Case Name: R. P. Jenkins v. W. G. Ewin, Clerk
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1872-03-09
Citations: 8 Heisk. 456
Docket Number: 
Parties: R. P. Jenkins v. W. G. Ewin, Clerk.
Judges: Sneed, J. dissented.
Reporter: Tennessee Reports
Volume: 55
Pages: 456–488

Head Matter:
R. P. Jenkins v. W. G. Ewin, Clerk.
1. Privilegie Deitoed. p. —.
A word having a meaning established by judicial construction, being used in new Constitution, must be taken to be used in that established sense: p. —.
2. Same. Basis of. Not police power.
The right to tax as a privilege, does not depend upon the police power to prohibit the thing taxed, or occupation: p. —.
3. Taxation. General rule as £o the power. Merchants, p. —.
The power of the Legislature to tax exists, except where restricted by the Constitution. The clause as to taxing merchants does not confer the power to tax in that mode; it merely prevents the exclusion of that power by the foregoing clause in the Constitution.
Cases cited: State v. Orawford, 2 Head, 462; Mayes v. Erwin, 8 Hum., 290.
Code cited: 545.
EROM DAVIDSON.
Appeal by plaintiffs from tbe judgment of tbe Circuit Court at its January Term, 1872, on an agreed case before J. C. Guild, J.
The agreed case was as follows:
1. That the plaintiff is a wholesale druggist, doing business at Nashville, Tennessee, and has been during the time for which the tax in question was assessed and collected.
2. That f>20,000 was the cash value of the largest amount of goods which the plaintiff had in stock at any one time, subject to taxation, during the year commencing on the 18th day of January, 1871, and ending the 18th day of January, 1872.
3. That under the acts of the Legislature of 1869 — 70, c. 45, ss. 1-10, and act of 1870-71, c. 51, s. 2, W. G. Ewin, Clerk of the County Court of Davidson county, Tennessee, assessed and collected from the plaintiff $240 tax for the State, of which $120 was collected as ad valorem tax on capital stock, and $120 was collected as a license or privilege tax as a merchant, for the year commencing on the 18th day of January, 1871, and ending on the 18th day of January, 1872, and the said Ewin collected $220 for the county of Davidson for the same year, of which six mills on the dollar, or $120, was collected as a license or privilege tax as a merchant, and five mills on the dollar, or $100, was collected as the ad valorem tax on capital stock.
4. That the plaintiff paid this tax under protest, alleging it was not lawful for the said Ewin, clerk, etc., to collect this tax, and this action is brought to recover the amounts so paid by the plaintiff.
5. That if the Court should be of opinion that said tax was illegally collected from the plaintiff, then judgment shall be for the plaintiff, otherwise for the defendant.
Jaenagin & Eeaziee, of Memphis, being employed for the State in a case at Memphis involving the same questions, filed the following brief:
Under the act of 24th January, 1871, Shankland, p. 210, the defendant claims the right to assess a tax upon the capital of the petitioner, and also requires the petitioner to pay for a license as a merchant. He has paid^ the ad valorem tax on his capital, but refuses to pay for a license, upon the grounds that the Legislature has no power to require it — that it is a double tax; that it is an assumption of power to regulate commerce between the United States and foreign countries, and between the States.'
I. The proceedings are in conformity with the law.
II. The “manner” of taxing is in conformity with long established usage.
By the act of • 1808, ch. 3, s. 4, merchants and peddlers were required to obtain license.
By the Constitution of 1834, the Legislature had power “ to tax merchants, peddlers, and privileges, in such manner as they may from time to time direct.”
By act of 1835, ch. 13, s. 5, Car. & Nic., p. 604, commission merchants were ■ taxed $150, and retail merchants had to pay the same, unless they would make a statement on oath, showing stock on hand “at thé invoice cost where purchased.” Both had to obtain a license.
Sec. 7 shows the graduated scale upon which the cost of the license was predicated.
Sec. 5 was construed in State v. Smith, 5 Hum., 395, defines merchant.
Art. 2, s. 28, Constitution, was construed in Mabry v. Tarver, 1 Hum., 94. Vide, French v. Balter, 4 Head, 193; Mayes v. Frwin, 8 Hum., 290; Oity of Nashville v. Althorp, 5 Col., 554.
Under Code, 544-5, a peddler who sold articles manufactured out of the State, had to pay as a merchant, although he had a peddler’s license: Naff v. Russell, 2 Col., 36; Btate v. Crawford, 2 Head, 460.
The power of the Legislature is without restriction: Adams v. Mayor, &o., 2 Head, 365.
By act of. 18th January, 1870, s. 202, the tax upon sales and privileges of merchandizing was abolished. By the new mode- the cash capital invested was taken as the basis for an ad valorem tax, thus reaching the merchant’s property directly, as land or other property.
Merchandizing, ]¡>y the law, is a privilege; and the largest amount of goods on hand at any one time in the year, is the basis for fixing the cost of the license.
