Court Opinion

ID: 7812320
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:14:13.021761+00
Date Added: 2024-06-11T16:30:30.552091
License: Public Domain

Wood, J., (dissenting). The act under review levies what is denominated in the act as ‘ ‘ a privilege or license tax,” and called the severance tax, upon each person, firm, corporation, or association of persons, called the “producer,” who engages in the business of severing from the soil or water, for commercial purposes, the various natural products enumerated in the act. If the tax be an occupation tax ór privilege tax, and if it applies to corporations, then unquestionably it also applies to individuals. The act is too long to set forth and analyze at length, but a careful reading of the whole, including its title and the emergency clause, convinces me that the Legislature would not have enacted this severance tax law if it had conceived for one moment that the act would be construed as valid when applied to corporations but unconstitutional and void when applied to individuals and the other classes mentioned therein. The act lays the tax upon the producer who severs the natural resources of the soil and water, and then the Legislature, after specifically naming every resource it could conceive, included any that might have been overlooked in the all-embracing words, “and all other natural products of the soil or water of Arkansas.” The act on its face, if valid, is fair, but, if it could be construed to intend to include only corporations, it would be so shockingly unjust and discriminatory that no court of last resort would hesitate to declare it unconstitutional and void. To illustrate, if a corporation owned a thousand acres of coal, bauxite, zinc, or other mineral lands, gas and oil or timber lands, from which these natural products were being severed by the corporation for commercial purposes, and an individual or partnership, company, or an association of persons, not a corporation, owned a thousand acres of similar lands adjoining from which these natural resources were being taken or severed in precisely similar manner as that employed by the corporation, would any court tolerate a classification which imposed the severance tax levied by this law on the corporation and at the same time exempted the noncorporate owners from the same tax burden? Corporations,'after all, are but an aggregation of individuals doing business by authority of the sovereign as a corporate entity. The right to do business in this form and to possess and enjoy all the rights incident thereto are as sacred under our Constitution and statutes as are the rights of individuals and other classes named in the act who do not conduct the same business as a corporation. I am unwilling to impeach our lawmaking body or any member thereof of the monstrous injustice and' unfairness that would be involved in the proposition of declaring that they intended to pass a law of this kind, which might, by any possibility, be held constitutional and valid as applied to corporations, but unconstitutional find void as applied to individuals and other classes of producers named therein. I am aware that the Legislature has a wide discretion in the matter of classification. Conceding, for the sake of the argument only, that it was within the power of the Legislature to lay this severance tax as a privilege tax upon the franchise of corporations, authorizing them to engage in the business of severing the various natural products enumerated in the act, still I cannot believe tliat even the most inveterate revenue sleuth in any General Assembly, in his persistent search for taxes and still more taxes, would have pounced upon corporations and passed by individuals if he .had anticipated that it would be construed as applying to corporations but not to individuals. The G-eneral Assembly, I am sure, had no such thought when it enacted this law. The act as a whole shows clearly that thé General Assembly was seeking more revenue producers, under a system which, it believed, would place the burden impartially upon all classes that were in the same or similar situations. I feel certain that it was not the intention of the Legislature to pass over one class, and thus exempt it from the burden, while laying it upon another class who were producers under the same conditions. The law, as announced by Judge Cooley and followed in innumerable cases of our own and other courts, is to the effect that, if the provisions of a statute “are so mutually connected with and dependent on each other as conditions, considerations or compensations for each other, as to warrant the belief that the Legislature would not pass the residue independently, then, if some parts are unconstitutional,' all the provisions which are thus dependent, conditional, or connected must fall with them.” Oliver v. Southern Trust Company, 138 Ark. 381-387. While the act contains the usual sweeping provision to the effect that “if any section, subsection, sentence, clause, or phrase be held unconstitutional, such decision shall not affect the validity of the remaining portions of the act,” yet I am persuaded that such a clause should only be Construed as expressing a desire upon the part of the Legislature to pass an act that was not unconstitutional and to so phrase it that it could not be declared unconstitutional. We virtually so held in the recent case of Nixon v. Allen, 150 Ark. 253. Certainly it was not intended by such a clause to justify the elimination, by judicial construction, of any provision in the act which was a “condition, consideration or compensation” for some other provision, and which provisions, taken all together, are essential to effectuate the intention of the Legislature in passing the act. The first section of the act and the various other sections show that the Legislature had in mind each and every