Wright v. Hirsch , 155 Ga. 229 ( 1923 )

Hines, J.

It is insisted that paragraphs 40 and 41 of section 2 of the general tax of 1921 act do not operate uniformly, because, while taxing cigar dealers as a class (admittedly within legislative power) theydo not place the same tax on all members of that class throughout the territory of the State, but levy different taxes against members of such class in cities and towns graduated according to population, and exempt from such tax all members of the class in unincorporated districts in the State, of which there is a large number. It is further insisted that paragraph 41 is unconstitutional, because it operates more favorably for a large dealer in a small town than for a small dealer in a large town; and even in the same town, where the large dealer has a chain of stores operating under the payment of one tax, and the small dealer has but one store; also more favorably for non-residents than for residents; also more favorably for dealers in unincorporated territory within the limits of the State than for dealers operating in towns and cities having the population specified in this section; and for these reasons it is alleged that this paragraph of this section of the act is discriminatory and violates article Í, section 1, paragraph 2, of the constitution of this State, which declares that “Protection to person and property is the paramount duty of government, and shall be impartial and complete.” Civil Code (1910), § 6358. Paragraph 41 is attacked on the ground that, under normal conditions of trade, gross sales of a large number of the plaintiffs amount to only $750 per annum, and the gross sales of others of the plaintiffs amount to only $75 per annum, and that as to the former class the tax would amount to all the profit made by such dealers, and as to the latter class the tax would amount to their gross sales, and would, in effect, take their property without due process, of law, in violation of the due-process clause of the State constitution.

We should go at a snail’s gait in declaring legislative enactments, and especially tax acts, upon which the very life of the State depends, unconstitutional and void. We should avoid declaring legislation unconstitutional and void except as a dernier resort. A solemn act of the legislature will not be set aside by the courts in a doubtful case. The repugnancy between statute and the constitution must be clear and palpable. Carey v. Giles, 9 Ga. 253 (4); Wellborn v. Estes, 70 Ga. 390; McMahon v. Savannah, 66 Ga. 217, 222 (42 Am. R. 65). A legislative act will never be set aside in a doubtful case. Park v. Candler, 114 Ga. 466 (40 S. E. 523). In approaching a question involving the constitutionality of legislation, we should saturate our minds with the above principle, and should never in a case of doubt pronounce invalid the action of the legislative department of the government.

Are these attacks upon these two paragraphs of section 2 of this tax act well founded? Are they in conflict with article 7, section 2, paragraph 1, of the constitution of this State? The answer to these questions involves the proper construction of the constitutional provision, which is as follows: “ All taxation shall be uniform upon the same class of subjects, and ad valorem on all property subject to be taxed within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” Civil Code (1910), § 6553. This paragraph of the constitution provides for the levying of occupation taxes and taxes on property. The language, “all taxation shall be uniform upon the same class of subjects,” refers to occupation taxes. The phrase, “ ad valorem on all property subject to be taxed within the territorial limits of the authority levying the tax,” refers to taxation on property, and has nothing whatever to do with an excise or business tax. This doctrine has long been established and persistently adhered to by this court. Burch v. Savannah, 42 Ga. 600; Bohler v. Schneider, 49 Ga. 195; Home Ins. Co. v. Augusta, 50 Ga. 530; Mayor &c. of Rome v. McWilliams, 52 Ga. 251, 269; Goodwin v. Savannah, 53 Ga. 410; Shepherd v. Commissioners, 59 Ga. 535 (27 Am. R. 394); Cutliff v. Albany, 60 Ga. 597; Johnston v. Macon, 62 Ga. 645; Davis v. Macon, 64 Ga. 128 (37 Am. R. 60); Mayor &c. of Savannah v. Weed, 84 Ga. 683 (11 S. E. 235, 8 L. R. A. 270); Weaver v. State, 89 Ga. 639, 642 (15 S. E. 840); McGhee v. State, 92 Ga. 21 (17 S. E. 276); Singer Mfg. Co. v. Wright, 97 Ga. 114 (25 S. E. 249, 35 L. R. A. 497); Stewart v. Kehrer, 115 Ga. 184, 189 (41 S. E. 680); City Council of Augusta v. Clark, 124 Ga. 254 (52 S. E. 881); Witham v. Stewart, 129 Ga. 48 (58 S. E. 463); O’Neal v. Siloam, 147 Ga. 420 (94 S. E. 238); Adams Motor Co. v. Cler, 149 Ga. 818 (102 S. E. 440).

