Court Opinion

ID: 9767560
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:21:27.521698+00
Date Added: 2024-06-11T07:30:31.756914
License: Public Domain

McGEE, Justice
(dissenting).
I respectfully dissent. I do not believe that the constitutional provision on which *625the majority relies1 was intended to prevent the type of program involved in this case. While this Court has had no previous opportunity to consider the Texas Commodity Referendum Act, the validity of the Act has been attacked on various state and federal constitutional grounds in two previous suits which were not appealed from the trial level.2 The statute’s constitutionality was upheld in both previous suits and by the court below in this suit. The majority now holds that the statute, which is designed to benefit the farmer and has been enthusiastically adopted by the agricultural community, contravenes a constitutional provision which was intended to protect the farmer. And the majority arrives at this holding without even mentioning the language or the purpose of the constitutional provision invoked.
I agree with the majority that the fact that the assessment is refundable at the option of the producer does not prevent it from being a tax. A monetary exaction loses its voluntary character when the individual loses the right to refuse to pay, not when he loses the right to eventually recover the payment. However, I cannot agree that once the conclusion that assessments under Article 55c are taxes is reached, “it is clear that the assessment is an occupation tax within the meaning of Article VIII, Section 1, of the Texas Constitution.” Nor do I believe that the cases cited by the majority require that conclusion. None of those cases construes the constitutional provision involved in the instant case; none considers a tax with the attributes of the one involved here; none turns on whether the tax is an occupation tax on an agricultural pursuit; and none discusses the purpose for the constitutional prohibition of such taxes.
The primary case relied upon by the majority, and the case which appellants argue is controlling, is H. Rouw Co. v. Texas Citrus Commission, 151 Tex. 182, 247 S.W.2d 231 (1952). It is true that in Rouw a similar assessment program imposed upon citrus fruit packers was called an “occupation tax” and held unconstitutional. However, the constitutional defect in Rouw was not that the program constituted an occupation tax on an agricultural pursuit, but that natural persons were exempt while corporations were taxed. This discrimination was held to violate not only Article VIII, Section 2 of the Texas Constitution, dealing with occupation taxes, but also Article VIII, Section 1 of the Texas Constitution and Section 1 of the 14th Amendment to the United States Constitution. These latter two constitutional provisions prohibit arbitrary discrimination in the imposition of any tax. Bluitt v. State, 56 Tex.Cr.R. 525, 121 S.W. 168 (1909); Grayson County State Bank v. Calvert, 357 S.W.2d 160 (Tex.Civ.App.—Austin 1962, writ ref’d n. r. e.); Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927 (1928). Therefore, the assessment program in Rouw was held invalid because it was a tax, not because it was an occupation tax.
The opinion in Rouw shows that the Citrus Commission’s primary contention was that the asssessment program involved was not a revenue raising measure (tax) but was a regulatory measure (license fee) and therefore the above constitutional provisions did not apply. The language quoted from Rouw by the majority is directed at *626this contention and, read in context, clearly holds only that the primary purpose of the statute involved was to raise revenue and thus the assessment was not a license fee. The label “occupation tax” was used only to distinguish a revenue raising measure from a regulatory measure. On motion for rehearing, the Citrus Commission raised the ingenious but unmeritorious argument that if the assessment were an occupation tax it was an occupation tax on an agricultural pursuit and Article VIII, Section 1 of the Texas Constitution ( . . . persons engaged in agricultural pursuits shall never be required to pay an occupation tax) required the discrimination found objectional, since natural persons could not be subject to the tax but corporations could. In disposing of the contention this Court made clear that it did not intend to hold that the assessment was an occupation tax as opposed to any other kind of tax or revenue raising measure. The opinion on rehearing begins:
