There is nothing in the federal Constitution which forbids a
state to reach backward and collect taxes from certain kinds of
property which were not at the time collected through lack of
statutory provision therefor, or in consequence of a
misunderstanding as to the law, or from neglect of administrative
officials, without also making provision for collecting the taxes,
for the same years, on other property.
The Constitution of Florida of 1868, art. 16, sec. 24, as
amended by art. 11 of the amendments of 1875, is as follows:
"The property of all corporations, whether heretofore or
hereafter incorporated, shall be subject to taxation, unless such
property be held and used exclusively for religious, educational,
or charitable purposes."
Sec. 26, c. 3413, of the Laws of Florida, 1883, reads:
"If any assessor, when making his assessments, shall discover
that any land in his county was omitted in the assessment roll of
either or all of the three previous years, and was then liable to
taxation, he shall, in addition to the assessment of such land for
that year, assess the same separately for such year or years that
may have been so omitted at the just value thereof in such year,
noting distinctly the year when such omission occurred, and such
assessment shall have the same force and effect as it would have
had if made in the year the same was omitted, and taxes shall be
levied and collected thereon in like manner and together with the
taxes of the year in which the assessment is made; but no lands
shall be assessed for more than three years' arrears of taxes, and
all lands shall be subject to such taxes omitted to be assessed,
into whosesoever hands they may come."
In 1885, this statute was passed:
Page 183 U. S. 472
"SEC. 1. That in all cases in which any railroad or the
properties thereto belonging or appertaining in this state, in the
tax years commencing March 1, 1879, 1880, and 1881, or any of such
years, were not assessed for taxes for such years, it shall be the
duty of the comptroller to cause the same, or so much thereof, as
were not assessed, to be assessed for state and county taxes, and
twenty percentum of the taxes so assessed for said years and now
unpaid shall be collected at the same time the taxes for the year
1885 shall be assessed and collected, and each year thereafter an
additional twenty percentum of said taxes shall be collected at the
same time and in the same manner as the taxes for such year are
collected, until the whole amount of said unpaid taxes for the
years 1879, 1880, and 1881 are paid."
"The taxes to be assessed under this act shall be the same in
amount as they would have been had they been assessed in such years
or any of them as to which there was a failure to assess."
Laws of Florida 1885, c. 3558.
This statute was followed in 1891 by one in these words:
"SEC. 1. That the state and county taxes assessed by the
comptroller of the State of Florida upon any railroads and the
properties thereof in said state for the years 1879, 1880, and
1881, under and in pursuance of 'An Act to Provide for the
Assessment and Collection of Taxes on Railroads and the Properties
Thereof for the Years 1879, 1880, and 1881, as to Which There Was
no Assessment,' but which have not been collected, shall be
collected, and the payment thereof enforced at the same times and
in the same manner as is now or may hereafter be provided by law
for the collection and the enforcement of the payment of taxes
assessed upon the railroads and the properties thereof in the State
of Florida."
Laws of Florida, 1891, c. 4073.
The assessment of railroad property in Florida was not made by
the county assessors, but by the comptroller of the state. Acts
Florida, 1879, c. 3099, secs. 45-46.
The plaintiff is a corporation organized under the laws of
Florida on November 17, 1888, and was the owner of several lines of
railway which, on May 1, 1889, it acquired from the
Page 183 U. S. 473
Florida Railway & Navigation Company under foreclosure
proceedings. The Florida Railway & Navigation Company was
organized on February 29, 1884, by the consolidation of several
companies, and on July 1 of that year, it placed upon its
properties a trust deed to secure the payment of $10,000,000
bonds.
This bill was filed November 2, 1892, in the Circuit Court of
the Second Judicial Circuit of Florida, in and for the County of
Leon. Its purpose was to restrain the collection of certain taxes
and to recover other taxes paid under protest. After three appeals
to the supreme court of the state (35 Fla. 625, 39 Fla. 243, 28 So.
861), the final outcome of the litigation was a decree dismissing
the plaintiff's bill
in toto.
MR. JUSTICE BREWER delivered the opinion of the Court.
