This Court will not consider whether a state statute is
unconstitutional under provisions of the Constitution other than
those set up in the state court even if those provisions be
referred to in the assignment of error.
On writ of error, this Court is not concerned with the question
of whether the statute attacked as unconstitutional under the
Fourteenth Amendment violates the state constitution if the state
courts have held that it does not do so.
Whether the severity of penalties for noncompliance with a state
statute renders it unconstitutional under the Fourteenth Amendment
will not be considered in an action in which the state does not ask
for any penalties.
Page 217 U. S. 115
The Fourteenth Amendment was not intended to cripple the taxing
power of the states or to impose upon them any iron rule of
taxation.
This Court will not speculate as to the motive of a state in
adopting taxing laws, but assumes, the statute neither upon its
face nor by necessary operation suggesting a contrary assumption,
that it was adopted in good faith.
Except as restrained by its own or the federal Constitution, a
state may prescribe any system of taxation it deems best, and it
may, without violating the Fourteenth Amendment, classify
occupations, imposing a tax on some and not on others, so long as
it treats equally all in the same class.
An occupation tax on all wholesale dealers in certain specified
articles does not on its face deprive wholesale dealers in those
articles of their property without due process of law or deny them
the equal protection of the law because a similar tax is not
imposed on wholesale dealers in other articles, and so
held as to the Kennedy Act of Texas of 1905 levying an
occupation tax on wholesale dealers in coal and mineral oils.
A federal court cannot interfere with the enforcement of a state
statute merely because it disapproves of the terms of the act,
questions the wisdom of its enactment, or is not sure as to the
precise reasons inducing the state to enact it.
100 Tex. 647 affirmed.
The facts, which involve the constitutionality of certain
provisions of the Kennedy Act of Texas of 1905 for taxing certain
classes of business, are stated in the opinion.
MR. JUSTICE HARLAN delivered the opinion of the Court.
This action was brought by the State of Texas in one of its own
courts against the Southwestern Oil Company, a corporation of that
state, to recover the amount of certain taxes alleged to be due
under what is known as the Kennedy Act, Chapter 148, General Laws
of Texas, 1905, p. 358, providing
Page 217 U. S. 116
for the levy and collection of a tax upon individuals, firms,
associations, or other persons owning, managing, operating, or
controlling for profit within the state certain specified kinds of
business, including wholesale dealers in coal oil, etc., and
prescribing penalties for violations of the act. The state
recovered judgment for a part of that amount. Upon appeal to the
court of civil appeals, the judgment was affirmed, and the action
of the latter court was afterwards affirmed by the Supreme Court of
Texas.
Upon this writ of error, the Southwestern Oil Company contends
here, as it contended in the state courts, that the statute under
which the state proceeded was in violation of the Constitution of
the United States.
The statute in question (§ 9) provides:
"Each and every person, association of persons, or corporation
created by the laws of this or any other state or nation, which
shall engage in their own name, or in the name of others, or in the
name of their representatives or agents in this state, in the
wholesale business of coal oil, naphtha, benzin, or any other
mineral oils refined from petroleum, and any and all mineral oils,
shall pay an annual tax of two percent upon their gross receipts
from any and all sales in this state of any said articles in
section 9 of this act hereinabove mentioned, and an annual tax of
two percent of the cash market value of any and all of said
articles that may be received or possessed or handled or disposed
of in any manner other than by sale in this state, and it is hereby
expressly provided that delivery to or possession by any person,
association of persons, or corporation in this state of any of the
articles hereinabove mentioned in § 9 of this act, from whatever
source the same may have been received, shall, for the purpose of
this act, be held and considered such a sale and such ownership and
possession of such articles and property (where no sale is made) as
will and shall subject the same to the tax herein provided for.
Said tax herein provided for shall be paid to the State Treasurer
quarterly, and every such person, agent, association of
persons,
Page 217 U. S. 117
or corporation so owning, controlling, or managing such business
shall, on or before the first day of April, and quarterly
thereafter, report to the Comptroller, under oath of the president,
treasurer, superintendent, or some other officer of said
corporation or association or some duly authorized agent thereof,
the amount received by them from such business in this state.
