Court Opinion

ID: 3396481
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:03:48.413184+00
Date Added: 2024-06-11T14:02:56.810368
License: Public Domain

In view of the objections set forth in the separate opinion of Mr. JUSTICE BUFORD, dissenting in part from the opinion of a majority of this Court in this case upholding the validity of Subdivision A of Section 4 of Chapter 16848 (Senate Bill No. 724) as a whole, instead of rejecting all parts of it except Class 1 (which by itself is admittedly a valid tax in each judge's opinion), I deem it appropriate to briefly suggest the answers to them which *Page 624 
in my opinion warrant a conclusion that Subdivision A in is stated form is valid.
(1) On the point of confiscation. It is suggested that a tax of $400.00 per annum on each separate store in the highest chain class (Class 6) is inherently oppressive and confiscatory, yet it amounts to little more than a tax of $1.00 per day on the privilege of opening an outlet for the doing of the enormous volume of business usually perceived to result from each extension of the larger chains. In Hiers v. Mitchell, 95 Fla. 345, 116 Sou. Rep. 81 (which was a special school license tax case), this Court sustained as valid the imposition of a special license tax of $120.00 per year ($10.00 per month) upon all sellers of tires and tubes doing business in the City of Tampa, as against the objection that any such enormous tax was confiscatory and a violation of both the State and Federal Constitutions. That ruling the Supreme Court of the United States has refused to disturb. See: Carter v. Burnett, 116 Fla. 699, 156 Sou. Rep. 698, 294 U.S. 697, 55 Sup. Ct. 547, 79 L.Ed. 1234. Certainly if a special $10.00 a month special school tax is constitutionally justified on a little independent automobile tire and tube dealer whose stock in trade may be worth no more than the yearly tax, a tax amounting to a little more than $1.00 per day on each store in the largest class of chains is not unwarranted for the same (public school) purpose. In this connection it is to be observed that although Chapter 12412, Acts 1927, has been in force for eight years, no special diminution in the number of available tire and tube dealers establishments in the State has been noted to have been occasioned by the continued collection of the tax, or the Legislature's refusal to repeal it. On the contrary, the tire and tube dealers have simply passed the special tax on to the public in the form of an *Page 625 
increased price for automobile tires and tubes sold in Florida, and thereby tourists and others who buy tires and tubes on which to travel about in this state for the enjoyment of its climate, have indirectly contributed their "bit" to the education of their children which it is the state's policy to educate free of tuition, despite non residence in the state.
(2) On the Point of Arbitrary Classification. Much of what has been said on this point is to "stress mere details but ignore the underlying reason for sustaining the classification * * * attacked" — a practice expressly condemned by the Supreme Court of the United States in its opinion in Liggett Co. v. Lee,288 U.S. 517, 53 Sup. Ct. 481-484, 77 L.Ed. 929, 85 A.L.R. 699. In that case the United States Supreme Court pointedly held (text page 533) "neither similarity of opportunities and advanages in some respects, nor the fact that one kind of store competes with the other, is enough to condemn the discrimination in the taxes imposed" and that gradation of the tax according to the number of units operated cannot be said to be so unreasonable as to transcend the constitutional powers of the Legislature." In this case there is at least a "rough and ready" but honest effort to classify chains into five classes in each subdivision of Section 4 of the Act. Such classes are (a) chains of two to three stores, both inclusive; (b) chains of four to six stores, both inclusive; (c) chains of seven to ten stores, both inclusive; (d) chains of eleven to fifteen stores, both inclusive; and (e) chains of sixteen stores, or more, however great the total number thereof in the chain. Within each stated class the tax is laid uniformly on each separate store at the same amount for every store in the given class. Only by a comparison of stores in one class with the stores in an entirely different *Page 626 
class can any so called discrimination be made to appear. Such comparisons between individual units in different classes constitutes a mere "stressing of details," as the Supreme Court of the United States has pointed out and is not demonstrative of an arbitrary classification. On the contrary, in Liggett v. Lee,supra, the Federal Supreme Court expressly held, "The addition of a store to an existing chain is a privilege, and an increase of the tax on all the stores for the privilege of expanding thechain cannot be condemned as arbitrary" (288 U.S. text page 533). Such a deliberately phrased statement by the Supreme Court of the United States is one that cannot be lightly disregarded or casually swept aside as mere "dicta," especially in view of the fact that the Court in reviewing Liggett v. Lee, supra, was therein not only called upon to decide the controversy then before it on its narrowest consideration, but was plainly authorized to, and in fact did undertake to, define the scope and limits of the state's legislative power necessarily involved in the rule it was compelled to announce on that appeal in order to decide that case at all. For an appellate court to state a rule of law pertaining to a state's powers as limited by the Federal Constitution, after all, demands that the limitations and exceptions to the rule be likewise specified as an incident to its own correct enunciation, in order that misapprehension may be avoided as to what is intended to be within the scope of the major rule. The fact that the Legislature might have legitimately provided for a progressively increasing tax on the chains for each and every added store ad infinitum is no cause for saying that the law is unconstitutional because the Legislature did not make the taxes on each added store to a chain as burdensome and oppressive as it was authorized to make them within the limits *Page 627 
of its legislative power as set forth in Fox v. Standard Oil Co.,294 U.S. 87, 55 Sup. Ct. Rep. 333, 79 L.Ed. 780. The fact that a class of chain stores, consisting of a specified number of stores, could have been extended to embrace some others who have been excluded, is not necessarily proof of unjust discrimination or of denial of the equal protection of the laws. Middleton v. Texas Power  Light Co., 249 U.S. 152, 39 Sup. Ct. Rep. 227, 63 L.Ed. 527; Rosenthal v. New York, 226 U.S. 260, 33 Sup. Ct. Rep. 27, 57 L.Ed. 212; Heath  Milligan Mfg. Co. v. Worst,207 U.S. 338, text 355, 28 Sup. Ct. Rep. 114, 52 L.Ed. 236.
