Court Opinion

ID: 7097602
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:12:35.823734+00
Date Added: 2024-06-11T16:13:18.203394
License: Public Domain

Beck, J., dissenting.
After a patient and careful consideration of the important constitutional question involved in this case, I am unable to concur in the foregoing opinion of the majority of this court. Mr. Justice Adams is also unable to assent to the conclusions and arguments found in the opinion, and unites with me in dissenting therefrom. The views which I shall attempt briefly to express are entertained by him as well as myself.
*204I. The provisions of the statute which are brought in question in this case are, perhaps, stated in the foregoing opinion with sufficient fullness. Its effect is this: The property, real and personal, of railroad corporations situated and found in the cities of this State, and used in the operation of railroads, is not subject to municipal taxation, to the extent of its assessed value, as the property of individual tax-payers of the cities. All property of the corporations not a part of the railroads, but used in their operation, is valued and the amount added to the value of the road; the gross sum thus obtained is divided by the number corresponding with the length of the road in miles, and the value of the railroad per mile is thus found. Each county, taxing district and city is authorized to levy .and collect taxes upon thé road within its limits, according to the valuation per mile found as just explained. Taxes in no other manner and to no greater extent can be assessed against the corporation upon such property. Personal and real property situated in the cities and used in connection with the railroads is exempt from taxation, or, rather, is taxed through the assessment of the railroad.
A railroad terminating in or passing through a city may own therein large tracts of land whereon are erected valuable buildings containing machinery, stores, etc., all reaching the value of hundreds of thousands of dollars; but two or three miles of the road may be within the city. In such a case the municipal taxation would be upon the road within the city limits valued at, say, $20,000, while the value of the property in the city owned by the corporation would reach, say, $500,000, if assessed for taxation as the property of individuals. The city could assess the road for taxation at $20,000. The half million of property which would be taxable at that value, if owned by individuals, iu the hands of the corporation is exempt from taxation except for the small amount which enters into the valuation of the railroad. This is a correct statement of the practical effect of the statute.
II. We will proceed to inquire whether this statute, enacted, as appears from its language and is made known by its legislative history, for the purpose of relieving railroad corporations *205from equal burdens of municipal taxation, is in conflict with the Constitution of the State. Article 8, § 2 of that instrument is in these words: “The property of corporations for pecuniary profit shall be subject to taxation the same as that of individuals.” It has been held by this court that this provision applies to municipal taxation as well as to taxation for the support of the State government in its various branches. The City of Davenport v. C., R. I. & P. R. Co., 38 Iowa, 633; The City of Dubuque v. Ill. Cen. R. Co., 29 Iowa, 56.
It is also held in those cases that the provision is mandatory and requires the property of corporations contemplated therein to be made subject to all taxes that are levied upon the property of natural persons. The doctrine recognized and the arguments supporting it may be better presented by the use of the following language found in the decision of the last of these cases:
“ The language of this provision (Art. 8, § 2 of the constitution), is so simple and direct that it cannot be made plainer by exposition. .
“ Its obvious meaning is that the property of artificial persons, existing for pecuniary profit, shall be assessed and taxes thereon levied and collected, for these acts are incidents in rendering property subject to taxation, the same as that of individuals. The same rule of taxation that extends to individuals, citizens, residents, who are taxpayers of the State, must be applied to corporations of the character contemplated. . “While the explicit language of the provision leaves no room for doubt as to its meaning, the reasons upon which it is based give double assurance of the correctness of our interpretation.
“ It is essential to the justice of taxation that it be uniform, bearing equally upon owners of all the property which is under the protection of the laws of the State. All not exempt must pay taxes, which are not to be imposed alone or unequally upon particular individuals or classes. Warren v. Henly, 31 Iowa, 31.
• “ If classes or individuals be exempted from 'taxation, uniformity and equality is destroyed. This uniformity in taxa*206tion is within the purview of Art. 1, § 6 of the constitution, which secures uniform operation of all laws and forbids the General Assembly to grant to any citizen or class of citizens special privileges or immunities.'