No question is presented concerning the claim for the taxes paid
under protest, counsel for plaintiff stating in their brief
that
"the sole relief sought in this Court is to obtain a reversal of
the decree of the state supreme court, insofar as it reversed the
decree of the circuit court enjoining the sale of complainant's
lines of railroad for the taxes assessed for the years 1879, 1880,
and 1881, such taxes amounting to $96,181.69,"
and, in respect to this matter, they sum up their contention in
these words:
"By the law of 1885, the state attempted to authorize the
assessment of taxes for 1879-1881, but only upon property belonging
to railroad companies, though it appears from the record that other
properties of like class,
i.e., real estate belonging to
individuals and owners, not railroad companies, had not been
assessed for taxes for such years. "
Page 183 U. S. 474
"It surely cannot be 'due process of law' for the State of
Florida in 1885 to arbitrarily impose a burden theretofore unheard
of upon security holders who in 1884 had invested their money upon
the faith of a title then clear of such burden."
"It surely cannot be less than a denial of the equal protection
of the laws for the State of Florida in 1885 to impose burdens
theretofore unheard of upon the property of railroad companies
which under the laws of Florida is real estate, while permitting
other real estate, otherwise owned, to escape such burdens."
The decision of the supreme court of the state establishes that
these proceedings are not in conflict with the Constitution of
Florida. The single question, therefore, to consider, is whether
there is anything in the federal Constitution which forbids a state
to reach backward and collect taxes from certain kinds of property
which were not at the time collected through lack of statutory
provisions therefor, or in consequence of a misunderstanding as to
the law, or from neglect of administrative officials, without also
making provision for collecting the taxes for the same years on
other property. It will be perceived that there was no new levy of
taxes. No act of the legislature was passed imposing an additional
burden upon the property of the state in general, or upon any
particular property, but the case is one in which, general levies
having been made for the years named, certain property which ought
to have paid taxes under them -- and thus contributed its share of
the expenses of the state -- failed to do so, and the effort is to
compel that property to discharge its obligation. The objection is
not that the property ought not during those years to have paid its
proportion of the taxes, but that it ought not now to be compelled
to pay such proportion, because certain other property was
similarly situated, and no effort is made to compel payment from
it.
The fault, if fault there be, is one of omission, rather than
commission. The act of the legislature is not a mandate to a single
officer, charged with the duty of assessing all property, to assess
certain property, and to omit to assess the rest; but the general
legislation having provided that railroad property should be
assessed by the comptroller and real estate by county assessors,
the act simply directed the comptroller to discharge the
Page 183 U. S. 475
duties of assessment as to the property committed to his care,
and omitted any direction to the county assessors. This omission,
it is contended, makes the act unconstitutional. In other words,
the legislature may not pass an act directing one officer to
discharge his duty unless it couples therewith a direction to other
officers charged with kindred duty to perform theirs. It would seem
to follow that, if the legislature had on the same day passed
another act with like command to the county assessors, the two acts
together would be constitutional, though each, standing alone,
would not be, and as the time of its passage is not generally of
the essence of a statute, it would also seem to follow that, if the
legislature should today pass an act directing the county assessors
to assess delinquent real estate for those years, this late
enactment would give constitutional vitality to that passed years
ago. How far can this theory of constitutionality be sustained?
It must be remembered that "taxes are not debts in the ordinary
sense of that term;" that they are
"the enforced proportional contribution of persons and property,
levied by the authority of the state for the support of the
government and for all public needs."
Cooley on Taxation, 1st ed., pp. 13 and 1. They are obligations
of the highest character, for only as they are discharged is the
continued existence of government possible. They are not cancelled
and discharged by the failure of duty on the part of any tribunal
or officer, legislative or administrative. Payment alone discharges
the obligation, and until payment, the state may proceed by all
proper means to compel the performance of the obligation. No
statutes of limitation run against the state, and it is a matter of
discretion with it to determine how far into the past it will reach
to compel performance of this obligation.
