Wyatt v. Board of Equalization , 74 N.H. 552 ( 1908 )

I agree with Judge Peaslee in all that he has said; and while little can be added to his able and exhaustive discussion, the question is of such importance, and the opinion of the majority is so fallacious in reasoning and unjust in its result, that I feel 1 would be remiss in the performance of my duties if I failed to state, in part at least, the views I entertain.

The main question in the case is whether the taxes assessed upon savings banks and fire insurance companies shall be taken into consideration in ascertaining the rate at which railroad, telegraph, telephone, and express companies shall be taxed. The board of equalization, acting under the advice of the attorney-general and in disregard of the decision of the court in Boston etc. R. R. v. State, 62 N.H. 648, have added the amount of savings bank deposits and fire insurance capital to the amount of property in the various cities and towns throughout the state, and the amount of the tax raised upon savings bank deposits and fire insurance capital, at the fixed rates of three quarters of one per cent and one per cent, to the amount raised in cities and towns throughout the state to meet the public charges incurred by them and by the counties and such part of the state charges as have been apportioned to them, and with these figures as a basis have computed the rate for the assessment of the tax upon the above named corporations. The result of this method of computation has been to reduce the amount of tax paid by public service corporations upon their taxable property from $70,000 to $75,000 each year below what they would have had to pay if their property had been taxed at the same rate at which individuals are taxed for town, county, and state purposes upon an equal amount of property. This being the result, the question presented is: Does the statute under which the tax is assessed authorize the adoption of such a method of computation; and if it does, is it sanctioned under the provisions of our constitution?

In Amoskeag Mfg[.] Co. v. Manchester, 70 N.H. 336, 344, Chief Justice Parsons, then an associate justice, in delivering the opinion of the court said: "By an unbroken line of decisions in this state during the last seventy-three years, from the Opinion of the Justices, in 1827 (4 N.H. 565) to the decision in this case (ante, p. 200), it has been conclusively settled that the constitutional rule of equality in taxation requires that throughout the same taxing district the same tax shall be laid upon the same amount of property, `so that each man's taxable property shall bear its due portion of the tax according to its value.' Opinion of the Court, 4 N.H. 565, 568. The share which every person is bound to contribute for the protection in the enjoyment of his life, liberty, and property, to which he is entitled (Bill of Rights, art. 12), is his proportional part of the expense of such protection according to the amount of his taxable estate. . . . Any scheme of mathematical reasoning which . . . assesses against the plaintiffs a tax greater or less than that assessed to others upon the same amount of taxable estate, — a result in conflict with the constitution and fundamental principles of justice, — is inevitably unsound and erroneous, either in the theory itself, or in the premises upon which such system is based. If the method is correct, the result must be right. If the result is wrong, the reasoning is fallacious. The accuracy of the method of computation is safely and sufficiently tested by the result."

Starting with these declarations as our premise, and they are undoubtedly sound, it is apparent that all taxes upon property which are sanctioned under the provisions of our constitution must be proportional and equal; that each man's taxable estate must bear its due proportion of the public burden according to its value; and that any scheme of mathematical reasoning which assesses against the property of one man in the same taxing district a tax greater or less than that assessed to others on the same amount of taxable property is in conflict with the constitution and fundamental principles of justice, and the reasoning by which such a result is reached is fallacious.

In Boston etc. R. R. v. State, 60 N.H. 87, it was held, Chief Justice Doe delivering the opinion, that the tax assessed upon railroads pursuant to the statute here under consideration was a proportional tax, that it must be laid according to the constitutional rule of equality, and that if it was a state tax it "must be proportional throughout the state"; in other words, that the tax was a property tax, and that the property of the railroad must bear its due proportion of the public burden according to its value. It having been thus determined that the railroad tax is a property tax, we will now consider the nature of the tax assessed upon savings banks.

In Boston etc. R. R. v. State, 62 N.H. 648, 649, it was held, in opinion delivered by the same chief justice, that "the savings bank tax (G. L., c. 65, s. 8) is an anomaly, resting on peculiar grounds of public policy, and is universally understood to have acquired the position of an exception to the constitutional rule of equality." In Somersworth Savings Bank v. Somersworth, 68 N.H. 402, the constitutionality of the savings bank tax was sustained, not, however, on the ground that it was a property tax and that the property of the bank bore its due proportion of the public burden according to its value, but upon the ground, as announced in Boston etc. R. R. v. State, 62 N.H. 648, that "the savings bank tax is an anomaly, resting on peculiar grounds of public policy, and is universally understood to have acquired the position of an exception to the constitutional rule of equality." The opinion in this case was also written by Chief Justice Doe. It was edited by Judge Walker after Judge Doe's death, and was adopted by his surviving associates, including the present chief justice, as the opinion of the court.

