Wright v. Steers, 30148
| Decision Date | 30 January 1962 |
| Docket Number | No. 30148,30148 |
| Citation | 179 N.E.2d 721,242 Ind. 582 |
| Parties | Fred J. WRIGHT, Marguerite Wright, Joseph Dunne, Florine M. Dunne, Individually and as representatives of a class consisting of all citizens and taxpayers of the State of Indiana, subject to the ad valorem property tax, Appellants, v. Edwin K. STEERS, as Attorney General of the State of Indiana et al., Appellees. |
| Court | Indiana Supreme Court |
Murray, Mannon, Fairchild & Stewart, H. William Irwin, Indianapolis, for appellants.
Edwin K. Steers, Atty. Gen., Michael B. Reddington, Indianapolis, for appellee Robert Reilly.
Francis E. Thomason, Indianapolis, for appellee Phillip L. Bayt.
Obed T. Kilgore, Indianapolis, for appellees Allan Hunter, David Finney and Clem Smith.
John I. Bradshaw, Jr., Indianapolis, for appellee Marguerite Joyce and Special Attorney for appellees Alva Brewer, Richard L. Worley, Lawrence D. Baker, Peter Beczkiewiez, Dorothy Gardner, John Hatchett and John Barton.
Thomas M. Scanlon and George J. Zazas, Indianapolis, for appellee Automobile Dealers Ass'n of Indiana, Inc.
Andrew Jacobs, Sr., Indianapolis, for Robert O'Neal, Sheriff.
Barnes, Hickam, Pantzer & Boyd, Indianapolis, of counsel, for appellees.
This appeal concerns the constitutionality of Chapter 345 of the Acts of the General Assembly of 1961, which provides for a tax of two (2%) per cent on the value of motor vehicles and mobile homes '* * * in lieu of the ad valorem property tax * * *.' To raise this question the appellants filed a complaint for a declaratory judgment and asked for injunctive relief against the defendant public officials to prevent the enforcement of the Act. The trial court rendered a judgment holding the Act to be constitutional and denied the injunctive relief asked.
The contentions of the parties in this case in a large measure, revolve around the question as to whether the proposed tax is an excise tax or an ad valorem property tax.
The Act briefly provides:
(Our italics.)
It further provides that the tax shall be a sum equal to two (2%) per cent of the value of the vehicle, which shall be determined on a sliding scale of depreciation beginning with the delivered price. There are various other provisions with reference to adjusting this valuation in cases of inequities that we need not consider here. It is further provided that the tax shall be paid each year at the time the vehicle is registered and a license tag is obtained. Provisions are made for a reduction of the tax, depending upon the portion of the year having expired at the time application is made for registration.
As noted above, no such vehicle to which the tax is applicable may be assessed as personal property or be subject to ad valorem taxes thereafter.
It is generally recognized that there is no limitation under the Indiana Constitution as to the number of excise taxes which may be imposed by the legislature. Such a tax has been defined as one which is imposed upon the exercise of a privilege or use within the state, the most common illustration being that of the use of the public highways. Miles v. Dept. of Treasury (1935), 209 Ind. 172, 199 N.E. 372, 101 A.L.R. 1359, appeal dism. 298 U.S. 640, 56 S.Ct. 750, 80 L.Ed. 1372; Crittenberger, Auditor, v. State, etc., Trust Co. (1920), 189 Ind. 411, 127 N.E. 552; Gafill v. Bracken, Auditor (1924), 195 Ind. 551, 145 N.E. 312, 146 N.E. 109.
It is contended that although the Act in question calls the tax an 'excise' and 'license' tax, at no place therein does it define the use or privilege for which the tax is levied. It does not fix the purpose for which the proceeds from the tax shall be applied. It is further pointed out that the amount of tax in each instance is based upon the value of the property, and not related to the extent of the use made. It is true that the nature of the tax must be determined by its operation and incidence, rather than by its title or designation made by the legislature. In other words, the legislature may not change a factual situation by giving it a different name or designation. However, none of these factors are decisive of the question here. 51 Am.Jur., Taxation, § 28, pp. 56, 57; Miles v. Dept. of Treasury, supra; Flint v. Stone Tracy Co. (1911), 220 U.S. 107, 31 S.Ct. 342, 55 L.Ed. 389; Nicol v. Ames (1899), 173 U.S. 509, 19 S.Ct. 522, 43 L.Ed. 786.
