are in the principal sums of $800,000; $1,200,000 and $1,507,132, respectively, all maturing on August 31, 1980. Interest on these notes is at the rate of four per cent per annum, except as to the last five notes of the series the interest is increased to five per cent per annum after August 31, 1975. The total of the principal of these fifteen notes is $10,521,396.

(2) Thirteen notes of a series executed by the Sentinel Star Company in favor of Martin Andersen as Trustee for Jeannette Andersen; twelve of which are in the principal amount of $242,179.50 each. These twelve mature consecutively, the first on August 31, 1968 and the remaining eleven on August 31st of each year thereafter, i.e., until August 31, 1979. The thirteenth note is in the principal sum of $1,453,077 and matures August 31, 1980. Interest on these notes is at the rate of four per cent per annum, except as to the last five notes of the series interest is increased to five per cent per annum after August 31, 1975. The total of the principal of these notes is $4,359,231.00.

(3) Thirteen promissory notes of a series executed by the Sentinel Star Company in favor of Martin Andersen, Trustee for Marcia Andersen Murphy; twelve of which are in the principal amount of $121,076.55 each. These twelve mature consecutively, the first on August 31, 1968 and the remaining eleven on August 31st of each year thereafter, i.e., until August 31, 1979. The thirteenth note is in the principal sum of $726,459.30 and matures August 31, 1980. Interest on these notes is at the rate of four per cent per annum, except as to the last five notes of the series interest is increased to five per cent per annum after August 31, 1975. The total of the principal of these notes is $2,179,377.90.

In his suit the plaintiff, Martin Andersen, alleges his promissory notes:

'* * * are in no wise secured by a lien upon real estate and therefore were returned as 'Class D intangible personal property,' as that term is defined in Section 199.022 Florida Statutes (1965) * * *. Were these notes classified as C--1 or C--2 intangible personal property, they would be taxed two mills, which tax would be levied only once and would amount to a total of only $21,042.00. But because these fifteen notes are classified as Class D intangibles and are taxed annually at one mill on their just valuation, plaintiff will be required to pay over the next fifteen years a total of $100,668.00. * * *

'5. There is no justification for distinguishing between the obligations represented by plaintiff's unsecured notes and obligations represented by notes secured by a lien on either Florida or out-of-state real property. Therefore, the classifications created by §§ 199.022(3)(a) (Class C--11 (C--1)), 199.022(3)(b) (Class C--2), and 199.022(4) (Class D), are arbitrary and capricious under both the Florida and Federal Constitutions; and to tax plaintiff's notes annually at one mill rather than once at two mills is violative of the uniform and equal provisions of Article IX, Section 1, of the Florida Constitution (F.S.A.) and the equal protection and due process clauses of the Fourteenth Amendment of the Federal Constitution.

'6. Alternatively, he annual one mill tax imposed on plaintiff's Class D obligations is violative of the uniform and equal provision of Article IX, Section 1, of the Florida Constitution because the rate of taxation imposed on Class D obligations is greater than the rates imposed on the obligations recently classified as C--2 by the Legislature.'

Similar allegations appear in the suits of Martin Andersen as Trustee. In the suit relating to Jeannette Andersen it is contended that if the notes involved therein were classed C--1 or C--2 the intangible tax thereon levied only once would total $8,714.00; but classified as Class D intangibles and taxed one mill annually over the next fifteen years the total tax paid would be $41,709.00. In the suit relating to Marcia Andersen Murphy a two mill one time intangible personal property tax levy on the notes involved therein would amount to only $4,357.00, but a one mill intangible tax over the next fifteen years thereon would total $20,851.00.

The Tax Assessor of Orange County, Florida, who was named defendant in the suits, defaulted therein but the Attorney General having appeared in the cases pursuant to authority of statute (see F.S. section 16.01, F.S.A.; State ex rel. Landis v. S. H. Kress & Co., 115 Fla. 189, 155 So. 823; 7 Am.Jur.2d 7 Attorney General § 6.) filed motions to dismiss and answers. On motion of plaintiffs, in which the Attorney General joined, the suits were consolidated. Plaintiffs moved the Circuit Court for judgment on the pleading. The Circuit Court entered its final judgment holding as to plaintiffs' unsecured promissory notes as follows:

'(a) When compared with Class C--2 intangibles, § 199.022(3)(b), Class D intangibles, § 199.022(4), constitute an unreasonable and arbitrary classification; therefore the annual one-mill Class D tax imposed by § 199.141(4) violates the uniform and equal provision of Article IX, Section 1, of the Florida Constitution and the equal protection and due process requirements of Sections 1 and 12 of the Declaration of Rights of the Florida Constitution and of the Fourteenth Amendment of the Federal Constitution.

'(b) When compared with Class C--1 intangibles, § 199.022(3)(a), Class D intangibles constitute an unreasonable and arbitrary classification; therefore, the annual one-mill tax imposed by § 199.141(4) violates the uniform and equal provision of Article IX, Section 1, of the Florida Constitution and the equal protection and due process requirements of Sections 1 and 12 of the Declaration of Rights of the Florida Constitution and of the Fourteenth Amendment of the Federal Constitution.

'(c) Alternatively, even if Class D constitutes a valid classification when compared with Class C--1, the burden of the annual one-mill Class D tax is, without sufficient justification, so much greater in the cases at bar than the burden of the one-time two-mill tax under Class C--1 that it violates the due process requirements of Section 12 of the Declaration of Rights of the Florida Constitution and the Fourteenth Amendment of the Federal Constitution.

'3. Defendant tax assessor and its (sic) successors and privies are hereby permanently enjoined from assessing or in any way attempting to assess or collect the annual one-mill tax prescribed by § 199.141(4) Fla.Stat. (1965) insofar as concerns plaintiffs' unsecured promissory notes identified in the three complaints in these consolidated actions.'

The State, through the Attorney General, filed this appeal. We have jurisdiction of the appeal because the Circuit Court held F.S. sections 199.022(4) and 199.141(4), F.S.A., unconstitutional insofar as they attempt to impose Class D intangible personal property taxes upon plaintiffs' unsecured promissory notes.

We disagree with the holding of the Circuit Court and reverse.

Pertinent constitutional and statutory provisions relating to Class D, Class C--1 and Class C--2 are as follows: Section 1, Article IX of the State Constitution provides in part:

'The Legislature shall provide for a uniform and equal rate of taxation, except that it may provide for special rate or rates on intangible property, but such special rate or rates shall not exceed two mills on the dollar of the assessed valuation of such intangible property; provided, that as to any obligations secured by mortgage, deed of trust, or other lien, the Legislature may prescribe an intangible tax of not more than two (2) mills on the dollar, which shall be payable at the time such mortgage, deed of trust, or other lien is presented for recordation, said tax to be in lieu of all other intangible assessments on such obligations. * * *'

F.S. section 199.022, F.S.A., classifies for the purpose of taxation intangible personal property into four classes to be known as classes A, B, C (C--1, C--2) and D intangible personal property. Class A includes money deposited in banks and building, loan and saving associations, and legal tender notes, certificates of deposit, cahsiers and certified checks, drafts and bills of exchange. Class B includes all corporate bonds and stocks, and all obligations dated prior to January 1, 1942 secured by mortgages or other liens upon real or personal estates situated in Florida. Class C includes:

'Class C--1, all notes, bonds, and other obligations bearing date subsequent to December 31, 1941, for payment of money which are secured by mortgage, deed of trust or other liens upon real property situated in Florida; provided that only that part of the value of the mortgage, deed of trust, or other lien, the real property of...