Pingree v. Auditor General

44 L.R.A. 679, 120 Mich. 95

• Court: Michigan Supreme Court
• Decided: April 26, 1899
• Status: Published

Opinions

Hooker, J.

In the year 1881 the legislature passed an act (No. 168, Pub. Acts 1881; 1 How. Stat. § 1237 et seq.) entitled “An act to provide for the assessment and taxation of telegraph and telephone lines within the State of Michigan.” Its provisions are, in substance, that the auditor general, state treasurer, and commissioner of the state land office shall assess telegraph and telephone lines at their true cash value, and levy a tax upon said assessment at a rate which shall equal the average rate of taxes (general, municipal, and local) levied throughout the State during the previous year, to be ascertained from the records and files of the auditor general’s office, which tax shall be in lieu of all other taxes. This tax has since been paid, and the auditor general has treated it as a specific tax, and credited the amounts collected to the educational fund, under the provisions of section Í of article 14 of the Constitution, which provides:

“All specific state taxes, except those received from the mining companies of the Upper Peninsula, shall be applied in paying the interest upon the primary-school, university, and other educational funds, and the interest and principal of the state debt, in the order herein recited, until the extinguishment of the state debt, other than the amounts due to educational funds, when such specific taxes shall be added to and constitute a part of the primary-school interest fund. The legislature shall provide for an annual tax, sufficient, with other resources, to pay the estimated expenses of the state government, the interest of the state debt, and such deficiency as may occur in the resources.”

The application of the governor is for a mandamus to compel the auditor general to transfer to the general fund, from the primary-school fund, the amount of moneys collected under the act mentioned, and now on hand, upon the ground that the tax provided in said act is not a specific tax. The Tecumseh Telephone Company’s application is based upon the same ground, and asks that the tax be canceled, upon the further contention that the tax, not being a specific tax, is not levied in conformity to other provisions of the Constitution, viz., sections 11 and 14 of article 14, which are as follows:

“Sec. 11. The legislature shall provide an uniform rule of taxation, except on property paying specific taxes, and taxes shall be levied on such property as shall be prescribed by law.”

“Sec. 14. 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.”

The auditor general has answered both petitions; claiming that the tax is specific, and not a property tax, and that, if it be determined otherwise, the tax is valid.

In addition to the sections quoted, sections 10 and 12 of article 14 of the Constitution are as follows:

“Sec. 10. 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.”

“Sec. 12. All assessments hereafter authorized shall be on property at its cash value.”

The first question presented, then, is, Does Act No. 168 of the Public Acts of 1881 provide for a specific tax, within the meaning of the Constitution ? If it does, it disposes of the cases, and both applications should be denied.

Amasa Walker, in his Science of Wealth, at page 339, says that: “Duties are generally of two kinds, — specific and ad valorem. Specific duties are imposed by the pound, yard, gallon, etc.” The late Mr. Justice Cooley, in his work on Taxation (2d Ed., p. 238), uses a similar classification as to taxes, arid says of specific taxes that:

“Under this head may be classed those which impose a specific sum by the head or number, or by some standard of weight or measurement, and which require no assessment beyond a listing and- classification of the subjects to be taxed.”

He describes ad valorem taxes as follows:

“Ad Valorem Taxes. A large proportion of the duties on iriiports are of this description, and so, sometimes, are many of the taxes which make up the internal revenue. The statute laying them prescribes the rule, but requires the action of appraisers in apportioning them between individuals. By far the larger proportion of all state taxation is also upon property by a valuation, and effect can only be given to it by means of assessors, who value the property, and apportion the tax by their estimate.”

A similar description of specific taxes is found in 25 Am. & Eng. Enc. Law, 17, note 3.

In Colton’s Public Economy, at page 510, it is said:

“A specific duty is assessed by measure, — as so much per yard, per gallon, per cwt., per caldron, etc.; the instrument of measure being such as the nature of the article requires.”

Perry, in his Principles of Political Economy, at page 557, says:

“What is the difference between specific and ad valorem taxes, and why should the student take careful note of these, both singly and combined? These terms are used more particularly in relation to tariff taxes, but there is nothing in the distinction itself so to limit its application. A specific tax is a tax of so many cents or dollars on the pound, yard, gallon, or other quantity measurable. An ad valorem tax is a tax of so much per centum on the invoiced or appraised money value of the goods subject to the tax.”

Bouv. Diet, says:

“Ad Valorem.' (Lat.) According, to the valuation.. Duties may be specific or ad valorem. Ad valorem duties are always estimated at a certain per cent; on the valuation of the property.”

