Bee v. City of Huntington , 114 W. Va. 40 ( 1933 )

The first of these cases is a suit of a taxpayer, in the city of Huntington, to enjoin the levying of municipal taxes, for the fiscal year 1933-34, in excess of the alleged maximum levies permitted under the constitutional amendment adopted at the general election of 1932, classifying property for taxation and limiting the respective levies in the several classifications. The bill has been presented to this court for a preliminary injunction (under chapter 53, article 5, section 5, Code 1931), following the refusal thereof by the circuit court of Cabell County.

In the second case a taxpayer of the town of Sutton, Holly District, Braxton County, seeks like relief against the municipality, the county court of Braxton County, and others. This case is here upon application for an appeal from a decree of the circuit court of Braxton County, denying relief upon final hearing on the bill, answer and proof.

The third case is a suit by the owner of real estate, situate in Huntington, attacking the validity of the amendment in so far as it authorizes the classification of property for taxation to discharge prior governmental bonded indebtedness.

As the first and second cases involve the same questions, they will be considered, together, before discussing the third.

The amendment follows: "Section 1. Subject to the exceptions in this section contained, taxation shall be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law. No one species of property from which a tax may be collected shall be taxed higher than any other species of property of equal value; except that the aggregate of taxes assessed in any one year upon personal property employed exclusively in agriculture, including horticulture and grazing, products of agriculture as above defined, including' live stock while owned by the producer, and money, notes, bonds, bills and accounts receivable, stocks and other similar intangible personal property shall not exceed fifty cents on each one hundred dollars of value thereon and upon all property owned, used and occupied by the owner thereof exclusively for residential purposes and upon farms occupied and cultivated by their owners or bona fide tenants one dollar; and upon all other property situated outside of municipalities, one dollar and fifty cents; and upon all other such property situated within municipalities, two dollars; and the legislature shall further provide by general law, for increasing the maximum rates, authorized to be fixed, by the different levying bodies upon all classes of property, by submitting the question to the voters of the taxing units affected, but no increase shall be effective unless at least sixty per cent of the qualified voters shall favor such increase, and such increase shall not continue for a longer period than three years at any one time, and shall never exceed by more than fifty per cent the maximum rate herein provided and prescribed by law; and the revenue derived from this source shall be apportioned by the legislature among the levying units of the state in proportion to the levy laid in said units upon real and other personal property; but property used for educational, literary, scientific, religious or charitable purposes, all cemeteries, public property, the personal property, including live stock, employed exclusively in agriculture as above defined and the products of agriculture as so defined while owned by the producers may by law be exempted from taxation; household goods to the value of two hundred dollars shall be exempted from taxation. The legislature shall have authority to tax privileges, franchises, and incomes of persons and corporations and to classify and graduate the tax on all incomes according to the amount thereof and to exempt from taxation, incomes below a minimum to be fixed from time to time, and such revenues as may be derived from such tax may be appropriated as the legislature may provide. After the year nineteen hundred thirty-three, the rate of the state tax upon property shall not exceed one cent upon the hundred dollars valuation, except to pay the principal and interest of bonded indebtedness of the state now existing." Section 1, chapter 9, 1932 Extraordinary Session of the Legislature.

In Finlayson v. City of Shinnston, 113 W. Va. 434,168 S.E. 479, this court, construing the amendment, held that the limitation of assessments therein prescribed embraces levies for all purposes, including previous governmental bonded debts, except in cases in which such limitation of levies would result in the impairment of existing legal obligations. Following this decision, the legislature by an Act of March 11, 1933 (chapter 38, Acts 1933), relating to tax levies, authorized the various tax levying bodies to "impose the levy necessary for current expenses" to the extent of the maximum levies prescribed in the amendment, and to lay additional levies to "meet current requirements of now-existing indebtedness." The levying bodies sought to be enjoined have pursued this course by imposing the maximum levies for current expenses and additional levies to meet current requirements of existing indebtedness. It will thus be observed that the interpretation of the amendment by the legislature is incompatible with the previous construction of this court in the Finlayson case.

