Court Opinion

ID: 7940034
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:13:52.152429+00
Date Added: 2024-06-11T16:33:40.289082
License: Public Domain

Grant, C. J.
I concur in the opinions of my Brothers Hooker and Montgomery, but desire to express my views somewhat more fully. Our Constitution authorizes only two kinds of taxes, — one, specific, imposed without regard to the value of the thing taxed; the other, general, based upon assessed cash value, and'requiring uniformity. The principal question for determination is, Is the tax imposed by this act a specific tax ? If it is a specific tax, the act is valid; if it is not a specific tax, it is void, for non*109compliance with section 14, art. 14, of the Constitution, which provides that “every law which imposes, continues, or revives a tax shall distinctly state the tax, and the object to which it is to be applied; and it shall not be sufficient to refer to any other law to fix such tax or object.” This law does not provide the object to which the tax is to be applied. This is so obvious that'I spend no time in discussing it. When a tax is specific, the Constitution fixes the object to which it is to be applied.
It appears to me impossible to read the definitions of the lexicographers and the decisions of the courts without reaching the conclusion that the terms “ specific ,tax ” and “ ad valorem tax” have a well-defined meaning; and in the Constitution of this State, as well as in the statutes and decisions, these definitions are clearly recognized. Concise definitions are given in 25 Am. & Eng. Enc. Law, 17, notes 2, 3, and Cooley, Tax’n (2d Ed.), 238. As these are found in the opinions of my brothers, I will not restate them. These two definitions are, in substance, the same as given by other authorities, both legal and lay. A tax based upon the assessed cash value of the property assessed is not a specific tax. It is an ad valorem tax, and any enactment by a legislature that it is a specific tax does not make it so; otherwise, the legislature could determine what was meant by the use of terms in the Constitution which have a well-defined meaning. The fact that, in imposing a specific tax, the value of the thing taxed is taken into consideration in determining the amount of it, does not change the nature of the tax. A tax upon the capital stock of a corporation, paid or unpaid, or upon its bonds issued or money borrowed, is just as' much a specific tax as is so much per article upon the thing produced. The real value of the capital stock is not its par value. It would probably be safe to say that there is not a corporation in this State whose stock, paid or unpaid, at its par value, is its real value, or whose indebtedness in money borrowed represents its value. It is a well-known. fact that the actual value of many of our mining corpora*110tions is manji- times greater than the par value of the stock, while that of others is many times less than the par value. So a tax upon the bonds or upon the borrowed money of a corporation is not a tax upon the value of the corporation. The next day the money borrowed may be put into improvements which will increase the real value of the property much greater than the amount borrowed, while in other instances it will be a loss. All such taxes are not taxes upon value, but upon the specific thing, regardless of its real value.
It is undoubtedly true, as argued by the learned counsel for the respondent, that value enters into every specific tax. The people do not tax, specifically or otherwise, worthless property. Probably the specific tax on a ton of copper or silver would be placed at a much higher sum than a tax upon a ton of iron; but this fact does not change the nature of the tax. I speak of this because it is argued that when the framers of the Constitution, in section 10 of article 14, provided: “The State may continue to collect all specific taxes accruing to the treasury under existing laws. The legislature may provide for the collection of specific taxes from banking, railroad, plank-road, and other corporations hereafter created,”' — they used the term “specific” with reference to its meaning in the laws as they then existed. This is conceded to be correct; and Messrs. Hanchett and Pond,-who, at the request of the governor, have appeared as counsel for the relators, also argued that the term was so used in all laws prior to the adoption of the Constitution of 1850, where a tax upon value was understood to be a specific tax. We have examined all the laws referred to, and we do not find that in any single act passed prior to 1850 is there any language to justify the conclusion that the term “specific tax ” was used to apply to an ad valorem tax, as in the' act under discussion. In all these acts, — and there were many,— the only thing to be done was for the ministerial officer to list the property, and the law stepped in and determined the tax. There was no officer of the State *111appointed to assess the value. The real value was wholly immaterial, and not to be considered. The money borrowed might be invested profitably or unprofitably. The tax was on the specific thing, and not upon value. This is the criterion to determine whether the tax is specific or ad valorem. There is nothing, therefore, in these acts, to show that the legislature had ever intended to impose a specific tax upon an ad valorem assessment. On the contrary, we think the plain conclusion is that the framers of the Constitution used these terms within the definitions above given.
In Bailey v. Fuqua, 24 Miss. 497, the court say:
“The term ad valorem tax’ is as well defined and fixed as any other used in political economy or legislation, and simply means a tax or duty upon the value of the article or thing subject to taxation.”
It 'is stated by one of the learned counsel for the relators, in his brief, that the specific taxes levied prior to the adoption of the present Constitution were not, with possibly one exception, levied upon an assessed value. That exception, I suppose, was under the law approved April 25, 1846; being an act declaratory of the interests of the State of Michigan in mines and minerals. Section 4 of that act (being section 2557 of the Compiled Laws of 1857) provided for a “specific tax of 4 per cent., to be in lieu of all other state taxes, * * * to be assessed thereon upon the average yield and value of such ores.” This is called a specific tax in the law, and is a specific tax, being a tax upon the specific article produced, and recognizes a proper principle in specific taxation, viz., that of considering value an element in fixing the amount. But there was no attempt to assess and tax the entire property of the company. A specific tax may be so much per pound, or so much per dollar upon the value, .of the article produced. In neither case is any attempt made to assess and tax all the property of the corporation.