producer of the natural products of the soil and water therein specified, without making any unfair, unjust and unreasonable discrimination between them. But, if I am mistaken iir the above conclusion, and if the act embraces corporations only, and is a tax on the business of severing the natural products enumerated, for commercial purposes, imposed under the name and guise of a franchise or privilege tax, it is in palpable violation of article 12, § 6, of the Constitution of 1874, which, while conferring power upon the G-eneral Assembly to alter any charter of incorporation, requires that, in doing so, no injustice shall be done to the corporators. The tax laid in this manner upon corporations, under the guise of a franchise or privilege tax, would place a burden upon the incorporators which, for the amount of the taxes imposed, would be a lien on their property which they could not escape, even if the charters were surrendered or annulled. After conferring upon corporations charter powers to conduct a business of severing natural products from the soil or water, and the same kind of business that is conducted by the other persons named in the statute, and in the same manner and under like circumstances, I cannot conceive of a greater injustice to the corporators than laying a severance tax upon their business, under the guise of a franchise or privilege tax, and allowing the other persons named in the statute to escape. When corporations are chartered to do business in the State and, in the pursuit of that business and under powers conferred by their charter, acquire property, they have a right to possess, enjoy and dispose of that property just as natural persons may do. These are vested rights, and are as sacred under our Constitution as the same rights when enjoyed by individuals. I have therefore reached the conclusion that the act is a nonseverable act; that, if it applies to corporations, it also applies to individuals; and that, if construed to apply to corporations only, the act is unconstitutional and void. 2. (a) It is an egregious mistake to treat the word “privileges,” as used in our Constitution, as synonymous with the term “pursuit,” “business,” or “occupation.” "We held just the reverse in State ex rel. Norwood v. N. Y. Life Insurance Company, 119 Ark. 214-318, where we said: “The words ‘pursuits’ and ‘occupations’ are synonymous, and are used in their common acceptation to denote the principal business, vocation, employment, calling or trade of individuals, that, but for some constitutional 'or statutory inhibition, could be exercised and enjoyed as of common right. But the word ‘privilege’ is not used in the Constitution in the same sense as the words ‘pursuits’ and ‘occupations,’ and it has an entirely different meaning.” In the above ease we quoted Judge Mitchell’s definition of a privilege in the case of International Trust Co. v. American Loan & Trust Company, 62 Minn. 501, as follows: “A privilege, as distinguished from a mere power, is a right peculiar to the person or class of persons on which it is conferred, and not possessed by others. As applied to a corporation, it is ordinarily used as synonymous with ‘franchise,’ and means a special privilege conferred by the State which does not belong to citizens generally of common right, and which cannot be enjoyed or exercised without legislative authority. ’ ’ The Supreme Court of Tennessee, in Mabry v. Tarver, 1 Humph. 94, 98, gives an excellent definition of privilege as follows: “A privilege is the exercise of an occupation or business which requires a license from some properly constituted authority designated bv general law, and not open to all or any one without such license.” See also the numerous Tennessee cases cited in Constitution of Tennessee (Anno.) Shannon, p. 314. Now, the tax imposed by this act, so far as corporar tions are concerned, does not purport to be a tax upon the right or privilege of corporations to exist and carry-on their business in this State. It is therefore not a tax on the franchise or privilege of being a corporation. The privilege or franchise tax on the right to do business as a corporation is laid on manufacturing and other business corporations, under § 1711 of Crawford & Moses’ Digest. The businesses which such corporations carry-on, after obtaining their license or privilege to do business, are powers, and not franchises. The distinction between the powers exercised by a corporation after it obtains a franchise and the franchise itself is well expressed by the great judge to whom I have just referred, in the case of State v. Mfg. Co., 40 Minn. 213-225, as follows: “To bea franchise, the right possessed must be such as cannot be exercised without the express permission of the sovereign power, a privilege or immunity of a public nature which cannot be legally exercised without legislative grant. It follows that the right, whether existing in a natural or artificial person, to carry on any particular business is not necessarily or usually a franchise. The kinds of business which corporations (manufacturing corporations) are authorized to carry on are powers, but not franchises, because it is a right possessed by all citizens who choose to engage in it without any legislative grant. The only franchise which such corporations possess is the general franchise to be or exist as a corporate entity. Hence, if they' engage in any business not authorized by the statute, it is ultra vires, or in excess of their powers, but not a usurpation of franchises not granted, nor necessarily a misuser of those franchises.” The act under review lays the severance tax upon corporations and all other classes named in the act, called the producers, who are engaged in the business of mining, cutting, or otherwise severing from the soil or water natural products for commercial purposes, etc. True, the act declares