Williams v. Baldridge

• Decision Date: 13 January 1930
• Docket Number: 5479
• Citation: 284 P. 203,48 Idaho 618
• Parties: JAMES W. WILLIAMS et al., Appellants, v. H. C. BALDRIDGE et al., Respondents, and MILNER LOW LIFT IRRIGATION DISTRICT et al., Intervenors
• Court: Idaho Supreme Court

284 P. 203

48 Idaho 618

JAMES W. WILLIAMS et al., Appellants, v. H. C. BALDRIDGE et al., Respondents, and MILNER LOW LIFT IRRIGATION DISTRICT et al., Intervenors

No. 5479

Supreme Court of Idaho

January 13, 1930

CONSTITUTIONAL LAW-TAXATION-TAX EXEMPTIONS.

1. Property owners and taxpayers of county held proper parties to bring injunction suit to test validity of statute allowing tax exemption to power company on property used in developing or transmitting electrical energy for pumping water for irrigation purposes.

2. Court must presume the legislature did not intend to violate Constitution by lending state aid and credit to private individuals in nature of subsidy in violation of Const., art 7, secs. 2, 5, where statutes were enacted as exemptions and so denominated.

3. Statute allowing exemptions from taxation under Const., art 7, sec. 5, is not objectionable as donation or extension of credit of state or county in aid of private individuals or corporations.

4. C S., sec. 3099, as amended, and sec. 3099A as added by Laws 1921, chap. 106, sec. 1, subd. 15, and sec. 2, exempting from taxation property of power companies used in developing or transmitting electrical energy for pumping water for irrigation purposes, enacted pursuant to Const., art. 7, sec 5, permitting legislature to allow exemption from taxation held not violative of Const., art. 8, secs. 2, 4, prohibiting donation or extension of credit by state or county to private enterprises, though method was expressly provided by statute for transfer of ultimate benefit to the consumer of the power by credit to be determined by Public Utilities Commission.

5. It is a fundamental rule that, unless person is injured by an act of the legislature, he may not question its constitutionality.

6. Power of legislature to tax or to exempt from taxation is plenary, save only as limited by Constitution of state or of United States.

7. Legislature has very broad discretion in dealing with tax exemptions under Const., art. 7, sec. 5, permitting legislature to allow such exemptions from taxation from time to time as it shall deem necessary and just.

8. If there is any ambiguity or uncertainty in sections of Constitution, court may look to proceedings of constitutional convention for aid in construction.

9. Court must construe statutes and Constitution in such a manner as to sustain the statutes, if such construction is possible.

10. Statute must be clearly prohibited by the Constitution before it can be declared in violation thereof.

11. Const., art. 7, sec. 8, providing that power to tax corporations or corporate property shall never be relinquished or suspended, is not designed to prevent suspension of particular tax of corporation, which is otherwise allowed under sec. 5, but is designed to prevent legislature from bargaining away its power to tax.

12. C. S., sec. 3099 as amended, and sec. 3099A as added by Laws 1921, chap. 106, sec. 1, subd. 15, and sec. 2, exempting property of all power companies from taxation where used in developing or transmitting electrical energy for pumping water for irrigation purposes, pursuant to Const., art. 7, sec. 5, permitting legislature to allow exemptions, held not violative of sec. 8, providing that power to tax corporations or corporate property shall never be relinquished or suspended, and that all corporations shall be subject to taxation on all property "not by this constitution exempted from taxation," since sec. 8 does not prevent legislature from suspending particular tax on corporation's property.

13. C. S., sec. 3099, as amended, and sec. 3099A as added by Laws 1021, chap. 106, sec. 1, subd. 15, and sec. 2, exempting from taxation property of power companies used in developing or transmitting electrical energy for pumping water for irrigation purposes, is general and not invalid as special or class legislation.

14. C. S., sec. 3099 as amended, and sec. 3099A as added by Laws 1921, chap. 106, sec. 1, subd. 15, sec. 2, exempting from taxation property of power companies used in developing or transmitting electrical energy for pumping water for irrigation purposes, held not void as fixing arbitrary, unreasonable and unjust classification.

15. Classification for purposes of exemption from taxation must not be arbitrary.

16. Where the plenary power of the legislature to exempt from taxation has not been limited by constitutional provision, it may exercise this power to encourage private initiative and thereby further the public welfare.

17. Property owners and taxpayers suing to enjoin allowance of tax exemption of property of power companies used in developing or transmitting electrical energy for pumping water for irrigation purposes under C. S., sec. 3099 as amended, and sec. 3099A as added by Laws 1921, chap. 106, sec. 1, subd. 15, and sec. 2, were not in position to urge that provisions of statute for taking funds saved by the exemption from power company, and giving them to irrigationists, deprived power company of its property without just compensation in violation of Const., art. 1, sec. 13, and Const. U.S. , Amend. 14.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Dana E. Brinck, Judge.

