Court Opinion

ID: 3984660
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:40:55.737362+00
Date Added: 2024-06-11T07:44:17.362935
License: Public Domain

I think the court's opinion presents a clear and able exposition of the questions therein discussed. However, I think the occasion demands a somewhat more specific consideration of the nature of the functions remaining in the Legislature as they relate to and impinge on the power of the Tax Commission to assess utilities given in Article 13, § 3, of the Constitution, as amended in 1930. Otherwise, it may be wrongly inferred that the Legislature has no power to lay down formulae for the guidance of the Tax Commission in the exercise of its functions of assessing utilities. The opinion states:
"The legislative power to `prescribe by law such regulations as shall secure a just valuation for taxation of such property' under section 3 *Page 116 
of article 13 of the Constitution, as amended in 1930, has not been exercised to specify a definite guide in fixing values. That is to say, the Legislature has not indicated whether it shall be on the basis of any or all of the following: Historical cost, reproduction cost less depreciation, capitalization of earnings, market value of stocks and bonds, actual earnings or earning capacity. That is still left to a state agency to determine, but the agency to which it is delegated is the Public Service Commission which has power to fix values for rate purposes, and not to the Tax Commission which is vested by the Constitution with the power of assessment, adjustment, and equalization of utility properties for tax purposes."
Thus it appears affirmatively to recognize that the content of the word "assess" in the phrase, "It shall assess mines and public utilities," etc., as used in article 13, § 11, amended in 1930, is not such as to prevent the Legislature from providing a method or formula, which if it embraces the proper principles for arriving at "value in money," must be followed by the Tax Commission. However, where the line between constitutionality and unconstitutionality is narrow and refined, the fatalities relied on for the decision of unconstitutionality should be so particularized that the pitfalls may be avoided if and when the Legislature chooses again to follow that road toward a more equitable distribution of the heavy tax load the citizens of the State are required to bear.
I shall, therefore, endeavor to confine my remarks to a consideration of the type of formula which the Legislature may provide as binding on the Tax Commission. As a preliminary to this consideration I shall state why I think the word "assess" as used in the clause above set out, from article 13, § 11, does not have the content of meaning which gives the Tax Commission not only the power to value but also the exclusive authority of determining how and by what formulae in its discretion it will find the value. The Legislature, I think, may subject it to directions in that regard.
If the amendment of 1930 gave the Tax Commission sole authority to devise the formula to be applied, it would *Page 117 
enjoy a power vast in its extent, and exercisable without democratic control. The Governor appoints the Tax Commission by and with the consent of the Senate. It would have to be quite clear that the people in adopting this amendment meant to give to an appointive commission, removable only for cause, such power completely divorced from democratic control through the Legislature. Such concentration of sole powers in a small appointive body free from any control of the Legislature would be very apt to intensify the battle of conflicting interests to control the appointing power — a consequence not particularly healthy in political life.
Far from being clear that the people meant to do this, it seems to me that an interlaced reading of all the provisions of sections 3 and 11, article 13, shows just the opposite. Section 3 specifies that "The Legislature shall provide by law a uniform and equal rate of assessment and taxation on all tangible property in the State, according to its value in money," (Italics added) — not a law regarding some or most of the tangible property, but all of it. Then follows a specification that it "shall prescribe by law such regulations as shall secure a just valuation for taxation of such property, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its tangible property." Were it not for section 11, there could be no doubt but that section 3 would permit the Legislature to provide regulations to govern the valuation of public utilities. It would be charged with that duty. I think regardless of section 11 the Legislature still has that power. I do not see that there is any real conflict between the powers given the Tax Commission under section 11 and those duties imposed on the Legislature by section 3. I do not think it is a matter of a specific provision prevailing over a general one. I think the two provisions can be and necessarily must be harmonized by a different tenet of construction. What is the interpretation which should be given to the word "assess" as contained in the phrase, "It shall assess mines and public utilities," etc., in section 11, article 13, and the meaning which *Page 118 
must be given to the word "assessment" in section 3 of the same article?