Should any person, association of persons, or corporation, or the
officers or agents of any such corporation, person, or association
of persons herein named, fail to make the report herein provided
for and pay said taxes for thirty days after the termination of any
quarter of the year, then he shall be deemed guilty of a
misdemeanor, and upon conviction shall be fined in any sum not less
than fifty nor more than one hundred dollars. Each and every day
after said thirty days have expired shall be deemed a separate
offense. In addition thereto, in the event of the failure of the
officers or agents of any such company or corporation to make the
reports and pay said taxes for thirty days after the termination of
any quarter of the year, each and every such company or corporation
or their officers or agents so failing shall forfeit and pay to the
state the sum of twenty-five dollars for each day said report and
payment are delayed, which forfeiture and taxes shall be sued for
by the Attorney General in the name of the state. For the purpose
of suits and prosecutions provided for in this article, venue and
jurisdiction are hereby expressly conferred upon the courts of
Travis County, and service may be had upon any officer or agent of
such company or corporation in the state, and such service shall in
all respects be held legal and valid. The tax herein levied shall
be in addition to all other taxes levied by law."
The defendant insists that the statute is inconsistent with the
Fourteenth Amendment of the Constitution of the United States in
the following particulars: that it arbitrarily selects and levies
upon the
wholesale business in coal oil, naphtha, benzin,
or other mineral oils refined from petroleum and any and all
mineral oils a tax of from fifty to one hundred times
Page 217 U. S. 118
greater than is levied by the state upon wholesale business in
other articles; that it denies to the defendant the equal
protection of the laws in that the failure of the wholesale dealer
to pay the required tax for thirty days is made a misdemeanor, and
subjects such dealer, upon conviction, to a fine of not less than
fifty nor more than one hundred dollars, each day after the
expiration of the thirty day being deemed a separate offense, and,
in addition, subjects him to a forfeiture of $25 for each day's
delay in making the report required and paying the taxes imposed,
while the only punishment prescribed against a wholesale dealer in
other articles was a fine in any sum not less than the taxes due,
and not more than double that sum and the cost of prosecution, the
taxpayer in such case having the right to a dismissal of the
prosecution on the payment of the tax and costs of prosecution and
procuring the license to pursue or follow the occupation for the
pursuing of which, without license, the prosecution was instituted,
no prosecution to be commenced against any person after the
procuring of said license if the license procured covers the time
actually followed in said occupation or calling. Penal Code, Art.
112.
The transcript contains three principal assignments of error,
one of which is that the state court should have held § 9 of the
statute to be unconstitutional as laying a tax or burden on
interstate commerce. It may be observed that no such defense was
made by the company in its answer, and we need not stop to consider
the question whether such a defense would have merit. Besides, the
certificate made by the Supreme Court of Texas at the request of
the Oil Company shows that the alleged invalidity of the statute
was based entirely on the Fourteenth Amendment. Again, no point
under the commerce clause is urged in the brief of the company. In
this Court, it contends only that § 9 of the statute contravenes
the Fourteenth Amendment. In our consideration of that proposition,
we assume, in conformity with the decision of the state court, that
the statute is not in violation
Page 217 U. S. 119
of any provision of the Constitution or statutes of Texas. That
is a local question with which this Court is not concerned on this
writ of error. We are only concerned to inquire whether the statute
is inconsistent with the Fourteenth Amendment either as depriving
the taxpayer of property without due process of law or as denying
the equal protection of the laws.
Looking at the clause of the amendment prohibiting the
deprivation of property without due process of law, it is to be
remembered that the provision to that effect appeared in most of
the state constitutions long before the amendment was adopted, and
that principle was accepted everywhere as vital in the American
systems of government. But the amendment, although negative in its
words, had the effect to incorporate into the fundamental law of
each state a rule theretofore prescribed by the Constitution of the
United States for the general government and its agencies. So that,
prior to the adoption of the Fourteenth Amendment, the states were
controlled, in imposing and collecting taxes, entirely by their own
fundamental law, and if they departed from due process of law in
matters involving the deprivation of property, the taxpayer
injuriously affected by its action could not,
for that
reason, prior to the amendment, invoke for his or its
protection any provision of the Constitution of the United States.
But upon the adoption of the Fourteenth Amendment, whatever their
own constitutions may then or have subsequently declared, the
states became bound, as was the United States, by the Fifth
Amendment not to deprive any person of property without due process
of law. Still it was never contemplated when the amendment was
adopted to restrain or cripple the taxing power of the states,
whatever the methods they devised for the purposes of taxation,
unless those methods, by their necessary operation, were
inconsistent with the fundamental principles embraced by the
requirements of due process of law and the equal protection of the
laws in respect of rights of property.
