Village of Hardwick v. Town of Wolcott

• Court: Vermont Supreme Court
• Writing for the Court: SLACK
• Citation: Village of Hardwick v. Town of Wolcott, 98 Vt. 343, 129 A. 159 (Vt. 1925)
• Decision Date: 04 February 1925
• Parties: VILLAGE OF HARDWICK v. TOWN OF WOLCOTT

129 A. 159

98 Vt. 343

VILLAGE OF HARDWICK v. TOWN OF WOLCOTT

Supreme Court of Vermont

February 4, 1925

November Term, 1923.

ACTION OF CONTRACT to recover taxes, assessed by town of Wolcott against certain property situated therein, and paid under protest. Heard on agreed statement of facts at the December Term, 1920, Caledonia County, Chase, J., presiding. Judgment pro forma, and without hearing, for the plaintiff. The defendant excepted. The opinion states the case. Reversed and judgment for plaintiff to recover a lesser sum. Plaintiff's motion for reargument denied.

Judgment reversed, and judgment for plaintiff to recover $ 1,218.83, with interest from October 27 1919.

F G. Fleetwood and John M. Avery for the defendant.

Present: WATSON, C. J., POWERS, TAYLOR, SLACK, and BUTLER, JJ.

OPINION

SLACK

The plaintiff is a municipal corporation comprising part of the territory of the town of Hardwick. It was chartered in 1890. In 1894, it was authorized to purchase or construct an electric light plant, and to that end was given authority to take land and water power in the town of Hardwick and in adjoining towns under the power of eminent domain. Acts 1894, No. 180. By No. 192, Acts 1898, it was authorized to sell electricity for light and power purposes to any person, company, or corporation desiring it, in the towns of Hardwick and Wolcott; and by No. 296, Acts 1915 such authority was extended to include the towns of Woodbury, Craftsbury, and Greensboro. In 1898, it purchased a water power in the defendant town and there constructed a hydro-electric plant, and built a transmission line therefrom to within its own territorial limits, which it has ever since used in lighting its streets and public buildings, and to furnish light, heat, and power to its inhabitants. Some time later, the date not appearing, it constructed a distribution system for the purpose of lighting the streets of the village of Wolcott and of supplying the inhabitants thereof with lights, and at the time of the trial below it was furnishing electricity for twenty-six street lights and for fifty-five houses in that village. Still later, it constructed a transmission line to the villages of Woodbury and South Woodbury, and another to the villages of East Hardwick, Greensboro Bend, Greensboro, East Craftsbury, North Craftsbury, and Craftsbury, for the purpose of supplying lights and electricity for "small power users" in those places. To what extent the latter lines have been used did not appear.

In 1918 and in 1919, the defendant taxed that part of the plaintiff's property located in that town; the plaintiff paid taxes under protest, and is now seeking to recover them.

G. L. 684, sub-division VI, provides that, "real and personal estate granted, sequestered or used for public, pious or charitable uses" shall be exempt from taxation. But this general exemption is limited by G. L. 687, which provides that such exemption "shall not be construed * * * as exempting municipal electric light plants when located outside the town wherein the municipality owning the same is situated."

No question is made but that that part of plaintiff's property located in the defendant town was there taxable when these taxes were assessed if the latter statute is constitutional.

The plaintiff contends, however, that this statute offends the provision of Article IX, Chapter I, of the State Constitution which requires every member of society "to contribute his proportion towards the expense" of maintaining the protection of life, liberty, and property which the Constitution guarantees to all the inhabitants of the State; and also, the provision of section I of the Fourteenth Amendment to the Federal Constitution that, "no state shall * * * deny to any person within its jurisdiction the equal protection of the law," because it effects a classification of property for taxation purposes which is not permissible under either constitution.

It is a well-established rule that every presumption is to be made in favor of the constitutionality of a statute, and it will not be declared unconstitutional without clear and irrefragable evidence that it infringes the paramount law. In re Hackett, 53 Vt. 354; State v. Clement National Bank, 84 Vt. 167, 78 A. 944, Ann. Cas. 1912D, 22. It was said by Chief Justice Shaw in Wellington v. Petitioners, 16 Pick. (Mass.) 87, 26 A. D. 631: "Courts will approach the question with great caution, examine it in every possible aspect, and ponder upon it as long as deliberation and patient attention can throw any new light on the subject, and never declare a statute void, unless the nullity and invalidity of the act are placed, in their judgment, beyond reasonable doubt."