Plaintiffs contend that a levying body may not levy beyond the respective aggregates specified in the amendment without the special authorization, therein prescribed, from the qualified voters of the particular governmental unit.

Defendants insist that they may levy, in accordance with the statute, to the limit of such aggregates for current expenses of government, and, in addition thereto, taxes necessary to meet current requirements of existing indebtedness, or, at least, of indebtedness incurred prior to the amendment. They rely upon three grounds, which will be considered in the order named, as follows: (1) That the language of the amendment, in the light of other provisions of the constitution, should be so construed; (2) that the maintenance of modern, orderly government is necessary for the preservation of property values and the collection of taxes to prevent the impairment of debts created prior to the amendment, and (3) that the essentials of government must be provided for regardless of the constitutional limitation.

The attorney general has cited Mauney v. Board ofCommissioners, 71 N.C. 486; French v. Board of Commissioners,74 N.C. 692, and Clifton v. Wynne, 80 N.C. 145, as supporting the first ground. These cases involved the interpretation of the following constitutional declarations:

(1) "The general assembly shall levy a capitation tax on every male inhabitant over twenty-one and under fifty years of age, which shall be equal on each to the tax on property valued at three hundred dollars in cash. The commissioners of the several counties may exempt from capitation tax in special cases, on account of poverty and infirmity, and the state and county capitation tax combined shall never exceed two dollars on the head.

(2) "The taxes levied by the commissioners of the several counties for county purposes shall be levied in like manner with the state taxes, and shall never exceed the double of the state tax, except for a special purpose and with the special approval of the general assembly." The court read into these provisions an implied limitation upon the taxation of property to two dollars on three hundred dollars valuation for current expenses and indebtedness, but did not extend the implication to legal indebtedness existing prior to the adoption of the constitution, in 1868. It will be observed that the North Carolina court applied a liberal interpretation of the constitutional limitation in favor of the taxpayers, as there does not appear to be within the language of the provisions quoted any limitation upon property levies, the limitation being confined to capitation tax. Note the difference between the language in the North Carolina constitution, from which a limitation upon the taxation of property was implied, and the express declaration in ours "that the aggregate of taxes assessed in any year" upon the several classifications of property "shall not exceed" the respective rates therein enumerated. In amplification of the many reasons for applying the limitation, affirmatively expressed in the amendment, to past as well as current debts, we quote at length from the comprehensive and convincing opinion of Judge Haymond Maxwell in the Finlayson case, as follows

"Taxes levied by the various tax levying bodies of the state have very generally increased by leaps and bounds within the last decade. And not only that, but the people themselves of many taxation units have authorized bond issues, the interest and sinking funds of which now add substantially to the burdens of taxation. The serious economic depression of the last three years has greatly accentuated the tax situation. The people have come to realize that a public spending program of exaggerated proportions, such as came into being in the World War period and in the succeeding years of inflation bears heavily upon the people in a period of adversity.

"With these undesirable conditions existing, it must be considered that when the people of the state adopted a constitutional amendment providing that 'the aggregate of taxes assessed in any one year * * * shall not exceed' the maximum levies prescribed by the amendment for different classes of property therein enumerated, the people meant that such prescribed maximum levies should be in fact the outside limit, for all purposes, save only as such course might imperil the integrity of solemn obligations and thereby violate paramount law. We say this because the plain language 'aggregate of taxes' means all the taxes. Simply that and nothing less. Such plain and unequivocal language leaves no room for interpretation.