No question of
bona fide purchase arises, for it was
held by the supreme court that, inasmuch as no assessment of this
railroad property had been made during the years named, and no lien
thereon for taxes established, a
bona fide purchaser would
have taken it free from any liability for such taxes; but it was
also held that the present owner was not a
bona fide
purchaser, and, this being a local matter, the decision is
conclusive upon this Court.
Page 183 U. S. 476
The question how far the provisions of the Fourteenth Amendment
interfere with a state's system of taxation has been more than once
before this Court. It was very carefully considered in
Bell's
Gap Railroad Co. v. Pennsylvania, 134 U.
S. 232, and the general rule thus stated by Mr. Justice
Bradley on page
134 U. S.
237:
"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. . . . 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."
It is well known that the states vary materially in their
systems of taxation. Each determines for itself what in its
judgment is best for the interests of its people. In some, there
are general exemptions of particular classes of property, such as
property used for religious, educational, and benevolent purposes.
Some, in order to encourage certain industries such as
manufacturing, make either general or special exemptions. Some
think it for their best interest to derive their revenues from
personal property, corporations, and licenses, and exempt real
estate. In some, contracts for exemption are authorized by the
state constitution; in others, they are forbidden. Now considering
the great diversity in these systems, it would obviously have
worked a marked revolution if the first section of the Fourteenth
Amendment had been construed as compelling a cast-iron rule of
equal taxation. It was not intended, as held in the case quoted
from, and also in
Barbier v. Connolly, 113 U. S.
27, to restrain the legislature from any proper and
legitimate classification, both as respects property for taxation
and the methods
Page 183 U. S. 477
of assessment and taxation. Doubtless it would prohibit a state
from selecting some obnoxious person and casting upon his property
the sole burden of taxation, or a burden differing from that cast
upon others whose property was similarly situated, but it does not
prevent a state from exercising its judgment as to the property to
be taxed and the modes of taxation, providing all property
similarly situated is treated in the same way.
Besides those just cited, other cases in this Court affirm the
same propositions. In
The Delaware Railroad
Tax, 18 Wall. 206, a special act of the State of
Delaware imposing a tax of three percent upon the net earnings or
income received by railroad and canal companies from all sources
was sustained, the Court saying (p.
85 U. S.
231):
"The state may impose taxes upon the corporation as an entity
existing under its laws, as well as upon the capital stock of the
corporation or its separate corporate property. And the manner in
which its value shall be assessed and the rate of taxation, however
arbitrary or capricious, are mere matters of legislative
discretion. 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."
In
Home Insurance Company v. New York, 134 U.
S. 594, a tax upon the corporate franchise or business
of corporations, graded according to the dividends declared by the
corporation, was sustained, the Court, on p.
134 U. S. 606,
referring in these words to the objection that the tax was in
conflict with the Fourteenth Amendment.
"But the amendment does not prevent the classification of
property for taxation -- subjecting one kind of property to one
rate of taxation and another 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
Page 183 U. S. 478
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.
Barbier v. Connolly, 113 U. S.
29,
113 U. S. 32;
Soon Hing v.
Crowley, 113 U. S. 703,
113 U. S.
709;
Missouri Pacific Railway v. Humes,
115 U. S.
512,
115 U. S. 523;
Missouri
Pacific Railway v. Mackey, 127 U. S. 205,
127 U. S.
209;
Minneapolis &c. Railway Co. v.
Beckwith, 129 U. S. 26,
129 U. S.
32."
In
Giozza v. Tiernans, 148 U.
S. 657, a difference in the amount of license required
from parties carrying on different kinds of business was the ground
of attack upon a state statute, but the statute was sustained, and
in respect to the Fourteenth Amendment it was said (p.
148 U. S.
662):
"Nor, in respect of taxation was the amendment intended to
compel the state to adopt an iron rule of equality, to prevent the
classification of property for taxation at different rates, or to
prohibit legislation in that regard, special either in the extent
to which it operates or the objects sought to be obtained by it. It
is enough that there is no discrimination in favor of one as
against another of the same class.
Bell's Gap Railroad v.