“On original submission all parties briefed and argued the case on the premise that unless the tax levied were a license, or privilege tax, as distinguished from a revenue raising measure, (which all parties called an occupation tax), the tax in question violated the constitutional requirements that it must be equal and uniform.”
It is instructive that in the original opinion the assessment program was freely referred to as an occupation tax; but in the opinion on rehearing, when the distinction between “revenue raising measure” and “occupation tax” was before the Court, the assessment was never called an occupation tax. I do not believe that Rouw can be fairly read as holding that the assessment involved there was an occupation tax in the constitutional sense, much less that the assessment involved here is such a tax.
Nor do I find much help elsewhere in the jurisprudence of Texas in discovering what the term “occupation tax” means in the Texas Constitution. It has been said that Texas “evidences an occupation tax complex, the Legislature under the slightest pretext characterizing a given imposition as a tax upon an ‘occupation’ . .” M. Mahany, Texas Taxes 557 (1946). The United States Supreme Court has noted that a tax which the Texas Legislature called an occupation tax was actually “an excise laid on the production of oil, measured by the extent of the production, and charged ratably against all who have an interest in the oil produced.” Barwise v. Sheppard, 299 U.S. 33, 37, 57 S.Ct. 70, 71, 81 L.Ed. 23 (1936). In discussing a tax on admission fees to amusements, another federal court said, “It may be an occupation tax under the elastic concept of that term in Texas but it is not an occupation tax in the strict sense.” Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Sheppard, 123 F.2d 773 (5th Cir. 1941). Opinions of Texas courts are likewise of doubtful value in the present case since the label “occupation tax” has often been loosely used in holding that certain impositions are not other types of taxes, are not license fees, or do or do not suffer from various constitutional defects other than those concerning occupation taxes. See, e. g., Western Union Tel. Co. v. State, 55 Tex. 314 (1881) (held: tax not invalid as regulation of interstate commerce); Pullman Palace Car Co. v. State, 64 Tex. 274 (1885) (held: not tax on property, not tax on persons, not equal and uniform) ; State v. Galveston, H. & S. A. Ry. Co., 100 Tex. 153, 97 S.W. 71 (1906), rev’d 210 U.S. 217, 28 S.Ct. 638, 52 L.Ed. 1031 (held: equal and uniform, not interference with interstate commerce); Texas Co. v. Stephens, 100 Tex. 628, 103 S.W. 481 (1907) (held: not ad valorem tax etc.); Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896 (1937) (held: not license fee, equal and uniform).
An analysis of the “occupation tax” cases reveals only that occupation taxes are revenue raising measures imposed upon occupations. This obvious tautology is suffi*627cient to distinguish license fees and other types of taxes such as property taxes and is therefore normally an adequate method of classification since few situations arise where it is important to determine whether a particular measure is or is not an occupation tax in the constitutional sense.3 However, when such a situation arises, as it has in this case, the semantic problems of labeling must be disregarded and a closer examination of the constitutional meaning of “occupation tax” must be undertaken.
The inquiry must start with a presumption that the legislature understood and correctly interpreted the constitutional prohibition. Smith v. Davis, 426 S.W.2d 827 (Tex.1968). “Both the constitutional provision and the questioned statute are to be liberally construed in favor of constitutionality.” Robinson v. Hill, 507 S.W.2d 521, 524 (Tex.1974). The search is to determine “the purpose, meaning and intent of the framers of the Constitution.” Western Co. v. Sheppard, 181 S.W.2d 850, 853 (Tex.Civ.App. — Austin 1944, writ ref’d). As this Court said in Travelers’ Ins. Co. v. Marshall, 124 Tex. 45, 55, 76 S.W.2d 1007, 1012, 96 A.L.R. 802, 809 (1934):
“[T]he problem before us will be solved when we ascertain the meaning of that language as generally understood when the Constitution was adopted.