The mode of assessment is equal, and applies to all merchants. The petitioners must deny that the Constitution gives the power to create and regulate and tax a privilege, or if given, it is nullified by the provision which prohibits one species of property from being taxed higher than another.
This erroneously assumes that a privilege is property. When a license has been issued, it has some resemblance to a franchise, but it is not one. It is a simple authority or permit to do what can not be done without it, for the time specified. The capital of the citizen is taxed without reference to its investment. If he chooses to invest in merchandizing, he must pay for the privilege. If he is already engaged in that business, he must give in all his other property and pay the ad valorem tax, and then go to the privilege tax collector and show how much he has in merchandizing. The two lists bring him to the same basis as other citizens, upon the question of mere property.
Paying for a license is not, therefore, a double tax. The cost of the license may be greater or less, it can hardly be the same. The rate per hundred dollars is restricted in one case to the ad valorem tax, by reason of the provision inserted in the new Constitution :' “ The portion of a merchant’s capital used in the purchase of merchandize sold by him to nonresidents and sent beyond the fjState, shall not be taxed at a rate higher than the ad valorem tax on property.” Sec. 28, 2d clause, art. 2, Constitution.
By act of 24th January, 1871, the license tax can be no ' more. The law and Constitution together fix the amounts. Previous to the act of 18th January, 1870, a per cent, upon sales had been collected from merchants; and by that act, a specific tax upon each additional $10,000 capital used. Either of these modes might have taxed the merchant’s capital higher than other property; so it was provided in the new Constitution that capital used in purchasing goods sold actually to non-residents, should not be taxed at a higher rate than the ad valorem tax. Hence, the act of 24th January, 1871, changed the manner of assessing. The greatest stock of goods on hand is the calculus by which the amount of the license tax is made certain. It is a license, and not a property, tax.
III. Does the tax for the license contravene the Constitution of the United States?
Not, unless it shall regulate or control commerce, foreign or inter-State.
Foreign goods in original packages, held by the importer, can not be subjected to such a tax as this: Brown v. State of Maryland, 12 Wheat, 419.
It does not appear that any such goods are involved. Nor does it appear that the goods have been brought from another State. It is wholly im'material, as Congress has not legislated upon interstate commerce.
In same case, p. 449 (273 in Curtis’s ed.), Chief Justice Marshall says: “It may be proper to add, that we suppose the principles laid down in this case apply equally to importations from a' sister State. We do not mean to give any opinion on a tax discriminating between foreign and domestic articles.”
This was not the point in judgment.
In the license cases, 5 How., 594 (p. 537 C. ed.), Justice McLean dissented from the dietwm, and gives good reasons for the contrary opinion.
Justice Catron said, p. 609 (553 C. ed.): “ Until such regulation is made by Congress, the States may exercise the power within their respective limits.”
This power of taxing by a license has always been exercised in Tennessee.
The goods, then, which are used as a basis for fixing the amount of the license tax, have entered into the general stock of goods or property of the country, ‘ and are not protected by any notion of for eign or inter-State commerce: 12 Wheat, 419; 8 Wallace.
Generally, there is no restriction on the exercise of this power. It has been exercised in a variety of methods. Standing a jack is a privilege {Cate v. State, 3 Sneed, 120); and the price of a season has been made the price of .the license. The value of the jack is subject to the ad valorem, tax: Act February 25, 1870, Shankland, p. 205.
It may be conceded that the license tax is a tax upon the property, in the sense of Brown v. State of Maryland, 12 Wheat; and in the license cases, 5 How. (p. 547 G. ed.), where Judge Catron says: “ 1. That a tax on the importer is a tax on the import;” and yet it is plain that operating the jack in this particular way is a privilege, and that the exercise of it is the occasion of the assessment.
In this case the largest stock on any one day is the incident upon which the amount of license tax is determined. The specific articles of that day’s stock are not the only merchandize affected by it. A dozen stocks may be sold during the year. The aggregate of goods sold may be ten times the amount of the stock on hand when the tax is fixed. The aggregate of sales may be ten times as much as the capital. There is no limit by law upon the merchant. He has the privilege of selling what he can, for which he is now required only to pay sixty cents per hundred dollars of the value of the largest stock on hand any one day during the year. In the exercise of his privilege, he may buy on a credit ex clusively — having no capital of. his own. It is not true, therefore, in any sense, that it is a double tax.
It has been suggested that the new provision in the Constitution about capital used in buying goods which are sold to non-residents, makes this assessment illegal, because it does not discriminate or allow an exemption. The ad valorem tax is sixty cents, and that is the assessment on these merchants’ capital. This provision does not affect the case.
H. E. Jones, for the plaintiff, said:
I. “ The Merchants Tax Law” is in violation of the Constitution of the United States, in that it levies a tax, indiscriminately, on imports, and goods not imported : Brown v. State of Maryland, 6 Cond. S. C. Tep., 554; 12 Wheaton, 419; MeOullough v. State of Maryland, 4 Wheaton, 316; 4 Cond. Tep., 466, and cases cited.
