Court Opinion

ID: 6483911
Source: CourtListenerOpinion
Date Created: 2022-06-26 23:07:34.345051+00
Date Added: 2024-06-11T15:54:15.412442
License: Public Domain

DISSENTING OPINION OP
GALBRAITH, J.
These cases are original submissions under the statute.
In the Hobertson case the agreed facts are as follows:
First: “That there is a question in difference between the respective parties hereto which might be the subject of a civil action in the Circuit Court of said Territory. That said parties have agreed upon the following Statement of Facts upon which the controversy depends, and without action to present herewith a submission of the same to the Justices of the Supreme Court of the Territory of Hawaii, for their decision, pursuant to Sections 1255-1258, Civil Laws of 1897, and Act 18 of the Session Laws of 1898, of said Territory.”
Second: “That the plaintiff is a resident of Honolulu, in the First Taxation Division of the Territory of Hawaii.”
Third: “That J. W. Pratt is the duly appointed, qualified and acting Assessor and Collector of Taxes for the First Taxation Division of said Territory of Hawaii, residing in said Honolulu.”
Fourth: “That said plan tiff has paid or stands ready and willing to pay all taxes levied, assessed or collected upon his property pursuant to Act 51 of the Session Laws of 1896 for the yeárs 1900-1901, which said taxes include taxes assessed upon cash on hand, being income derived by the plaintiff since the first day of July, 1900, and remaining unexpended on the ■date of assessment under said Act 51.”
Fifth: “That on the 23rd day of July, 1901, plantiff duly made and filed, under protest, with said Assessor, his taxation return pursuant to Section 6 of Act 20 of the Session Laws of 1901 of the Territory of Hawaii, entitled “An Act to Provide a Tax on Incomes.”
Sixth: “That the amount of the total income, gains and profits of said plaintiff for the year ending June 30, 1901, less the deductions made pursuant to the provisions of said Act 20 of the Session Laws of 1901, is the sum of six thousand five hundred and forty-five and sixty-three one-hundredths dollars .($6,545.63). That the amount of the tax on the income, gains *615and profits of said plaintiff required to be paid by virtue of said Act 20 is tbe sum of one hundred and thirty and ninety-one one-hundredths dollars ($130.91), the same being two per cent, of the net income of said plaintiff as provided by said Act.”
Seventh: “That thereafter, to wit: on the 9th day of August, 1901, said plaintiff paid the said sum of one hundred and thirty and ninety-one one-hundredths dollars ($130.91), the smie being in payment of the tax upon his income, gains and profits, levied and assessed as aforesaid, to said defendant as such Assessor, xinder protest, and with notice that he intended to bring suit to test the validity of said tax, and said plaintiff thereupon demanded the return to him of said sum of one hundred and thirty and ninety-one one-hundredths dollars ($130.91) so paid as aforesaid, on the ground that said tax is unconstitutional, illegal, invalid and void; and the said Assessor thereupon refused to pay the said sum back to said plaintiff.”
Eighth: “Plaintiff claims that said Act 20 of the Session Laws of 1901 of the Territory of Hawaii (entitled ‘An Act to Provide a Tax on Incomes,’ is unconstitutional, invalid, inoperative and void, upon the ground that the same is inconsistent with and not authorized by the Constitution and laws of the Hnited States and (or) by the Organic Act of the Territory of Hawaii; and that by reason thereof the said tax so assessed, paid and required as aforesaid was illegally assessed and levied and the said sum of one1 hundred and thirty and ninety-one one-hundredths dollars ($130.91) should be returned to this plaintiff, who herewith submits detailed specifications of the grounds for holding said Act to be unconstitutional, invalid, inoperative and void, said specifications being hereunto annexed and marked Exhibit ‘A’.”
Ninth: “Defendant claims that said Act 20 of the Session Laws of 1901 of the Territory of Hawaii is constitutional and valid; that said assessment was legally made; that the tax so paid as aforesaid is legally required by said defendant, as such Assessor, and that said payment should stand as made.”