"This conclusion is emphasized by the fact that although the amendment contains a provision limiting the state tax to one cent on the hundred dollars valuation, after 1933, 'except to pay the principal and interest of bonded indebtedness of the state now existing', no such exception appears with reference to the bonded indebtedness of any of the governmental subdivisions of the state. Enumeratio unius est exclusioalterius. The conclusion stated is accentuated, too, by the fact that the state senate rejected Senate Joint Resolution No. 1 proposing a constitutional amendment in large measure the same as the amendment later submitted to the people by the Legislature, except that the rejected resolution contained the language: 'The limitations contained herein shall not apply to levies for Virginia debt, or levies heretofore or hereafter authorized by a vote of the people under the provisions of section eight, article ten, and the good roads amendment, of this constitution.' It therefore seems to have been the intent of both the legislature and the voters that all levies for governmental subdivisions of the state should come within the maximums fixed by the amendment, except as might be otherwise required by paramount law.

"Other provisions of the state Constitution must be construed in the light of the amendment."

Regarding constitutional construction, this court said, inC. O. Ry Co. v. Miller, 19 W. Va. 408, 419: "Where the text is plain and unambiguous, courts are not at liberty to search for its meaning beyond the instrument itself." This rule was emphasized by the New York Court in Newell v. People, 7 N.Y. 9,97, as follows: "That which the words declare, is the meaning of the instrument; and neither courts nor legislatures have a right to add to or take away from that meaning." The doctrine, thus stated, is universal. Cooley's Constitutional Limitations (8th Ed.), 124, etc.; 12 C. J. 703; Board of Commissioners v.Rollins, 130 U.S. 662, 32 L.Ed. 1060. The "plain and unequivocal language" of the amendment, as was said in theFinlayson case, "leaves no room for interpretation". We cannot, under such circumstances, weigh the policy of the legislature. Our duty, as pointed out in People v. Draper, 15 N.Y. 532, 546, is merely "the humble one of construing the constitution by the language it contains." The language of the amendment makes no exception in favor of the exigencies or the necessities of local government save the authority of the legislature to provide indirect taxation and the people to vote an increase of levies. By that language (alone) the several limitations on direct taxes are absolute. The judiciary has no part in the policies of government. The power of the legislature, exercised within constitutional limits, is exclusive and supreme in this sphere.

The second ground is without merit. Not only are there no creditors (whose claims were created prior to the adoption of the amendment), complaining, but there is also an absence of proof that the maintenance of what may be considered by the various fiscal bodies of the state as constitutional government is necessary for the preservation of property values and the collection of taxes to prevent the impairment of such debts. By virtue of section 8, Article X of the constitution, these claims may not exceed five per cent of the value of the taxable property. Defendants cite numerous cases for their contention, including Von Hoffman v. Quincy, 71 U.S. 535, 18 L.Ed. 403, andWelch Water Co. v. Town of Welch, 64 W. Va. 373, 62 S.E. 497. These authorities merely apply the universal rule that legal government obligations must be discharged regardless of statutory or constitutional limitations upon taxation.

It is argued, substantially, that the limitation should be ignored in levying taxes necessary for orderly government, which would mean that a limitation of levies for the operation of government cannot be effected even by constitutional proclamation. This position also is without legal basis. In the case of Brannon v. County Court, 33 W. Va. 789, 11 S.E. 34, 36, Judge Brannon, speaking for the court in answer to a like contention, said that county courts must have an eye to constitutional limitations, "and so apportion the assessment as will, in their judgment, best answer the public interest, butmust keep within the limit; and, if that be not adequate for public wants, all that can be said is, 'so the constitution is written.' " In Board of Commissioners v. Rollins, cited, the Supreme Court of the United States, responding to a similar argument, observed: "We cannot say, as a matter of law, that it was absurd for the framers of the constitution of this new state (Colorado) to plan for the establishment of its financial system on a basis that should closely approximate the basis of cash. It was a scheme favored by some of the ablest of the earlier American statesmen. Nor can the fact disclosed in the bill of exceptions, that, after the adoption of the state constitution the county officials, and many of the people, designedly or undesignedly, disregarded the constitutional rule, render the plan absurd. If it was a mistaken scheme, ifits operation has proved or shall prove to be more inconvenientthan beneficial, the remedy is with the people, not with thecourts." In French v. Board of Commissioners, (heretofore cited as an authority relied on by defendants) the court stated: "If what are often miscalled the 'necessary expenses' of a county exceed the limitation prescribed by law, the necessity cannotjustify the violation of the Constitution. In such cases two remedies are open to the county. One is to apply to the Legislature, if the tax is required for a special purpose. The Constitution, Art. V, sec. 7, empowers the Legislature in such cases to give a special approval for an increased levy. The other and better way, however, is to reduce the expenditures. The old proverb, 'cut the garment according to the cloth', has in it much practical wisdom. It is illustrated every day in private life, and is the foundation of individual integrity, contentment and success."