2. It is a violation of the Constitution of the United States, in that it interferes • with the exclusive rights of Congress to regulate commerce between the States: Ibid.
This law, as it stands, is general in its scope and language, embracing in its requirements and prohibitions, those merchants who .are importers and those who are not. It is a double violation of the Constitution of the United States, in that it prohibits importation, except by license, and then taxes the import, as well as the privilege of buying and selling it.
3. It is in violation of the Constitution of the State of Tennessee, in that it taxes one species of pro perty at a higher rate than, other property is taxed.
Taxing merchandize as such, and then taxing the privilege of selling the merchandize already taxed, is simply double taxation of the same thing: Brown v. State of Maryland.
The term “ Merchant,” as used in the State Constitution, in reference to taxation, must necessarily embrace everything that it takes to constitute a merchant, that is, both merchandize, and the right or “privilege” to sell.
It is foolish to claim the right to tax a man as a merchant, and then deny him the necessary incidents of a merchant — the right to buy and sell.
By the words “merchants, peddlers and privileges,” the Constitution designated three distinct classes, as subjects for taxation, and the Legislature has no right, by shallow, arbitrary and oppressive devices, to destroy a plain constitutional distinction, by taxing one of these classes under two heads.
In reference to each other, these terms are used in a specific sense, and mean separate and distinct classes; otherwise the words “merchants” and “privileges” are surplusage, and mean nothing.
By the ordinary rules of constitutional construction, every word is to be given its due weight and appropriate meaning, and especially is this the case in language of specific enumeration. It is not to be presumed that idle words are used in so solemn an instrument as a Constitution. If language of enumeration is used, and two words appear that may refer to the same thing, or to different things, by the ordinary rules of construction, they are presumed to refer, to different things, else one or the other would be surplusage. And so, if two or more words occur in an enumeration, and one or more are specific terms and the other generic or specific, and in its generic sense may embrace the others, it is presumed that all were used in their specific sense.
Thus, suppose the Constitution should designate that the Legislature might levy an ad volarem tax on mares, geldings and horses; would it be inferred that the Legislature would have the power to double tax • mares and geldings because mares and geldings are also included in the generic term horses?
No more may the Legislature tax- merchants as merchants, and then tax them under the all-prevailing term of “privileges.”
A merchant is one who enjoys the right, or privilege, if you please, of buying and selling merchandize. Take away the right to buy and sell, or to mercbandize, and there is no such thing as merchant. The Constitution has designated “merchants” as subjects of taxation, and it has also designated, in the same enumeration, “privileges” as separate and distinct subjects of taxation. Therefore, to tax merchants under both heads would be to obliterate a clear constitutional distinction.
Furthermore, in order to tax merchandizing as a “privilege,” the Legislature must first, by a- general law, abolish the occupation of merchants. Having then no such thing as a merchant, in law, how then can the Legislature tax what it has abolished? To tax merchants,, as merchants, and then tax merchandizing as a privilege, is a legal absurdity.
Whatever be the power of the Legislature in the creation of privileges, and whatever be the extent of that pliable, and uncertain term, by no rules of grammatical or constitutional construction can it even be made to include merchants and peddlers, for purposes of taxation. They have separate constitutional existence, given to them by recognition and enumeration in the Constitution itself, in reference to the taxing power. They then have an undeniable constitutional right to be taxed as merchants and peddlers, and not as privileges.
To tax merchants as merchants, is to recognize their legal existence as such, and having recognized their legal existence — to tax them under the head of privileges” becomes a legal impossibility.
How can the Legislature tax a thing únder one head, and then, at the same time, annihilate it for the purpose of taxing it under another ? The assumption is an absurdity.
The law in question, is simply a shallow device, by which it is sought to double tax a certain class.
The Legislature in the act itself, fixes the value of the naked license at $5, then all the license tax in excess of the naked license, as separated from property valuation, is nothing more nor less than an additional tax on capital. It is a palpable contradiction of terms for the Legislature to say that the tax on a merchant’s capital shall be the same as the tax levied on other property, and then double the tax on said capital, by cloaking the excess under the style of “ license tax.”
Therefore, the Legislature having fixed the ad valorem tax, to be fixed on a merchant’s capital, at the same rate of taxation as that levied on other property, and it having been shown that in effect and reality the so called license tax, is an additional tax on said capital, it follows that the said license tax is illegal and unconstitutional.
Me. Phelan, of Memphis, made a most elaborate and able argument on the same side, but I have been unable to find any memoranda of his argument.
Attorney-General Heiskell, for the State, argued:
The Constitution of this State provides that “ all property shall be taxed according to its value. * * No one species of property shall be taxed higher than any other species of property of the same value. But the Legislature shall have power to tax merchants, peddlers, and privileges in such manner as they may from time to time direct: ” Art. 2, s. 28.