Page 217 U. S. 120
Can it be predicated of the statute of Texas that its provisions
for the imposition and collection of taxes are not conformable to
due process of law? We think not. The tax in question is an
occupation tax only. The statute has been so construed by the state
court, and counsel for the Oil Company accept that construction as
the law that should be applied in this case. The tax was imposed by
the legislature, charged with the duty of providing the means
necessary for the support of the state government. That branch of
the state government alone could declare what taxes should be
imposed and upon whom or upon what kinds of business imposed. If
the state seeks, directly, by civil suit, or indirectly, by
criminal prosecution in one of its courts, to enforce the
provisions of the statute, the way is open for the taxpayer, in his
defense, to raise the question of the constitutional validity
either of the statute as a whole or of any method prescribed in it
for the collection of the tax. No element of due process of law
seems to be wanting unless it be, as contended by the Oil Company,
that the penalties prescribed for failing to make the "reports"
required by the statute are so severe and exacting as to make it
unsafe for the taxpayer to question the validity of such penalties,
and thereby interfere with or suspend the collection of the taxes
by insisting that they have been imposed in disregard of due
process of law. But this point as to the severity and exacting
character of the penalties need not be now considered, because no
penalties are claimed by the state in this action, and no judgment
therefor was rendered. Besides, the provision as to penalties is
not so necessarily connected with the other parts of the statute as
to vitiate the entire act, even if that provision should be held to
be void. The right of the state, by a civil suit, to recover the
taxes imposed is wholly independent of its right, by suit or
prosecution, to recover the prescribed penalties. If the provisions
as to penalties should be stricken down, there will still be left a
complete act providing for the collection by civil suit of the
taxes due the
Page 217 U. S. 121
state. The rule is well settled that, if one part of a statute
is valid and another invalid, the former may be enforced if it be
not so connected with or dependent on the other as to make it clear
that the legislature would not have passed that part without the
part that may be deemed invalid.
But it is contended that the statute contravenes the Fourteenth
Amendment in that it denies to the Oil Company the equal protection
of the laws. This position is based mainly on the ground that the
statute, by imposing a tax on wholesale dealers of coal oil,
naphtha, benzin, mineral oils refined from petroleum, and all other
mineral oils while omitting to put any such tax whatever on
wholesale dealers in other articles of merchandise -- such, for
instance, as sugar, bacon, coal, and iron -- so discriminates
against wholesale dealers in the several articles specified in § 9
as to deny them the equal protection of the laws. This view gives
to the amendment a scope that could not have been contemplated at
the time of its adoption. The tax in question is conceded to be an
occupation tax simply. It was imposed under the authority of the
state constitution, providing that the legislature may
"impose occupation taxes, both upon natural persons and upon
corporations other than municipal, doing any business in this state
. . . except that persons engaged in mechanical and agricultural
pursuits shall never be required to pay an occupation tax."
It is not questioned that the state may classify occupations for
purposes of taxation. In its discretion, it may tax all, or it may
tax one or some, taking care to accord to all in
the same
class equality of rights. The statute, in respect of the
particular class of wholesale dealers mentioned in it, is to be
referred to the governmental power of the state, in its discretion,
to classify occupations for purposes of taxation. The state,
keeping within the limits of its own fundamental law, can adopt any
system of taxation or any classification that it deems best for the
common good and the maintenance of its government, provided such
classification be not in violation of the Fourteenth Amendment.
Page 217 U. S. 122
A leading case on the general subject is
Bell's Gap R. Co.
v. Pennsylvania, 134 U. S. 232,
134 U. S. 237.
In that case, a question arose as to whether a statute of
Pennsylvania subjecting bonds and other securities issued by
corporations to a higher rate of taxation than was imposed on other
moneyed securities was a denial of the equal protection of the laws
to corporations. This Court held that there was no discrimination
which the state was not competent to make, saying:
"All corporate securities are subject to the same regulations.