“The history of corporations for pecuniary profit in this country shows that there long has been a disposition on the part of these artificial persons to seek, and on the part of legislatures to grant, immunities and exemptions from taxation.
“ It has often occurred that their charters provided for total exemptions from taxes or for rates of taxation, applicable to them, different from those affecting other property holders.
“Legislation in other forms has been often sought and granted, securing the same end.
“The law before us, as well as others enacted in this State, bear evidence of the correctness of this statement. Against such legislation, the evils of which existed and were felt when the constitution of 1857 was adopted, the provision above quoted was aimed. (See Code of 1851, § 462.) The end sought and attained thereby is equal and uniform taxation of the property of all the taxpayers of the State.
“ The language of the provision must be understood to be mandatory, and not permissive. If it be regarded as permissive, only, the provision is nullified.
“Undoubtedly, without it the legislature could provide for the taxation of the property of corporations the same as that of individuals, and justice would so demand. There is no restriction upon the legislative power forbidding uniform taxation or preventing its application to corporations. If, therefore, the language of the section be construed as ¡permissive, it grants no power and imposes no restriction upon the exercise of power, and is rendered meaningless.
“The provision is not limited in effect to any particular class or kind of taxes, considered either as to the property upon which they are levied or the purposes of their imposi-I tion, or the branch of the civil government for the support of which they arc collected. The language is general and comprehensive. The word taxation applies to all assessments for public purposes which are called taxes, and are authorized by *207law. Municipal taxes are witliin the language and spirit of the constitutional provision. They are levied for public purposes and are authorized by law. The State delegates to the cities its police and civil authority, which is exorcised for the protection of property and persons therein. To enable these corporations to exercise the authority thus conferred, the power of taxation is necessary, and for that purpose is granted. Taxation for such purposes is obviously within the pmrview of the constitutional provision under consideration. Weeks v.. The City of Milwaukee, 10 Wis., 242; The City of Zanesville v. Richards, Auditor, etc., 5 Ohio St., 589.
“The conclusion just, announced is supported by considerations of justice, which should always have controlling weight in construing laws, both constitutional and statutory, admitting of conflicting interpretations, in order to arrive at the true intentions of the law-makers, which, in such cases, must be presumed to accord with right.
“Under the statute involved in this case, and the doctrines upon which it is attempted to be supported, the legislature exempts railroad property from municipal taxation — relieving it by special enactment from taxes lawfully levied. The cities are charged with the.duty of giving protection to the property and business of the railroad corporations found and transacted within their limits. In many of them such property, both real and personal, of vast value is situated. In some instances many acres of ground, almost in the heart of the cities, are covered with,railroad cars and buildings, subject to conflagrations and other causes of destruction and loss.
“The business houses and dwellings of the people are endangered by proximity to such vast collections of combustible material. The city is charged with the protection of this property from destruction, and expensive machinery must be maintained for that purpose. The personal property of the railroad companies, as well as that carried by them, must be protected from pillage and larceny, and good order must be preserved in the throngs, of people that are constantly found about their depots, entailing largo outlay for the support of the police force of the cities. Those expenses and responsibilities *208are imposed upon the municipalities for the protection of the property and the rights of the corporations.” The City of Dubuque v. Ill. Cent. R. Co., 39 Iowa, 56 (68).
To exempt the property of railroad corporations from their equal burden of municipal taxation, where their property and business demands such great outlay by the cities for protection, is so grossly unjust that it is to be presumed the constitutional provision in question was intended to give protection from the evils of such legislation.
The doctrines of the cases just cited apply to the statute in question in this ease. If it be unconstitutional for the legislature to relieve the corporations wholly from municipal taxes, an attempt to partly exempt them therefrom is equally invalid. If a statute be in conflict with the constitution, on the ground that under it corporations are not taxed at all, one that provides they shall be liable for only a part of the taxes assessed against natural persons is subject to the same objection. In neither case is the taxation of the corporations the same as that of individuals. Each law, therefore, is in conflict with the constitution.
