Court Opinion

ID: 3542157
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:53:43.361027+00
Date Added: 2024-06-11T14:21:54.563353
License: Public Domain

This court as early as 1896 held that Section 4 of Article XII of the Constitution does not apply to license taxes. State v. Camp Sing, 18 Mont. 128, 44 P. 516, 521, 32 L.R.A. 635, 56 Am. St. Rep. 551. In that case 70% of the license tax imposed by the legislative act there in question went to the county and the balance to the state.
The court in speaking of the words "inhabitants" and "property" used in Section 4, Article XII said: "While these two words are used, the subject-matter is the same. And if the section refers, as we have endeavored to show that it does, to taxation of property, it was not important that the section uses the word `inhabitants' as well as `property,' for the result is the same, and the taxation referred to meant a property tax; that is to say, a tax upon a person, levied upon the basis of the property owned by him."
The same question arose with reference to the gasoline license tax, being Chapter 186, Laws of 1925, under the provisions of which 55% of the money received therefrom was distributed to the counties.
On the authority of State v. Camp Sing the gasoline license tax law was held not to violate Section 4, Article XII of the Constitution. State v. Silver Bow Refining Co., 78 Mont. 1,252 P. 301. The attempt in the majority opinion to draw a distinction between the Silver Bow Refining Company case and this case on the ground that the former imposes a tax upon the business of running a manufacturing plant, refining, producing and selling gasoline and distillate is simply playing with words. Everyone knows that the gasoline license tax is actually paid by the one who drives into the filling station and buys gasoline for use in propelling vehicles over the highways.
Likewise, the Act in question here imposes the tax upon the *Page 559 
ones only who buy liquor from the state. But like the gasoline license tax, when liquor is bought for resale the tax is actually passed on to the ultimate consumer.
Both stand on exactly the same footing.
The majority opinion asserts that the Camp Sing and the Silver Bow Refining Co. cases sustain the license imposed by the statutes under the last sentence of Section 1, Article XII of the Constitution, but not under Section 4, Article XII. The majority are in error in that statement. The opinion in both of those cases sustained the Acts in question as against the contention that the statutes violated Section 4 of Article XII.
Idaho has a similar constitutional provision. It reads: "The legislature shall not impose taxes for the purpose of any county, city, town, or other municipal corporation, but may by law invest in the corporate authorities thereof, respectively, the power to assess and collect taxes for all purposes of such corporation." Sec. 6, Art. 7. The Idaho constitution also authorizes a license tax as does ours. It also unlike ours authorizes a per capita tax. Sec. 2, Art. 7.
The Supreme Court of Idaho cited and quoted from the Camp Sing case and held that its section 6 of Article 7 applies only to property or ad valorem taxes and did not apply to occupation or privilege taxes. Idaho Gold Dredging Co. v. Balderston, 58 Idaho 692,78 P.2d 105.
Oklahoma takes the same view. Trustees', Executors' 
Securities, Ins. Corp. v. Hooton, 53 Okla. 530, 157 P. 293, L.R.A. 1916E, 602.
In State ex rel. Pierce v. Gowdy, 62 Mont. 119, 203 P. 1115, this court held that Section 4 of Article XII of our Constitution prohibits the state from levying a per capita or poll tax, the proceeds of which shall be paid to the counties and credited to the poor fund. I think, however, that the statute involved in the Gowdy case is different in principle from that here involved.
The per capita tax involved in the Gowdy case was a direct tax upon the inhabitants of the county as such. Here the tax is imposed not against the inhabitants as such but only if they *Page 560 
choose to exercise the privilege of buying liquor. Likewise the tax here involved is imposed upon everyone who buys liquor whether he be an inhabitant or not.
It should be noted too that the statute involved in the Gowdy case specifically provided that the funds should be credited to the poor fund of the counties. Under Section 5 of Article X of our Constitution the obligation to care for the poor is expressly imposed upon the counties. Hence the tax there under consideration was limited in its use to a function provided by the Constitution to be local.