The provision in the Fourteenth Amendment that no state shall deny
to any person within its jurisdiction the equal protection of the
laws was not intended to prevent a state from adjusting its system
of taxation in all proper and reasonable ways. It may, if it
chooses, exempt certain classes of property from any taxation at
all, such as churches, libraries, and the property of charitable
institutions. It may impose different specific taxes upon different
trades and professions, and may vary the rates of excise upon
various products; it may tax real estate and personal property in a
different manner; it may tax visible property only, and not tax
securities for payment of money; it may allow deductions for
indebtedness, or not allow them. All such regulations, and those of
like character, so long as they proceed within reasonable limits
and general usages, are within the discretion of the state
legislature, or the people of the state, in framing their
Constitution. But clear and hostile discriminations against
particular persons and classes, especially such as are of an
unusual character unknown to the practice of our governments, might
be obnoxious to the constitutional prohibition. It would, however,
be impracticable and unwise to attempt to lay down any general rule
or definition on the subject that would include all cases. They
must be decided as they arise. We think that we are safe in saying
that the Fourteenth Amendment was not intended to compel the state
to adopt an iron rule of equal taxation. If that were its proper
construction, it would not only supersede all those constitutional
provisions
Page 217 U. S. 123
and laws of some of the states, whose object is to secure
equality of taxation, and which are usually accompanied with
qualifications deemed material, but it would render nugatory those
discriminations which the best interests of society require, which
are necessary for the encouragement of needed and useful industries
and the discouragement of intemperance and vice, and which every
state, in one form or another, deems it expedient to adopt."
In
Home Ins. Co. v. New York, 134 U.
S. 594, involving the constitutional validity of a law
taxing corporate franchises and business, the Court held that the
statute was not a denial of the equal protection of laws. It said
that the Amendment
"does not prevent the classification of property for taxation,
subjecting one kind of property to one rate of taxation and other
kind of property to a different rate -- distinguishing between
franchises, licenses, and privileges, and visible and tangible
property, and between real and personal property. Nor does the
amendment prohibit special legislation. Indeed, the greater part of
all legislation is special either in the extent to which it
operates or the objects sought to be obtained by it. And when such
legislation applies to artificial bodies, it is not open to
objection if all such bodies are treated alike under similar
circumstances and conditions in respect to the privileges conferred
upon them and the liabilities to which they are subjected. Under
the statute of New York, all corporations, joint stock companies,
and associations of the same kind are subjected to the same tax.
There is the same rule applicable to all under the same conditions
in determining the rate of taxation. There is no discrimination in
favor of one against another
of the same class."
So, in
Connolly v. Union Sewer Pipe Co., 184 U.
S. 540,
184 U. S.
562:
"A tax may be imposed only upon certain callings and trades, for
when the state exerts its power to tax, it is not bound to tax all
pursuits or all property that may be legitimately taxed for
governmental purposes. It would be an intolerable burden if a state
could not tax any property or
Page 217 U. S. 124
calling unless at the same time, it taxed all property or all
callings. Its discretion in such matters is very great, and should
be exercised solely with reference to the general welfare, as
involved in the necessity of taxation for the support of the state.
A state may, in its wisdom, classify property for purposes of
taxation, and the exercise of its discretion is not to be
questioned in a court of the United States so long as the
classification does not invade rights secured by the Constitution
of the United States."
There are many other cases in which the Court considered the
meaning and scope of the constitutional guaranty of the equal
protection of the laws. We will refer to a few of them.
In
Kentucky Railroad Tax Cases, 115 U.
S. 321,
115 U. S. 337,
the Court sustained, as not inconsistent with the equal protection
clause of the Fourteenth Amendment, a Kentucky statute providing
for the assessment of railroad property for purposes of taxation in
a mode different from that prescribed as to ordinary real estate,
or as to the property of corporations chartered for other purposes,
such as bridge, mining, street railway, manufacturing, gas, and
water companies. It said that
"the rule of equality in respect to the subject only requires
the same means and methods to be applied impartially to all the
constituents
of each class, so that the law shall operate
equally and uniformly upon all persons
in similar
circumstances. There is no objection, therefore, to the
discrimination made as between railroad companies and other
corporations in the methods and instrumentalities by which the
value of their property is ascertained."
In
Magoun v. Illinois Trust & Savings Bank,
170 U. S. 283,
170 U. S. 294,
which involved the constitutionality of an inheritance tax law, the
Court recognized the power of the state to "distinguish, select,
and classify objects of legislation" by laws which did not violate
the settled usages and established practices of our government. In
American Sugar Refining Co. v. Louisiana, 179 U. S.
