Sterling Gas Co. v. Higby

• Decision Date: 31 October 1890
• Citation: 134 Ill. 557,25 N.E. 660
• Parties: STERLING GAS CO. v. HIGBY, TAX-COLLECTOR.
• Court: Illinois Supreme Court

134 Ill. 557

25 N.E. 660

STERLING GAS CO.

v.HIGBY, TAX-COLLECTOR.¹

Supreme Court of Illinois.

Oct. 31, 1890.

Appeal from circuit court, Whiteside county.

John G. Manahan, for appellant.

Walter Stager, for appellee.

BAKER, J.

By this bill in chancery appellant sought to enjoin the collection of a tax assessed against its capital stock by the state board of equalization for the year 1885. The circuit court of Whiteside county sustained a demurrer to and entered a decree dismissing the bill. Two grounds are relied upon to reverse that decree.

The first contention of appellant is that the fourth division of section 3 of the revenue act, as amended in 1879, violates the rule of uniformity provided for by section 1 of article 9 of the constitution of 1870. The section of the constitution in question reads as follows: ‘The general assembly shall provide such revenue as may be needful by levying a tax, by valuation, so that every person and corporation shall pay a tax in propertion to the value of his, her, or its property, such value to be ascertained by some person or persons to be elected or appointed in such manner as the general assembly shall direct, and not otherwise; but the general assembly shall have power to tax peddlers, auctioneers, brokers, hawkers, merchants, commission merchants, showmen, jugglers, innkeepers, grocery keepers, liquor dealers, tollbridges, ferries, insurance, telegraph, and express interests or business, vendors of patents, and persons or corporations owning or using franchises and privileges, in such manner as it shall from time to time direct by general law, uniform as to the class upon which it operates.’ Section 3 of the revenue act, as amended in 1879, provides, among other things, as follows: ‘Personal property shall be valued as follows: * * * Fourth. The capital stock of all companies and associations now or hereafter created under the laws of this state (except those required to be assessed by the local assessors, as hereinafter provided) shall be so valued by the state board of equalization as to ascertain and determine, respectively, the fair cash value of such capital stock, including the fran chise, over and above the assessed value of the tangible property of such company or association: * * * provided, further, that companies and associations organized for purely manufacturing purposes, or for printing or for publishing of newspapers, or for the improving and breeding of stock, shall be assessed by the local assessors in like manner as the property of individuals is required to be assessed.’ Rev. St. 1889, c. 120, § 3. In Coal Co. v. Finlen, 124 Ill. 666, 17 N. E. Rep. 11, it was held that the constitution does not prohibit the legislature from placing certain specified corporations in one class, and providing a uniform method of assessment for that class, and placing certain other specified corporations in another class, and providing a uniform manner of assessment for that class, different from that in the other class; and that the rule of uniformity in the constitution applies to the class, and not to all corporations alike. In Coke Co. v. Downey, 127 Ill. 201, 20 N. E. Rep. 20, it was expressly held that under the statutes now in force the capital stock of gas companies is required to be assessed by the state board of equalization, and that such statutes, in distinguishing gas companies from purely manufacturing companies, and classing them with certain other corporations, and requiring their capital stock to be assessed by the state board of equalization, are not in violation of the state constitution. In this latter case, however, there was no consideration given to the matter of the constitutionality of the legislation in question further than the statement that the decision of the court in Coal Co. v. Finlen was directly in point, and decisive of the question presented. In the case now at bar, objection is taken to the conclusion reached by the court in the Coal Co. Case, and it is urged that the position taken by counsel in that case necessarily and improperly conceded that the tax referred to in the latter portion of section 1, art. 9, of the constitution had reference to a property tax, and that the court, proceeding upon that assumption, held that the legislature might lawfully make the classification it made in the act, and that the difference in the manner or making the assessments upon the different corporations organized under the statute did not render the fourth division of section 3 of the revenue act obnoxious to the second clause of section 1, art. 9, of the constitution, which clause authorizes the general assembly to tax corporations owning and using franchises in such manner as it shall direct by general law, uniform as to the class upon which it operates. The particular contention here insisted upon by appellant, as we understand it, is that the capital-stock tax provided for in the statute and now in controversy is essentially a property tax; that said second clause of said section 1 of the constitution does not authorize the imposition of a property tax, but, on the contrary thereof, merely permits taxation upon occupations, and this, too, without any reference whatever to property or property values; that the right to impose a tax upon property must necessarily be referred to the first clause of the constitutional provision above quoted; and that since, by the amendment of 1879 to the statute providing for a tax upon the capital stock of corporations, all companies and associations organized for purely manufacturing purposes, or for printing or publishing newspapers, or for improving and breeding stock are expressly relieved from the burden of such a tax, that statute is in direct conflict with the rule of uniformity and universality, established by the first clause of said section 1 of the constitution, which provides that every person and corporation shall pay a tax in proportion to the value of his, her, or its property; and that the statute is therefore void, and the assessment upon the capital stock of appellant unauthorized. It is unquestionably true that both the capital stock of a corporation and its franchise are corporate property; and it was only upon the ground they were property, and belong to the corporation, that the capital-stock taxes levied under the law of 1872 were sustained in Porter v. Railroad Co., 76 Ill. 561, and numberous other cases. It must also be conceded that if the right to levy a tax upon the capital stock and the franchise of a corporation, based upon valuation, is referable alone to the first clause of the constitutional provision under consideration, then the conclusion that the act, as amended in 1879, providing for their assessment by the state board of equalization, and excluding from the operation of the act certain classes of corporations organized for pecuniary profit, is obnoxious to the rule of uniformity and universality announced in said clause, is entirely legitimate.

The claim, however, that the power to impose a tax such as that in question is given only in the first clause of said section of the constitution, and that no authority in that behalf is...