(3) The Declaration of Policy Criticised. Whatever attempt was incorporated in Chapter 16848, supra, to entirely destroy chainstores as such by taxing them out of existence (in line with those parts of the Legislature's declaration of policy which are capable of being construed to that effect), is to be found to have attempted only in Subdivision B of Section 4 of the Act. It can hardly be denied that the scheduled gradation of the gross receipts privilege tax therein specified was plainly designed to make the increased volume of business usually done by chain stores a self-consuming fire of increased tax burdens in order to bring about the accomplishment of the total destruction of the chains. However, all the Judges have agreed that the attemptedgradation incorporated in Subdivision B of Section 4 of the Act must fall insofar as it is in excess of the minimum uniform rate of one half of one per cent. prescribed for single stores by Class 1 of Subdivision B, so any declaration of policy for the destruction of the chains as such disappears out of the case and becomes moot with the excision of Classes 2, 3, 4, 5 and 6 of Subdivision B of said Section 4.
(4) On the Point of Equal Protection and Due Process *Page 628 of Law. Our Constitution provides that "All men are equal before the law. * * * (Section 1, Declaration of Rights) and that "No person shall be * * * deprived of life, liberty or property without due process of law. * * *" Section 12, Declaration of rights.) It also provides that "the paramount allegiance of every citizen is due to the Federal government * * *" (Section 2, Declaration of Rights.) The Federal Constitution provides that "nor shall any state deprive any person of life, liberty or property without due process of law; nor deny to any person
within its jurisdiction the equal protection of the laws." (Section 1, Fourteenth Amendment, U.S. Constitution.)
Insofar as "equal protection of the laws" is concerned, our State Constitution contains no "equality before the law" limitation except as to "men," although such an implied limitation as to persons, natural and corporate, may be somewhat comprehended in the idea of "due process of law." Hence the only judicially recognized express constitutional requirement of "equal protection of the law" for all "persons" (meaning thereby corporations as well as individuals under the United States Supreme Court decisions*) is to be found in the Fourteenth Amendment to the Federal Constitution. The "equal protection of the laws" clause of the United States Constitution being enforceable in the State Courts, as the "Supreme Law of the Land," in accordance with Article VI, paragraph 2, of the U.S. Constitution, the Federal Court decisions are peculiarly applicable to any case in such State Courts involving an alleged denial of "equal protection of the laws" by a state legislative Act, whether the applicable Federal Court decisions are those of the Supreme Court of the United States or of the unreversed lower Federal Courts. *Page 629 
On the point of "equal protection of the laws" under the Federal Constitution, it is pertinent to refer to the fact that the present Florida statute — Chaper 16848, Acts of 1935, now being considered in this case, was first put in litigation in the Federal Courts and the validity of Subdivision A of Section 4 of said Chapter 16848 (including its double tax feature) fully sustained therein, prior to the time this suit was filed in the Supreme Court of Florida. See: Lane Drug Stores v. Lee,11 F. Supp. 672 (decided July 29, 1935). Therefore since we have an unappealed from and unreversed Federal stautory court decision on the precise point of law at issue in this case, which Federal Court decision is on an asserted right predicated solely on the Constitution of the United States, and the point involved in this case has been decided by the Federal Court in a case instituted long prior to this one, I think we should regard the Federal Court decision as ample authority upon which to uphold the validity of Subdivision A of Section 4 of the Act, if we had nothing else at all to go on, at least until we have had it demonstrated that the Federal Court decision is clearly wrong as a substantive precedent.
