Court Opinion

ID: 7891321
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:15.270823+00
Date Added: 2024-06-11T16:31:55.533160
License: Public Domain

The opinion of the court was delivered by
Smith, J. :
Chapter 243, Laws of 1897 (Gen. Stat. 1897, ch. 158, §§32-41; Gen. Stat. 1899, §§7175-7184), relating to the taxation of personal judgments, *515is attacked as unconstitutional. The first section of the law reads :
“ Section 1. The term ‘ personal judgments ’ shall include all personal judgments for money only, owned by residents and non-residents of the state of Kansas : Provided, this section shall not apply to judgments upon foreclosure of mortgages prior to the sale of the lands described in the decree, work and labor judgments or for material furnished in the erection of buildings, and improvements on land or lots. But shall apply to all personal judgments rendered upon foreclosure of mortgage after sale when a deficiency judgment remains against the judgment debtor.”
It is particularly urged that the exemptions contained in said section violate the requirement of uniformity in assessment and taxation contained in section 1, article 11, of the constitution, as follows:
“§1. The legislature shall provide for a uniform and equal rate of assessment and taxation; but all property used exclusively for state, county, municipal, literary, educational, scientific, religious, benevolent and charitable purposes, and personal property to the amount of at least two hundred dollars for each family, shall be exempted from taxation.”
It is evident that the prescribed rule of uniformity has been disregarded in the discriminations made between different classes of judgments mentioned in section 1 of the act. It is quite certain that the law in question was passed for other purposes than the production of revenue. This, however, would be an immaterial consideration if the taxing power had confined itself within constitutional limits.
We know by common experience that judgments on debts secured by mortgages are of much greater value than deficiency judgments for the same amounts remaining over after the property upon which they were liens has been exhausted. Yet under this law such *516valuable judgments are wholly exempted while judgments for deficiencies are taxed. Again, it is difficult to furnish a reason why, under a tax law requiring uniformity and equality in its operation, a judgment for material furnished in the erection of buildings should be exempted from taxation, while a judgment rendered for money borrowed to purchase the material so used should be taxed. Deficiency judgments remaining after the sale of real estate upon foreclosure of mortgages are subject to be taxed; but any deficiency arising on judgments in the case of the foreclosure of other liens, such as mechanics’ or material men’s liens, is wholly exempted.
While it may be an unimportant inquiry, yet, reading the whole law together, it seems to have been enacted for the purpose of benefiting judgment debtors. By section 9, after a judgment has been advertised and offered for sale without bidders, the county treasurer is required to bid in the same in the name of the county. Thereafter the board of county commissioners is authorized to compromise the tax with the judgment debtors upon such terms and conditions as may be to the best interests of the county, thus restricting the power of the county commissioners to sell the judgment so held by the county, unless the judgment debtor shall see fit to purchase the same. Strangers to the judgment, or even the holder and owner of the same, cannot compromise the tax thereon with the county.
Under the above constitutional provision, the legislature has a narrow, latitude in exempting property from taxation, and the extent of its departure from a uniform and equal rate of assessment and levy is marked out and circumscribed in express terms. This constitutional provision is to be regarded as a limita*517tion on the power of the legislature to discriminate between different classes or kinds of property when-enacting tax laws. In Cooley on Taxation (2d ed.), 215, it is said :
“It is difficult to conceive of a justifiable exemption law which should select single individuals or corporations, or single articles of property, and, taking them out of the class to which they belong, make them the subject of capricious legislative favor. Such favoritism could make no pretense to equality; it would lack the semblance of legitimate tax legislation.”
In the case of In re Page, 60 Kan. 842, 847, 58 Pac. 478, this court passed upon the validity of a law providing for the taxation of contracts of insurance made with insurance companies not authorized to do business in this state. The tax was restricted in its operation to contracts with insurance companies not licensed here, and made no provision for taxing contracts with domestic companies or companies authorized and licensed to carry on insurance in Kansas. The law was held void. Mr. Justice Johnston, speaking for the court, said :
“The lack of uniformity is manifest in another way : One taxpayer has a policy written in the state by a company with authority on which no tax is imposed, while his neighbor has one written by an unlicensed company at Indianapolis, or other place outside of the state, which is subject to taxation. Taxes are uniform and equal when imposed on all property of the same character within the taxing district, and yet here the insured pays a ten-per-cent, tax upon a policy written outside of the state, while his neighbor pays nothing on a policy of equal value and affording the same protection because it is written within the state. . . . This is an invidious discrimination, purposely made, and is a distinct departure from the constitutional rule of uniformity.” (See the numerous authorities *518cited, and, also, Railway Co. v. Clark, 60 Kan. 826, 58 Pac. 477.)
Much has been said by counsel for plaintiff regarding the situs of the judgment, it being owned by a citizen and resident of Iowa. We deem it unnecessary to enter into a discussion of that question. For the purposes of the case we assume that the situs of the judgment is in this state.
The act in question is void, and the sale of the judgment and its satisfaction by the judgment debtor unauthorized. A peremptory writ of mandamus will be awarded.