State v. Pinder

• Decision Date: 18 October 1919
• Citation: 30 Del. 416,108 A. 43
• Court: Court of General Sessions of Delaware
• Parties: STATE v. JAMES H. PINDER

108 A. 43

30 Del. 416

STATE v. JAMES H. PINDER

Court of General Sessions of Delaware, New Castle County

October 18, 1919

Court of General Sessions for New Castle County, September Term 1919.

INDICTMENT No. 143, September Term, 1919.

James H. Pinder, indicted for violating the state Income Tax Law demurs to the indictment. Demurrer overruled.

The indictment contained two counts. The first count charged that James H. Pinder "unlawfully did refuse to make a true and accurate return under oath to the state treasurer of the state of Delaware, in the form prescribed by the said state treasurer, setting forth specifically the gross amount of income from all separate sources and the aggregate of all exemptions and deductions authorized by law, for the calendar year 1918, he, the said James H. Pinder, having received during the calendar year of 1918, a gross income of $ 1,000 or over, against," etc. The second count is the same as the first, except it charges that James H. Pinder "unlawfully and willfully neglected to make a true and accurate return," etc.

The defendant filed a demurrer to the indictment, and the causes assigned raised the question of the constitutionality of the Income Tax Law. Chapter 26, Volume 29, Laws of Delaware.

The Court of General Sessions, considering that the questions of law involved ought to be heard by the Court in Banc, and upon the application of the parties, directed the same to be so heard. Article 4, § 15, Constitution 1897.

The cause, coming on to be heard in the Court in Banc, was argued before PENNEWILL, C. J., and BOYCE, CONRAD, RICE, and HEISEL JJ.

The causes of demurrer, and the four distinct grounds urged at the argument, in support of the demurrer, appear in the opinion of the Court in Banc.

Demurrer overruled.

David J. Reinhardt, Atty.-Gen., P. Warren Green, and Frank L. Speakman, Deputy Attys.-Gen., for the State.

Henry R. Isaacs and William W. Knowles for defendant.

CONRAD and HEISEL, J. J., sitting.

OPINION

PENNEWILL, C. J.

To the indictment the defendant filed a demurrer, the causes being stated as follows:

"1. That chapter 26, Volume 29, Laws of Delaware, being the statute law under which the indictment in said cause is framed and found, is, under the provision of article 8, section 1, of the Constitution of the State of Delaware, unconstitutional and void.

"2. That said statute, being the law under which the indictment in said cause is framed and found, is, under the provisions of article 8, section 1, of the Constitution of the State of Delaware, providing that all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, unconstitutional and void, in that it discriminates against citizens of the same class.

"3. That said statute, being the law under which the indictment in said cause is framed and found, is, under the provisions of article 8, section 1, of the Constitution of the State of Delaware, unconstitutional and void, in that the clear intendment of said article and section is that taxes shall be levied upon 'property' only, whereas the said defendant contends that the income of citizens is not 'property' and therefore not within the purview of said article and section of the Constitution.

"4. That said statute, being the law under which the indictment in said cause is framed and found, is, under the provisions of article 14, section 1, of the Amendments to the Constitution of the United States, providing that no state shall deny to any person within its jurisdiction the equal protection of the law, unconstitutional and void, inasmuch as said statute confers upon citizens to wit, the Governor of the state at the time of the enactment of said statute and other public officers of the state then in office during their then present terms of office respectively and citizens deriving income from the rentals of real estate and gains or profits from agricultural occupations, certain privileges which are not conferred upon other citizens of the same class.

"5. That said statute, being the law under which the indictment in said cause is framed and found, is, under the provisions of article 14, section 1, of the Amendments to the Constitution of the United States, providing that no state shall deny to any person within its jurisdiction the equal protection of the law, unconstitutional and void, inasmuch as it exempts out of the income of each taxable the sum of one thousand dollars ($ 1,000), no greater exemption being allowed to a married man, or to the head of a family, or to a citizen having persons dependent upon him for support, than to an unmarried person, or to a person not the head of a family, nor having those dependent for support upon him or her.