Black’s definition is:

“Ad Valorem. According to value. Duties are either ad valorem or specific, — the former when the duty is laid in the form of a percentage on the value of the property; the latter where it is imposed as a fixed sum on each article of a class, without regard to its value. 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.”

Black, Tax Titles, § 83, says upon the subject that;

“ Difference between Specific and Ad Valorem Taxes. In regard to specific taxes, no other apportionment is requisite than that necessarily prescribed by the statute which lays the tax. The share of each taxpayer is completely determined by his condition with reference to the number of the given articles in his possession, or their weight or measurement, or with reference to the fact of his pursuing the particular avocation taxed, or enjoying the particular franchise, or otherwise, as the case may be. But the case is different with respect to ad valorem taxes. Here the intervention of ministerial officers is necessary to effect the apportionment between individuals. Assessors are called upon to estimate the value of the property to be taxed, and apportion the shares according to their valuation.” .

This distinction has been recognized as applied to duties for many years. Benton’s Thirty Years in Congress says of the customs act of 1833:

“Specific duties had been the rule, ad valorem the exception; from the beginning of the collection of the custom-house revenue. The specific duty was a question in the exact sciences, depending upon a mathematical solution by weight, count, or measure.”

In Gibbons v. Ogden, 9 Wheat. 188, Chief Justice Marshall said:

“The framers of the Constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said.”

Quoting this language, Judge Cooley, in his Constitutional Limitations, said at page ?3 (6th Ed.):

“This is but saying that no forced or unnatural construction is to be put upon their language, and it seems so obvious a truism that one expects to see it universally accepted without question; but. the attempt is made so often, by interested subtlety and ingenious refinement,- to induce the courts to force from these instruments a meaning'which their framers never held, that it frequently becomes necessary to re-declare this fundamental maxim.”

It is urged that the framers of the Constitution used the term “specific tax” in a different and broader sense, and that, in contradistinction to the uniform tax contemplated by section 11, it should be construed to mean any tax on property not conforming to such uniform rule. We have only to examine the statutes in force at the time the Constitution was adopted, to see that the term “specific tax” was known and applied in this State previous to the meeting of the constitutional convention. Title 5 of the Revised Statutes of 1846 is divided into chapters 20 and 21. The former treats of the “Assessment and Collection of Taxes;” the latter, of “Specific State Taxes and Duties,” —thus indicating that specific taxes and duties embraced taxes other and different from those ordinary taxes which were provided for in chapter 20, and which were assessed and collected locally. An examination of chapter 21 will show that the term”“specific taxes” was used in conformity to the definitions above given. Thus banks were taxed a specified per centum upon the amount of capital stock paid in. A similar tax was imposed upon railroad, canal, and turnpike companies. These taxes were payable to the state treasurer. It will be. noticed that they were not based upon the actual value of the real and personal property in possession of the companies at the time, but upon the amount of capital that had been previously invested in their business. The interposition of no assessing officer was required to value the property. Reports to the state treasurer were required (see Rev. Stat. 1846, tit. 10, chap. 55, § 24); and presumably he was to determine the amount, and collect the tax, after making a deduction from the amount of capital stock equal in amount to such property, real and personal, of the banks, as was locally assessed and taxed. The legislatures of 1846 to 1849, inclusive, passed many acts- — -some general and some special — imposing taxes of this kind upon corporations created by them, such as railroads, plank roads, and mining companies. The briefs of counsel refer to them, and we will not repeat the citations. Without exception, they provide for reports from which the amount of taxes was computed. Other recognized specific taxes, such as taxes upon brokers, peddlers, etc., were included in chapter 21 of the Revised Statutes. It even seems to have been thought advisable tp distinguish duties from them. Accordingly the title mentions them, and the chapter (21) imposes ad valorem duties upon property sold at auction, and spirituous liquors. In view of -these laws, some .of which continued in force after the adoption of the Constitution, we are satisfied that the convention understood the meaning of the term “specific taxes,” and used it in no other than the common and well-settled sense of the term, which they understood to imply a tax which was made specific in rate and arbitrary in its standard, requiring no assessment beyond a mathematical computation. Of such taxes, Mr. Cooley says:

“License taxes, and other taxes on business or occupations, stamp taxes, taxes on franchises and privileges, are usually specific, as are also other excise and customs taxes. As regards all such taxes, the law by which they are laid is of itself a complete apportionment. Ministerial officers have nothing to do but to list the subjects of taxation; classify them, where that is necessary; ascertain the number, weight, measurement, etc., when taxation depends upon it; and collect the sum which the law has definitely fixed. If the taxes are stamp or license taxes, even the listing may not be required, but the individual who is to pay them will purchase his stamp or his license, and thus make voluntary payment, as he may have occasion.” Cooley, Tax’n (2d Ed.), 238.