“Generally it may be said that in determining the meaning, intent, and purpose of a law or constitutional provision, the history of the times out of which it grew, and to which it may be rationally supposed to bear some direct relationship, the evils intended to be remedied and the good to be accomplished, are proper subjects of inquiry.”
With these principles in mind, a reading of the pertinent constitutional provisions, together with the appropriate portions of the constitutional convention journal, Journal of the Constitutional Convention of Texas, 1875 (1875), and the debates of the delegates, S. McKay, Debates in the Texas Constitutional Convention of 1875 (1930), convinces me that the tax imposed by the Texas Commodity Referendum Act is not an occupation tax as understood by the framers of the Constitution and as prohibited upon persons engaged in agricultural pursuits.
The Constitution itself makes no attempt to define what an occupation tax is. In the parlance of the day, a variety of measures were enacted as occupation taxes and were popularly known as income taxes. Miller, The Historical Development of the Texas State Tax System, 60 Southwestern Historical Quarterly 1, 4 (1951). In considering the subject of Revenue and Taxa*628tion, the delegates to the 1875 convention were primarily concerned with promoting frugality in state government by restricting the taxing power. See Braden, et al., The Texas Constitution: An Annotated and Comparative Analysis, Article VIII, Introductory Comment. They “endeavored to define a system of taxation based upon consideration of natural rights and upon correct principles of political economy, limiting the assessment and expenditure strictly to legitimate objects of government and to so guard the definement as to prevent future variances and abuses.” Journal 378-379. All delegates seemed agreed that the primary method of raising state revenue should be ad valorem taxation. Journal 379; Debates 302, 307. Likewise, there was no argument against authorizing the legislature to levy a poll tax. Journal 464, 525; Debates 302, et seq.
However, there were strong differences of opinion on the subject of occupation taxes. The original report of the Committee on Revenue and Taxation provided, “Occupation taxes, being in their nature an infringement upon natural rights of persons, shall be laid only to discourage pursuits immoral in their tendency or not strictly useful, or as a discrimination against itinerant traders.” Journal 379. A substitute article, taken primarily from the 1845 Constitution, was offered which included the provision, “The Legislature shall have power to levy an income tax, and to tax all persons pursuing any occupation, trade, or profession; provided, that the term occupation shall not be construed to apply to pursuits either agricultural or mechanical.” Journal 451. Thereupon considerable debate upon the merits of the occupation tax ensued. Debates 295-309. Those opposing the occupation tax argued that it was a tax on brains and forced professional men to bear a disproportionate share of the burden of state government. Those supporting the occupation tax pointed out that it supplied a large portion of the state’s revenue and contended that it spread the tax burden fairly since it fell primarily on those who made substantial income without owning significant amounts of property and thus largely escaped ad va-lorem taxation. The latter view prevailed and the present provision was adopted. Journal 525-526.
From the above proceedings, I conclude that the delegates recognized that occupation taxes have a deterring effect when imposed upon an occupation. Despite this adverse effect, they adopted the concept of occupation taxes as an alternative to the property tax as a source of general revenue. Occupation taxes on agricultural and mechanical pursuits were forbidden to avoid discouraging people from pursuing those essential livelihoods and because it was felt that persons engaged in those pursuits carried their share of the common tax burden through ad valorem taxation.
The constitutional concept of an occupation tax is therefore that of a monetary charge imposed by a governmental body upon persons engaged in a certain pursuit for the purpose of raising general revenue for programs generally beneficial to that governmental body. The justification for such a tax is that the need for revenue to support generally beneficial programs outweighs the specific adverse effect on that particular occupation. Since the justification does not obtain for farmers and mechanics, such taxes on them are forbidden.
When the assessment program under the Texas Commodity Referendum Act is compared to this constitutional concept of an occupation tax, the differences become apparent. First, the assessment program is not imposed by the legislature upon the members of an occupation. The producers of a commodity must impose the assessment upon themselves by a substantial majority vote and may terminate the program at any time by a simple majority vote.4
*629The program is thus voluntary, not to the individual, but to the occupation. Second, the assessment program does not raise general revenue to support programs generally beneficial to the state. The legislature may not set the rate of the assessment and has no power to spend the proceeds. The producers elect a board from their own ranks to levy the assessment, provide for its collection, and spend the proceeds solely on programs of primary benefit to the producers. This is in direct contrast to the normal occupation tax situation where the adverse effect on the occupation is justified by the general benefit to the levying body.
The above factors convince me that the framers of the Texas Constitution did not intend to prohibit such programs as the Texas Commodity Referendum Act when they prohibited occupation taxes upon agricultural pursuits. This conclusion alone is sufficient to justify my dissent. However, there is another reason why I cannot join in the majority opinion. I believe the constitutional provision involved is an outmoded and unnecessary restriction upon the legislative power and should not be given the broad interpretation which the majority imparts to it.
In the almost 100 years during which Texas has operated under her present Constitution, including the provision involved here, no statute has been held unconstitutional as an occupation tax on a mechanical or agricultural pursuit.5 During the recent attempts to rewrite the Texas Constitution there was a noticeable lack of effort to include similar provisions in a new constitution. The Constitutional Revision Commission proposed a constitution which omitted all references to occupation taxes and noted in the accompanying commentary :
“Requirements concerning occupation taxes were not included in the new constitution. Exemptions from occupation taxes for agricultural and mechanical pursuits contained in the 1876 Constitution have not been of historical importance.” Texas Constitutional Revision Commission, A New Constitution for Texas: Text, Explanation, Commentary 141 (November, 1973).
The Finance Committee of the recently completed Texas Constitutional Convention of 1974 considered the subject of taxation at exhaustive length and prepared a majority report and several minority reports, none of which contained any restriction on the legislature’s power to levy occupation taxes. Journal of the Constitutional Convention of Texas, 1974, 606-618 (1974). These reports were debated at length on the floor of the convention, numerous amendments were proposed, additional reports were prepared, but no attempt was made to insert any limitation on the levy of occupation taxes. Journal of the Constitutional Convention of Texas, 1974, 681-866, 1906-1955, 1974-1977, 2327-2342, 2367, 2379-2859 (1974). The delegates to the convention must have unanimously concluded that such limitations were a product of a bygone era and tax structure and served no useful purpose in today’s society.
At a time when the original purpose for this constitutional restriction on the taxing power no longer obtains, it seems unfortunate to me that the majority opinion breathes new life into it and gives it a broader, more sweeping interpretation than is supported or required by the history of the provision.
*630I would hold that the assessment program under the Texas Commodity Referendum Act is not an occupation tax as that term is used in the Texas Constitution and would affirm the judgment of the trial court declaring the Act constitutional.
DENTON and SAM D. JOHNSON, JJ., join in this dissent.