That too was true in Walker v. Bedford, 93 Colo. 400,  26 P.2d 1051 (a four to three decision) relied upon in the majority opinion.
"In its modern sense an excise tax is any tax which does not fall within the classification of a poll tax or a property tax, and embraces every form of burden not laid directly upon persons or property." 51 Am. Jur., Taxation, sec. 33, p. 61, and cases cited therein.
In California it has been held that a similar constitutional provision applies to license and privilege taxes as well as to property taxes. City of Los Angeles v. Riley, 6 Cal. 2d 621,59 P.2d 137, and see San Francisco v. Liverpool  L.  G. Inc. Co., 74 Cal. 113, 15 P. 380, 5 Am. St. Rep. 425; ex parte Schuler, 167 Cal. 282, 139 P. 685, Ann. Cas. 1915C, 706. The California decisions are of course entitled to respectful consideration but are not controlling in the face of decisions of our own court to the contrary. But California sustains license taxes when a part of the proceeds goes to cities or counties when the act specifies the purpose of the funds and when the purpose is at least partially a state purpose. Bacon Service Corp. v. Huss, 199 Cal. 21, 248 P. 235; City of Los Angeles v. Riley, supra.
The Act in question here can be sustained even under the California rule. The Constitution prohibits a state levy "for county, town, or municipal purposes."
How can it be said that the moneys provided by Chapter 15, *Page 561 
Laws of 1949, will be used for county, town or municipal purposes exclusively?
"It is well settled * * * that where the project has a state purpose, it is immaterial that in other respects it is local in nature." City of Los Angeles v. Post War Public Works Review Board, 26 Cal. 2d 101, 156 P.2d 746, 754.
In City of Los Angeles v. Riley, 6 Cal. 2d 621,59 P.2d 137, the court had before it a license tax law imposing a tax of one and three-quarters per cent. of the value of each vehicle used on the public highways. A certain percentage of the receipts were apportioned to the cities "for law enforcement and regulation and control and fire protection of highway traffic * * *." The Act also allocated a certain percentage of the receipts to counties and cities "without restriction as to use." The Act as a whole had previously been upheld. Ingels v. Riley, 5 Cal. 2d 154,53 P.2d 939, 941, 103 A.L.R. 1.
The court in City of Los Angeles v. Riley, supra, said:
"It, therefore, follows that if the purposes enumerated in the statute are `local' or `municipal' purposes, as distinguished from `state' purposes, the statute, to that extent, would be invalid.
"What constitutes a local and what a state purpose is a question not always free from doubt. See annotation, 46 A.L.R. 609. There are some functions performed by cities that are both local and state in nature. City of Sacramento v. Adams, 171 Cal. 458,153 P. 908; City of Oakland v. Garrison, 194 Cal. 298,228 P. 433. The constitutional provision above quoted does not prohibit state taxation for a state purpose, even though, under some circumstances, the purpose could also be local. To some extent the spheres of operation of the two overlap. In the present case, the purposes designated in the statute are `law enforcement and the regulation and control and fire protection of highway traffic.' There cannot be any reasonable doubt but that those purposes are state in character, within the meaning of the above constitutional provision. In Bacon Service Corp. v. Huss,199 Cal. 21, 40, 248 P. 235, 243; in passing on the validity *Page 562 
of the allocation of certain funds to counties for highway purposes, as one ground of its opinion, it was held `The license taxes here imposed by the legislature are in furtherance of a state purpose for the maintenance of state highways and to extend aid in the maintenance of county highways.' See, also, County of San Benito v. Riley, 88 Cal. App. 131, 263 P. 349. It has been held that law enforcement, in relation to traffic on the streets of a city, is a state affair. Ex parte Daniels, 183 Cal. 636,192 P. 442, 21 A.L.R. 1172. In that case, it was held that while the regulation of traffic upon the streets of a city is of special interest to the people of the municipality, nevertheless, such regulation was a state and not a municipal affair. See, also, People v. County of Marin, 103 Cal. 223, 37 P. 203, 26 L.R.A. 659. Under such circumstances, it must be held that the purposes enumerated in the statute are state purposes and that the provision of the Constitution here involved is not violated by the allocation of these funds to the cities and to the cities and counties. It seems quite clear that if `law enforcement and the regulation and control * * * of highway traffic' are state purposes, as held in the above cases, then `fire protection of highway traffic' is also a state purpose."