the tax to be a privilege or license tax. But for this declaration and inhibition of the business named, without a license, such, bnsiness could be carried on by corporations and all persons as a matter of common right. After corporations have received their franchise or license to be a corporation, under § 1711, swpra, it is not then within the power of the Legislature, under the guise of a franchise or privilege tax, to lay another tax on their powers or the business which they have been authorized to do (and which is a business of common right in which all classes of persons may engage), in such manner as to do injustice to the corpo-rators. In some jurisdictions, under precisely similar constitutional provision to article 16, § 5 of our Constitution, it is held that “a privilege is whatever business, pursuit, occupation or vocation' affecting the public the Legislature chooses to declare and tax as such.” Mabry v. Tarver, supra. Such is the rule in Tennessee, Minnesota, and other States. The Supreme Court of the United States, in a very recent opinion, has held that where such is the rule of the State court, a tax on pursuits and occupations which the Legislature of the State declared to be privileges, and taxed as such, will be upheld as being within the power of the State court to construe its own constitutional provision. See Oliver Iron & Milling. Co. v. Lord, 262 U. S. 172. Our court, from a very early period in its history, has taken a different view, by holding that it is not within the power of the Legislature, under our Constitution, to declare and tax as a privilege, for State revenue, those pursuits and occupations which every one may follow as a matter of common right. The doctrine of our court is that these pursuits and occupation's which are matters of common right cannot be taxed as privileges for State revenue. It is within the power of the Legislature, under our Constitution, to authorize counties and towns to regulate or tax callings and pursuits, but this cannot be done by towns or counties for the purpose of raising State revenue, nor by the Legislature itself for that purpose. Of course, if pursuits or occupations which are matters of common right are conducted in a manner which injuriously affects the public interest, they may be required to pay a license tax for purposes of regulation under the police power. See Stevens v. State, 2 Art. 291; Gibson v. Pulaski County, 2 Ark. 209; Washington v. State, 13 Ark. 752; McGehee v. Mathis, 21 Ark. 40; Straub v. Gordon, 27 Ark. 625; Barton v. Little Rock, 33 Ark. 442; Little Rock v. Board, 42 Ark. 160; Baker v. State, 44 Ark. 134; State v. Washmood, 58 Ark. 609. Under the doctrine of stare deeisis, these cases have become the settled law of this State, and, until they are overruled, which up to this hour has not been done, this court cannot consistently hold that it is within the power of the Legislature to declare and tax as privileges, .for State revenue, pursuits and occupations which are matters of common right. To so hold would be to overrule all these cases, and, if they are to be overruled at all, it should be done expressly, and not by implication. Therefore, even if the tax under review were an occupation tax, it would be unconstitutional and void, under these numerous decisions of our court. (b) The term “land” is real property, and includes whatever of natural origin is growing upon it to the highest heights, and whatever of such origin is contained within or beneath its surface to the deepest depths. 1 Washburn, Real Property, § 3. Therefore, ownership of the land embraces all the natural products mentioned in this act. They are taxed when a property tax is laid on the land. Under our Constitution all lands in this State are declared to be allodial; and feudal tenures of every description with all their incidents are prohibited. Constitution 1874, article 2, § 28. An estate in free and pure allodium, and an estate in fee simple absolute, mean essentially the same thing, and they describe the most ample and perfect interest which can be owned in land. 4 Kent Com. *3; 2 Blk. Com. 45, note “f” (3), 47-105; Greenleaf’s Cruise on Real Property, 1 and 2, p. 6, § 13; 1 Wash. Real Property, p. 59; 1 Tiffany, Real Property, p. 18; Goodwin, Law Real Property, p. 4; Gray, Rule Against Perpetuities, pp. 16-17, note. Chancellor Kent says: “In this country every real vestige of tenure has been annihilated.” 4 Com. p. 25. In declaring that lands in this State are allodial, the framers of our Constitution meant that the owners of land should have the absolute property therein, in their own right, and complete dominion over the same. “This is property in its highest degree.” 2 Blk. Com. 104-105. Therefore, the owners of land in our State have the unrestricted and common right to use their lands in any manner they choose, so long as such use is not detrimental to the public weal. In the light of the decisions of our own court, supra, and the character of land ownership in this country, as shown by the above authorities, how fallacious the notion that the framers of our Constitution intended to confer upon the Legislature the power to declare as a privilege, and to tax as such, the right of appellees to use their lands in the manner set forth in the act. Such a doctrine is utterly at war with the genius of our institutions, State and National. To declare and tax this common right as a privilege is contrary to both the spirit and letter of the law of real property in this country, and harks back to that “deep and ancient night” when feudal lords “over conquered realms and servile vassals held despotic sway.” 3. But, after a careful analysis of this act and a careful reading and consideration of all briefs that have been filed in this case, I have reached the conclusion that the tax here imposed is a property tax, pure and simple. Article 