III. The validity of the statute in question is supported, in the foregoing opinion of the majority of the court, on the ground that it is impossible to frame revenue laws which, in all cases, will impose an equal burden of taxation, and that there must always be this inequality resulting from the cupidity of man and the inherent difficulty in devising laws under which all taxes will be uniform and equal upon all. It is quite true that exact uniformity and equality in taxation can never be attained.. When taxes are unequal because they cannot be made equal, it is no ground for holding the law under which they are levied void. I may be permitted to repeat, as applicable to this point, language which I have before used. “That a tax, or a system of taxation, may not bear equally upon all, when weighed in the nicest balance of equity and justice, is no reason for holding that it conflicts with the fundamental and essential rule under consideration. Such a result is inevitable from the nature of things, for it is practically impossible *209so to form a system of taxation that all will equally bear the burden imposed.” Warren v. Henly, 31 Iowa, 31 (40).
But inequality in taxation resulting from necessity growing out of the imperfection of the human understanding, from the cupidity and disregard of law of tax-payers, from the great variety of pursuits and of classes and kinds of property and the like, is one thing, while inequality intended and avowedly and deliberately provided for by statute is another. ' The object and design of the statute in question is to exempt railroad corporations from taxation equal to that borne by individuals. Inequality is intended and provided for unequivocally by carefully prepared provisions that could have had no other purpose in the mind of the legislators. It is not an incident that could not be avoided, but is an object carefully provided for in the statute. It cannot, by any fairness, be claimed that real estate and personal property of railroad corporations, connected with the use of the roads, cannot be made subject to taxation the same as like property of individuals. There is not 'the least difficulty in providing a system of taxation which, in its theory at least, shall impose a burden upon such property equal to that provided for the property of individuals. The argument then, based upon necessity, fails, and seems but to expose the injustice of the statute and its conflict with the constitution.
IY. That part of the opinion which holds the legislature may, in providing for taxation, “ adopt different methods of ascertaining values adapted to the various-peculiarities of the property,” and may fix the situs of property, both real and personal, for the purpose of taxation, announces an undisputed rule. But this may not be done for the purpose of creating inequality of taxation. It may be done to promote equality, not to effect inequality. The statute involved in this case, in providing for the taxation of railroad property, requires the assess7 ment of lands, houses and personal property, situated in the city of Dubuque, to be made by the state officers, and the values thereof to be added to the value of the railroad, the aggregate to be regarded as the value of the road; the city is permitted to tax the road in its limits upon its value per mile, ascertained from its total value, fixed as aforesaid, and is forbidden to tax *210the real and personal property of the corporation in the city, disconnected from the railroad. It is apparent-that this is an ingenious method adopted to relieve the corporation of municipal taxation, from which individuals owning property in the city are not exempt.
Y. But it is said that property of the corporation situated in the city, while not subject to municipal taxation, may be taxed by the counties, school districts, etc., to an amount which it would bear, were it taxable in the city. Eor the present we will concede the correctness of the fact assumed. But it does not establish that the corporation property is subject to taxation as the property of individuals, according to the mandatory provision of the constitution. If all owners of property situated in the city of Dubuque are subject to municipal taxes in that city, the law, which provides that the railroad property, situated in the same city, shall be taxed in othér counties, surely prescribes for taxation of such property differently from the property of individuals. The objection is not to the manner of the taxation, but to the -taxation itself. The manner of assessing the valuation of the property may not be objectionable, Unequal taxation is forbidden by the constitution. It will not be valid because the manner of its enforcement is not unlawful.