Here the Act does not state the purpose for which the funds are to be used. The fact is well known, however, that the sale of liquor creates police and law enforcement problems, all of which cast regulatory burdens upon local authorities almost exclusively. Yet problems of regulating traffic in liquor and consequent law enforcement problems are state purposes going even to the matter of the safety of the state highways.
It is no answer to say that the money allocated to the local authorities may not in fact be used in any way to regulate or control the liquor traffic or for law enforcement. The fact is that if it is not used for either of those purposes it will release other local funds for those purposes and the result is the same. Chapter 15 is merely a device to enable local authorities to carry the financial burden of caring for police and law enforcement problems arising from the sale of liquor which otherwise will be *Page 563 
saddled upon the property owners in the cities and counties in the form of ad valorem taxes. It is not a strictly local purpose. Nor is it any answer that there is no showing that all of the proceeds of the tax or the equivalent in dollars and cents will be used by the counties or cities for a purpose in which the state is interested. The presumption is that the statute is valid and that the money will be so used. The invalidity of the statute will be declared only when it appears beyond a reasonable doubt to be in conflict with some constitutional provision. This rule is so fundamental that citation of authority is unnecessary. A late case so declaring is Mulholland v. Ayers, 109 Mont. 558,99 P.2d 234.
I think Chapter 15 does not conflict with section 4, Article XII of the Constitution. For more than 35 years section 5127, R.C.M. 1935, has been in effect, which allocates license fees collected by the state auditor to the cities and towns for the use of the fire department relief associations and though the validity of the Act was questioned by such able lawyers as Walsh, Nolan and Scallon and E.C. Day, Equitable Life Assur. Co. v. Hart, 55 Mont. 76, 173 P. 1062, its validity on the ground here claimed was not ever questioned. If Chapter 15, Laws of 1949, violates section 4, Article XII, then section 5127 is likewise invalid. I think both are valid.
My associates have stressed the "Home Rule" doctrine. As an abstract legal question I agree with the principle of "Home Rule." I fail to see where it sheds any light on the question before us. Either Chapter 15, Laws of 1949, violates section 4 of Article XII of the Montana Constitution or it does not. It seems to me that discussion of the "Home Rule" doctrine when dealing with the subject of intoxicating liquors as here may have far reaching consequences.
Do the majority members of the court in the per curiam opinion imply that henceforth the cities and counties must be consulted before state liquor stores may be established and maintained therein by the state? Until now the state through the legislative assembly has commanded that the liquor control board *Page 564 
"shall establish and maintain at the county seats and such other places as the board deems advisable, one or more stores to be known as `state liquor stores,' for the sale of liquor * * *." Sec. 2815.69, R.C.M. 1935, as amended by Chapter 30, Laws of 1937, and Chapter 237, Laws of 1947, and as last amended by Chapter 162, Laws of 1949.
Until now it has been supposed that the liquor control board had full control and authority over the liquor traffic in the state except that county option was provided for in section 2815.96. Is it now to be understood that cities under the Home Rule doctrine may determine for themselves whether liquors shall be sold therein and if so by whom?
And does the "Home Rule" doctrine permit the counties to exclude the sale of liquor therein at any time or must they express themselves no oftener than two years as provided by section 2815.101?
I see no occasion for a discussion of these interesting questions in this case.
Finding no basis for condemning Chapter 15, I think the judgment appealed from should be reversed.