The points relied on to establish the unconstitutionality of the Act are as follows:
1. “The provisions allowing only one deduction of one thousand dollars from the aggregate annual income from all members of one family composed of one or both parents and one or more minor children, husband and wife, and in the case of a *616guardian of two or more minors in one family, is inconsistent with the 14th or 5th Amendments of the Constitution of the United States.”
2. “The provision exempting incomes under one thousand dollars is inconsistent with the 14th or 5th Amendment of the Constitution of the United States.”
3. “The provision of the Act in so far as resulting in taxation of the salaries of the Chief Justice and Associate Justices of the Supreme Court and Judges of the Circuit Courts of the Territory of Hawaii are inconsistent with Section 21 of the Organic Act and other laws of the United States.”
4. “The provisions of the Act in so far as resulting in the taxation on bonds of the United States Government are inconsistent with the Constitution and laws of the United States.”
5. “The provisions of the Act relative to cases of refusal or neglect to make i*etums whereby the Assessor may lawfully summon any officer of a corporation or any person having possession of the books of the company to produce the same and to give testimony under oath respecting any income liable to tax and to add two hundred per cent, to the amount of the tax in case of fraudulent returns is inconsistent with the 4th, 5 th or 6th Amendments of the Constitution of the United States.”
6. “Said Act arbitrarily, unreasonably and unlawfully exempts persons and property from taxation.”
Y. “Said Act is unconstitutional as resulting in duplicate taxation for the reason that the income, gains and profits derived from all real and personal property situate in said Territory is taxed pursuant to Sections 1Y and 69 of Act 51 of the Session Laws of 1896, heretofore passed and now standing unrepealed.”
8. “That the whole Act is unconstitutional, invalid, inoperative and void by reason of the invalidity of the many provisions thereof inasmuch as it would result in a subversion of the legislative intent to enforce only the'remaining provisions of said Act.”
9. “That said Act is otherwise unconstitutional, null and void.”
10. “That said Income Tax Law is based on no rule of uniformity, nor is it based on a rule of apportionment, such as the Constitution requires of taxes imposed by Congress upon the States of the United States, and is therefore inconsistent with *617the Constitution of the United States as well as with the Organic Act giving the Constitution the same force and effect as elsewhere in the United States.”
11. “That said Income Tax Law authorizes taxation which is not uniform and is not proportonate taxation within the Territory of Hawaii, and therefore is inconsistent with the Constitution of the United States.”
In the "Waimea Sugar Mill Company the facts are similar to those in the Robertson, case except the allegation that the plaintiff is a corporation and the difference in the amount of the tax paid. The points urged against the validity of the Act are as follows:
1. “The provisions taxing corporations on total net income without the exemption of the one thousand dollars allowed individuals, is inconsistent with the 14th or 5th Amendments of the Constitution of the United States.”
2. “The provision totally exempting insurance companies taxed on a percentage of the premiums under the authority of another Act is an unwarranted discrimination and inconsistent with the 14th or 5th Amendments of the Constitution of the United States.”
3. “The provision exempting incomes under one thousand dollars is inconsistent with the 14th or 5th Amendments of the Constitution of the United States.”
4. “The provisions of the Act in so far as resulting in taxation of the salaries of the Chief Justice and Associate Justices of the Supreme Court and Judges of the Circuit Courts of the Territory of Hawaii are inconsistent with Section 21 of the Organic Act and other laws of the United States.”
5. “The provisions of the Act in SO' far as resulting in the taxation on bonds of the United States Government are inconsistent with the Constitution and laws of the United States.”
6. “The provisions of the Act relative to cases of refusal or neglect to make returns whereby the Assessor may lawfully summon any officer of a corporation or any person having possession of the books of the company to produce the same and to give testimony under oath respecting any income liable to tax and to add two hundred per cent, to the amount of the tax in case of fraudulent returns is inconsistent with the 4th, 5th or 6th Amendments of the Constitution of the United States.”
*618I. “Said Act arbitrarily, unreasonably and unlawfully exempts persons and property from taxation.”