But the position of fact upon which the argument we are now attempting to answer is based, cannot be admitted. The railroad corporations do escape from the payment of large amounts of taxes upon their city property, which, if the property were owned by natural persons, would be imposed thereon. Can it be supposed that the law would be upon our statute book if it had not been intended to have that effect? Its history is known to the world, and all men know that the object of its enactment was to lighten the burdens of taxation to be borne by the favored corporations. It is just as plain that in its practical workings it has the effect intended in its enactment. The defendants, the railroad companies, pay coun-. ty and school taxes in Clayton county under the law. If assessed as the property of individuals in Dubuque, they would pay county and school taxes there. Under the laws they do *211not pay any kind of taxes that would not be paid if taxed in Dubuque, equally with natural persons. In addition to their taxes they now pay, if taxed in Dubuque, municipal taxes would be a burden on their property; .these they almost wholly escape so far as property connected with the road is concerned.
VI. As we have said, the law is not invalid on account, of the method or manner of assessing the property and levying the taxfes. The point, therefore, made in the opinion, based upon the existence of different methods of taxation for different classes of taxpayers, does not support the validity of the law. "Whenever unequal taxation, such as is forbidden by the constitution, is provided for, it will be invalid though the method and manner of its enforcement may be in accord with the forms of law. In our opinion, the majority of the court fail to distinguish throughout their discussion of the case between illegal taxation and lawful forms of exercising the taxing power.
VII. With the policy of the statute we have nothing to do, but the ill effects of breaking down the constitutional requirement, relating to the taxation of the property of corporations, is a proper matter for consideration. There can be no safety to the people except in obedience to all laws, and especially to the supreme law of the State. That course of construction of the constitution which disregards its obvious meaning, which makes the instrument a palimpsest in the hands of the courts, upon which may be written other language than that found recorded there, will inevitably lead to the most threatening evils. If for expediency, or to gain a desired good end, to-day this course of construction is pursued, to-morrow it may be followed for mischief and oppression. And in no kind of legislation are such results to be more certainly apprehended and feared than in the exercise of the taxing power. If to-day, in favor of railroads, the corporations owning them may be exempted from taxation imposed upon individuals, to-morrow burdens in the way of taxes may be imposed upon them which natural persons will not share. The power to impose taxes upon corporations which are not equal to those of individuals may be exercised in levying more burdensome taxes upon corporate *212property than upon the property of natural persons. If this power exists at all, it may be exercised for the oppression as well as for the protection of corporations. It is indeed a dangerous power and should be invoked with fear. The framers of the constitution, in view of these considerations, forever forbade its exercise.
YIII. Tallman v. Butler County, 12 Iowa, 531, is cited in support of the conclusions announced in the opinion of the majority of the court. In our judgment it utterly fails to present any rule or principle applicable to the case before us.
Under the Code of 1851, the property of railway corporations was taxed through the shares of the stockholders. Certain lands granted by the United States and the State to a railroad company were assessed and taxed, as we understand the opinion, to the corporation. The case holds that the lands were properly taxable through the shares of the stockholders. The constitutional question involved in the case before us was in no manner raised, and not one word is found in the opinion thereon. The conclusion reached by the court is exclusively based upon the construction of the statute. All that is said in announcing the decision, and quoted in the foregoing opinion of the majority, is sound law and is applicable to the constitutional exercise of the taxing power. Whether the tax was in conflict with the constitution was not made a question and not, of course, decided. The reason this question was not decided is, it was not raised, and it was probably not raised for two reasons. The present constitution had but just superseded the constitution of 1816, which contained no provision similar to Art. 8, § 2, now a part of the paramount law of the State. The Code of 1851 was enacted under the old constitution and had not been made to conform with the new constitution. It may well be supposed that the constitutional question, if it really existed in the case, was overlooked. This presumption is supported by the fact appearing in the opinion that the court below held the tax levied upon the corporation invalid, and the county treasurer appealed. But there was no appearance in this court for the appellant and it was submitted without argument. The appellee, it is not to be supposed, would *213have raised a question involving so much peril to his side of the case. At all events the question of the constitutionality of the law was not raised or decided. These facts and considerations sufficiently dispose of the case so far as it is claimed to be authority upon the point now before us.
