Case Name: Samuel Burger, Tax Collector, ads. The State, ex Relatione William Carter
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1841-02
Citations: 1 McMul. 410
Docket Number: 
Parties: *Samuel Burger, Tax Collector, ads. The State, ex Relatione William Carter.
Judges: *G1antt, Evans, Earle, and Butler, JJ., and D. Johnson, Ch., concurred.
Reporter: South Carolina Law Reports
Volume: 26
Pages: 267–279

Head Matter:
*Samuel Burger, Tax Collector, ads. The State, ex Relatione William Carter.
The first clause of the Act to raise supplies for the year 1839, which directs “that a tax shall be raised and paid into the Treasury of this State, of one-eighth of one per cent, upon all purchases and sales of bullion, specie, bank-notes, bills of exchange, and stocks, which may be made by any brokers or agents in this State, for or on account of any bank, company or individual without the State; and also, upon all such purchases and sales as may be made by any such broker or agent upon his own account, or for account of others engaged in the same pursuits,” held to be constitutional, but prospective in its words.
By the tax Act of 1788, the fiscal year is considered as beginning on the first day of October, preceding the enactment of the tax Act.
A writ of prohibition will lie, to restrain the enforcement of a tax execution.
Before O’Neall, J., at Chambers, Charleston, February, 1840.
This was an application for a writ of prohibition, to restrain the defendant, the tax collector of Saint Philip’s and Saint Michael’s from collecting a tax imposed upon the relator, under the provision of the first clause of the Act to raise supplies for the year 1839, which directs “ that a tax shall be raised and paid into the Treasury of this State, of one-eighth of one per cent, upon all purchases and sales of bullion, specie, bank-notes, bills of exchange, and stocks, which may be made by any brokers or agents, in this State, for or on account of any bank, company or individual without the State ; and also, upon all such purchases and sales as may be made by any such broker or agent, upon his own account, or for account of others engaged in the same pursuits.”
The same clause, in a previous part, imposes a tax of “ sixty cents per hundred dollars, on factorage employments, faculties and professions.”
The relator alleges, that he is not a broker or agent within the meaning of the law ; but in making the purchases contemplated in it, he acts as a principal, and on his own account.
It might be enough to dispose of the case, on this allegation in part, and direct the plaintiff to declare in prohibition, so that the truth of it might be ascertaind by jury. The definition of the word Brokers, given in the Commercial Dictionary, is “ persons appointed to transact business between ^merchant and merchant, or merchant and tradesmen, in matters of money or merchandise, for which they received a stipulated commission,” it may be that this definition would not embrace the relator. Still I have no doubt in construing the statute, that we may look to a popular meaning of a word not embraced in any strict definition. If the relator' is a broker or agent, acting for a bank, company, or individual without the States, in making such purchases, although he may use his own funds, and although he might consider them on his own account, still, he may be within the sense and meaning in which the legislature used the words. I will not, however, pursue this matter, for I shall not avoid giving my judgment on the graver questions made.
I have no doubt, the tax was intended to be imposed on such brokers or agents as usually make purchases of bullion, specie, bank notes, bills of exchange, and stocks, for any bank, company, or individual without the State, whether the purchases were made for or on account of the bank company or individual without the State, or for or on account of such brokers or agents themselves. Unquestionably, the object of it was, to subject to tax transactions of this kind, which could not be embraced in the tax on factorage emplojnnents, faculties and professions ; and so far, if the law could be enforced against them alono, I should think the tax legitimate and proper. For it is not to be allowed to corporations or individuals of other States, to have, free from taxation, all the benefits of a business, in which, if our own citizens engage, they pay a tax on their income. But, so far as it would operate on the income of the brokers, derived from this business, then the effect of the Act would be, to subject it to two taxes at the same time, the tax of sixty cents on factorages, &c., and the tax of one-eighth of one per cent, on all purchases and sales of bullion, &c. This could not have been intended ; for the Legislature of South Carolina never have done, and never will do an act of wilful injustice. If this, however, is the clear effect of the law, it might constitute a reason for holding it to be unconstitutional, on the ground, that the same thing cannot be twice taxed, without violating the guaranty of property, which our constitution secures to each and every one.
This posbi011 ⅛, however, not necessary to be assumed as *a distinct ground of decision ; it may be resorted to in aid of the conclusion to which I shall come in another part of this case.