This case is intended by the plaintiff in error to attack the constitutionality of the law, on the ground that it is in violation of the principle of equality.
Mr. Phelan starts out with the proposition that this right to tax merchants is something by way of exception from the general words of the clause, and that the exception must be clearly shown. He will not deny that there is an exception as to manner. But he declares that an exception as to mode can not be construed to confer the right to destroy, which he insists is the signification we give it. He cites many instances from the Constitution, and one very nigh parallel: Soldiers shall not be quartered upon the people in time of peace, nor in time of war, except in" a manner prescribed by law. Now, according to the argument, the Legislature would have the power to prescribe the -ceremonial, the orders or billets for introduction of soldiers to the houses of citizens, the military salutes — possibly the fare. But where is the thing to stop when once begun? -Manner does not include length of time, certainly, for that involves amount of burthen, and the Legislature has only power to fix the mode, not the extent. Now, either in the power or in the mcmner, this power to limit and fix amount exists, and it matters not in which. In the power to tax merchants, or in the manner, there must also be some way in which amount is to be fixed. By his construction the Legislature having the power to tax, but the manner leaving us no power at all as to amount, we would have to be bounded alone by the physical limit.
Now, if a little attention is given to the taxation of 'merchants, and its nature, it will be seen at once that it is not in its nature subject to the same rule as property. You are to tax property and merchants, property and peddlers, property, polls and privileges, ^property, ad valorem and equally, polls and privileges, in such manner as the Legislature may prescribe. But the counsel insists that these are subject to the ad valorem principle too. ■ How are these to be valued — polls, how? privileges, how? In the very nature of the thing, they are not subject to be valued .as tangible property, but to be estimated, or, without estimation ' or valuation, are to be taxed at the discretion of the Legislature.
The criticism on the word “manner” may be correct, or it may be that mode may include time, place and quantity. But that is not the gist of this matter. It is that you tax a thing that' is not property, and you may tax it in a mode which property has nothing to do with, and in which property can not afford the measure of it. You tax the surgeon, the schoolmaster, the advocate, the gambler, and the acrobat, on their privileges. The manner surely covers the form of the tax; and though it might not overcome any fundamental restrictive rules, yet, in the absence of any rule applicable, it must be held that the power or the manner, one or the other, would give the Legislature the power to fix the amount. The surgeon may have no property, or it may be of no value in proportion to his profits; so of all the others They may be taxed according to profits. How is the clause as to property to attach to this. The commission merchant may have nothing, but may sell millions. The privilege is taxed, not the property. It may be arbitrary, as upon the lawyer and butcher; or by the amount of business; or by the number of rooms, as a hotel; or the place, as in case of photographers. In each the Legislature pre scribes the manner in which the tax is laid, assessed,, and collected; and in none of them is the measure of the value of property applicable or appropriate to-the thing done. In these cases this can not operate as a limit; nor can it if the form of the merchant’s tax is fixed without reference to property. The tax on the privilege then would not be a tax on property at all. But if the measure were adopted to charge upon the frontage of his store, or its depth and front, or the size of his windows, these having some relation to property, but no ascertainable relation to value, would be a standard of measure as admissible as the size of the town. Still it would be the tax on the privilege or on the merchant. Manner covers all these things, and leaves us without any limitation at all. Now, the exception being established, the manner of settling the amount is a mere question of mode. If you may fix the amount in these modes, then you may measure it by the amount of business, the amount of capital, and the number of times it is turned over, or in any manner the Legislature may prescribe.
He announces the principle, that if a word is used in one sense in one part of a sentence, it must be construed in the same sense wherever it occurs in the same sentence. If I say a man is mean, do I mean to use the word mean in the sense of meaning? The words occur in the same sentence. The dog dogged the fellow with dogged obstinacy. The fellow was himself a dog.
One point in this sentence has been passed over in silence. The word but — a small word. in dimensions, but, like the dwarf in the fairy tale, endowed with wonderful strength. It is a dam in the course of a stream — a lock in a canal, which changes your level, lets you down or raises you up. Mr. J. Horne Tooke has devoted twenty-three pages to the discussion of this word, or rather, two words in one, for he derives it from Botan, Bot, to Boot, and Beutan — being, being so. The first is the signification here — the power to tax property in a particular manner, ad valorem and equally. Boot, in addition, the . power to tax merchants, &c., in such manner, Ac.
The following points are established by judicial decision in this State;
1. That a ■ privilege is’ whatever the Legislature chooses to tax as such: Mabry v. Tarver, 1 Hum., 98 per Reese; Mayor and Aldermen of Columbia v. Beasley, lb., 240, Green, J.; Mayes v. Erwin, 8 Hum., 293; Gate v. The State, 3 Sneed, 121, Caruthers, J.; French v. Balter, 4 Sneed, 195, Caruthers, J.; Lobinsón v. Henegar, 5 Sneed, 258, Caruthers, J.; Mayor and Aldermen of Columbia v. Guest, 3 Head, 414, Caruthers, J.; Schlier v. State 3 Heis.; 281, Wiltse v. Guthrie, Knoxville, October 18, 1871, oral, deciding that a tax on a real estate broker is valid.