8. “Said Act is unconstitutional as resulting in duplicate taxation for the reason that the income, gains and profits derived from all real and personal property situate in said Territory is taxed pursuant to Sections 11 and 69 of Act 51 of the Session Laws of 1896, heretofore passed and now standing unrepealed.”
9. “That the whole Act is unconstitutional, invalid, inoperative and void by reason of the invalidity of the many provisions thereof, inasmuch as it would result in a subversion of the legislative intent to enforce only the remaining provisions of said Act.”
10. “That said Act is otherwise unconstitutional, null and void.”
II. “That said Income Tax Law is based on no rule of uniformity, nor is it based on a rule of apportionment, such as the Constitution requires of taxes imposed by Congress upon the States of the United States, and is therefore inconsistent with the Constitution of the United States as well as with the Organic Act giving the Constitution the same force and effect as elsewhere in the United States.”
12.“That said Income Tax Law authorizes taxation which is not uniform and is not proportionate taxation within the Territory of Hawaii, and therefore is inconsistent with the Constitution of the United States.”
I agree with counsel for the defendant that the law in question should be considered in connection with the other tax laws in force in the Territory as constituting a system of laws for raising necessary revenue for governmental purposes.
Act 51, Laws of 1896, continued in force by the Organic Act creating the Territory of Hawaii, provides, inter alia, as follows: Sec. 1. For the division of the Islands into four taxation districts; Sec. 2. That all property, except growing rice, shall be assessed as of the first day of January of each year; that personal and dog tax shall be assessed as of the same date that growing rice shall be assessed as of May 1st in each year. Secs. 3, 4 and 6 provides respectively for a poll, school and road tax. Sec. 8. For a cart and dray tax. Sec. 9. For a carnage, wagon, wagonette, horse and omnibus tax. Sec. 11. For a dog *619tax discriminating against the- female dog. This discrimination, however, was removed by Act 21 of the Legislature of 1901 (all dogs in the Territory now being taxed under the rule of ‘“uniformity and equality.”) Sec. 14 reads: “Except as herein provided, all real property and all personal property within the Republic shall be subject to an annual tax of one per cent, upon the full cash value of the same.” Sec. 15 defines “real property” and Sec. 16 “personal property”. Sec. 17. “All real and personal property and the interests of any person in any real ■or personal property shall be assessed separately as to each item ■thereof for its full cash value.
“Provided, however, that in all cases where real and persona] property, or several classes or kinds or parcels of real estate or .personal property respectively, are combined and made the basis of an enterprise for profit, the combined property forming :such basis of such enterprise for profit, shall be assessed as a whole on its fair and reasonable aggregate value.” The remaining part of the section provides for the method to be pursued in ■ascertaining the “aggregate value” of such property. Sec. 18 provides for assessing the individual interest of every person in •every kind of property and makes every tax due upon property ■a lien thereon. Sec. 20 reads: “All foreign marine and fire insurance companies carrying on business in the Republic shall pay for and in respect of every one hundred dollars received by ■such companies or their agents respectively, for gross premiums, •during the year preceding the assessment of taxes, the sum of ■one dollar, and such companies shall not be caused to pay any •other taxes or duties under this Act.”
Sec. 27 requires the property of corporations and copartnerships to be assessed in the name of the company and relieves the individual member from assessment on his interest or shares in the company. Sec. 28 prescribes method of taxing mortgaged property. Sec. 31 exempts diplomatic agents, clergymen, members of fire department and officers and members of the National Guard. Sec. 33 exempts from all tax government property and certain school, hospital and church property and Sec. 34 *620provides that the tax of one per cent, shall be collected on property in excess of $300.00. In addition to the above provisions there are certain stamp duties collected and a tax on inheritances.
Act 20, Laws of 1901, reads in part as follows:
“Section 1. From and after the first day of July, A. D. 1901, there shall be levied, assessed, collected and paid annually upon the gains, profits and income, over and above one thousand dollars, derived by every person residing in the Territory of Hawaii from all property owned, and every business, trade, profession, employment or vocation carried on in the Territory, and by every person residing without the Territory from all property owned, and every business, trade, profession, employment or vocation carried on in the Territory, and by eveiy servant, or officer, of the Territory wherever residing, a tax of two per cent, on the amount so derived during the year preceding.