If the tax in this case is clearly an ad valorem tax, if it is a tax on property, — and this cannot be questioned, because the title and the act both call it a tax on telegraph lines, which are property,- — -there is nothing in the law to indicate that an occupation tax or tax upon business was intended, even were we to hold that its ad valorem feature would not necessarily preclude its being denominated a specific tax.

It follows that the auditor general should not treat this as a specific tax, by crediting it to the educational fund.

It remains to inquire whether this tax can be sustained as an ad valorem tax. We have seen that the Constitution requires uniformity in taxation, except as to property specifically taxed. Not being a specific tax, this must comply with this requirement, which it can hardly be said to do. It is to be assessed according to cash value, which is a compliance with section 12; but if assessment as a whole, and not locally, and by a state board, and not by a local board, as in ordinary cases, can be said to be permissible, — which we do not decide, — -the fact remains that the rate is determined in a different way, and is different in amount, from taxes imposed upon other property which contributes to state taxes. We must infer that this is a state tax, for it is payable to the state treasurer, and the law does not provide for its application to local purposes. The taxes generally assessed for the State bear a proportion to the amount to be raised, and all taxable property, except that paying specific taxes, is charged with a given and equal per centum upon its assessed value. That cannot be said of this property, for the rate is to be the average of all taxes raised for all purposes,- — -local as well as state. It is not a specific tax, and it is not within the uniform rule of taxation' prescribed for other property, and the law providing for it must therefore be held void.

Counsel urge that this statute has been a law since 1879 (Act No. 77, Pub. Acts 1879), recognized by the departments as valid, and acquiesced in by the corporations taxed under it, and by the public, and ask us to apply to this case the doctrine that “long and continued usage furnishes a contemporaneous construction which must prevail over the more technical import of words.” This principle should be applied more cautiously to constitutions than to laws. The inference that the public is satisfied with a construction of a law giving it an effect which the legislature might have lawfully provided, and which would not be disputed had its. language shown an intent to do so, is much greater than in the case of a constitutional provision, where the question arises, not in regard to legislative intention, but to legislative power. And, if we could eliminate this distinction, the ability to easily change the law by legislative action would give more force to a construction in conformity to usage than would be justified in the case of .a constitutional provision, which^cannot be so readily altered. It is a rule which should not be applied except in cases of doubt. Mr. Cooley, in his Constitutional Limitations (6th Ed., p. 85), says:

“Acquiescence for no length of time can legalize a clear usurpation of power, where the people have plainly ex-' pressed their will in the constitution, and appointed judicial tribunals to enforce it. A power is frequently yielded to merely because it is claimed, and it may be exercised for a long period, in violation of the constitutional prohibition, without the mischief which the constitution was designed to guard against appearing, or^ without any one being sufficiently interested in the subject ’ to raise the question; but these circumstances cannot be allowed to sanction a clear infraction of the constitution. We think we allow to contemporary and practical construction its full legitimate force when we suffer it, where it is clear and uniform, to solve in its own favor the doubts which arise on reading the instrument to be construed.”

The rule of contemporaneous construction was applied in the case of McPherson v. Blacker, 92 Mich. 377 (16 L. R. A. 475, 31 Am. St. Rep. 587), where the question was what was meant by the language of the Federal Constitution which provides that—

“Each State shall appoint, in such manner as the legislature thereof may direct, a number of electors equal to the whole number of senators and representatives to which the State may be entitled in the congress.”

The opinion in that case, and in the case of City of Detroit v. Chapin, 108 Mich. 136 (37 L. R. A. 391), review the' authorities sustaining that rule. In the latter case it was held that the question must be a doubtful one, to permit contemporaneous construction to have weight.

Again, this usage has not the force that it would otherwise have, because the law was not passed until nearly 30 years after the adoption of the Constitution. To apply this principle would be to hold, in substance, that the practical construction of a department, acquiesced in by those affected by the law, possibly satisfied with it because of the favorable consideration that it gives them, has made necessary or proper a construction of the Constitution, upon a most important subject, which, in the absence of the practice under it, would not be indulged.

The applications must be granted, — that of the telephone company, as prayed; that of the-governor, to the extent of requiring the amount collected under the law, and now in the hands of the treasurer, to be credited to the general fund. Costs will not follow.

The other Justices concurred.