It is not necessary for us to make an exact determination of these questions for the reason that it appears to us that whether the Act in question establishes an excise tax or an ad valorem property tax, it has, in either case, inherent constitutional weaknesses.
Let us first consider the Act as if it were an ad valorem property tax. The Constitution of Indiana provides (Article 10, § 1) 'Assessment and taxation.--The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes, as may be specially exempted by law.'
As stated in the related case of Finney v. Johnson (Ind.1962), 179 N.E.2d 718 ():
'Viewing the Indiana constitutional provision (Article 10, § 1) set forth above, it has three main provisions: (1) The rate of taxation shall be uniform. (2) The valuation and assessment for taxes must be 'just' on all property. (3) Only property used for
It is apparent from the Act in question that if it is an ad valorem property tax, it does not meet the requirement that the rate of taxation shall be uniform and equal on all property. The Act purports to fix a tax rate in the amount of two (2%) per cent of the value of the motor vehicle. This is neither uniform nor equal with the general tax rate established annually on 'all property, both real and personal.'
'The provision of said section and article of the Constitution is complied with when all property is assessed at its true cash value and at the same rate; there is then uniformity and equality of assessment and taxation.' Davis v. Sexton, County Treasurer (1936), 210 Ind. 138, 161, 200 N.E. 233, 243; Miles v. Dept. of Treasury (1935), 209 Ind. 172, 199 N.E. 372, 101 A.L.R. 1359, appeal dism. 298 U.S. 640, 56 S.Ct. 750, 80 L.Ed. 1372; Kerr v. Perry School Tp. (1904), 162 Ind. 310, 70 N.E. 246.
We can find no cases in Indiana which hold that the legislature, in imposing a general ad valorem property tax (as distinguished from an excise tax), may tax different classes of property at different rates.
The legislation must therefore fall as an ad valorem property tax by reason of a failure to comply with the constitutional provision requiring an equal and uniform rate for all ad valorem property taxes.
We take up next the consideration of the legislation as a validly enacted excise tax. It is argued that the tenor of the Act reveals an intention to tax for the use of the highways only those motor vehicles that are registered for that purpose; that all other motor vehicles are specifically exempted from the application of the Act; that the Act specifically says that the proposed 'excise' tax 'shall be in lieu of the ad valorem property tax.' It is conceded that the legislature is under no constitutional prohibition under Article 10, § 1 in fixing an excise tax and in varying the rates and classifying the property upon the basis of sound public policy. Miles v. Dept. of Treasury, supra; State Board of Tax Commissioners v. Jackson (1931), 283 U.S. 527, 51 S.Ct. 540, 75 L.Ed. 1248, 73 A.L.R. 1464; Board etc., v. Johnson (1909), 173 Ind. 76, 89 N.E. 590; Gafill v. Bracken, Auditor (1924), 195 Ind. 551, 145 N.E. 312, 146 N.E. 109.
Assuming the legislation meets the qualifications of an excise tax and therefore is not subject to the provisions of Article 10, § 1 of our Constitution in that respect, there is still contained therein a section exempting motor vehicles so taxed from the general property tax. The Act thus runs afoul of the constitutional provision, which prevents any exemptions from ad valorem property tax except property used 'for 'municipal, educational, literary, scientific, religious or charitable purposes.''
Section 2 of the Act provides:
This court has said:
Stark v. Kreyling (1934), 207 Ind. 128, 132, 188 N.E. 680, 681.
So long as the Constitution reads as it does, the legislature had no authority to exempt from the general property tax any property other than that specifically limited in Article 10, § 1. Stark v. Kreyling, supra; The State ex rel. Tieman et al. v. The City of Indianapolis (1879), 69 Ind. 375, 35 Am.Rep. 223; Miles v. Dept. of Treasury (1935), 209 Ind. 172, 199 N.E. 372, 101 A.L.R. 1359, appeal dism. 298 U.S. 640, 56 S.Ct. 750, 80 L.Ed. 1372.
It is urged upon us, however, that the Act has a severability clause in Section 20, which, in substance, provides that if any part is declared...
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