The first inquiry is, can the defendant be subjected to an assessment of one-eighth of one percent, on all purchases and sales of bullion, &c., made before the 1st of last October ? According to the tax Act of 1788, the fiscal year is considered as beginning on the 1st day of October of the year preceding the enactment of the tax Act. Income and property, (with the exception of stock in trade,) are returned as of that time ; and the usual taxation of the State is raised and paid accordingly. If, however, the Legislature choose to raise a new tax, and use words which show they could not have intended it to be raised as of a past time, then it would be violating every rule of construction to give it that effect. The words here used, plainly point to a future act to be done, on which the tax, (as the Legislature call it,) is to arise. — “ One-eighth of one per cent, on all purchases and sales of bullion, specie, bank notes, bills of exchange, and stocks, which may be made by any brokers or agents,” &c. If the relator had, on the passage of the Act, closed his office, and ceased to do business, it is clear that he would not be liable to the payment of any thing under this provision, That being the case, his subsequent pursuit of the same business cannot make him liable on his past transactions. Then, it is only necessary to refer to the case of the State vs. Allen, (2 McC., 55,) as a conclusive authority on this point. The Act of 1820 imposes a tax of §10,000 upon any person “ who shall, after the passing of this Act, open or keep open, any office for the sale of any lottery tickets,” &c. It was held by the whole court, that the language of the Act being prospective, the tax, as it was called, could not be referred to the commencement of the fiscal year. The words in the Act of 1839 are as plainly prospective as those used in the Act of 1820, and no room is left for a distinction ; and hence, both from their own legitimate construction, and from the authority of the State vs. Allen, I conclude that the assessment on the relator, as of the 1st of last October, is not authorized by the Act.
The next, and most serious inquiry, is, Is the provision which we are considering, a tax or a penalty ? If it is the latter, then * it is unconstitutional, and cannot be enforced. I have endeavored, in every way which I could, to avoid the conclusion to which I have come. The duty of passing between the Legislature and the people, is not to be courted by even a full bench of Judges, much less should it be willingly assumed by a single Judge. But there is nothing more sacredly due to the people, by a Judge, than the duty of protecting each and every one of them, against plainly unconstitutional enactments.
Generally, I would say, that taxation is of three kinds — property, income, and capitation. A liability to pay into the treasury a sum of money, which is to arise on an act to be done, is hardly to be considered, in any point of view, a tax. It is, then, in restraint of action, and is a penalty. The only apparent exception which strikes my mind, is that of duties and imposts. They are, however, levied on the property; and although the liability to pay them arises from an act done in bringing the goods into a port of the United States, still they are essentially a tax on property. This, if it could bo considered as in reality a tax on income, although it might arise from an act to be done, I should bo disposed to hold, that it was a rightful exercise of the taxing power. But it is plain that it is not a tax on income, for the income of the relator had already been taxed. It is, then, in restraint of his action in purchasing or selling bullion, specie, bank notes, bills of exchange, and stocks, both for any bank, company, or individual out of the State, or on his own account. This makes it a plain case of penalty. It is saying, if you do such an act, you must pay to the public such a sum of money. Here the constitution guarantees a trial, both by the defendant’s peers, and also according to the course of the common law, which I understand to be the meaning of “ the law of the land.” For, before the defendant is liable to pay it, an act done must be ascertained. He cannot be made to accuse himself, or forced to testify against himself, according to the course of the common law ; and yet, according to the tax Act, he must make his return, on oath. This would be in violation of his right of trial as a freeman, and cannot, therefore, be enforced. The ascertainment of the fact on which his liability to pay, arises, can only be per testes on a trial by a jury. The power of the tax collector to assess a tax on an act to be done, and issue his execution, is in violation of the protection guaranteed ky the constitution.* It cannot derive any support from the sum required to be paid for a license to keep a tavern, or retail. The party there pays, voluntarily, a sum of money, to do an act which would otherwise be unlawful. That is consentive, and not compulsory, and cannot be, therefore, objected to. If the Legislature had thought proper to require that brokers should, before engaging in the business described by this Act, take out a license, and for it should pay a sum of money, they might have done so. That this provision is a penalty, is, I think, fully made out by the reasoning which I have very imperfectly sketched.
The case of the State vs. Allen, (2 McC. 55,) is an analogous case, and its authority makes it imperative on me to declare this provision of the Act of ’39, unconstitutional, as the Court then did that of 1820.
It is ordered that the writ of prohibition prayed for be granted.
From this order the respondent appeals, and moves that the same may be reversed, or rescinded, for the following reasons :
1. 'that the Act of 1839 must be construed in connection with the Acts regulating the fiscal year ; and that by the proper construction of the Act of 1839, the tax on brokers is not prospective, but applies to the relator, and renders him liable to the payment of the sum assessed against him by the respondent.
2. That the subjects of taxation by the Legislature, are not limited by the constitution ; and that a pecuniary imposition is a tax, or a penalty, as the Legislature may make or declare it to be the one or the other, by legislation.