2. That a corporation can not create a privilege, or discriminate between persons exercising the same privilege, but may tax it when created by the State: Mayor and City Council of Nashville v. Althorp, 5 Col., 554, Andrews, J.
3. That privileges may be taxed at the discretion of the Legislature: 1 Hum., 240; Adams v. Mayor of Somerville, 2 Head, 366.
4. One sort of privilege may be taxed without reference to another: Mayor and Aldermen of Columbia v. Beasley, 1 Hum., 240.
5. That the principle of taxation which applies to property is impracticable as to privileges: Adams v. Mayor and Aldermen of Somerville, 2 Head, 366, McKinney, J.
6. That the mode of taxation by measuring value of privilege by sales is admissible: Mayes v. Erwin, 8 Hum., 293; State v. Crawford, 2 Head 462. Ergo, one payment does not exempt the goods: lb. And this estimate may include articles expressly exempt from taxation: lb. See also Naff v. Russell, 2 Col., 37. Merchant must pay additional tax as peddler: Woolman v. State, 2 Swan, 357.
7. That a tax upon the privilege, though measured by sales of property, is not a tax on property: 2 Head, 462.
8. That merchandizing is a privilege: Mayes v. Erwin, 8 Hum., 293; State v. Crawford, 2 Head, 462; French v. Baker, 4 Sneed, 196.
See this principle stated in Adam v. Mayor & Ald. of Somerville, 2 Head, 366.

Opinion:
Nicholson, C. J.,
delivered the opinion. of the court.
This case involves the constitutionality of the act of January 24, 1871, which enacts "that in addition to the ad valorem tax, to be paid by merchants on their capital, they shall be liable and required to pay a license tax equal in amount to the ad valorem tax: provided, that in no case shall the license tax be less than five dollars." In pursuance of this act, the plaintiff in. error, who is a merchant, was taxed on his capital invested in merchandize, an amount equal to the ad valorem tax assessed on all other property, and in addition thereto, he was assessed as "merchant," an equal amount for a license tax.
No question is made as to the power of the Legislature to impose the ad valorem tax, but it is argued with much earnestness and great force, that the additional license tax is unauthorized by the true construction of the Constitution. The clause of the Constitution under which the Legislature claimed the power to enact the law complained of, is in these words: "But the Legislature shall have power to tax merchants, peddlers and privileges, in such manner as they may from time time direct."
Upon well settled principles of construing constitutional or statutory provisions, the enumeration of "merchants" and "peddlers" as distinct objects of taxation, would generally be taken as excluding the intention of embracing them under the term " privileges," which is also designated as a distinct subject for taxation. The power to tax "merchants" and "peddlers" is as distinctly recognized by these terms as objects of taxation as in the term "privileges," and the fact that the framers of the Constitution specified merchants and peddlers as distinct objects, would seem to indicate that they did not use the word "privileges" as including in its definition, either "merchants" or "peddlers," but that they intended they might be taxed as merchants and peddlers, and not as privileges.
Under this view of the probable meaning of the above quoted clause, we are under no necessity of construing the word " privileges," or of undertaking to define its true meaning. It is sufficient for our present purpose, to state, that if the Legislature passed the third section of the act of 1870, c. 45, under the impression that it was necessary for them to prohibit any one from engaging in merchandizing, with the view of thereby obtaining the power to tax such person as enjoying a privilege, by reason of obtaining a license, they acted under a misapprehension of the meaning of the Constitution, and performed an act of supererogation. They had the plain language of the Constitution, recognizing their power to tax merchants as such, without any enactment for the purpose of bringing them within the term "privileges." We may add, that if the tax now called in question, can not be sustained upon the power to "tax merchants," it can not be sustained upon the power to tax " privileges."
But we do not understand the prohibition against merchandizing, without first having obtained a license, as being intended to secure the power of taxing merchandize as a "privilege," but as the means of secur ing the prompt and faithful performance of the duty of taking out a license, by annexing a penalty to the failure to do so.
Although it is not necessary in the present case to give a definition of the term "privileges" as used in the Constitution of 1870, it may not be improper, in view of the severe criticisms in which counsel have indulged, as to the definition of the term by the Legislature, and by this Court, from the time of its introduction into the Constitution of 1834, down to the present time, to remark, that we have no disposition to depart from a definition of the word, which was adopted .nearly forty years ago by the Legislature which organized the State government under the Constitution of 1834, and which has been followed ever since by successive Legislatures, and by the judicial department in numerous adjudications, made by the successive judges who have since occupied the Supreme Court bench. In 1859, in the case of the Mayor and Aldermen of Columbia v. J. L. Guest, Judge Caruthers used the following language: "What are privileges, is a question of construction dependent upon the general law. We have defined it in several cases to be, the exercise of an occupation or business, which require a license from some proper authority, designated by a general law, and not open to all, or any one, without such license. It is a power of the Legislature alone to create privileges, and forbid their exercise without license."