Pennsylvania, 134 U. S. 232;
Home
Insurance Co. v. New York, 134 U. S. 594;
Pacific
Express Co. v. Seibert, 142 U. S. 339. And due process
of law, within the meaning of the amendment, is secured if the laws
operate on all alike, and do not subject the individual to an
arbitrary exercise of the powers of government.
Leeper v.
Texas, 139 U. S. 462."
In
King v. Mullins, 171 U. S. 404, a
discrimination in the laws of West Virginia as to the matter of
forfeiture in tax proceedings between the owners of tracts of less
than one thousand acres and those owning larger tracts was
challenged, but the court overruled the contention, saying (p.
171 U. S.
435):
"Another point made by the plaintiff in error is that the
Page 183 U. S. 479
provision of the Constitution of Virginia exempting tracts of
less than one thousand acres from forfeiture is a discrimination
against the owners of tracts containing one thousand acres or more,
which amounts to a denial to citizens or landowners of the latter
class of the equal protection of the laws. We do not concur in this
view. The evil intended to be remedied by the Constitution and laws
of West Virginia was the persistent failure of those who owned or
claimed to own large tracts of lands patented in the last century
or early in the present century to put them on the land books, so
that the extent and boundaries of such tracts could be easily
ascertained by the officers charged with the duty of assessing and
collecting taxes. Where the tract was a small one, the probability
was that it was actually occupied by someone, and its extent or
boundary could be readily ascertained for purposes of assessment
and taxation. We can well understand why one policy could be
properly adopted as to large tracts which the necessities of the
public revenue did not require to be prescribed as to small tracts.
The judiciary should be very reluctant to interfere with the taxing
systems of a state, and should never do so unless that which the
state attempts to do is in palpable violation of the constitutional
rights of the owners of property. Under this view of our duty, we
are unwilling to hold that the provision referred to is repugnant
to the clause of the Fourteenth Amendment forbidding a denial of
the equal protection of the laws."
See also Pacific Express Company v. Seibert,
142 U. S. 339;
Thomas v. Gay, 169 U. S. 264.
Textbooks affirm the same doctrine. Burroughs on Taxation, sec. 56,
says: "The rule is that the legislature may select the subjects of
taxation in their discretion;" and in Cooley on Taxation, c. 6, p.
124, it is said:
"There is no imperative requirement that taxation shall be
equal. . . . The legislature must decide when and how and for what
public purposes a tax shall be levied, and must select the subjects
of taxation. This is legislative, and the legislative conclusion in
the premises must be accepted as proper and final."
Gilman v.
Sheboygan, 2 Black 510, is not in conflict
Page 183 U. S. 480
with these views. True, in that case, a tax levied for a special
purpose by the city was adjudged void on the ground that it was
levied exclusively on real property, but the decision was placed
upon a conflict with the Constitution of the state as interpreted
by its supreme court. In other words, the supreme court of the
state having in several cases held that such a discrimination
avoided a tax, this Court simply followed those decisions, saying
(p.
67 U. S. 518)
that it considered itself "bound in cases like this to follow the
settled adjudications of the highest state court giving
constructions to the Constitution and laws of the state."
In the light of these decisions, if the State of Florida had
deemed it for the best interests of its people to encourage the
building of railroads by exempting their property from taxation,
such exemption could not have been adjudged in conflict with the
Fourteenth Amendment, even though thereby the burden of taxation
upon other property in the state was largely increased. Indeed,
that was the policy of the state prior to the Constitution of 1868.
And, conversely, if the state had subjected railroads to taxation,
while exempting some other class of property, it would be difficult
to find anything in the Fourteenth Amendment to overthrow its
action. The mere fact that such legislation may operate with
harshness is not, of itself, sufficient to justify the court in
declaring it unconstitutional. These matters of classification are
of state policy, to be determined by the state, and the federal
government is not charged with the duty of supervising its
action.