We first inquire concerning our own constitutional inhibition upon the classification of property for the purpose of taxation.

The only requirement of our Constitution in this matter is that every member of society shall contribute his proportion towards the expense of the governmental protection afforded him. The general scope of this provision is pointed out in Colton & More v. City of Montpelier, 71 Vt. 413, 45 A. 1039; In re Hickok's Estate, 78 Vt. 259, 62 A. 724, 6 Ann. Cas. 578; State v. Clement Nat. Bk., supra, 191. It is enough to say for the purpose of this case, at least, that the limitation imposed by our Constitution does not forbid any classification of property for the purpose of taxation, or the adoption of any scheme of taxation, provided that they do not offend the Federal Constitution, the equality clause in the former and the uniform clause in the latter being in effect the same for such purposes.

This brings us to consider whether this statute violates that provision of the latter Constitution relied upon by the plaintiff.

While this provision of the Federal Constitution imposes a limitation upon all the powers of the state which touch the individual or his property, it was not its purpose to prevent the state from adopting any proper and reasonable system of taxation. It does not prohibit the classification of property by the state for the purpose of taxation so long as the classification rests upon some ground of difference having a fair and reasonable relation to the subject of legislation, so that all persons similarly situated are treated alike. Its limitation upon the taxing power of the state is nowhere better stated than in Bell's Gap Railroad v. Pennsylvania, 134 U.S. 232, 33 L.Ed. 892, 10 S.Ct. 533, where it is said: "The provision in the Fourteenth Amendment that no state shall deny to any person within its jurisdiction the equal protection of the laws was not intended to prevent a state from adjusting its system of taxation in all proper and reasonable ways. It may, if it choses, exempt certain classes of property from taxation at all, such as churches, libraries, and the property of charitable institutions. It may impose different specific taxes upon different trades and professions, and may vary the rate of excise upon various products; it may tax real estate and personal property in a different manner; it may tax visible property only, and not tax securities for payment of money; it may allow deductions for indebtedness, or not allow them. All such regulations, and those of like character, so long as they proceed within reasonable limits and general usage, are within the discretion of the state legislature, or the people of the state in framing their Constitution. * * * * We think that we are safe in saying that the FourteenthAmendment was not intended to compel the State to adopt an iron rule of taxation." That pronouncement of the scope of this provision as affecting the taxing power of the states has since been the polestar in cases involving that question. In Merchants' Bank v. Pennsylvania, 167 U.S. 461, 464, 42 L.Ed. 236, 17 S.Ct. 829, 830, it is said: "This whole argument of a right under the federal Constitution to challenge a tax law on the ground of inequality in the burden resulting from the operation of the law is put at rest by the decision in Bell's Gap Railroad v. Pennsylvania."

Later cases are: Travellers' Ins. Co. v. Connecticut, 185 U.S. 364, 46 L.Ed. 949, 22 S.Ct. 673; Michigan Central Railroad v. Powers, 201 U.S. 245, 293, 50 L.Ed. 744, 26 S.Ct. 459; Ohio Tax Cases , 232 U.S. 576, 590, 58 L.Ed. 737, 34 S.Ct. 372; F. S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415, 64 L.Ed. 989, 40

S.Ct. 560; City of Trenton v. New Jersey, 262 U.S. 182, 67 L.Ed. 937, 43 S.Ct. 534; City of Newark v. New Jersey, 262 U.S. 192, 67 L.Ed. 943, 43 S.Ct. 539. This Court said in State v. Clement National Bank, supra, referring to the constitutional inhibition before us: "Diversity of taxation, both with respect to the amount imposed and the species of property selected for taxation or exemption, is not inconsistent with a perfect uniformity and equality of taxation in the proper sense of the term."

So, the question is: Does the statute under consideration offend this constitutional provision, as construed by the courts, both state and federal? Not unless the classification thereby made must be held to be purely arbitrary--"without any distinction that bears a just relation to the purpose of its enactment."

In considering this question, it should be borne in mind that this statute affects the taxability of the property of municipal corporations only. Such corporations whether villages, cities, towns, or counties, are the auxiliaries of the state in the important business of municipal rule; and however great or small their sphere of action, they remain the creatures of the state, holding and exercising powers and privileges subject to the sovereign will. For the purpose of carrying on such activities as are entrusted to...