A careful study of the above cases will demonstrate that the two propositions above stated are now the well settled law of this State. In Bohler v. Schneider, this court held that the act of the legislature “imposing a special tax- on wholesale dealers in malt liquors is not in violation . ..^pf-the constitution of this State, which says, ‘taxation on property shall be ad valorem only and uniform on all species of property taxed” In Home Ins. Co. v. Augusta this court said: “ A tax on occupations, businesses, etc., is not, in legal contemplation, a tax on property, so as to be subject to the ad valorem and uniformity rules of taxation, prescribed by the constitution.” In Mayor &c. of Rome v. McWilliams, this court declared: “The objection is that this act is unconstitutional, in that it empowers the city authorities to assess a different rate on some trades, callings, etc., than it does on others, and is therefore in conflict with that provision of the constitution which requires taxation on property to. be ad valorem, and uniform on all species of property taxed. It has been held by this court in several cases that a tax on businesses, professions, etc., was not a tax on property. It is unnecessary to do more than to refer to them withqut repeating the argument;” and the court then refers to Mayor &c. of Savannah v. Charlton, 36 Ga. 460, and the three cases, 42 Ga., 49 Ga. and 50 Ga:, to which we refer above. In Goodwin v. Savannah, this court again ruled: “ It has been several times held by this court that a tax on occupations, businesses, professions, etc., is not a tax on property, subject to the ad valorem and uniformity rule, provided in the 27th section of the 1st article of the constitution: 42 Georgia, 596; 49 Ibid. 195; 50 Ibid. 530.” The above eases were decided under the constitution of 1868; but this fact does not render these decisions inapplicable to the proper construction of the provision in the constitution of 1877 on this subject, although the provision upon the same subject in the former constitution is somewhat different from that in the latter. In Mayor &c. of Savannah v. Weed, a case construing the provision in the constitution of 1877, this court again proclaimed the same doctrine, as follows: “We think that this clause refers to subjects of taxation other than propert3r, and means that if one kind of business, privilege, franchise, right, etc., is taxed, the tax shall be uniform upon all of that class.” In Weaver v. State, this court again said: “It is too well settled to require discussion, .that a tax upon a business or occupation is not a tax upon property, within the meaning of the ad valorem and uniformity clause of the constitution. And it is not a valid objection that another business or occupation is not taxed, or is taxed a different amount. The requirement as to this kind of taxation is that it shall be uniform upon all business of the same class.”

What, then, is the uniformity required in the classification of occupations for taxation? We have seen that the provision in the constitution, that taxation upon property shall be ad valorem within the territorial limits of the authority levying the tax, does not apply to the taxation of occupations. The uniformity required in the latter kind of taxation is simple. It is this, that the tax upon every member of any class, which the taxing authority may make, shall be uniform. When that is accomplished, there is no infraction of .the constitution. In McGhee v. State, supra, it was said: “When, however, the legislature does make a distinct class, it must treat each member of it alike. It could not provide that some lawyers, some, physicians, or some liquor dealers, must register and pay their taxes in advance, and be indictable for failing to do either, and relieve other lawyers, physicians, or liquor dealers from these provisions. When it makes a class of lawyers, physicians, liquor-dealers, dealers in futures, or any other class, including one or more occupations, the same ■provisions must be made as to each member of the class.” The real question in this case is this: can the legislature classify .cigar dealers into city dealers and country dealers, and tax the members of the former class and leave the latter untaxed? The answer to this question depends upon the extent of the power of the legislature to make classifications of subjects for levying occupation taxes.

