The City of Newton v. Atchison

• Decision Date: 01 July 1883
• Citation: 1 P. 288,31 Kan. 151
• Parties: THE CITY OF NEWTON, et al., v. T. B. ATCHISON, et al
• Court: Kansas Supreme Court

1 P. 288

31 Kan. 151

THE CITY OF NEWTON, et al., v. T. B. ATCHISON, et al

Supreme Court of Kansas

July 1, 1883

Error from Harvey District Court.

ACTION by T. B. Atchison and another, (partners as Atchison &amp Knowlton,) and others, against the City of Newton and three others, to perpetually enjoin said city and its officers from enforcing against plaintiffs, as hardware and implement merchants therein, a certain ordinance levying a business license tax against them. March 6, 1883, Hon. L. HOUK, judge of the district court, at chambers, overruled defendants' motion to dissolve a temporary order of injunction theretofore granted in favor of plaintiffs. This ruling the defendants bring to this court. The facts are sufficiently stated in the opinion.

Judgment reversed and case remanded.

Charles Bucher, city attorney, and C. S. Bowman, for plaintiffs in error.

A. L Greene, John Reid, and J. W. Ady, for defendants in error.

BREWER J. HORTON C. J., VALENTINE, J., concurring.

OPINION

BREWER, J.:

The question in this case is as to the validity of a certain ordinance of the city of Newton, providing for the levy and collection of a license tax. It is the same ordinance which was presented in the case of McGrath v. City of Newton, 29 Kan. 364. In that case certain technical objections to the validity of the ordinance as a whole were considered and disposed of. But a full inquiry into all the questions discussed by counsel was declined, on the ground that by reason of a manifest misjoinder of causes of action the ruling of the district court was correct. The plaintiffs in the present case, defendants in error here, were all hardware merchants, and within the rule laid down in McGrath v. City of Newton, could properly join as plaintiffs in this action. They challenge the validity of this ordinance so far as it imposes upon their business, that of hardware merchants, a license tax. Some questions of practice are presented and discussed, but we shall not stop to consider them, preferring to address our inquiry to those which are substantial and fundamental. The first section of the ordinance contains all the facts necessary to a full understanding of the questions involved. That section reads:

"That a license tax per annum is hereby levied upon all merchants or persons engaged in merchandising, as follows, to wit: Five dollars upon all persons whose average amount of stock does not exceed one thousand, and two dollars and fifty cents in addition thereto for every one thousand dollars or fractional part thereof in excess of the first thousand dollars."

Before noticing some specific objections which are made to this particular tax, we think it proper to state certain general propositions which underlie this matter of a license tax.

First. In the absence of any inhibition, express or implied, in the constitution, the legislature has power, either directly to levy and collect license taxes on any business or occupation, or to delegate like authority to a municipal corporation. This seems to be the concurrent voice of all the authorities. In 1 Dillon on Municipal Corporations, 3d ed., § 357, note, the author says: "Unless specially restrained by the constitution, the legislature may provide for the taxing of any occupation or trade, and may confer this power upon municipal corporations." In Burroughs on Taxation, page 148, is this language: "Where the constitution is silent on the subject, the right of the state to exact from its citizens a tax regulated by the avocations they pursue, cannot be questioned." In Savings Society v. Coite, 6 Wall. 594, 18 L.Ed. 897, the supreme court of the United States thus states the law: "Nothing can be more certain in legal decision than that the privileges and franchises of a private corporation, and all trades and avocations by which the citizens acquire a livelihood, may be taxed by a state for the support of the state government." (Hamilton Co. v. Massachusetts, 6 Wall. 632, 18 L.Ed. 904; Cooley on Taxation, 384 to 392, 410.) On page 384 the author observes. "The same is true of occupations; government may tax one, or it may tax all. There is no restriction upon its power in this regard unless one is expressly imposed by the constitution."

In State Tax on Foreign-held Bonds, 15 Wall. 300, 21 L.Ed. 179, Field, J., among other things, speaking of the power of taxation, says:

"It may touch property in every shape, in its natural condition, in its manufactured form, and in its various transmutations. And the amount of taxation may be determined by the value of the property, or its use, or its capacity, or its productiveness. It may touch business in the almost infinite forms in which it is conducted; in professions, in commerce, in manufactures, and in transportation. Unless restrained by the constitution, the power as to the mode, forms and extent of taxation is unlimited."