On the point of deprivation of life, liberty and property without "due process of law" as reviewable in the State Courts, as distinguished from the Federal Courts, the rule established in our state decisions is that since "due process of law" includes due process of law in the exercise of the taxing power and is regarded as an express right secured by our State Constitution's Declaration of Rights, that the scope of judicial inquiry into the statutes in the State Courts is broader when a violation of the State's Declaration of Rights by such statutes is claimed — not that the right itself to due process of law is any different than that recognized in the Federal Courts. *Page 630 
The Federal Courts have no such freedom of judicial action as the State Courts of Florida have to grant relief against alleged oppressive state taxation so heavy as to amount to a designed destruction of an inherently lawful business or calling. This follows because the Federal Courts must apply to the State as a unit a negative Federal constitutional restraint against the alleged sovereign power of the State itself* as exerted in all of its departments, while, as a State Court, we are required to act judicially only against an alleged usurpation of power by the State Legislature (as one department of the State) in cases where the Legislature may have attempted to unconstitutionally destroy a citizen's right to his life, liberty, property or pursuit of happiness contrary to the spirit of the State's Declaration of Rights as expressed in the State's own Constitution.
Under the Federal doctrine as expounded in Fox v. Standard Oil Co., 294 U.S. 87, 55 Sup. Ct. Rep, 333, 79 L.Ed. 780, the power to tax chain stores being found to exist, the character and extent of its exercise, however oppressive the specific amount of taxes imposed may be, is not subject to judicial review. But under our State Court decisions, a more liberal rule exists, as evidenced by our heretofore expressed view in City of DeLand v. Florida Public Service Co., 119 Fla. 804-819, 161 Sou. Rep. 735, 740-741, and kindred cases. We are committed to the doctrine that the state's power to impose a privilege tax cannot be so exercised in the State of Florida as to amount to the spoliation of a common calling, such as the merchandising business, under the guise of taxation, subject of course to *Page 631 
the well recognized exception that where the state is warranted in employing its police power to entirely suppress a business because of its invidious nature as one detrimental to the public welfare, it may do indirectly what it can do directly, namely, impose a prohibitive license tax on it as a means to that end. Compare: Jackson v. O'Connell, 114 Fla. 705, 154 Sou. Rep. 697 (sustaining the validity of a municipally imposed prohibitive tax on slot machines of a gambling character) with Heriot v. City of Pensacola, 108 Fla. 480, 146 Sou. Rep. 654 (sustaining a special privilege tax on inherently lawful common callings).
I am unable to subscribe to the new legal theory being advanced to the effect that "chain stores" as such are subject to entire prohibition under the state's police power, so any tax imposed on such stores must be sustainable under the ordinary doctrine of taxation that inhibits such heavy taxation on such stores as to amount to a destruction of them by such means.
So while the Declaration of Rights entitled the parties to this case to a judicial review under the State Court decisions of the alleged oppressiveness of the tax, I find nothing in the record to support the argument that the maximum tax of $400.00 per annum per store, plus one-half of one per cent. tax on the gross receipts of each chain store in the largest class of chains, will be so inherently destructive as to amount to unconstitutional spoliation.
It was the adoption by the people of the 1934 Homestead Tax Exemption Amendment, as stated by the Governor* in his first message to the 1935 Legislators, that made some new form of taxation by the 1935 Legislature necessary to replace what revenue was lost to the schools on exempted *Page 632 
homesteads. The tax is plainly a combination privilege tax obviously intended and designed by its authors to be passed on to the consuming public who make up the personnel of the buying public who ordinarily carry on a retail trade with the affected stores. Therefore the public, not the merchants, will consequently be forced to pay the new tax indirectly by means of increased prices inevitably to be occasioned by this form of "sugar coated" sales tax (as Mr. Justice BUFORD has characterized it), thereby compelling the buyers, not the merchants, to bear in different form the burden of ad valorem taxes that could otherwise have been raised solely by a direct ad valorem
increased real and personal property tax of fifteen mills on business properties, i.e. properties devoted to purposes other than use as homesteads.
It is extremely unlikely that the retail merchants in this State will find themselves inherently any more incapable of collecting and paying such a tax as this, in the form in which it is provided to be enforced, than such business men would find themselves incapable of collecting from the public and in turn paying into the state treasury a three per cent. general sales tax for which this particular tax measure was evidently adopted by the Legislature as a substitute. Therefore the tax cannot be struck down as a confiscatory one amounting to a denial of due process of law in violation of the Bill of Rights until a clearer demonstration of its unrighteous effect is made to appear than has been demonstrated by the showing now before this Court.