89, a state enactment imposing a license tax on the
business of refining sugar and molasses was held not
Page 217 U. S. 125
to be a denial of the equal protection of the laws because of
the exemption from such tax of planters and farmers who ground and
refined their own sugar and molasses. In
W. W. Cargill Co. v.
Minnesota, 180 U. S. 452, a
statute requiring a license to operate a warehouse for the receipt
of grain located upon the right of way of a railroad, but which did
not require a license as to a similar warehouse not located on any
right of way, was not a denial of the equal protection of the laws
to the first-named class. In
Cook v. Marshall Co.,
196 U. S. 268,
which involved the validity of a cigarette tax law that made a
distinction between jobbers and wholesale dealers in cigarettes,
the Court said:
"There is a clear distinction in principle between persons
engaged in selling cigarettes generally or at retail and those
engaged in selling by wholesale to customers without the state.
They are two entirely distinct occupations. One sells at retail,
and the other at wholesale -- one to the public generally, and the
other to a particular class; one within the state, the other
without. From time out of mind, it has been the custom of Congress
to impose a special license tax upon wholesale dealers different
from that imposed upon retail dealers. A like distinction is
observed between brewers and rectifiers, wholesale and retail
dealers in leaf tobacco and liquors, manufacturers of tobacco and
manufacturers of cigars, as well as peddlers of tobacco. It may be
difficult to distinguish these several classes in principle, but
the power of Congress to make this discrimination has not, we
believe, been questioned."
In
Armour Packing Co. v. Lacy, 200 U.
S. 226, a state law imposing a license tax on meat
packing houses did not deny the equal protection of the laws to
persons or corporations engaged in such business because a like tax
was not imposed on persons engaged in the business of selling the
products of such houses, or on those engaged in packing articles of
food other than meat.
In our judgment, the objection that, within the true meaning of
the Fourteenth Amendment, the statute of Texas has the effect to
deny to the Oil Company the equal protection
Page 217 U. S. 126
of the laws does not rest upon any solid basis. The statute
makes no distinction among such wholesale dealers as handle
the
particular articles specified in § 9. The state had the right
to classify such dealers separately from those who sold, by
wholesale, other articles than those mentioned in that section. The
statute puts the constituents
of each of those separate
classes on the same plane of equality. It is not arbitrary
legislation except in the sense that all legislation is arbitrary.
If it be within the power of the legislature to enact the statute,
then arbitrariness cannot be predicated of it in a court of law.
And it cannot be held to be beyond legislative power simply because
of its classification of occupations. What were the special reasons
or motives inducing the state to adopt the classification of which
the Oil Company complains we do not certainly know. Nor is it
important that we should certainly know. It may be that the main
purpose of the state was to encourage retail dealing in the
particular articles mentioned in § 9. If the statute had its origin
in such a view, we do not perceive that this Court can deny the
power of the state to proceed on that ground. We may repeat what
was said in
Delaware Railroad Tax
Cases, 18 Wall. 206,
85 U. S. 231,
that
"it is not for us to suggest in any case that a more equitable
mode of assessment or rate of taxation might be adopted than the
one prescribed by the legislature of the state; our only concern is
with the validity of the tax; all else lies beyond the domain of
our jurisdiction."
But we will not speculate as to the motives of the state, and
will assume -- the statute, neither upon its face nor by its
necessary operation, not suggesting a contrary assumption -- that
the state has in good faith sought by its legislation to protect or
promote the interests of its people. It is sufficient for the
disposition of this case to say that, except as restrained by its
own Constitution or by the Constitution of the United States, the
State of Texas, by its legislature, has full power to prescribe any
system of taxation which, in its judgment, is best or necessary for
its people and government; that, so far as the
Page 217 U. S. 127
power of the United States is concerned, the state has the
right, by any rule it deems proper, to classify persons or
businesses for the purposes of taxation, subject to the condition
that such classification shall not be in violation of the
Constitution of the United States; that the requirement by the
state, that
all wholesale dealers in
specified
articles shall pay a tax of a given amount on their
occupation, without exacting a similar tax on the occupations of
wholesale dealers in other articles, cannot, on the face of the
statute or by reason of any facts within the judicial knowledge of
the court, be held, within the meaning of the Fourteenth Amendment,
to deprive the taxpayer of his property without due process of law
or to deny him the equal protection of the laws, and that the
federal court cannot interfere with the enforcement of the statute
simply because it may disapprove its terms or question the wisdom
of its enactment, or because it cannot be sure as to the precise
reasons inducing the state to enact it.
For the reasons herein stated, the judgment is
Affirmed.