Life Ass'n of America v. Board of Assessors

Wagner, Judge, delivered the opinion of the court. The assessors of St. Louis county assessed for the year 1870, furniture, money on hand, and bonds and notes of the value of $294,000, belonging to the appellant. To obtain relief from this assessment the proceeding was taken to the Circuit Court by certiorari, but there the assessment was sustained. The appellant is an association organized on the mutual plan for the assurance of lives, and it is claimed that by the law of this State their property is wholly exempt from assessment and taxation. This claim is based on the fortieth section of the act in regard to the incorporation and regulation of life insurance companies, approved March 10,1869 (Wagn. Stat. 752, § 40). The section provides that the life insurance companies referred to shall pay certain fees which shall go to the support of the insurance department, and shall be in lieu of all taxes, fees and licenses whatsoever collected for the benefit of the State; but that companies organized under the laws of the United States, or any other State, doing in this State the business mentioned, shall be subject to existing laws relating to fees and licenses for county and municipal purposes. The further provision is then made that all companies organized under the laws of this State and doing the business mentioned shall pay all fees required in the section, which shall be in lieu of — 518 — all fees or taxes whatsoever, except that they may be taxed upon their paid-up capital stock in the same manner as other property in the county, for county and municipal purposes. Under the organization of the appellant it has no paid-up capital stock, and its property consists wholly of its.assets; and if effect is given to the section, its entire property is exempt upon the payment of the designated fees. This law must he construed in subordination to the constitution of the State, and the question is whether it violates that instrument. Under the former constitution the Legislature might have undoubtedly passed the law, as there was then no provision against exemptions, and the whole matter of taxation was confided to the legislative discretion. But there are two clauses.in the present constitution which have a direct bearing on the subject, and which must control all legislative action. The first is embodied in the declaration of rights (art. I, § 30), which declares that “ all property subject to taxation ought to be taxed in proportion to its value; ” and the second is section 16 of article xi, which provides that “ no property, real or personal, shall be exempt from taxation except such as may he used exclusively for public schools, and such as may belong to the United States, to this State, to counties, or to municipal corporations within this State.” Some criticism has been indulged in by counsel on the phraseology of the first clause, and it is contended that the word “ought” shows that the provision was simply intended tobe directory; that as to uniformity of taxation it amounts to a recommendation, but is not imperative. The old constitution used the word “shall,” but it is evident from a survey of the whole instrument that the substitution of the one word for the other was not intended to produce any change in the construction or the duties enjoined. The word designated is expressive of a duty and equivalent to a prohibition against proceeding in any other way. This is abundantly manifest by comparing the phrase used with others, which all will concede are imperative and mandatory. Thus the constitution in other sections declares that “ all elections ought to be free and open;” that “courts of justice ought to he open to every person,” etc.; that “ no private property ought to be taken — 519 — .or applied to public use without just compensation;” and “ that the people ought to be secure in their persons, papers,” etc. These are all positive injunctions which cannot be denied, and their obligatory force would be in nowise strengthened by inserting the word “ shall” for “ ought.” Under the former constitution, when this provision was in the courts for interpretation, it was decided that the clause was evidently mandatory upon the general assembly, when exercising the taxing powers, and furnished a rule which was not to' be departed from. But it was said that the settlement of the question what property should be subjected to taxation was left to their discretion. (Hamilton & Treat v. St. Louis County Court, 15 Mo. 1; State v. North & Scott, 27 Mo. 464.) Since these decisions, however, that discretion has been withdrawn from the Legislature, and they are now expressly forbidden to exempt any property from taxation. But it is claimed that although the Legislature may not have the power to exempt property from taxation, it has the power to commute taxes, and that the fortieth section is a commutation. In Illinois this doctrine has been announced, under a constitutional provision not entirely similar to ours, but intended certainly to produce uniformity in taxation. The first ease-was The Illinois Central Railroad Company v. McLean County, 17 Ill. 291, where it was held that the provision in the charter of the railroad company exempting its property from taxation upon the payment of a certain proportion of its earnings was constitutional; and the second was the case of Hunsaker et al. v. Wright et al., 30 Ill. 146, where the court decided'that the Legislature might commute a tax for the payment of money or other equivalent. In these cases there was no claim of exemption, but sums of money were paid and burdens assumed in lieu of taxes. An attentive perusal of the cases has failed to convince me that they were decided on correct principles. In Ohio an act of incorporation was passed exempting property, under certain circumstances, from general taxes, upon the payment of a road tax. The Supreme Court held the law to be unconstitutional, and in their opinion they use this language: — 520 — “ The very last construction that should be adopted would be one that makes it conflict with the constitution ; and we are clear in the opinion that if it means what is claimed for it, and intends to provide for the exemption of any part of the property in a municipal corporation, otherwise subject to taxation, from contributing its- proper proportion to the general revenue fund, it is -in conflict with the second section of the twelfth article of that instrument, and should be treated as a nullity. Before the adoption of the present constitution the whole matter of taxation was committed to the discretion of the general assembly. It might be levied upon such