In Faxton v. McGosh, 12 Iowa, 527; The City of Davenport v. The M. & M. Ry Co., Id., 539, and The Dubuque & Sioux City R. Co. v. The City of Dubuque, 17 Iowa, 120, cited in the majority opinion, the question involving the constitutionality of the statute under which taxes were levied was not made and decided.
IX. The United States Express Co. v. Ellyson, 28 Iowa, 370, is also cited to support the conclusions of our brothers. The case, in our opinion, has no bearing whatever upon the constitutional question before us. It supports the rule, which we have again and again admitted, that the legislature may prescribe the method or manner of assessment of property, and that because of different methods being applied to different classes of property, or property held by different classes of owners, taxes for that reason are not invalid. The statute assailed in that case provided that the property, real and personal, of express companies should be assessed and taxed at the same rate as the property of other taxpayers. It' was taxed, too, in the same county or city in which like property of natural persons would be taxable. The act further provided that forty per centum of the gross incomes of such companies from their business should be assessed as personal property in the township or city in which such incomes were actually earned. The Express Company assailed the law on the ground that it was in conflict with Art. 8, § 2 of the constitution, to which we have so often referred. In answer to this objection this court used the following language: “It is a sufficient answer to this point to state that, by the very terms of the act, the property made subject to taxation by it is made liable to the same tax, whether it belongs to a body corporate or is the property of individuals, or a company. The law makes the property liable to taxation in the same manner, and to the same extent, where hold by individuals, or where held by a *214body corporate, and it cannot, therefore, be vulnerable to the charge of being in conflict with Art. 8, § 2 of our constitution. But if the act did prescribe a rule for the taxation of the property of corporations, different from that prescribed for taxation of the same class of property when owned by vndñviduals,'we see no escape from the conclusion that it would be in conflict with the clause of the constitution relied upon and quoted above and hence inoperative and void.” In citing this case as authority for the position that the statute involved in -this action, which provides for a “ rule of taxation for corporation property different from that prescribed for the taxation of the same class of property when owned by individuals,” our brothers have again failed to distinguish between the forms and proceedings for enforcement of taxation and the taxation itself It gives no support to the thought that taxation of corporate property which is not the same as that imposed upon .individuals is not obnoxious to the constitution.
X. The position is taken in the foregoing opinion that the law in question is applicable to all railroad property, whether owned by a corporation or an individual. The views of our brothers are clearly stated in the following extract from the opinion: “ It (the statute) does not provide a special manner .of assessing the property of railroad corporations, as such, but rather of railroad property. Although the act denominates the owners of the property as railroad companies, it does not name them as corporations, but the name is used as designating the owners of certain species of property, and we have no doubt 'that railroad property would be properly taxable under its provisions, whether owned by an incorporated company, a part- ■ nership, or an individual.”
We confess to astonishment that this view should be ad.vanced, in the face of the plain language of the act which provides for the taxation of railroad companies, aiid in view of the fact that the word compav/y is used by the people, the legislature and the courts, to indicate corporation. The word is so used more than once in the opinion of the majority. There is not -now, never has been and probably never will be, a railroad in this State owned by a partnership or individual. The law *215must be interpreted in view of this fact. The language of the statute, referring to and mentioning officers and persons connected only with corporations, unmistakably indicates that corporations are alone contemplated in the act. It would hardly be claimed that an individual or partnership can be spoken of as having a president, or vice-president, or other officers. Such terms are applied alone to persons representing corporations. The act of 1872 is copied into the Code, and was, doubtless, intended to present the same provisions there in substance as are found in the original enactment. Among the slight changes, of the language the word corporation is substituted for company. The meaning of both acts is the same; they are both intended to provide for the taxation of property owned by railroad corporations. The position of the majority of the court upon this point is in plain conflict with the language of the statute.
Upon these grounds, and others that could be mentioned, we think the judgment of the District Court ought to be affirmed.