In the first place, it will be noted that by section 3 the Legislature is not to "assess" or "tax" all tangible property. It could not do that because it is not directly equipped to do the administrative work of assessing. It must provide by law a uniform and equal rate of assessment and prescribe such regulations as shall secure a just valuation. I therefore agree with the main opinion that the Legislature has no direct power to assess or determine valuations. But in providing by law for the securing of a just valuation it must set up agencies to determine that valuation. In the case of ordinary property in the counties it has designated the county assessor. It was given power expressly by the Constitution, section 5, article 13, to "vest in the corporate authorities thereof [county, city, town or other municipal corporation] respectively, the power to assess and collect taxes for all purposes of such corporation." (Italics added.) The Legislature made the county assessor the officer to assess property, not only for purposes of the municipal corporations, but for state taxation purposes as well. See section 80-5-3, R.S.U. 1933, and like sections in former compilations. It thus used the power given by section 5, article 13.
Selecting the agency to effectuate this securing of a just valuation is one of the elements necessarily contained in the power and duty to secure such just valuation. The only property for which an agency to assess cannot be selected by the Legislature is that of public utilities and mines. The people in the case of utilities and mines themselves selected the assessing or valuing agency and froze this choice by embedding it in the Constitution. Thus I agree again with that part of the main opinion which holds that the Tax Commission is the sole agency to assess utilities. But a further point which must be noted is that the selection of the agency in the Constitution to value these properties did not detract from, and is in harmony with, the power of the Legislature *Page 119 
to provide by law, according to section 3, regulations to secure a just valuation of utilities. The Constitution made the Tax Commission the sole agency to assess, but subject to the paramount authority of the Legislature to prescribe regulations to govern the assessment. I emphasize this point because I think implications may be taken from the main opinion, unless a very careful reading is given it, which would seem to hold that the power to assess utilities given to the Tax Commission includes every step in the whole process of assessment. That would mean that it had the sole power to fix or adopt the formula to arrive at a "value in money."
Such power to make regulations includes the power to prescribe a method or formula for finding the value, which method or formula must be subject to the outstanding requirement that it be designed to find or reasonably appropriate or suitable for finding the "value in money." Such holding does not make the Tax Commission a mere computer. In the application of almost any formula or method there is great opportunity for the use of judgment. That my thesis to the effect that the Constitution in making the Tax Commission the valuation agency for utilities did not take from the Legislature the power to prescribe the method or formula is borne out by the following observations:
Section 11 specifies that the Tax Commission "shall assess mines and public utilities." But when we further examine section 4 of that same article 13, we find it specifies, "All metalliferous mines * * * shall be assessed as the Legislature shall provide." There is a proviso which retains a certain former constitutional method of assessment until January 1, 1935, and thereafter until others were provided by law. Section 11 giving the Tax Commission power to assess mines and section 4 giving the Legislature power to provide for assessment of mines after January 1, 1935, can only be reconciled on the basis above suggested, to wit: That one agency may prescribe the method or formula for assessment and the other agency do the assessing. If this is the case *Page 120 
with mines, I think under the overarching authority of section 3 it is also true of utilities.
I have attempted at some length to place the line of separation between the powers granted to the Legislature in reference to the valuation of mines and utilities and the powers granted to the Tax Commission in regard to the same subject. I now come to the question of prescribing the principles which must govern the legislative formulation of a method for assessment of utilities. The clue is, of course, given us by the words "assessment * * * according to its value in money." The Legislature may not in prescribing a formula ignore those words. They represent the objective which any prescribed method of assessment must be designed to obtain. If the formula contained elements which could not possibly be a guide or an aid or had no relevancy to the end to be arrived at, to wit, determination of the property's value in money, the formula would be pro tanto invalid. Moreover, if it was so restricted as to exclude the consideration of those elements which were generally recognized as being required to be taken into consideration to arrive at the value in money, it would be invalid in toto. By "value in money" is meant that money which one able to pay and desiring the property but not forced to buy would be willing to pay for the property when the seller was not forced to sell. In short, into what amount of money on a free market could the property be reasonably converted. In the case of utilities which must be appraised in the end as a unit, although resort may be had to the elements composing it as an aid, the task is quite difficult. This is because there is no ready market for utility systems and few, if any, buyers. So in the case of utilities, resort to many elements may be had. As stated by the prevailing opinion, there may be considered the original cost, or historic cost, revised to determine whether it was the prudent, reasonable, or necessary cost, reproduction cost new, capitalized earnings, stocks and bonds, surveyed over periods which will eliminate the fluctuations not due to intrinsic conditions or directly to economic *Page 121 