property and in such proportion as that body saw fit. The right to make exceptions and exemptions was unquestionable. But this discretion no longer exists. The public burdens are made to rest upon the property of the State, and whenever money is to be raised by taxation, the positive injunction is that laws shall be passed, taxing by a uniform rule all moneys, credits, investments in bonds, stocks, joint-stock companies, or otherwise; and also all real and personal property, according to its true-value in money.” (City of Zanesville v. Richards, Auditor, etc., 5 Ohio St. 589.) That case had as much of the characteristics of a commutation as the one under consideration. The State tFere undertook to exempt the property and make it liable only for the payment of a road tax, and here there is an exemption, and only certain fees are required. The -court -rejected the claim and construed the organic law according to its obvious import and the unquestioned intention of its framers. Under a constitutional provision -essentially the same os ours, enjoining a uniformity of taxation, the Wisconsin Legislature passed a law which required railroad and plank-road companies to pay for the use of the State one per cent, of the gross earnings of their respective roads, which should be in full of all taxes of every kind upon -such roads or other property belonging to such companies, or the stock held by individuals therein ; and in 1855, in the case of The Milwaukee & Mississippi R.R. Co. v. The Supervisors of Waukesha County, the Supreme Court held the act to be constitutional. The case was never reported, and the judg — 521 — ment seems to have been hastily made and not well considered. The question was again presented in 1862, in the case of Kneeland v. City of Milwaukee et al., 15 Wis. 454, and the court declared that if the question were a new one they would not hesitate to hold that the act was in violation of the constitution ; but that, in view of the fact that all the taxation of the State, and all the private transactions growing out of it, had for many years been conducted on the theory of its validity, and in view of the disastrous consequences which would flow from overturning the decision after such a lapse of time, they felt bound to adhere to and abide by the former ruling. No such difficulty environs this court in deciding this question. The constitution is now to be construed for the first time, and the determination herein will not interfere with property rights based upon a different adjudication. The section by which freedom from taxation is claimed is more of an exemption than a commutation. It does not provide for the payment of any sum to the general revenue in lieu of taxes, but only certain fees to the support of an officer. It is incredible that the Legislature intended that taxes on hundreds of thousands of dollars, which may come into the hands of wealthy corporations, should be commuted for the yearly payment of a hundred and fifty or two hundred dollars in official fees. But I am not inclined to the belief that this power of commutation exists under our present constitution. The literal reading of the two clauses hereinbefore referred to are surely in opposition to it. The constitution, by its injunction that no property should be exempt from taxation, and the requirement that it should be taxed in proportion to its value, was framed with the express view of remedying a great mischief. It is well known that under the former constitution the burdens of taxation were often unequal and unjust. Capitalists and corporations were in the habit of getting exemptions, so that a large proportion of their wealth was withdrawn from paying its proportionate share in administering the government, and a corresponding increase was thrown upon those who were least able to pay. The small property-holders, who comprise the great mass of the tax-payers, usually pay their taxes — 522 — promptly, without question, and seldom combine for the purpose of procuring any special privileges or exemptions. But capital, grasping and eager, lynx-eyed and vigilant, always ready to reach for profits and shrink from burdens, able and ready to bring powerful combinations to bear to influence legislative action, will be always ready to take advantage of a construction of the constitution which will enable it to shift the burdens it ought to bear on the shoulders of others. It was to avoid this injustice and to cut off all importunity for «class legislation, that the constitution made the provision forbidding all discrimination. But if what was intended as a safeguard for the people’s rights can be avoided by granting an immunity under the pretense of accepting the merest trifle as a commutation, the instrument is practically nullified and 'the clause is a sheer delusion. Any construction of the constitution by this court which would virtually annul its efficiency, would be as unwarranted as it would be disastrous to the rights of our citizens. I therefore come to the conclusion that the act in question cannot have the effect of exempting the appellant’s property from taxation. It is further insisted that, although the court should be of the opinion that the act did not grant an exemption from the payment of taxes, still there was no law in force authorizing the officers to make the assessment. It is true the assessment could not be made under sections 28 and 24 of the statute (Wagn. Stat. 1169), for these sections have reference to assessing shares of stock, and there are no shareholders in the appellant’s company. But the appellant owned the property and had it in its possession, and there is nothing to prevent its assessment under the general revenue law. The first section of the law declares that taxes shall be levied on all property, real and personal. (Wagn. Stat. 1159.) And it is made the duty of the assessor, in administering the oath to tax-payers, to swear them to give a true and correct list of all taxable property, including therein money and notes, or bonds in hand or on deposit, owned by them or under their charge. (Wagn. Stat. 1167, § 12.) The vice-president of the company gave in the property as under his charge and owned by the company, and he could have — 523 — done nothing else. The property was certainly liable to. taxation, and because it belonged to a corporation and did not come within the category of shares of stock, it was not entitled on that account to be exempted from assessment under the general provisions of the law. I am of the opinion that the assessors had full authority for their action, and that, the judgment of the Circuit Court should be affirmed. The other judges concur.