Albertson v. . Wallace

Smith, C. J. The appeal brings before us for consideration the interpretation of the tenth and twelfth sections of schedule B of the revenue law of March 10th, 1877 (Acts of 1876-77, ch. 156), and their consistency with the constitutions of the United States and of this state. The plaintiff is a grocer, dealing in spirituous liquors and other merchandise, incidental to his business, and is charged with a tax of $8.80, being five per cent, on the amount of his purchases of spirituous liquors for the six months preceding July 1st, 1877, for the state, and a like sum for county purposes. These liquors were all bought of wholesale dealers at Wilmington, who have paid a similar tax as required by section ten. He is also assessed with a tax for both state and county of thirty cents on the amount of his *481 pdrchases of other merchandise, out of the state. The propose of the suit is to arrest the collection of these taxes, on the ground of their illegality. Several propositions have been maintained in the argument of the plaintiff’s counsel. 1. There has been an ad valorem tax levied and collected on the stock of liquors as a part of the plaintiff’s taxable property, and the assessment under section ten is a duplication not allowable under the constitution. 2. The spirituous liquors are exempt from the tax by virtue of the concluding words of the first sentence in section, twelve. 3. The discrimination against goods purchased out of the, state is repugnant to the constitution of the United States,, which commits'to congress the exclusive right to regulate-inter-state commerce. The correctness of these propositions we will proceed to, examine in their order. 1. The first proposition is founded on a misconception of the meaning of section three, article five of the constitution,, which prescribes a “ uniform rule” of taxation upon property “ according to its true value in money.” The liquors which the defendant had on hand on the first da} of June, and which then constituted a part of his aggregate taxable-property, were properly assessed with the ad valorem tax as directed in the first clause of the section. The fax imposed in sections ten and twelve of the revenue act is not a tax-'on properly, but upon the trade or occupation of the person,, and is authorized by the concluding words of section three : “The general assembly may also tax trades, professions,, franchises and incomes, provided that no income shall be taxed when the property from which the income is derived is taxed.” It is under this clause that the tax is levied under sections ten and twelve on the plaintiff’s business or calling, and the amount of the tax to be paid is measured, by the extent and magnitude of that business. *482 The schedule recites in direct language that “ the taxes in this'schedule imposed, are a license tax for the privilege of carrying on the business or doing the act named,” and declares that “ nothing in this schedule contained shall be ■construed to relieve any person from the payment of the ad ■/valorem tax on his property, as required in the preceding schedule.” We see no just objection to the mode adopted for ascertaining and determining the amount of the privilege tax .and making it dependent upon the extent of the business of which the amount of the aggregate purchases may be as accurate a test or measure as any other that could be adopted. This mode of taxing is, in our opinion, eminently fair and reasonable in its operation., A specific tax of a ■definite sum upon a trade, without- regard to the extent of the trader’s operations, and pressing with the same force on •one whose business is small as upon the large operator, would be very unequal. The ability to pay increases with .an increased and successful business, and it is just and proper to gauge the sums to be paid upon that principle. This is what the statute undertakes to do, and no more, and it lies within the discretion of the taxing power to levy the privilege tax under this rule. 2. The plaintiff insists that upon the proper construction ■of the associated sections, the exemption of purchases from •those who have already paid the tax on their business, applies-equally to spirituous liquors, as to other kinds of merchandise, and therefore no tax is due from him. The subject is not altogether free from difficulty and we bave, after careful comparison of those sections, arrived at the conclusion that the exemption in section twelve does not extend to section ten. The latter is complete and unconditional, and requires that “ every dealer in spirituous or vinous liquors, porter, lager beer or other malt liquors, shall pay a tax of five per cent on the amount of any and all liquors.” *483 There is no qualification or exception and the language is peremptory and explicit. Section twelve imposes a tax on “ every merchant, jeweler, grocer, druggist and every other' trader who, as principal or agent, carries on the business of buying or selling goods, wares or merchandise of whatever name or description, except such as are specially taxed elsewhere in this act,” &c., obviously excluding from the scope of the general words of description, dealers in spirituous and other liquors, whose business is taxed in the preceding two sections ; and it is to the class specified in the section itself, that is, all other traders except those who deal in spirituous liquors, that the concluding words apply. “ But no tetail merchant shall be required to pay any tax on purchases made from wholesale merchants residing in the state.” The words are all contained in a single sentence, and the exception must be construed as limiting the generality and scope of the preceding language. This construction is fortified by the fact apparent in all the adverse legislation in relation to the sale and use of spirituous liquors, that the traffic is not favored, but is subjected to heavy burdens and restraints, and in localities is almost entirely prohibited. The samé general policy is carried out in the imposition of the license taxes, so much greater for the trade in this than in other articles of merchandise, and without the deductions allowed On the latter. We cannot therefore so interpret the act as to exempt the plaintiff from the assessment on his business, simply because those who sold to him have already paid a like 'tax on the amount of their purchases, and these goods constituted a part of their stock* in opposition to a law which taxes all dealers, without exception or regard to the source from which they were obtained. The suggestion that a law, distinguishing between the trade in liquors and other articles of merchandise, is an exercise of power not warranted by the constitution of the *484 United States or of this state, is sufficiently answered in what we have said in the opinion in the ca'se of the State v. Joyner, decided at the present term, and-we content ourselves, by referring to the authorities there cited. 