outlook, but because there are temporarily many more sellers than buyers and prospective earning power. I think the last quite important. At the argument much stress was laid on capitalized present earnings as the main criterion. But, if the assessing authorities were compelled to write off of the assessment rolls or reduce it to the value of its dead physical property at the prices such property would bring during depressions, we could not run the government. Every farmer who showed a loss might claim his business was a detriment because he was forced to put money into it to preserve and maintain it, and therefore it should not be taxed or its taxes greatly reduced. But the fact is that the government is up against the simple necessity of raising sufficient money to survive and, in order to do so, it must keep up the values on most property to somewhat the same levels through thick and thin. This, I think, presents perhaps the main reason why the Utah Power  Light Company, an illustration given in the briefs, actually was given a higher valuation during the period from 1930 to 1936 than it had in 1929. The prospective earning power is therefore a very important element. And I see no reason why the value that the utilities themselves place on items of tangible property may not be an element even though they are listed for rate making. In fact, even after the last word is spoken on the difference between value for rate-making and tax purposes, which last word will probably be just before the last lawyer and last court become extinct, the intelligent layman will still find difficulty in appreciating why a truck, for instance, should be valued at one figure for the ratepayer and at another figure for the taxpayer. The answer may lie in the esoterics of depreciation accounting.
I recognize, however, that utilities must be assessed as a unit — poles or trucks or power plants cannot be separately picked out and assessed except as an aid to arrive at a total unit assessment. But the Legislature may require the values on constituent tangible items, put in for rate making, to be accessible to the Tax Commission for its information. I *Page 122 
agree, however, that it cannot make the valuations of the Public Service Commission for rate making the absolute value for taxation purposes. For two reasons: One stated very well in the main opinion, that this would be putting in the Public Service Commission the duty of assessing the tangible property whereas the Constitution makes the Tax Commission the sole agent for that purpose; two, if it be contended that the Legislature required the findings of the Public Service Commission to be used as the value of those same tangibles for taxation purposes and that the Legislature is thereby only prescribing a formula, the answer is two-fold: One, that the legislative requirement that a body charged with the duty of assessing accept unqualifiedly a particular valuation is hardly a formula — the second body is not a valuing body but a mere copyist; two, the formula is too restricted to meet the requirements of due process. As before stated, any formula prescribed by the Legislature would have to be reasonably appropriate and bear some reasonable relation to the matter of determining money value. If it was so restricted as to exclude every element which in common practice, and by the common experience of mankind, is used to arrive at a judgment of money value or value in money, it would not be constitutional — not because the Legislature under article 13 would not have the power to prescribe a formula, but because the formula was of such a nature as to deny due process. The Legislature might require the Tax Commission to obtain the values found by the Public Service Commission and use them as a basis or factor for assessment where the Tax Commission was permitted to use the other principles above suggested for the ascertainment of money value and by a process of revision or modification from the figures obtained from the Public Service Commission arrive at a money value by the application of those principles, either higher or lower than the value found by the Public Service Commission for ratemaking purposes. That is quite a different thing than was done in the case at bar, where the figures found by the Public Service Commission *Page 123 
were made absolute on the Tax Commission. The Legislature attempted to compel the utility to make its own assessment for taxation, coerced in chapter 87 by the necessity of making it high enough in order to obtain a rate by which it may hope to obtain a fair return.
I have attempted in this opinion to set definite limits on what I consider to be the infirmities in the scheme contained in chapters 87 and 100, and to reconcile in a way differently than does the CHIEF JUSTICE the phrases in sections 3 and 11 of article 13 of the Constitution, but I fully concur in these general propositions laid down in that opinion: (1) That chapters 87 and 100 are one interlacing scheme and must be considered together as a plan for arriving at the valuation of utilities; (2) that the Legislature has no power to directly assess tangible property of any kind; (3) that the Tax Commission is the sole agency for assessing utilities; (4) that in the scheme laid down in chapters 87 and 100 the utility itself or the Public Service Commission really make the assessment. I furthermore think: (5) That the Constitution gives the Legislature power to prescribe a formula or method for finding money value of all tangible property in the state; and (6) that such formula when prescribed must direct or permit the inclusion of those elements generally taken into consideration by buyers who would translate the property into money value.