The Legislature in deciding to raise a total of $10,500,000.00 for state aid to the common schools ($4,500,000.00 of the amount being intended to be raised by this tax alone) was put to the practical choice of upping *Page 633 
the state millage 15 mills in order to produce the total appropriation of $10,500,000.00, or exacting it from the taxpayers of the state through other sources, such as taxes on liquor, slot machines, retail merchants, chain stores, automobile tags and the like. The Legislature's ultimate decision to give the school their demand for a $10,500,000.00 appropriation from state revenues, which is the equivalent of a state tax levy of 35 mills ($10,500,000.00) was expressed by the Legislature in the form of laws calculated to raise that amount from the people in the form of special excise taxes, instead of ad valorem taxes, but even so, the Legislature's plan is not subject to being judicially condemned as unconstitutional, regardless of the soundness of it as a matter of legislative policy.
In City of DeLand v. Florida Public Service Co., 119 Fla. 819, 161 Sou. Rep. 735, 740, 741, a privilege tax on public utility gross receipts similar to that prescribed by Subdivision B of Section 4 of Chapter 16848, supra, was struck down and condemned by this Court as confiscatory, because under the terms of the ordinance imposing the tax, the utility company was expressly forbidden to raise its rates to absorb it, even though its failure to do so might result in its being compelled to continue the dedication of its property and capital to the public service and for the public benefit, without any net profit to itself and even at a possible net loss continuous and certain in character.
In the present case, no such facts exist. Part of the combination privilege tax (the opportunity privilege segment of it) is made payable in advance on a yearly basis and such tax plainly constitutes a part of the capital investment required to be made in order to launch upon a year's business wherein the investment can be recouped in the form of profits to be realized from business done. The other segment *Page 634 
of it (the realization privilege tax computed on the basis of one-half of one per cent. of the previous month's gross receipts) is made payable monthly in advance for the convenience of the taxpayer, and is likewise capable of being taken into account and passed on, from month to month, in the form of a "sugar coated" sales tax to be added to the price of whatever may be sold during the particular month.
According to reliable sources of information,* Florida raises annually by various forms of taxes imposed by its Legislature, the following amounts of revenue (computed as to the fiscal year 1931-1932, except as otherwise indicated):
Individual Income Taxes ....................         None Estate, Inheritance and Gift Taxes .........$ 1,152,523.00 (1935) Tangible and Intangible Property ........... 48,497,000.00 Business Taxes: General (Capital Stock and Charter Taxes) ...............................    305,712.39 (1935) Corporation Income .....................         None Insurance ..............................    771,000.00 Utilities ..............................    514,450.00 (1934) Banks (Special) ........................         None Stock and Mortgage Transfer (Documentary Stamp in Florida)            427,231.36 (1935) Severance ..............................         None Occupational and Business License ......  5,374,000.00 Taxes on Motorists: Gasoline and Licenses .................. 19,770,000.00 *Page 635 
Excise Taxes: Liquor, Wines and Beer .................    374,193.00 (1934) Tobacco ................................     No special Lubricating Oils .......................     No special Sales Tax ..............................        None Special on Amusements ..................        None New Taxes under Chapter 16848, Acts 1935 ............................  4,500,000.00 Poll Taxes (for schools) ...................    419,000.00 Miscellaneous Taxes not already included in other classes .......................        None
A study of Florida's finance and taxation system, as reflected in the above tabulation of sources, classes and amounts of taxes raised under authority of the Legislature, will show the relative status of the new taxes provided for by Chapter 16848, Acts 1935, in the whole scheme of things, and is incorporated in this opinion as a judicial noticing by me of a factual background, no doubt well within the knowledge of the Legislature.
Viewing the controversy in all of its aspects, and in the light of the able and comprehensive briefs filed in this and companion cases, it seems to me that the opinion of Honorable Frank A. Smith, Circuit Judge, is not unsound, but is sustainable on principle as well as on the authorities he cites. I therefore concur in the holding that Subdivision A of Section 4 of Chapter 16848, Acts 1935, is valid and enforceable in its entirety. I also agree to the conclusion that Subdivision B of Section 4 of said Chapter 16848, supra, is invalid as a denial of the equal protection of the laws to stores in classes 2, 3, 4, 5 and 6 of that Subdivision, and that to the extent of the excess
comprehended in the attempted gradation upward of the specified tax beyond the *Page 636 
one-half of one per cent. on gross receipts specified for Class 1 stores in said Subdivision B that the tax in that subdivision is constitutionally unenforceable to the extent of such excessonly, but that the Act should be enforced in all respects except as to the attempted progressive increase in the amount of the rate beyond the amount applicable to Class 1 stores in Subdivision B of Section 4 above mentioned.
* Liggett v. Lee, supra.
* Or power of a "quasi-sovereign" State, as Mr. Justice SUTHERLAND puts it in the case of Florida v. Mellon, 273 U.S. 12
(text page 16); 47 Sup. Ct. Rep. 265, 171 L.Ed. 511.
* For the Governor's message so informing the Legislature, see 1933 Senate Journal, page 6, first column.
* Page 208, "Tax Systems of the World — Sixth Edition (1935," published by Tax Research Foundation.