“Section 2. There shall be levied, assessed, collected and paid annually, except as hereinafter provided, a tax of two per cent, on the net profit or income above actually operating and business expenses, from all property owned, and every business, trade, employment or vocation carried on in the Territory of Hawaii, of all corporations doing business for profit in the Territory, no matter where created and organized; provided, however, that nothing herein contained shall apply to corporations, companies or associations conducted solely for charitable, religious, educational or scientific purposes, including fraternal beneficiary societies, nor to insurance companies taxed on a percentage of the premiums under the authority of another Act.
“Section 3. In estimating the gains, profits and income of any person or corporation, there shall be included all income derived from interest upon notes, bonds 'and other securities, except such bonds of the Territory of Hawaii or of municipalities hereafter created by the Territory the principal and interest of which are by the law of their issuance exempt from all taxation; profits realized within the year preceding from sales of real estate, including leaseholds purchased within two years; dividends upon the stock of any corporation; the amount of all premiums on bonds, notes or coupons; the amount of sales of all movable property, less the amount expended in the purchase or production of the same; and in the case of a person not in-*621eluding any part thereof consumed directly by him or his family; money and the value of all personal property acquired by gift or inheritance, and all other gains, profits and income derived from any source whatsoever.
“Section 4. The net profits or income of all corporations shall include the amounts paid or payable to, or distributed or distributable among shareholders from any fund or account, or carried to the account of any fund or used for construction, enlargements of plant, or any other expenditure or investment paid from the net annual profits made or acquired by said corporation.
“In computing incomes, the necessary expenses actually incurred in carrying on any business, trade, profession or occupation, or in managing any property, shall be deducted, and also all interest paid by such person or corporation • on existing indebtedness. And all government taxes and- license fees paid within the year shall be deducted from the gains, profits or income of the person who or the corporation which has actually paid the same, whether such person or corporation be owner, tenant or mortgagor; also all losses actually sustained during the year incurred in trade or arising from losses by fire not covered by insurance, or losses otherwise actually incurred.
“Provided, that no deduction shall be made for any amount paid out for new buildings, permanent improvements'or betterments made to increase the value of any property or estate.
“Provided further, that no deduction shall be made for personal or family expenses, the exemption of one thousand dollars mentioned in Section 1 being in lieu of same.
“Provided further, that where allowable herein only one deduction of one thousand dollars shall be made from the aggregate annual income of all the members of one family composed of one or both parents and one or more minor children, or husband and wife; that guardians shall be allowed to make a deduction in favor of each and every ward, except where two or more wards are comprised in one family, in which case the aggregate deduction in their favor shall not exceed one thousand dollars.
• “Provided further, that in assessing the income of any person or corporation there shall not be included the amount received from any corporation as dividends upon the stock of such corporation if the tax of two per cent, has been assessed upon its net profits by said corporation as required by this Act, nor any bequest or inheritance otherwise taxed as such.
*622“Section 8. When any person or corporation having* a taxable income refuses or neglects to render any return or list required by law or decline to take oath or affirmation thereto the Assessor may make such assessments as he may consider-just and the same shall be binding and conclusive upon all parties and shall not be subject to appeal. In case of any false or fraudulent return or valuation by any tax payer the Assessor shall add 200 per cent, to a just valuation of the income of such tax payer and the amount of the tax assessed on such increase shall become part of the tax on the said income.”
The tax attempted to be levied and collected under the provisions of Act 20, is a direct tax. Calling it an income tax does not change its character. It is a'direct tax upon the real and personal property above the exemption of $1,000 the same-as the tax of one per cent, provided for under the Laws of 1886. Chief Justice Fuller speaking for the Supreme Court of the-United States said: That the tax on income from real estate “fell within the same class as the source whence the income was derived, that is, that a tax upon the realty and a tax upon the-receipts therefrom were alike direct.” Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 618. All of the taxes levied under the laws of the Territory except the stamp tax and that* on inheritances are direct taxes.