If the state, as has been seen, has the power, in the first
instance, to classify property for taxation, it has the same right
of classification as to property which in past years has escaped
taxation. We must assume that the legislature acts according to its
judgment for the best interests of the state. A wrong intent cannot
be imputed to it. It may have found that the railroad delinquent
tax was large, and the delinquent tax on other property was small,
and not worth the trouble of special provision therefor. If taxes
are to be regarded as mere debts, then the effort of the state to
collect from one debtor is not
Page 183 U. S. 481
prejudiced by its failure to make like effort to collect from
another. And if regarded in the truer light as a contribution to
the support of government, then it does not lie in the mouth of one
called upon to make his contribution to complain that some other
person has not been coerced into a like contribution. In
Winona
& St. Peter Land Co. v. Minnesota, 159 U.
S. 526, legislation of Minnesota for the collection of
delinquent taxes on real estate was challenged because of a lack of
similar legislation in respect to personal property, but the
challenge was overruled, the Court saying (p.
159 U. S.
539):
"This statute rests on the assumption that, generally speaking,
all property subject to taxation has been reached, and aims only to
provide for those accidents which may happen under any system of
taxation, in consequence of which here and there some item of
property has escaped its proper burden, and it may well be that the
legislature, in view of the probabilities of changes in the title
or situs of personal property, might deem it unwise to attempt to
charge it with back taxes, while at the same time, by reason of the
stationary character of real estate, it might elect to proceed
against that. At any rate, if it did so, it would violate no
provision of the federal Constitution, and whether it did so or not
was a matter to be determined finally by the supreme court of the
state."
Our conclusion is that, so far as the federal Constitution is
concerned, the Legislature of Florida had the power to compel the
collection of delinquent taxes from the railroad companies for the
years 1879, 1880, and 1881, even though it made no provision for
the collection of delinquent taxes for those years on other
property. The judgment therefore of the Supreme Court of Florida
is
Affirmed.
MR. JUSTICE BROWN dissenting:
I have no doubt whatever of the validity of the act of the
Legislature of Florida of 1883 requiring the assessor, upon
discovering that any land in his county was omitted from the
assessment roll of the three previous years, to assess the same
Page 183 U. S. 482
for such years, since this was a provision applicable to all
real estate in his county omitted from the assessment rolls for
such years. But the act of 1885 did not proceed upon this basis. It
arbitrarily selects railroad properties from all other species of
property, and requires their assessment for another three years
prior to the three covered by the act of 1883, and thereby, as it
seems to me, denies them the equal protection of the laws. Under
the act of 1883, all owners of real property omitted from the
assessment rolls of the three previous years were put upon an
equality, and made debtors to the state for the taxes of those
years; but to segregate railroads from all other delinquent
property, and tax them for another three years, as is done by the
act of 1885, seems to me to open the statutes to the criticism of
the Court, wherein it is said:
"Doubtless it [the Fourteenth Amendment] would prohibit a state
from selecting some obnoxious person, and casting upon his property
the sole burden of taxation or a burden differing from that cast
upon others whose property was similarly situated."
It appears quite immaterial that, under the act of 1883, the
property was to be assessed by the county assessors, and in the act
of 1885 by the state comptroller. The wrong done to the railway
company is not in the selection of an agent to collect the taxes,
but in the selection of a specially odious tax -- namely for
antecedent years -- and imposing it upon one class of delinquents
alone. If, for instance, a license tax varying in amount were
imposed upon a dozen different occupations, and by another act
subsequently passed were made retroactive for three years, could
the legislature, by still another act, made applicable only to
those employed in one out of these twelve occupations, make such
act retroactive for another three years, without denying to those
engaged in that occupation the equal protection of the laws?
I do not wish to be understood as saying that the state may not
impose a specific and even a discriminating tax upon railways, but
after the liability to the state of all real property owners has
once been established, and all placed upon the same footing, I do
not think a particular species of property can be arbitrarily taken
and subjected to a discriminating tax for a
Page 183 U. S. 483
series of years, during which, and upon the ground that, the
state officers had neglected their duty. If state railway taxes may
be made retroactive for three years, and again for another three
years, I see no reason why this method of taxation may not be
continued indefinitely so long as any property remains from which
it may be collected. This kind of discrimination seems to be
measurable only by the rapacity of the legislature.