. Tex.Const, art. VIII, § 1, which provides in pertinent part:
“The Legislature . . . may also impose occupation taxes, both upon natural persons and upon corporations, other than municipal, doing any business in this State. It may also tax incomes of both natural persons and corporations other than municipal, except that persons engaged in mechanical and agricultural pursuits shall never be required to pay an occupation tax.”

. Lance v. Texas Wheat Producers Association, No. 4035 in 84th District Court of Ochiltree County, Texas (December 21, 1971); Lance v. White, No. CA-2-1222 in U.S. District Court of the Northern District of Texas (Dismissed for lack of substantial federal question, March 21, 1973).

. It appears that the question of whether a measure is an occupation tax in the constitutional sense can arise in only three ways. The instant case illustrates one way — the measure is attacked as an occupation tax on an agricultural or mechanical pursuit. See Western Co. v. Sheppard, 181 S.W.2d 850 (Tex.Civ.App.—Austin 1944, writ ref’d); Gerard v. Smith, 52 S.W.2d 347 (Tex.Civ.App.—El Paso 1932, writ ref’d). A second method would be a claim that an exaction levied by a county, city or town is an occupation tax exceeding one half of the tax levied by the State in violation of Art. VIII, § 1. See Brown v. City of Galveston, 97 Tex. 1, 75 S.W. 488 (1903); Hoefling v. City of San Antonio, 85 Tex. 228, 20 S.W. 85 (1892). A third method would be a claim that a state tax is an occupation tax without one fourth of the revenue set apart for the public free schools as required by Art. VII, § 3. There seem to be no cases on this proposition, but see Tex.Att’y Gen.Op. No. V-1027 (1950). It might seem that the question could arise in a fourth manner by a claim that a tax was an occupation tax and not equal and uniform within classes as required by Art. VIII, § 2 and many cases have gone off on this ground. However, Art. VIII, § 1 requires all taxes to be equal and uniform and it is difficult to imagine a particular measure violating Art. VIII, § 2 as an occupation tax without also violating Art. VIII, § 1 as a tax. See H. Rouw Co. v. Texas Citrus Commission, 151 Tex. 182, 247 S.W.2d 231 (1952). Therefore, in deciding an “equal and uniform” attack it is necessary only to determine if the measure is a tax and not whether it is also an occupation tax.

. While the majority did not mention this facet of the Texas Commodity Referendum Act, upon the petition of 10 percent of participating producers, the commodity producers board must hold a termination referendum at which a simple majority of the qualified pro*629ucers voting is sufficient to terminate the program. Tex.Rev.Civ.Stat.Ann. art. 55c, § 16.

. A possible exception is Jackson v. State, 55 Tex.Cr.R. 557, 117 S.W. 818 (1908), which is sometimes cited for the proposition that a tax on barbers is an unconstitutional occupation tax on a mechanical pursuit. However, a reading of that opinion reveals that the court of criminal appeals discussed that contention and then failed to rely upon it, instead striking down the tax involved on the grounds that it was not equal and uniform. As previously discussed, and as the court of criminal appeals noted in its opinion, the equal and uniform requirement applies to all taxes, not just to occupation taxes.