3.. The third proposition is that the discrimination in favor of purchases made from wholesale dealers resident in the state, who have paid their privilege tax, and against purchases made .from those who have not, and from nonresidents, interferes with the exclusive power conferred on. congress “ to regulate commerce with foreign nations, and among the several states, and with the indian tribes. Const, of the U. S„ Art. I, § 7 (3). This objection applies only to the small tax of thirty cents derived from the aggregate purchases of merchandise other than spirituous liquors, from without the limits of the state, since, as we have said, the discrimination does not extend to the latter. In the case of. Davis v. Dashiel, Phil., 114, was called in question the validity of a provision in the revenue act of 1866 which imposed a tax upon every resident of the state who brings into the state, or buys from a non-resident whether by sample or otherwise, spirituous liquors, &c., for the purpose of sale, fifteen per cent on the amount of his purchases," and on. “ every person who buys to sell again spirituous liquors, &c., from the makers in this state, his agent, factor or commission merchant, ten per cent on the amount of his purchases.” Upon a review of the authorities it was held that the discrimination was not repugnant to the clause of the constitution, which forbids a sale without the consent of congress to lay imposts or duties on imports or exports. Art. I, § 10 (2). Nor to the clause already cited in regard to the regulation of commerce among the states. The opinion is based on the theory that when goods are brought into the state and mixed up with the mass of its property, they lose their separate identity as an importation, *485 and may be singled out and taxed at the will of the legislature, and this tax may discriminate against them, as of foreign origin. The decision was made in 1867 and upon facts occurring antecedent to the change in the constitution, and when the taxing • power was not under • its present restrictions. It is quite clear such a statute is not authorized under a system of uniform, ad valorem, taxation now prescribed by the fundamental law. But aside from this, that decision- is in conflict with the provisions of the federal constitution, as expounded by the supreme court of the United States, since it was paade, in the case of Welton v. State of Missouri, 91 U.S., 275, and the question must now be considered settled. The facts of this case are briefly these: The legislature by statute defined a peddler to be one who “ shall deal in the selling of patents, or other medicines, goods, wares; or merchandise, except books, charts, maps and stationery, which are not the growth, produce or manufacture of this state, by going from place to place to sell the same,” and prohibited any one dealing, as a peddler without license, for which a rate of charge is prescribed, under a penalty; while no such license is required from one who sells by going from place to place, articles “ the growth, produce or manufacture of the state.” The constitutionality of this tax was drawn into controversy, and defended on the ground that it was a privilege tax only and not a discriminating tax on property made in and out of the state. The court say, Mr. Justice Field delivering the opinion: “The general power-of the state to impose taxes in the way-of licenses upon all pursuits and occupations, within it's limits, is admitted; but like all other powers, must be exercised in subordination to the requirements of the federal constitution. Where the business or occupation consists in the sale of goods, the license tax required for its pursuit is in effect a tax upon the goods themselves. If such a tax be *486 within the power of the state to levy, it matters not whether it be raised directly from the goods, or indirectly from them through the license to the dealer; but if such tax conflict with any power vested in congress by the constitution of the United States, it will not be any the less invalid because enforced through the form of personal license.” Then after a full discussion of the question and an examination of the authorities, the result is thus stated: “ It is sufficient to hold now that the commercial power continues until the commodity has ceased to be the subject of discriminating legislation by, reason of its foreign character. That power protects it, even after it has entered the state, from any burdens imposed by reason óf its foreign origin. The act of Missouri encroaches upon this power in this respect, and is therefore, in our judgment, unconstitutional and void.” We cannot withdraw the tax now under consideration from the condemnation of the principle thus declared, and we yield to the authority of the decision. It is true, purchases from resident wholesale dealers who have not paid the tax, are put on the same footing as purchases from nonresidents, but as such wholesale dealers doing business in the state are required to pay the tax, the law makes practically and really the distinction between the home and nonresident merchant in regard to the goods, the very result against which the framers of the constitution intended to guard, by vesting the power in congress and denying it to the states. It is further argued that purchasers from home dealers are freed from the tax in order to put them on an equal footing with purchasers from non-residents, and in both cases one tax only be collected. • Otherwise a double assessment would be borne by the liquors in one case, and a single assessment in the other, to the disadvantage of the home merchant, and this, it is the purpose of the law to remove. But a state cannot on such pretext distinguish by legislation *487 against goods imported, so as to put on them, as such, a heavier burden than its own productions are made to bear, neither directly nor by license charges. Much confusion would ensue if the states were allowed thus to discriminate against the productions and manufactures of each other, to favor their own, and hence the constitution forbids it to be done. It will be noticed that there is a specific sum of five dollars required to be paid in addition to the per centum on the sales of other commodities as a pre-requisite to engaging in the traffic. It follows therefore that when, as in the present case, the trader deals in spirituous liquors and in other merchandise, the tax to be paid upon them will be on thé amount of his purchases of the former, the same as if that was his exclusive business, and upon other merchandise such as he would pay if he did not deal in liquors. In a proper sense he comes under the provisions of both sections. The plaintiff is therefore entitled to relief from the sum of thirty cents only, and must pay the residue of assessment in the defendant’s hands for collection. With this modification the interlocutory order is affirmed. Pee, CueiaM. Modified and affirmed.