Action to enjoin the allowance of a tax exemption. Judgment for defendants. Affirmed.

Judgment affirmed. Costs awarded to respondents.

M. F. Ryan, for Appellants.

Taxes cannot be imposed for other than a public purpose. If an object cannot have a tax levied for it then no appropriation of public money can be made for it. The right of the legislature to appropriate the public funds, is no greater than its right to tax. (Gem Irr. Dist. v. Van Deusen, 31 Idaho 779, 176 P. 887.)

That which the Constitution directly prohibits may not be done by indirection or by a general legislative act which is meant and intended to include and accomplish the purposes and objects specifically or impliedly prohibited. (Atkinson v. Board of County Commrs. of Ada County, 18 Idaho 282, 108 P. 1046.)

Acts inconsistent with the spirit of the Constitution are as much prohibited by its terms as are acts specifically enumerated and forbidden therein. (McDonald v. Doust, 11 Idaho 14, 81 P. 60, 69 L. R. A. 220.) C. S., subd. 15, secs. 3099 and 3099A, in so far as they attempt to create an exemption of corporate property, are void, being in violation of the provisions of Const., art. 7, sec. 8. Because of such constitutional provision there can be no exemption of corporate property. (Art. 7, sec. 8.)

Provisions in regard to exemptions are to be strictly construed as against the claim of exemption. This rule applies to constitutional provisions with equal force as to statutory provisions. (Salisbury v. Lane, 7 Idaho 370, 63 P. 383; Ex parte Elba Bank & Trust Co., 207 Ala. 711, 91 So. 922; People v. Catholic Bishop of Chicago, 311 Ill. 11, 142 N.E. 520.)

Exemptions must be founded on some rational basis and cannot be based upon mere arbitrary or capricious action. The legislature has no power to grant exemptions indiscriminately and the classification must be based upon a substantial difference in the situation of those exempt and those to whom the exemption does not apply. (State v. Crosson, 33 Idaho 140, 190 P. 922; Crom v. Frahm, 33 Idaho 314, 193 P. 1013; 6 R. C. L., pp. 373, 381, 382; Hamilton v. Wilson, 61 Kan. 511, 59 P. 1069, 48 L. R. A. 238.)

Hodgin & Hodgin, for Intervenor Milner Low Lift Irrigation District.

Walters, Parry & Thoman and J. R. Keenan, for Intervenor North Side Pumping Company.

The plaintiffs have not stated a cause of action, for the reason that they have no constitutional right to have the property in question taxed. Plaintiffs have no vested interest in the power of the legislature to tax or exempt property from taxation. (26 R. C. L. 28, par. 15, note 8; 26 R. C. L. 25, sec. 11, notes 11, 12, and authorities cited; 37 Cyc. 710, subd. B, and authorities cited; Meriwether v. Garrett, 102 U.S. 472, 26 L.Ed. 197.)

Property owned by a corporation may be exempted from taxation. (Fletcher v. Gifford, 20 Idaho 18, 115 P. 824; Fralick v. Guyer, 36 Idaho 648--658, 213 P. 337; R. S. 1887, vol. 3, sec. 14, p. 101; Rev. Codes 1908, vol. 1, sec. 1644; C. S., sec. 3099, subd. 2.)

Article 7, sec. 8, Constitution, does not prohibit the legislature from exempting from taxation corporate property nor require all corporate property to be always taxed. The limitation of that section is that the power to tax corporate property shall never be relinquished or suspended, meaning by grant, charter or contract. (Const., art. 7, sec. 8; Board of Supervisors v. Gulf Coast Military Academy, 126 Miss. 729, 89 So. 617; Jackson v. Mississippi Fire Ins. Co., 132 Miss. 415, 95 So. 845.)

A construction of art. 7, sec. 8, as contended for by appellants would invalidate that section under the due process and equal protection clauses of the federal Constitution. This section should be so construed, if possible, as to not be repugnant to those prohibitions.

Every exemption of property from taxation is a benefit to and assists some class of persons and thus is a subsidy, in one sense of the word. But, unless the exemption is prohibited by constitutional limitations, such as a limitation against donating or loaning the credit of the state, such a statute is not prohibited. (In re Opinion of the Justices, 261 Mass. 523, 159 N.E. 55; Gunkle v. Killingsworth, 118 Kan. 154, 233 P. 803; State v. Snyder, 29 Wyo. 199, 212 P. 771; Hermitage Co. v. Goldfogle, 204 A.D. 710, 199 N.Y.S. 382; Edward J. Moberg Co. v. Mohr, 236 N.Y. 553, 142 N.E. 280.)

Constitution art. 7, sec. 5, expresses the intent of the constitutional convention that the legislature should have the sole right to determine what should be exempt...