It will be observed that under the Laws of 1886 the legislature made a careful classification of property for taxation-purposes: that no kind of property fell under two classifications: that care was taken in making the classifications to avoid double • taxation. That under Act 20 a different classification is attempted to be made of a part of the same property, that is all. real estate and personal property in the Territory, and to tax* the same under a different rule; that- in Act 20 the exemption-of persons on account of their calling or occupation is omitted1 and a general exemption of all persons whose income is less-than one thousand dollars per annum and that the exemption of corporations organized for religious, charitable or educational purposes is maintained and the list is increased by adding* to it. insurance companies.
*623The validity of this Act is attacked on the several grounds hereinbefore set out. Uany of these objections run only to specific provisions of the Act and if sustained would not impair the Act as a whole. Two of the objections go to the validity of the law as a whole, that is (1) that the exemptions contained therein render it void, and (2) that the classification results in double taxation and an unequal and unjust distribution of the burdens of taxation.
Tor the purposes of these submissions it will only be necessary to consider these two objections.
It is claimed on behalf of the defendant that the power of the legislature on the subject of taxation is practically unlimited; that the legislature is given the power to legislate on the subject of taxation and that it is the exclusive judge of the objects of taxation and the method to be pursued 'in levying and collecting taxes.
Section 55 of the Organic Act provides in parr: “That the legislative power of the Territory shall extend to all rightful subjects of legislation not inconsistent with the Constitution and laws of the United States locally applicable.'” It is conceded that taxation is a “rightful subject of legislation.”
Is it true that there are no specific limitations in the Organic Act on the exercise of this power? An examination of the further provisions of Section 55 discloses the fact that it contains most of the provisions prohibiting the passing of '“local or special laws” by the “legislatures of the Territories of the United States now or hereafter to be organized” found in the Act of Congress of July 30, 1886. (24 Statutes at Large, p. 110.) Is is well understood that this Act of Congress was passed to prevent the Territorial legislatures “playing favorites” in legislation. It is true that the limitation on 'the taxing power of the legislature in the usual terms found'in the Organic Acts for the Territories is absent from the 'Organic Act of this Territory. I do not think it safe to conclude from this fact that Congress did not intend to place -any limitation on the exercise of this power by the legislature 'Of this Territory. There *624is in Section 55 of tbe Organic Act tbe following provision “but the legislature shall not grant to any corporation, association, or individual any special or exclusive privilege, immunity or franchise without the approval of Congress.” This is a very broad restriction, and in my opinion can be violated by the legislature in passing a tax law as well as in granting a charter to a private corporation, and that it is an absolute inhibition against the exemptions contained in Act 20 under consideration. That to exempt a man from taxation because his income is less than one 'thousand dollars per year or to exempt insurance companies from taxation is to grant to such individuals and to1 such insurance companies a special privilege or immunity not enjoyed by others of the community. That on account of these exemptions being prohibited by the Organic Act without the consent of Congress the whole law is null and void. This point was not raised in the argument and for that reason a decision based on it cannot be made without re-argument (C. L. Sec. 1171), and re-argument is not practicable at this time.
I do not agree with counsel that the 14th Amendment has any application in this case. It is well settled that this amendment is a restraint on the State Governments only and does not restrict Congress in legislating for the Territories nor the Territories in legislating for themselves. Brannon 14th Amendment, p. 46, and cases cited in note.
If it were admitted that there is no express limitation in the Organic Act on the power of the legislature when passing tax laws it does not follow that there is no restraint on the exercise of this power. The Campbell case was decided by the Supreme Court of the Republic in 1897, declaring the Income Tax law of 1896 to be in violation of that provision in the Constitution “requiring each member of society to contribute his proportion or share to the expense of protection.” This or a similar requirement whether found in the Organic Act or a written Constitution we understand to be fundamental and must be observed in all tax legislation.
*625“It has been forcibly, and very truly said, that an unlimited power in the legislature to make any and everything lawful which it might see fit to call taxation, would, when plainly stated; be an unlimited power to plunder the citizen.” Cooley on Taxation, p. 66.