The power of the legislature to classify persons for the purpose of imposing occupation taxes is undisputéd. The provision of the constitution with which we are dealing clearly recognizes this power of classification. The power to classify necessarily includes the power to subclassify. The legislature does not exhaust its power in this matter when it puts dealers of a particular kind in one class. It can place grocers in a class by themselves. It can put cigar dealers in a class by themselves. It can do the same thing with any other class of merchants. It can then subdivide these classes into wholesale and retail dealers, and put a higher tax upon the former than upon the latter. Cook v. Marshall County, 196 U. S. 261 (25 Sup. Ct. 233, 49 L. ed. 471). In framing tax acts it has long been the custom of the legislature to divide merchants into wholesale and retail, and to place a higher occupation tax upon the former than upon the latter. This power of subclassification has been expressly declared to exist, by this court. In McGhee v. State, supra, this court said: “Accordingly, there seems to be no constitutional reason why the legislature could not make one general class of all persons upon whose occupations it imposed taxation; and if this were done, we think it would then be incumbent on the legislature to make its system of taxation, as to such persons, uniform in all essential particulars, so as to operate fairly and equally upon each and every member of this general class, and this class might be made to include every person engaged in any sort of business vocation. The legislature has not seen proper, however, to make a class so universal. In the first place, many occupations are not taxed at all; and secondly, those which are taxed are divided into numerous .classes. Certainly the framers of our constitution never intended that no occupation could be taxed without taxing all occupations, as, for example, that in order to tax liquor-dealers on the business pursued by them, farmers must be taxed on their business. If this were so, it would follow that they must all pay the same tax, a result which we are absolutely certain was never contemplated by even a single member of the constitutional convention* We therefore think the legislature may omit from its system .of taxation on vocations many occupations altogether. It certainly does this, and, in our opinion, there can be no doubt of the wisdom and propriety of such action. We think, further, that occupations which are taxed may be divided into various classes.” - "

In Singer Manufacturing Co. v. Wright, supra, this court said: “It would therefore seem to be established that it is not only within the power of the General Assembly to make one general class of all persons engaged in manufacturing or dealing in sewing-machines, for the purpose of taxing them upon their occupations, but it may constitutionally make for this purpose a more limited class, composed of persons engaged in the sewing-machine business and consisting of those transacting such business in specified or particular ways.” Here the power of the legislature to make classifications and subclassifieations is expressly recognized and declared.

In Goodwin v. Savannah, 53 Ga. 410, this court held that “A tax levied by the mayor and council of Savannah, on the business of a common carrier within the city, is not illegal or unconstitutional because the tax is graduated according to the number of drays, carriages, wagons, etc., used in such business.” The ordinance of the City' of Savannah imposed an occupation tax upon every person employing in his business any dray, truck, cart, wagon, cab, hack, buggy, omnibus, break-wagon, or any other vehicle for the transportation of passengers and baggage, or goods, wares, and merchandise. The ordinance imposed a tax of “ $16.00 for each one-horse dray or truck; $24.00 for each two-horse dray or truck,” and so on. This ordinance dealt with a general class of common carriers in the City of Savannah. It created divers subdivisions of this class-.- Those who employed one one-horse dray were put in a class and taxed $16 per annum. Those who employed two one-horse drays -weré put in a class and taxed $32 per annum. Common carriers employing three one-horse drays were put in another class and taxed $48 per. annum. This multiplication of classes went on indefinitely, the employment of every additional one-horsé dray creating a separate and distinct class and an additional occupation tax. Furthermore, this ordinance levied a tax of $24 upon every common carrier in that city employing one two-horse dray. Thus carriers using only one two-horse dray were put in a class and an occupation tax of $24 was imposed upon each of them. Common carriers who employed two two-horse drays were put in another class and a tax of $48 per annum was imposed upon each member of this class. The employment of each additional two-horse dray had the effect of bringing into existence a separate and distinct class upon each member, of which an additional and heavier tax was imposed. ' This court held that this municipal ordinance which created a general class of common carriers and these numerous subdivisions of this class was constitutional. In Johnston v. Macon, this court declared: “A tax on the business of drayage, scaled according to the number of drays employed and according to the capacity of the drays, whether one or two-horse, is uniform.” The ordinance of the City of Macon involved in -this case put persons engaged in the business of drayage in that city in one class, and then divided that class up into various subdivisions. One division embraced the users of one-horse drays. Another division embraced users of two-horse drays. Each one of these subdivisions was again cut up into other classes depending upon the number of drays employed. The employers of one one-horse dray were put into a class by themselves and taxed $25 per annum. .The users of two-horse drays were put in another class and taxed $50 per annum. Users of wagons with two or more horses used in hauling brick, lumber, or any other article for owner’s private use or in the city were put in another class and a tax of $50 was imposed upon each member of that class. This court held that that ordinance did not offend the uniformity clause of the constitution which we now have under consideration.