It is too late now to enquire whether this defini tion of "privileges" conforms strictly to the true philological meaning of the term. It is the fixed legislative and judicial definition, and by its adoption in the Constitution of 1870, its definition, as so underderstood and fixed by previous legislative interpretation and judicial construction, is to be regarded as having the sanction of constitutional recognition.
It may not be out of place to remark, further, that in the adjudications heretofore made in- our State, as to the power of the Legislature to create privileges for purposes of taxation, it has not been necessary for the courts to refer - this authority to the police power which every sovereign State has to forbid such things as are detrimental to the public welfare. This power is never invoked except when it becomes necessary to forbid something that already is, or which may be, injurious to the public welfare. But when the object to be accomplished is legitimate taxation, and not absolute prohibition, the power is to be sought for either in the necessary incident to legislative authority, or in the express provisions of the Constitution.
There is a broad distinction between the exercise of the taxing power, as an incident of legislative authority, under constitutional provisions, and of the power of prohibition or destruction under the police power. In the adjudications which have determined that the Legislature may create privileges for the purposes of taxation, the power has been found under constitutional provisions, and hence there has been no necessity to resort to the police power, to sustain the authority of the Legislature. Whenever, therefore, a case of absolute prohibition or destruction of a common right shall cease, it will be time enough to determine whether such case falls within the proper exercise of the police power, or whether it is an abuse of that power, and therefore null and void. But the question now before us, involves no such exercise of the police power, but simply the question whether the taxing power has been constitutionally exercised. And to that question we will confine our examination.
It is a principle of universal constitutional law, that the power to levy and collect taxes is an incident of sovereignty. The Constitution of the State does not confer upon the Legislature the power of taxation — it passes under the general designation of " legislative power." There is no limitation upon the Legislature as to the amount or objects of taxation, except that found in the restrictions and prohibitions of the Constitution.
That section of the Constitution, in which is found the clause under which the tax in question was imposed, first lays down the general prohibition, that all property, real, personal and mixed, shall be taxed, but gives to the Legislature a discretion as to taxing property held by the State, by counties, cities, or towns, etc., and then by way of restriction upon the exercise of the power proceeds as follows: "All property shall be taxed according to its value, that value to be ascertained in such manner as the Legislature shall direct, so that taxes shall be equal and uniform throughout the State. No one species of property, from which a tax may be collected, shall be taxed higher than any other species of property/of the same value."
This is an absolute and imperative inhibition upon the Legislature, requiring them, in taxing property, to provide that it be taxed according to value, but expressly excepting from the inhibition the manner of ascertaining that value. This much is left to the discretion of the Legislature, but this discretion is to be so exercised, that no one species of property from which a tax is collected, shall be taxed higher than any other species of property of the same value.
So far the provision is confined expressly to the taxation of property. Then follows the controverted clause: "But the Legislature shall have power to tax merchants, peddlers, and privileges, in such manner as they may from time to time direct."
This language would seem, at first view, to confer upon the Legislature the power to tax merchants, peddlers, and privileges. Its true object, however, was to indicate with distinctness, that the power to tax merchants, peddlers, and privileges, was not to be understood as inhibited by the restriction as to the taxation of property. Its meaning is, that although in taxing property the Legislature is forbidden to tax it, except according to its value, yet as to merchants, peddlers, and privileges, the Legislature is not to be restricted, but may exercise the taxing power without restrictions, either as to the amount, or as to the manner or mode of exercising the power. The word "but" is significant of the purpose intended to be accomplished; it indicates that what follows is an ex ception to that which had gone before, and is not to be controlled by it.
• The words- "in such manner" used in this clause, have no other significance than to express with more distinctness and emphasis, that the power of the Legislature to tax merchants, peddlars, and privileges, was unlimited and unrestricted, and might be exercised in any manner and mode in their discretion.
The first clause has exclusive reference to the taxation of property, and in doing this the restriction is that it shall be taxed according to its value. The second clause has reference to the taxation of merchants, peddlars, and privileges, and in doing this, the discretion of the Legislature, both as to amount and manner of taxing, is clearly recognized. This clause has no reference whatever to the taxation of property— it is confined to the power to tax persons engaged in the business of merchandizing and peddling, and those enjoying privileges. It is not imperative upon the Legislature, requiring them to tax these occupations or persons, but it is left to the Legislature to exercise the power or not, as in their wisdom, sound policy may dictate.
The question now arises, does the act of 1871, already quoted, come in conflict with the clause of the Constitution, under which the Legislature claimed the power to enact it, and which we have construed?