“There is no such thing,” said Mr. Justice -Field, “in the theory of our national government as unlimited power of taxation in Congress. There are limitations of its powers arising out of the essential nature of all free governments; there are reservations of individual rights, without which society could not exist, and which are respected by every government. The right of taxation is subject to these limitations” (citing Loan Association v. Topeka, 20 Wall, 655, and Parkersburg v. Brown, 106 U. S. 487). Continuing the Justice said: “The inherent and fundamental nature and character of a tax is that of a contribution to the support of the government, levied upon the principal of equal and uniform apportionment among the persons taxed, and any other exaction does not come within the legal definition of a tax.”
“This inherent limitation upon the taxation power forbids the imposition of taxes which are unequal in their operation upon similar kinds of property and necessarily strikes down the gross and arbitrary distinctions in the income law as passed by Congress.” Pollock v. Farmers' Loan & Trust Co., 157 U. S. 599, 600.
The Congress of the United States, the creator and absolute monarch of the Territory and its legislature, being thus limited and restricted in enacting tax law, it follows as a matter of course that the legislature of the Territory of Hawaii is limited in like manner even in the absence of any written restrictions.
Was the legislature acting within the limitations of its powers in making the exemptions prescribed in this Act?
Section 1 provides “From and after the first day of July, A. D. 1901, there shall be levied, assessed, collected and paid annually upon the gains, profits and income over and above one thousand dollars, derived by every person residing in the Territory of Hawaii from all property owned, and every business, trade, profession, employment or vocation carried on in the Territory, and by every person residing without the Territory *626from all property owned, and every business, trade or profession, employment or vocation carried on in tbe Territory, by every servant, or officer, of the Territory wherever residing, a tax of Mco per cent, on the amount so received during the year preceding.”
A proviso in Section 4 reads: “Provided further, that no deduction shall be made for personal or family expenses, the exemption of one thousand dollars mentioned in Section 1 being in lieu thereof.”
Section 2 provides for the same rate of tax to be levied and collected on the net income of all private corporations doing business in the Territory except insurance companies, and these are exempted from all taxes under this Act.
“An exemption to be admissible, it would seem, ought to be either made on the basis of contract, in which case the public is supposed to í’eceive a full equivalent therefor, or it ought to be made on some ground of public policy, such as might justify a pension or a donation of the public funds on some general rule of which all who come within it may have the benefit. It is difficult to conceive of an exemption law which selects single individuals or corporations, or single articles of property, and taking them out of a class to which they belong, makes them the subject of capricious legislative favor. Such favoritism could make no pretense to equality, it would lack the semblance of legitimate tax legislation.” Cooley on Taxation, 152 and 153.
It is contended by counsel for the defendant that “the exemption of one thousand dollars was provided on the theory -that that sum represented the cost of providing the necessaries -of life for an average-sized family in this Territory and also be•■cause the legislature had found that these persons who would be exempted by this provision were already bearing a larger proportional share of the burdens of taxation than their more •wealthy neighbors.” The answer to the first part of this argument given by the Supreme Court of the Republic when presented by the same counsel in the Campbell case when urging the validity of the income tax law of 1896 in which the exemption was two thousand dollars, is pertinent. “It is argued,” said the Chief Justice, “that the exemption of incomes of two *627thousand- dollars is reasonable and in furtherance of a public purpose, because the sum of two thousand dollars is the average annual cost of living of a family. This is a mere supposition and is not to be taken as true in our community.” Campbell v. Shaw, 11 Haw. 121. If the court in 1897 refused to accept as true the supposition that two thousand dollars was the average annual cost of living of a family in this community, it does not seem that this court will now accept as true a supposition that one thousand dollars will cover such expense and that an exemption of one thousand dollars on such a theory is reasonable and fair and is in the furtherance of a public purpose. If this assumption be time, why is the exemption allowed to the single man without a family? Hnder the law the exemption is allowed to the individual without regard to the fact that there may be one or many dependent upon him for support unless the individual is the member of a family and then “only one deduction of one thousand dollars shall be made from the aggregate annual income of all the members of one family composed of one or both parents and one or more minor children, or husband and wife.” This is an unjust and indefensible discrimination against the one man or class of men in all communities who should have the thoughtful care of the legislature, that is, the man of large family, and in favor of the man without family. In reply to the last part of the argument, that is, that the legislature found “that the persons exempted had been bearing more than their proportion of the burden of taxation.” We fail to note any such finding by the legislature and if it had made such finding we are not sure that the court would be bound by it. It is clear that this exemption is purely arbitrary and capriciously made. No public pimpose is sought to be served by it. Those exempted from taxation are not proper subjects of charity. No good reason appears why persons whose income is less than one thousand dollars per year should be relieved from bearing their just proportion of the burdens of taxation.