3. That there is no ground for a discrimination between a tax and a penalty, with reference to the subject matter of the imposition ; and there is, therefore, no ground to declare the tax on brokers a penalty, which will not apply equally to every tax which has been, or can be, imposed by the Legislature.
4. That to declare a tax unconstitutional, on the ground that it is a penalty, is an invasion of the powers exclusively vested in the Legislature, by the constitution ; and involves a principle which concentrates in the Judiciary all the powers *of government, which it was the object of the constitution to lodge in separate departments.
5. That the order directing the writ of prohibition to issue in this case, is, in other respects, illegal, and an infringement of the provisions of the constitution.
Bailey, Attorney General, for the motion,
contended, first, that the Act was not prospective. That there was nothing to distinguish this Act from any other Act passed in 1839. The various Tax Acts have no specific time when the returns or assessments shall be made. Act 1788, (Public Laws, 439.)
2d. That it is not unconstitutional, because there is no restraint upon the taxing power. He cited Jac. L. D., as to the definition of taxes. Berney vs. Tax Collector, 2 Bail., 654; 4 McC., 206; Com. Dig., letter A., Tit. Prohib. Prohibition will not lie against a ministerial officer. Bac. Abr. Tit. Pro., letter J.; 1 Cranch, 137.
Hunt, contra.
I contend that the general power which it is admitted the Legislature possess, in selecting the subjects of taxation, must be controlled by the great fundamental principles upon which free government is based.
Taxation includes the power to collect, in a summary mode, the amount levied, from the necessity of the case. This arbitrary, but indispensable power, must be used only to the extent indispensable for the public weal; not abused, by applying it to the purposes of penal enactments, and under the guise of taxation, to impose penalties which are to be collected by an inquisition and execution by a collector, without recourse to the ordinary tribunals of the country. The constitution protects the citizen from all judgments against his person or property, otherwise than by a judicial trial by jury, as heretofore used. Now, the true difficulty is to ascertain whether, in truth, the imposition is a tax or not. But the nature of taxation must be ascertained by the general understanding of free government, and especially that from which we derive most of our principles of jurisprudence, modified by our free institutions.
A tax, as generally understood, is a contribution by the people, in proportion to their estates, for the public expense. And as in this State taxation and representation should concur, all who vote, should, as near as may be, pay equally; and certainly it is unprincipled to tax what a man does, and not his property. Even a tax on the income of a peculiar profession, has at least this palliation, that it is proportioned to the property acquired by that calling. But a tax, as in this case, upon the operation itself, without regard to the fact, whether much or little or nothing is acquired by it, is a tax upon what a man does, and not upon his property. Neither is it like a capitation tax, where every individual pays an equal amount. ^Neither is it like a stamp act. The law denies its aid to recover on contracts not engrossed on stamped paper, leaving it to the option of the party to buy this privilege.
Nor is it a license, which is voluntarily sought for; and the tax collector cannot collect a penalty for retailing without a license. It is a case for the Courts. Any attempt to impose is illegal, and the very amount of the alleged tax is one means of ascertaining the nature of the imposition.
Taxes, to be legitimate, must be moderate; and excessive.imposts, with a view to protection of one class, by exactions from others, are contrary to common right. The Legislature may prohibit, and impose penalties for the purposes of general morality ; but taxation is not the mode of enacting or enforcing penal laws.
Now, the law in question lays a tax “upon all purchases and sales of bullion, &c.,” without regard to the income or profit arising from the purchase or sales. It is a penalty on such transactions, under the guise of a tax — it is an imposition upon a particular class of industrious dealers, not for revenue merely, but the amount is so enormous that it is calculated not to raise money, but to break up the business. The usual profits upon stock transactions and money transfers, is little, if anything, more than this tax. Fifty or eighty per cent, on the profits of a transaction is too clearly a penalty, or at least a tax, calculated and intended to be prohibitory. Is prohibitory taxation constitutional?
Equality of rights lays at the foundation of our institutions, and the perversion of the taxing power, to foster or prohibit any honest labor, is against common right, and unconstitutional.
Although no limitation is fixed expressly, yet the Article 1, section 15, Constitution of South Carolina, speaks of “Bills for raising Revenue,” as tax bills. But it is said, the amount is not fixed; but sec. 4, art. 0, states, that “excessive fines shall not be imposed.” This clearly shows that the people shall not be interfered with by excessive fines ; and a fortiori, taxes which are excessive are against the nature of our institutions.
The case of Burnie vs. Tax Collector, shows, that under the pretence of taxation, you cannot enact penal laws. This Act is, therefore, unconstitutional.
