City of Richmond v. Drewry-Hughes Co. , 122 Va. 178 ( 1916 )

Harrison, P.,

delivered the opinion of the court.

This proceeding involves the right of the city of Richmond to assess the capital of merchants with an ad valorem tax in excess of thirty cents on the one hundred dollars.

By an ordinance approved April 9, 1915, the city assessed the capital employed by the defendant in error in its business as a merchant at the rate of $1.40 on the hundred dollars, and now appeals from the decision of the lower court holding that its power to levy such a tax was limited to thirty cents on the one hundred dollars. It is true that the city of Richmond, under its charter, has plenary powers of taxation, but its power to tax any particular property is subject to any limitation that may be placed thereon by the legislature.

By an act approved March 15,1915, the General Assembly of Virginia installed a new system of taxation, under which the several kinds and classes of property were segregated, specifying and determining upon what subjects local taxes might be levied. Acts, extra session, 1915, page 119. By this act all taxable real estate and all taxable tangible personal property is set apart and made subject to local taxation only. It is then declared that “all insurance taxes and licenses on insurance companies and all taxable intangible personal property, rolling stock of all corporations operating railroads by steam, and all other classes of property not hereinbefore specifically enumerated in this act shall be and the same are hereby segregated and made subject to State taxation only; provided that nothing herein contained shall prevent any city from levying a tax upon said segregated intangible personal property assessed to the residents therein at a rate not to exceed thirty cents upon the one hundred dollars of assessed valuation thereof.”

The foregoing language is clear and comprehensive and standing alone, leaves it free from doubt that the legislature limited localities to thirty cents on the one hundred dollars as the maximum rate of taxation that they could impose upon taxable intangible personal property.

It is admitted, as it must be, that the capital of merchants belongs to the class known as intangible personal property. The city of Richmond in maintenance of its right to levy the tax here called in question, insists that the capital of merchants has not been segregated, but has been excepted from the operation of the act; resting that contention upon the following language of the same paragraph containing the prescribed limitation of thirty cents, namely: “except that the capital of' merchants shall not be subject to State taxation, but may be taxed locally as prescribed by law." This contention cannot be sustained. The State taxes the capital of merchants on the basis of their purchases, calling it a license, and the purpose of the language relied on was clearly to exclude the idea that the State intended to tax the capital of merchants with both a license and an ad valorem tax. The act had already, by clear and specific language, segregated and set apart all taxable intangible personal property as one of the subjects that the State alone could tax, providing that localities might levy a tax thereon not exceeding thirty cents on the one hundred dollars, and it is not to be supposed that in the next breath the legislature intended to emasculate what it had just done by excepting from the operation of the act one of the largest classes of intangible personal property, thereby rendering its action meaningless.

Apart from the manifest desire and purpose of the legislature, as shown throughout this legislation, to adopt a more equitable system of taxation than had theretofore existed, it is clear that one of its chief purposes was to reduce the rate of taxation upon intangible personal property in order thereby to induce a more general return of such property, and to bring about uniformity in the rate of tax thereon by establishing a fixed rate applicable alike to all 'localities. The uniformity, consistency and reasonableness sought to be attained would be wholly defeated if the contention of the plaintiff in- error were tenable. The whole legislation on this subject makes it, we think, clear that under the act of March 15, 1915, the city of Richmond was limited in its power to tax the capital of merchants to thirty cents on the one hundred dollars. The language of the’ so-called exception, “that the capital of merchants shall not be subject to State taxation, but may be taxed locally as prescribed by law,” meant that such capital should not be subject to State taxation on the ad valorem, basis, so long as the State continued to tax merchants with a license. The language, “but may be taxed locally as prescribed by law,” meant that the local tax must be in accordance with the general law of the State, and had reference to the preceding provisions of the same section placing a maximum tax of thirty cents, by localities, upon intangible personal property.

If, however, this interpretation of the act of March 15, 1915, were doubtful, the result would be the same in this case, it being well settled that a tax must be plainly authorized before the citizen can be charged therewith.

The judgment complained of must be affirmed.