The exemption of insurance companies from taxation is less defensible than the class of persons above referred to. Why *628insurance companies should be classed with charitable^ religious and educational corporations or fraternal societies and exempted from paying taxes under this law does not clearly appear. The law says because they are taxed under another Act. The reference is to Section 20 of the Act of 1896, under which insurance companies are taxed one per cent, on gross premiums received. This section provides that “such companies shall not be caused to pay any other taxes or duties under this Act.” This exempts the real and personal property of insurance companies from taxation and now this Act 20 exempts the income from all property owned by insurance companies from taxation. It is claimed that insurance companies have no property in the Territory to be protected by its laws. This is not made the basis of the exemption in the statute. The statute says the exemption is made because they are taxed under another law and when we examine that other law we find that the real and personal property of insurance companies are exempt from taxation. We know as a matter of law that insurance companies can own and hold real and personal property. It does not appear from the submission whether they own much or little in this Territory. But it does appear that whatever property is owned by insurance companies in this Territory is wholly relieved from property or income tax. If the legislature can thus favor insurance companies by classing them as “religious, charitable or educational” corporations there is nothing to prevent it from extending similar favors to other corporations without this classification. In the language of Mr. Justice Field, the “inherent limitation upon the taxing power forbids the imposition of taxes which are unequal in their operation upon.similar kinds of property” and to make such unjust discrimination in exemptions is beyond the power of the legislature.
As to the second objection. It is conceded that the legislature has the power to classify the objects of taxation, “but it is equally well settled that selections cannot be made out of a class for taxation and others of the same class be exempted.” (Campbell v. Shaw, Id. 121.) This power of classification must in the *629very nature of the power be limited in other respects. When the legislature has once classified the objects of taxation within its jurisdiction this of necessity exhausts the power. If the same property can be classified twice, there is no limit to the number of classifications that may be made. It cannot after the first classification is complete proceed again to classify a part of the objects of taxation without repealing the first classification, otherwise there could be no equality and just apportionment of the burdens of taxation. This is exactly what the legislature has attempted in this income law. Without disturbing the classification made by the revenue law of 1886, it is sought -to re-classify a part of the property classified by the law of 1886 and under which a tax of one per cent, on the “full cash value” is levied and collected as of the first day of January of each year, that is, all real estate and all personal property in the Territory is classified, and where its owner has a net income of more than one thousand dollars per annum, the net income therefrom is taxed at two per cent. The result is that a part of the real and personal property is sought to be taxed twice, while other property of the same kind is to be taxed once.
Double taxation does not of necessity render a tax law void for the reason that double taxation of some character is a necessary incident of many tax laws, but where the manifest object and purpose of a law is to levy a double tax on some property and to arbitrarily exempt other property of the same kind, the law is null and void for the reason that it violates the fundamental principles binding on the legislature in enacting tax laws. “The inherent and fundamental nature of a tax is that of a contribution to the support of the government, levied upon the principle of equal and uniform apportionment among the persons taxed.” (157 U. S. 600.)
I feel much hesitation in arriving at the conclusion that an Act of the legislature is void and particularly a law enacted to provide needed revenue for the support of the Territorial Gov*630emment, but the vices of this Act are of such a nature and their practice, if unchecked, are so far-reaching that I am impelled to such conclusion in regards to the Act under consideration.