The proceedings of the tax collector are also illegal. The tax, like all others, relates to the 1st day of October. And as the transactions of the previous year were legal, and without any imposition at tho time they transpired, to collect so large a sum as one-eighth of one per cent., when one-fourth is the highest amount of commissions, equal therefore to fifty per cent., is equally unjust and illegal. It is a penalty imposed after the act done. Calling it a tax does not alter its nature. If, on the contrary, the tax is prospective, then it is not due until the year expires, and the attempt to collect it, at the time the collector made it, was premature, and the prohibition *must go. The very fact that it is a tax on actions and not on property, renders it difficult to say when and during wliat periods these actions are to transpire. Taxes arc annual — that is, property is taxed once a year. But this Act does not limit the time to the past year or the present, and there is no time within which the return must be made; and the tax collector might, every day, issue his execution as a sale was made. Is not this evidence that it is a penalty ? The power of this court to interpose, results from the fact, that there are two kinds of law which this court is called on to administer — the Constitution, and the Acts of the Legislature. An Act of the Legislature contrary to the Constitution is not obligatory ; and, therefore, whoever attempts to enforce it against the citizen, impairs his rights, and the court must protect him. The Legislature having passed a law is functus officio. They cannot, after adjournment, stay the execution of a law. It is only the judiciary who can act — without it, an unconstitutional law may be enforced. All tribunals must be subordinate to the highest. The tax collector acts judicially when ho fixes the amount; assesses, that is, adjudges, that the citizen is bound to pay the State a sum of money. If his judgment is wrong, the citizen has the right to the interference of this court. Whether prohibition be the mode, is immaterial; and in this State, the strict meaning of that writ in England, has been enlarged for the beneficial purposes of protecting the constitutional rights of the people. Thus, the Commissioners of the Tobacco Inspection, the Court of Wardens, and several other tribunals or boards, have been treated as courts, and prohibitions issued when they denied justice or exacted what was unlawful. Every board or commissioner exercising any jurisdiction over the persons or property of the citizen, is a judicial tribunal; and the writ of prohibition is the proper writ to restrain their proceeding.
This Act is absurd, as it speaks of a broker or agent selling on his own account, when his being an agent implies that he acts for another. But it is clear, that the object of the Act was, to prevent competition between brokers and the banks, Who have abandoned their legitimate office of discounting paper coming to maturity where their capitals were located, and thus enable the banks to manage exchanges so as to suit their own purposes. It is a perversion of taxation to create monopolies and interfere with the common rights of the whole community, to pursue their avocations under the protection of equal laws.
Bailey, in reply.
All Acts from 1790, down to the passage of this Act, are retrospective, if this Act of 1839 is decided to be so. A tax is in the nature of a contribution. A tax collector is not a judicial, but a ministerial, officer.
11 stat., 1.

Opinion:
* Curia, per
O'Neall, J.
In this case, I have been unable to discover any error in the opinion and judgment below. But a majority of the Court of Errors are not prepared to go as far as I did, and rule the clause of the Act of '39, under consideration, to be unconstitutional. They, however, agree with me, that it is, in its words, prospective, and did not justify the imposition of the tax assessed by the tax collector. The reasons assigned, in my opinion below, for this conclusion, are satisfactory to them, and need not be re-stated.
It has, however, been objected by the Attorney-General, in his argument here, that the writ of prohibition did not lie to prohibit the enforcement of a tax execution. I concede that if we were obliged to resort for authority, in this respect, to English precedents, wo could not sustain this proceeding. For, according to them, the writ of prohibition only lies to prohibit the enforcement of the judgment of an inferior jurisdiction, where it has proceeded without jurisdiction, or where, having jurisdiction, it has exceeded it.
But in this State it has had a wider operation. For the want of a better remedy, it has been allowed to restrain the enforcement of tax executions. How this practice began, it is difficult, as well as unimportant, to ascertain. It may be that it was allowed on the notion that a tax collector, although a ministerial officer, exercised a sort of judicial power, in deciding that a person who denied his liability to pay a tax, should, notwithstanding, pay it, and in issuing an execution to enforce that decision. This last is so much an incident of the judgment of a Court of general and limited jurisdiction, tliat when found to follow from the decision of a ministerial officer, it may well justify the application of a writ to him, which would be otherwise wholly inappropriate.
Be this, however, as it may, the practice is well established, has never been before questioned, has operated to the protection of the citizens ; and, so far as our experience or information extends, has effected no injury, and produced no inconvenience. We are, therefore of opinion, that it ought not now to be disturbed, for the sake of obtaining precise and technical conformity to the English precedents. The motion is dismissed.
*G1antt, Evans, Earle, and Butler, JJ., and D. Johnson, Ch., concurred.