In Walcott v. People, 17 Mich. 68, at page 90, Justice *112Campbell, in a dissenting opinion, after referring to sections 11 and 12 of article 14, says:
“Taking these sections together, and reading them according to their natural construction, the conclusion seems unavoidable that taxation by an assessed valuation of property must be the rule, and specific taxation the exception.”
The points in that case upon which the court disagreed were (1) whether the power given by the Constitution to continue specific taxes, and to impose specific taxes on corporations thereafter created, limited the right of specific taxation to such cases, or left the legislature at liberty to apply it to other branches of business; (2) whether it was repugnant to that clause of the Federal .Constitution which gives congress the power to regulate commerce among the several States. That case was referred to in Kitson v. Mayor, etc., of Ann Arbor, 26 Mich. 325, which again recognizes the two classes of taxation permissible under our Constitution, — the one, an assessment upon the property at its cash value; and the other, specific taxes not based upon value.
Both an ad valorem and a specific tax may be imposed. State v. North, 27 Mo. 464, upheld an ad valorem tax oh the goods of merchants, and also a tax on their occupation, to be collected in the form of a license.
In City of Brookfield v. Tooey, 141 Mo. 619, an ordinance of the city levied a license tax of 1 per cent, per annum upon the cash value of the stocks of merchants. The court held that this was a property tax, pure and simple, and that to call it a tax upon occupation was a misnomer. It was held to be void because not uniform upon all the personal property of the city, in that it levied $1 upon every $100 of assessable personal property belonging to a merchant, and exempted all personal property not belonging to merchants from such tax. So, in State v. Switzler, 143 Mo. 287 ( 65 Am. St. Rep. 653), a succession tax levied upon the appraised value of the whole estate left by the deceased, to be paid by the personal *113representatives, was held to differ in no particular from a general tax upon property, and to be void because it violated the constitutional requirement of uniformity. In Maine v. Grand Trunk R. Co., 142 U. S. 217, the statute required every railroad in the State to pay to the State an annual excise tax for the privilege of exercising its franchises in the State; the amount to be determined, by the gross transportation receipts of each corporation, person, or association. No question of specific or ad valorem taxes was involved. The constitution of Ohio (article 12, § 2) required that laws should be passed taxing by a uniform rule all moneys, credits, investments in bonds, stocks, joint-stock companies, or otherwise, and also all real or personal property, according to its true value in money. It also provided (article 12, § 3) that the general assembly should “provide by law for taxing the notes and bills discounted or purchased, moneys loaned,'and all other property, effects, or dues of every description (without deduction), of all banks now existing or hereafter created, and of all bankers, so that all property employed in banking shall always bear a burden of taxation equal to that imposed on the property of individuals.” The legislature provided for different modes and agencies to determine the true value of property liable to assessment. This law came before the supreme court of Ohio in Wagoner v. Loomis, 37 Ohio St. 571. The result of the law was an unjust discrimination against banking companies, but this was held to be the fault of the assessing officers, and not of the law. If the officers had performed their duty, the assessment would have been as nearly equal as human judgment could make it.
A statute of the State of Maine provided that every telegraph corporation, company, or person should annually pay into the state treasury a tax of 2-J- per cent, on the value of any telegraph line owned by said corporation, company, or person within the limits of the State, including all poles, wires, insulators, office furniture, batteries, *114and instruments, and any circumstances or conditions which affected the value of the property. The second seetion of the act provided for a return to the secretary of state, to be made under the oath of the superintendent of the company. The governor and council were then required to determine the valuation and assess the tax. The telegraph company claimed that the act was void, under article 9, § 8, of the constitution of Maine, which is as follows: “All taxes upon real and personal estate assessed by authority of this State shall be apportioned a,nd assessed equally, according to the just value thereof.” The opinion concedes that, if the act imposed a tax upon property, it was void, and then proceeds to demonstrate that it imposed a “tax or excise upon a specific use of the property, and therefore was not within the limitation of the constitution.” The opinion states that the law does not cover all the property of the company, and concludes that the purpose was to levy a tax upon the use or business of the company, and that in reality such was the tax imposed. State v. Telegraph Co., 73 Me. 518. I do not wish to be considered as assenting to the reasoning of that case. It seems to me a fair deduction from reading the act, which is given in full in the opinion, that the intention was to cover all the property of the company, and put a tax upon the valuation of all its property; but the court held otherwise, and that is the distinguishing feature of the case. In determining the character of this tax, the court say:
“The name is not material. It is the nature of the tax imposed which settles the question as to its validity. If the tax is upon the property as such, it is illegal, by whatever name we may christen it. If upon the franchise, it is clearly within legislative power, though the name be omitted, and thougli the value of the franchise may be ascertained by an estimate of certain property.”
The title of the act here in question is, “An act to provide for the' assessment and taxation of telegraph and telephone lines within the State of Michigan,” etc. Section 3 of the act requires the board to assess “said telegraph and *115telephone lines at the true cash value thereof.” If our statute includes all the property of the company, and imposes an ad valorem tax upon it, then the Maine case supports the contention of those attacking the validity of the act.
The evident design was to place this property upon an equality, so far as possible, with other property of the State, to make it bear its fair share of the public burdens. The act has none of the features of a specific tax. We are not now concerned with the question whether the appointment of a board to assess the property of these corporations is valid. Some of the authorities already cited support it. So, also, do Central Iowa R. Co. v. Board of Sup'rs, 67 Iowa, 199; County of Franklin v. Railway Co., 12 Lea, 521. I see no objection to this mode of assessment, when the design and effect of the law are to place the property of these corporations upon the same basis as other property of the State.