(See also the authorities collected in Fretwell v. City of Troy, 18 Kan. 271.) Nor does this rest alone upon a mere matter of authority. Full legislative power is, save as specially restricted by the constitution, vested in the legislature. Taxation is a legislative power. Full discretion and control therefore in reference to it are vested in the legislature, save when specially restricted. There is no inherent vice in the taxation of avocations. On the contrary, business is as legitimate an object of the taxing power as property. Oftentimes a tax on the former results in a more even and exact justice than one on the latter. Indeed, the taxing power is not limited to either property or avocations. It may, as was in fact done during the late war and the years immediately succeeding, be cast upon incomes, or placed upon deeds and other instruments. We know there is quite a prejudice against occupation taxes. It is thought to be really double taxation. Judge Dillon well says that "such taxes are apt to be inequitable, and the principle not free from danger of great abuse." Yet, wisely imposed, they will go far toward equalizing public burdens. A lawyer and a merchant may, out of their respective avocations, obtain the same income. Each receives the same protection and enjoys the same benefits of society and government. Yet the one having tangible property pays taxes; the other, whose property is all in legal learning and skill, wholly intangible, pays nothing. A wisely-adjusted occupation tax equalizes these inequalities. But after all, these are questions of policy, and for legislative consideration. It is enough for the courts that both occupation and property are legitimate objects of taxation; that they are essentially dissimilar; that constitutional provisions regulating the taxation of one do not control that of the other; and that there are no constitutional inhibitions on the taxation of business, either by the legislature directly, or by municipal corporations thereto empowered by the legislature.

Second. There is no inhibition, express or implied, in our constitution, on the power of the legislature to levy and collect license taxes, or to delegate like power to municipal corporations. It is not pretended that there is any express inhibition. It has been contended that § 1, art. 11, creates an implied inhibition, and this because it reads that "the legislature shall provide for a uniform and equal rate of assessment and taxation." But that section obviously refers to property, and not to license taxes. In Hines v. City of. Leavenworth, 3 Kan. 186, this court said:

"It will be observed that the constitution does not in terms require that the property in the state should be taxed according to its value, but it must be apparent to everyone that such was the intention of the constitution-makers. Taxes cannot be levied by an equal and uniform rate, except upon the value."

In Burroughs on Taxation, § 54, referring to the various provisions in the different constitutions as to uniformity and equality, the author adds:

"These provisions, as a general rule, are held to apply to property alone, and not to include taxation on privileges or occupations."

Sedgwick, in commenting upon this subject, says:

"In construing these provisions, it has been held, in many of the states, that the words 'equal' and 'uniform' apply only to a direct tax on property, and that the clause in regard to uniformity of taxation does not limit the power of the legislature as to the objects of taxation, but was only intended to prevent an arbitrary taxation, according to the kind or quality, without regard to value. Specific taxes have therefore been sustained as a valid exercise of the legislative power." (See Sedg. on Stat. and Const. Law, 2d ed., 504-507.)

In Baker v. City of Cincinnati, 11 Ohio St. 534, the supreme court, upon kindred constitutional sections, makes these observations:

"Now neither of these sections, in terms, prohibits granting licenses and making a charge therefor, or the imposition of a tax on a license. The second section requires the taxing of all property by a uniform rule. A license cannot be regarded as property. (Exchange Bank v. Hines, 3 Ohio St. 1 at 1-7.) It is not, therefore, to be taxed as property under that section. An express direction to impose a tax on all property by a uniform rule does not necessarily exclude taxation upon that which is not property, or cover the whole ground included within the limits of the taxing power. (City of Zanesville v. Richards, 5 Ohio St. 589, 593.)"

See also Walcott v. The People, 17 Mich. 68; Kitsen v. Mayor, 26 Mich. 325; City v Sternberg, 4 Mo.App. 453; same case, 69 Mo. 289; City v. Green, 7 Mo.App. 468; Glasgow v. Rowse, 43 Mo. 479; Express Co. v. St. Joseph, 66 Mo. 675; Sacramento v. Stage Co., 12 Cal. 134; Sacramento v. Crocker, 16 Cal. 119; Ex...