In Sawtell v. Atlanta, 138 Ga. 687 (75 S. E. 982), an ordinance of the City of Atlanta imposing a tax of a fixed amount on ice houses, manufacturers, or agencies not employing more than five wagons for selling or delivery purposes, and for each additional wagon above the number of five an additional tax of $10, was held to be valid and not violative- of the constitutional provision that all taxes must be uniform upon the same class of subjects. In Davis v. Macon, supra, this court held that an ordinance imposing a tax of $50 upon “ each person or firm - (farmers selling- their own produce excepted) retailing fresh or butcher’s meat in the city, whether from stalls, stores, or by peddling the same on the streets,” and which likewise imposed a tax of $25 “ for each and every wagon used by butchers and bakers in their business,” did not violate this provision of the constitution. This ordinance, in effect, created two classes of 'retailers of fresh or butcher’s meat. One class consisted of those who retailed such meat without the use of wagons, and a license or occupation tax of $50 was placed on each member of this class. The other class consisted of butchers who used wagons in their business, and an additional tax of $25 was placed- upon such butchers, making the members of the latter class pay an occupation tax of $75 per annum.

Subsection 12 of section 2 of the general tax act of 1918 (Acts 1918, pp. 43-83) imposed a graduated occupation tax upon every agent, dealer, and person soliciting orders for the sale of automobiles. In each county with a population of less than 20,000, a tax of $27.50 was imposed; in each county with population between 20,000 and 30,000, $55; in each county with population between 30,000 and 50,000, $82.50; in each county with population between 50,000 and 75,000, $110; in each county with population between 75,000 and 100,000, $165; in each county with population between 100,000 and 150,000, $220; and in each county with population exceeding 150,000, $275. Here the legislature put agents, dealers, and persons soliciting orders for sale of automobiles in one general class for the purpose of taxation. It then subdivided the general class into six classes. One embraced dealers operating in counties of a population of less than 20,000. A see-' ond class embraced persons operating in counties with population between 20,000 and 30,000. A third class related to counties with population between 30,000 and 50,000, and so on. In Adams Motor Co. v. Cler, supra, this court held .that this act' did not offend the provision of the constitution with which we are now dealing, and that the classification was not arbitrary, descriminatory, or unreasonable.

So this provision of the- constitution does not require that the legislature, in making a classification for the purpose of levying an occupation tax, shall put in one class all persons engaged in the same or similar" work, business, • occupation or trade. If this were- true, the -legislature could not place wholesale dealers in one class and retail dealers in another class, and tax the former and exempt the latter, or put upon the former a higher tax than on the latter. The legislature can divide persons engaged in the same general occupation into subdivisions, if there is reasonable ground for such subclassilication, and tax members of one subdivision, and exempt those of another subdivision. The legislature is not required to place all merchants in the same class. It can put fur merchants in one class and tax members of that class. It could subdivide this class, if there were reasonable ground for the subdivision. On the same principle, it can make classes of cigar dealers. It can classify them as wholesale and retail. It can place city cigar dealers in one class and country cigar dealers in another. It can tax one and leave the other untaxed. But when it makes such a classification, it must put the same tax upon each city dealer and provide the same method for collecting the tax from each member of the class.