It is agreed by the parties, that the plaintiff is a wholesale druggist, doing- business in Nashville — that $20,000 dollars was the cash value of the largest amount of goods, which he had in store at any one time, subject to taxation during the year ending the 18th January, 1872 — that, defendant, as Clerk of the County Court, assessed and collected from the plaintiff $240, tax for the State — of which $120 was collected as ad valorem tax .on capital stock, and $120 was collected as a license or privilege tax as a merchant, for the year ending January 18th, 1872 — that the plaintiff paid this tax under protest, and this action is to recover the money back.
The Court below, Judge Guild presiding, gave judgment for the defendant, and the plaintiff has appealed.
It is obvious, that the tax was assessed and collected in pursuance of the law — but if the law was unconstitutional, then the plaintiff is entitled to recover the money back.
The first ground upon which ' it is insisted, that the law is in violation of the State Constitution, is, that it taxes one species of property higher than other property is taxed. It is true, that under this law, the merchant pays an ad valorem tax on the value of his merchandize, equal to the tax paid on all other taxable property, and in addition to this, he pays a license tax of an equal amount. In ' this way he is required to pay a higher tax than others who are not merchants, having an equal amount in value of other property. But as the Legislature is unrestricted in its discretion, as . to the amount of tax that may be 'assessed on merchants as merchants, and as to the manner in which it may be assessed, it follows, that the additional -tax is not obnoxious to constitutional objection, unless such additional tax is an ad valorem and not a license tax. In the agreed statement of facts, it is said, "that $120 was collected as ad valorem tax on capital stock, and $120 as a license or privilege tax as a merchant." As a matter of fact then, the additional tax was not assessed on the merchandize of the merchant, but on his occupation as merchant.
It is not denied, that • if the whole tax of $240 had been assessed against the plaintiff as a merchant, no exception could have been taken to it, as the power to tax him as merchant is unlimited by any provision of the Constitution. But it is contended, that as an ad valorem tax was assessed on plaintiffs merchandise, equal to the tax on other property, no additional tax could be assessed against him as merchant. Under the construction we have placed upon; the Constitution, the Legislature had the power to determine the amount of tax to be assessed upon the plaintiff as merchant, and also to determine the manner or mode in which the tax should be assessed and collected. It was therefore competent for the Legislature to provide, that the amount assessed upon the plaintiff should be ascertained by requiring an amount equal to the ad valorem tax, to be assessed against him as merchant. It is the manner or mode prescribed for assessing the tax on merchants, and falls clearly within the discretion conferred upon the Legislature, both as to the amount of the tax and the manner of ascertaining and assessing it.
But it is argued for plaintiff, that the law imposes a double tax on his merchandize — because it first imposes on it an ad valorem tax of $120, and then imposes a license tax of $120. It is true that the merchant does pay a double tax, in the sense that he is required to pay an aggregate amount made up of the ad valorem tax and the license tax. It is insisted that this is a double tax on his merchandize because it is insisted in the case of Brown v. The State of Maryland, 12 Wheat, 444, that "a tax on the sale of an article, imported only for sale, is a tax on. the article itself." In that case the question was, whether a State could impose a tax on the importer of goods, while they were still in his possession and before they have become incorporated with the mass of the property in the country, notwithstanding the prohibiton upon the States to "lay any imposts or duties on imports or exports." That such tax could not be imposed on the goods themselves before becoming incorporated with the mass of the property in the country was clear, but it was supposed the prohibition might be evaded by imposing the tax on the importers personally. It was held that this would only be an indirect mode of levying a tax on imports, because a tax on the sale of an article, imported only for sale, is a tax on the article itself. To have held otherwise, would have been to sanction an evasion of a plain prohibition in the Constitution.
But the Constitution of Tennessee contains no such prohibition against the imposition of taxes on merchants — on the contrary, the power to tax them is expressly recognized, and there is no prohibition on the discretion of 'the Legislature, ' either as to the amount of the tax or the manner of assessing it. The authority, therefore, has no application to the present case. Indeed, the fact assumed by the Court in the case of Brown v. The State of Maryland, may be conceded to be true in the present case, that the merchant may if he choose, impose upon - his goods the additional license tax which he is required to pay, and in that way the selling price of his goods may be enhanced. In this way the merchant becomes a tax-gatherer for the State, instead of a tax payer. It is because of this power, that he has to reimburse himself by adding his own' taxes to the price of his goods, that the merchant has -at all times been taxed nominally, much higher than those whose taxes depended on the value of their property. In this way he has been an important financial agent of the State, in assessing and collecting taxes from the consumers of his goods. It was reasonable to presume that it was on account of the peculiar nature of his occupation, and his power to protect himself from unjust taxation, by distributing the burden among his customers, that the framers of the Constitution of 1834 and of 1870, expressly subjected the merchant to the unrestricted power of taxation by the Legislature.