"6. That said statute is, under the provisions of article 14, section 1, of the Amendments to the Constitution of the United States, unconstitutional and void, in that thereby this state is attempting to deprive persons of liberty and property without due process of law.

"7. That said statute is, under the provisions of section 7, article 1, of the Constitution of this state, unconstitutional and void, in that thereby persons are deprived of liberty and property contrary to the law of the land.

"8. That said statute, being the law under which the indictment in said cause is framed and found, is unconstitutional and void, inasmuch as there is no provision in the Constitution of the state of Delaware conferring upon the Legislature of the state the power to enact a law whereby an income tax may be levied and collected."

At the argument on the demurrer, counsel for the defendant attacked the constitutionality of the Income Tax Law on the following grounds:

1. Because the Legislature had, at the time of the enactment of said law, no authority under the Constitution of the state to enact a statute providing for an income tax.

2. Because said statute lacks the uniformity required of all tax laws by article 8, section 1, of the Constitution.

3. Because the statute denies to citizens of the state the equal protection of the law guaranteed by the Fourteenth Amendment to the Constitution of the United States.

4. Because by said statute the defendant is deprived of his property "without due process of law" and contrary to the "law of the land," in violation of said Fourteenth Amendment to the Constitution of the United States, and of section 7, article 1, of the Constitution of this state.

Section 1 of article 8 of the Constitution of this state provides as follows:

"All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws, but the General Assembly may by general laws exempt from taxation such property as in the opinion of the General Assembly will best promote the public welfare."

The defendant contends that the Legislature had no authority to enact a statute providing for an income tax, because, under said section 1 of article 8 of the Constitution, nothing but "property" can be the subject of taxation, and income is not property. He insists that while said section, for the purpose of taxation, refers to "class of subjects," which is general, and not specifically exclusive of "income," nevertheless the use of the word "property" in the exemption clause makes it clear that nothing can be taxed that is not property. The defendant admits that it is competent for the Legislature to exempt from taxation such property as will in its judgment best promote the public welfare, provided the exemption is reasonable and not arbitrary, but insists that income is not property and, therefore, not subject to exemption.

In support of his contention that the income of the citizen is not property for purposes of taxation, the defendant has cited the following authorities: Savannah v. Hartridge, 8 Ga. 23; Waring v. Savannah, 60 Ga. 93; Dyer v. Melrose, 197 Mass. 99, 83 N.E. 6, 34 L. R. A. (N.S.) 1215, 125 Am. St. Rep. 330; Wilcox v. County Commissioners, 103 Mass. 544; Glasgow v. Rowse, 43 Mo. 479; State v. Frear, 148 Wis. 456, 134 N.W. 673, 135 N.W. 164, L. R. A. 1915B, 569, 606, Ann. Cas. 1913A, 1147; Black on Income, etc., 19.

Probably no other cases can be found that can be regarded as supporting in the slightest degree the defendant's contention, and upon examination it appears that the cases cited are not really in point. The Georgia cases furnish the basis for the text of Mr. Black, and Savannah v. Hartridge is the defendant's leading authority. In that case was involved the validity of a city ordinance which imposed a tax on incomes, and the question raised was not the power of the state to tax incomes, but whether such tax was authorized by any of the three acts granting to council the power to tax. The court, in denying the authority, said:

"This may be thought a close construction of the charter;" but we must recollect "that, in the construction of statutes made in favor of corporations or particular persons, and in derogation of common right, care should be taken not to extend them beyond their express words, or their clear import."

The court also said in that case:

"And the point to be decided is, not whether income may, not possibly, be comprehended under the general name of property, but whether such is its meaning, and such was the design of the Legislature, in this act?"

In Waring v. Savannah, the court said:

"So that, perhaps, the true question is this: Is income property, in the sense of the Constitution, and must it be taxed at the same rate as other property?"

This case is similar in principle to Glasgow v. Rowse, in which it was held that income tax "did not come within the meaning of...