This brings us to consider the limitations upon the power of the legislature to make classifications of subjects for occupation taxes. This power is not unlimited; but it has but one limitation. The classification must be reasonable, and not unreasonable or arbitrary. “ Any classification may be made which is not arbitrary.” Mayor &c. of Savannah v. Cooper, 131 Ga. 670 (63 S. E. 138); Williams v. State, 150 Ga. 480, 485 (104 S. E. 408). In the first instance, it is for the legislature to judge of-the reasonableness of the classification; but finally the courts decide for themselves the reasonableness or unreasonableness of the classification. Now by what rule are the courts governed in deciding upon the reasonableness or unreasonableness of such classification ? Classification must be based on some reasonable ground. It can not be an arbitrary selection. This is about as accurately as the rule can be stated. The classification must square with the rule of reason. Billings v. Illinois, 188 U. S. 91, 101, 102 (23 Sup. Ct. 212, 47 L. ed. 400). The classification must be based on some difference which bears a just and proper relation to the attempted classification. Juniate Limestone Co. v. Farley, 187 Pa. 193 (40 Atl. 977, 42 L. R. A. 442, 67 Am. St. R. 579). If there is some reasonable ground for the classification of cigar dealers into city cigar dealers and country cigar dealers, the classification is valid and constitutional. If a classication can be based upon the number of drays or wagons used in a business, or upon the fact that the person taxed uses a one-horse dray or a two-horse dray, or upon the fact that the person taxed uses more than five wagons-in his ice business, or upon the population of the county in which the person taxed does business, then surely a classification based upon the distinction between a' mercantile business carried ón in a city and the same business conducted in the country rests upon a reasonable ground, and is .not unreasonable and arbitrary. There is a substantial difference between the businesses, of these two kinds of dealers. They are alike alone in the one fact that they both sell cigars. The stores and places of business of the country dealers are located in hamlets, at country cross-roads, and on farms. The places of business of city dealers are in the centers of population. The volume of business done by the former. is always small and insignificant. The amount of business done by the latter is usually substantial. The profits of the former are small. The gains of the latter are large. The turnover of capital on the business of the former is slow; and of the latter, frequent. The business of the former for many months in the year is done on a credit. The business of the latter is for cash or on short credit. These and other facts furnish.ample reason for this classification. ' -

We have been unable to' find many cases which bear upon the exact point involved. The question was involved in Davis v. Macon, 64 Ga. 128 (supra). That case dealt with an ordinance of the City of Macon which imposed an occupation tax upon butchers and retailers of meat, but exempted farmers from its operation. This classification was upheld upon the grofind that the tax was a business tax, “and a farmer’s business is production, not trade, and the sale directly by himself of what he rears and produces is merely occasional and incidental.” In State v. Carter, 129 N. C. 560 (40 S. E. 11), it was held that a statute imposing a license tax upon the business of buying and selling fresh meats in cities, such tax graduated according to population, and exempting persons carrying on the business outside Of cities and towns, was not unconstitutional, as it was uniform as to all within such class. In Texas Banking &c. Co. v. State, 42 Tex. 636, the Supreme Court of Texas held: “ The constitutional limitation, that * taxation shall be equal and uniform throughout the State,’ is not violated by the act . . imposing an occupation tax upon every person or firm dealing in stocks or bills of exchange, in any city or town exceeding five thousand in population, an annual tax of two hundred and fifty dollars, and upon such occupation, in a city or town of less population, fifty dollars.” The flaw in the contention of the plaintiffs, and the vice in the reasoning upon which they base their contention, are that they assume that the classification is a territorial one, when in fact it is a classification of cigar dealers for the purpose of levying occupation taxes. This- classification is not one of territory.' Ik is one of cigar dealers. It is one of persons. It is one of subjects of taxation. A typical case of territorial classification would be made, if the legislature should impose an occupation tax upon cigar dealers in north Georgia and exempt cigar dealers .from the tax in south Georgia, or impose an occupation tax upon these dealers in Chatham County, and exempt all dealers in other counties of the State. So we are of the opinion that these provisions of the tax act of 1921 do not violate the provision of the State constitution which provides for uniformity in taxation upon the same class of subjects. Whenever a classification for occupation taxes, whatever may be its basis, is reasonable and the tax imposed upon all persons falling within such class is the same, the uniformity demanded by our constitution is secured.

If we are right in the position announced above, and this classification is reasonable, there is no denial of the equal protection of the law, and no deprivation of property without due-process of law, and no violation of the provision of the constitution which declares that protection of person and property is the paramount duty of government, and shall be impartial and complete.

But it is further insisted that the enforcement of this tax will deprive certain dealers of all the profits which they make from the sale of cigars, and will take from others the actual investment in such merchandise. This furnishes no reason to declare these provisions of the tax act of 1921 unconstitutional. The occupation tax is to be judged by its effect upon dealers generally, and is hot to be considered unreasonable because it is prohibitive upon certain financially weak persons. Only those laws imposing occupation' taxes the general operation' of which is confiscatory and oppressive are to be declared unconstitutional. Ohio Tax Cases, 232 U. S. 576 (34 Sup. Ct. 372, 58 L. ed. 737).

Judgment reversed.

All the Justices concur, except