At one time the tax on merchants under the Constitution of 1834, was a specific amount, without regard to the extent of his business. Afterwards his license tax was graduated according to the amount of goods sold. In the case of the State v. Crawford, 2 Head, 402, a question arose, whether in making his estimate of sales, to ascertain the amount of his tax, the merchant could be required to include articles of produce and manufactures, exempt by the Constitution from taxation, and in that way enhance the amount of the tax to be paid by him. By sec. 545 of the Code, it was provided, that the above named articles should not be exempt from taxation in the hands of a merchant. The question was, whether the Legislature could impose a tax on those articles, in the hands of merchants, which the Constitution declared should be exempt from taxation? The prohibition against the taxation of these articles is express in the Constitution, yet under the clause which authorizes the Legislature to tax merchants in' such manner as they may direct, the Court held that when these articles are in the hands of a merchant, they might be estimated in fixing the amount of his tax. The Court says, "This is not a tax upon the articles, but upon the occupation of the merchant. There would have been no question if the old mode of taxing the occupation of the merchant a gross sum had been continued. But what difference can it make? The change is only as to the 'manner' of settling the amount to be paid for the privilege. It is not the article which is taxed but the occupation or privilege."
The construction of the same clause in the Constitution of 1834, was involved in the case of Mayes v. Erwin, 8 Hum., 290. In that case, the Court held, that the permission, or license, to retail goods in this State, is one of the privileges made subject to taxation under our Constitution and laws. The tax is upon the privilege itself, rather than upon the goods; although the amount of such tax may be graduated at the election of the applicant for license, according to the value of the stock or capital in trade. The. amount of the tax to be paid for the license to sell, depends upon or is ascertained by the amount or value of such entire stock.
So, in the present case, the additional tax imposed upon the merchant is not on his merchandize, but on his occupation, and the ad valorem tax is only adopted as the "manner" of ascertaining the amount of the license or occupation tax, and is authorized by the clause of the Constitution under which the tax is imposed.
It is clear therefore, that from thé adoption of the Constitution of 1834, to the adoption of that of 1870, the uniform legislation and judicial construction of the clause under consideration has been, that in assessing taxes on merchants, the Legislature had the power to assess any amount at discretion, and in the exercise of this discretion, they could assess a specific amount without regard to the amount of capital, or it could be graduated according to the amount of capital, and the tax so assessed, was regarded as a tax on the occupation or privilege, and not upon the goods.
In view of these well known historical facts, it is a reasonable presumption that when the convention of 1870, adopted exactly the same language that had been used in the Constitution of 1834, they adopted it with a full. knowledge of the legislative and judicial construction which had been uniformly placed upon the language.
But that the convention adopted the construction as well as the language of 1834, is placed beyond all controversy by the clause in the Constitution of 1870,, which follows that under consideration. It is as follows: "The portion of a merchant's capital used in the purchase of merchandize sold by him to non-residents and sent beyond the State, shall not be taxed at a rate higher than the ad valorem tax on property."
This language conveys the necessary implication that that portion of a merchant's capital used in the purchase of merchandize sold by him to residents of the State, could be taxed higher than the ad valorem tax on other property; and therefore, it was necessary for the protection of wholesale merchants that this clause should be inserted to prevent them from being subjected to higher taxes than the ad valorem tax on property. If the convention did not understand the preceding clauses as permitting the Legislature in their discretion, to tax merchants higher than the ad valorem tax on property, then this last clause was entirely a work of supererogation.'
With the policy which controlled the convention in adopting either of these clauses, we have nothing .to do. Our duty is to construe what we find in the Constitution, and to determine whether the Legislature has transcended its powers. We find that ' the Constitution has placed no restriction upon the Legislature in the exercise of the power to tax merchants, peddlers and privileges, and we are bound to presume that their power was thus left unrestricted, under the conviction that the representatives of the people would not abuse the power by unjust or oppressive taxation. Whether this power has been abused or not in the enactment of the statutes under consideration, is not for us to determine. But it is our province to determine whether the Legislature has transcended its constitutional power, and being fully satisfied that they have not, we so declare.
But it is also argued, that the act of the Legislature under consideration, is in violation of those clauses of the United States Constitution which prohibit the States from levying imposts or duties on imports, and which give to Congress the power to regulate commerce with foreign nations, and among the several States. By reference to the facts, as agreed on, it does not appear that the plaintiff is an importer, or that any fact is stated which can raise the question as to any conflict between the act of the Legislature and the Constitution of the United States, in regard to the regulation of commerce with foreign nations or among the States.
All that appears by the agreed . case is, that the plaintiff is "a wholesale druggist, doing business in Nashville." We can not presume that he is an importer, and that his drugs or any portion of them have remained unincorporated with the mass of the property of the country. No question can therefore arise, involving the Constitution of the United States or the laws of Congress. The only issue raised by the facts is, whether as merchant he is liable to pay the tax assessed against him as a merchant. If he was an importer, and his goods were in a condition to be exempt from taxation, by the Constitution of the United States, or the laws of Congress, he was bound to so have presented the facts as to raise that question.
We are therefore of opinion, that there is no error in the judgment below, and affirm the same.
Sneed, J. dissented.