2, § 2, of our Constitution declares that “all men are created equally free and independent, and have certain inherent and alienable rights, amongst which are those of * * * acquiring, possessing and protecting property.” As is said by one of the great judges of this court, Judge Battle, in the case of Leep v. Ry. Co., 58 Ark. 407-422, “the enjoyment or deprivation of these rights and privileges constitutes the essential distinction between freedom and slavery; between liberty and oppression.” The owners of the lands and waters containing the various natural resources are, by virtue of such ownership, also owners of the natural products at which this act was leveled. Those products give to the lands, as shown by the facts alleged, and which are by the demurrer admitted to be true, their only value. The only possible use that can be made of these products is by severing them from the soil and water for commercial purposes. To deprive the owners, by law, of this use would be virtually a confiscation of their property, and to tax this use is to tax the only available purpose or use which the property has. Some of the timbers to be cut, as shown by the facts, are on lands situated on islands that are not susceptible of cultivation, and much of it on tracts that can never be made available for homestead or agricultural purposes. Therefore the timber thus situated cannot be, and is not to be, used for fencing purposes or ornamental shade trees or other uses about a home or farm. Likewise, the various other natural products named cannot be used, and have no value whatever, unless they are severed from the soil and water for commercial purposes. Such severance therefore is necessarily incident to the right of the use of this property, the only possible ' use that it has. Such is the. plain common-sense meaning of the words of this statute. Since the act levies a tax on the business of “severing from the soil or water, for commercial purposes, natural resources,” it lays upon the owners of such resources a tax burden which restricts them from the free enjoyment and use of these resources, from the only possible use they can make of their property. It deprives them of a common' right, which they had under all our previous decisions, even down to Standard Oil Co. v. Brodie, 153 Ark. 114. Under these decisions the Legislature cannot, by declaring it -a “privilege or license tax,” make it so. It occurs to me it requires a radical and wonderful metamorphosis of the plain language in which this act is couched to convert the property tax imposed into a privilege tdx. We cannot do so, I protest most respectfully, but most earnestly, without entering the domain of legislation. As a property tax the act is in palpable violation of the ad valorem and uniform clause of article 16, § 5, of our Constitution. My views on this subject are well expressed by the Supreme Court of Mississippi in Thompson v. Kreutzer, 72 So. 891, as follows: “A tax on the ownership of property, whatever it may be called, is a property tax. A tax on a thing is a tax on all its essential attributes, and a tax on an essential attribute of a thing is a tax on the thing itself. So that a tax on a thing owned is necessarily a tax on the right of the ownership thereof; and a tax on the right of ownership of a thing is necessarily a tax on the thing itself. No definition of property can be framed which does not' include the right of ownership. Consequently, no tax can be imposed on the right of ownership which is not also a tax on property. It follows that a tax on the attributes of ownership, or on the right to make the only use of property for which it is of any value, is a tax on the property itself.” And, in the case of Thompson v. McLeod, 112 Miss. 383, a privilege tax was levied upon persons pursuing the business of extracting turpentine from standing trees. The Supreme Court, in a learned and exhaustive opinion, held that the act laid a property tax in violation of the uniform and ad valorem clause of their Constitution, which is like ours. Among other things the court said : “There cannot be ownership of standing pine trees without an owner, and if you tax the standing trees with an ad valorem tax, and at the same time exact tribute from the owner as a condition precedent to his right to lay hands upon the tree, the State is imposing double taxation upon the tree itself. Section 112 of our Constitution solemnly declares that ‘taxation shall be uniform and equal throughout the State,’ and that ‘property shall be taxed in proportion to its value.’ If the tax here questioned can lawfully be imposed, then the Legislature of our State, in a desperate search for revenue, can effectually brush aside the essential feature of equality and uniformity demanded by the Constitution. The provision that property shall be taxed in proportion to its value would be nullified, and the integrity of the Constitution' itself destroyed. * * * The conclusion of the whole matter, then, is that this tax operates necessarily and immediately as a property tax, and not as a privilege tax, and the statute imposing’ it violates § 112 of our Constitution, and the result reached by the learned chancellor is eminently correct, and his decree is accordingly affirmed.” See also Dawson v. Kentucky Distilleries Co., 255 U. S. 288. These are the only cases I have been able to find that are directly in point, and they better express my views than I am capable of doing. I do hot care to say more. No refinements of language or subtleties of logic could make the proposition any plainer. I am not sufficiently skilled and dextrous in the use of the “Queen’s English” to make an obvious truth any plainer, and to attempt to do so would be a mere juggling with words. The act is therefore unconstitutional and void. The decree of the trial court so holding is correct, and should be affirmed.