It is proposed to evade the constitutional limitation by levying first for current governmental costs upon the theory that such expenses have preference over existing legal indebtness, which, as heretofore shown, must be provided for in all events. If such practice were permissible, constitutional tax limitation would be impossible; for if we assume that the various fiscal bodies of the state have the power, notwithstanding the limitation, to levy taxes for the maintenance of orderly government, it is for them and not the courts to say what expenditures may be necessary for that purpose. "The question, what expenditures are proper and necessary for a municipal administration, is not judicial; it is confided by law to the discretion of the municipal authorities. No court has the right to control that discretion, much less usurp and supersede it."City of East St. Louis et al v. United States ex rel. Zebley,110 U.S. 321, cited by defendants.

If, as is claimed, the various subdivisions of government are confronted with a large accumulation of current indebtedness, some of these obligations must have been contracted in violation of section 13, article 8, chapter 11, Code 1931, which not only prohibits fiscal bodies from entering into any contract involving the expenditures of funds not available for the current year, but declares that such contract shall be illegal and void. The statute has been strictly enforced in numerous decisions of this court. Shonk Land Company v.Joachim, 96 W. Va. 708, 123 S.E. 444; Huddleston v. CountyCourt, 98 W. Va. 706, 128 S.E. 925; Swiger v. Board ofEducation, 107 W. Va. 173, 147 S.E. 708; McCoy v. Town ofRiverside, 109 W. Va. 670, 158 S.E. 539. The amendment should serve to prevent the illegal practice on the part of levying bodies of contracting debts beyond the current revenues as well as to reduce legitimate costs of government.

Finally, assuming that a constitutional limit on taxation could be legally exceeded for the exigencies of an emergency in government, such is not the situation presented. The people may, under the amendment, vote an increase of fifty per cent in direct levies, and, through their representatives in the legislature, augment the revenues by indirect taxation. Chapter 38, Acts 1933, provides for such vote after two weeks' notice. This court would not be justified in assuming that local communities in need of additional levies to maintain constitutional government would deliberately refuse to cast the requisite vote. The theory of organized society rests in the assumption that the community is capable of self-government. As the legal indebtedness must be paid, levies may be made to the extent of the current requirements for that purpose notwithstanding the limitations. Corrugated Culvert Co. v.County Court of Logan County, 114 W. Va. 138, 171 S.E. 110, decided at this term. So, in the event of elections for increased levies, the people naturally will respond more readily to the emergency, knowing that the proposed taxes can be used only for the purpose of providing the essentials of government, and not to pay past debts.

The plaintiff Snider, in the third case, alleges that he is a resident and taxpayer of Cabell County and the owner of real estate in the city of Huntington; that at the time the bonded indebtedness of the municipality (existing prior to the ratification of the amendment) was incurred, section 1, Article X of the Constitution required uniform taxation; and that to permit levies according to the classifications prescribed in the amendment to meet the current requirements of such indebtedness would constitute an impairment of contract between the city and its citizens. No authority is cited upholding this view. The plaintiff does not allege when he became a resident and taxpayer of Cabell County or the owner of real estate in the city of Huntington. Moreover, reasonable classification of property for the purposes of taxation and the imposition of different rates on different classes is not denial of due process of law. 61 C. J. 158; Hope Natural Gas Co. v. Hall,102 W. Va. 272, 277, 135 S.E. 582.

An injunction will, therefore, be awarded in the first and second cases and denied in the third.

Injunctions awarded in the first and second cases; denied inthe third.