In State v. Griffin, 69 N.H. 1, 33, Chief Justice Carpenter, in speaking of the savings bank tax and the statute authorizing its assessment, said: "This court, in 1883, less than twenty years after the enactment creating the discrimination, declared that `the savings bank tax is an anomaly, resting on peculiar grounds of public policy, and is universally understood to have acquired the position of an exception to the constitutional rule of equality.' Railroad v. State, 62 N.H. 648, 649"; and that it became an exception "solely by virtue of the statute creating it, and less than twenty years of public acquiescence." See, also, State v. Gerry,68 N.H. 495, 510. It is therefore authoritatively determined by these decisions that in this state the savings bank tax is not a proportional and equal tax, that the property of the bank does not bear the same amount of tax as is borne by others upon a like amount of property, and that it is not a property tax within the meaning of our constitution, but an anomaly and an exception to the constitutional rule of equality. These decisions are directly in conflict with the earlier decision of Bartlett v. Carter,59 N.H. 105, and must be considered as overruling it, to the extent that they hold that the tax upon savings banks is an anomaly and not a proportional tax laid upon property according to the constitutional rule of equality.

It was also held in Boston etc. R. R. v. State, 62 N.H. 648, that the savings bank tax, being an anomaly and not laid according to the constitutional rule of equality, was not to be taken into consideration in assessing the tax upon railroads; that it was not taken into consideration in assessing state, county, and town taxes upon individuals; and that the railroads stood in no different relation to the tax to be assessed, upon them. The syllabus to the case states that "in the assessment of a railroad `as near as may be in proportion to the taxation of other property' in towns, the rate at which savings banks are taxed by the state is not considered." There can be no doubt as to the meaning of this decision. The entry of Judge Isaac W. Smith, upon the record of the case preserved in 148 Briefs and Cases 321, states that the tax upon railroads is "to be assessed as if there were no savings banks." The entry in Judge Clark's docket is that it is "agreed that no deduction of tax should be made on account of savings bank tax being one per cent and other property one and a half per cent." And the figures in the office of the state treasurer show that the tax paid by the railroad was in accordance with the findings of the referees, which excluded the savings bank tax from the computation. The question arose upon an appeal from the tax of 1880. The referees found that the true value of the railroad was $1,900,000; that property generally throughout the state was assessed at 73.6 per cent of its true value; that the railroad should therefore be valued for purposes of taxation at 73.6 per cent of $1,900,000, or at $1,398,400; that the average rate of taxation throughout the state, excluding the tax on savings bank deposits, was $1.52, and including it, $1.44; that the railroad should be taxed at the rate of $1.52 on $1,398,400, and should pay a tax of $21,255.68. In 1880, the railroad paid to the state treasurer on its tax for that year $17,000. This left a balance of $4,255.68 due the state. In 1888, an abatement of $2,331.10 was allowed the railroad on its appeal from the tax of 1881. This sum was applied by the state treasurer, under the direction of Attorney-General Barnard and Edwin G. Eastman, our present attorney-general, upon the balance of $4,255.68, leaving still due the state upon the tax for 1880 the sum of $1,924.58. This balance, with interest to June, 1888, was then paid by the railroad. If its property had been assessed by the referees at the rate of $1.44, which rate would have included the savings bank tax, the tax then assessed against it would have been $20,136.96, or $1,118.74 less than the tax in fact assessed, and the payment made by it would have been correspondingly less. These facts clearly disclose the meaning of the court as expressed in their decision in this case, and demonstrate beyond a doubt that what the court intended to decide, and what they in fact decided, was that in assessing taxes upon railroads the tax upon savings banks should be excluded from the computation.

Again, in the case of Amoskeag Mfg. Co. v. Manchester, supra, in which the opinion was delivered by our present chief justice, it was decided that in determining the amount of the public burden to be apportioned to the Amoskeag Company as a tax upon its property, the tax assessed upon polls could not be taken into consideration; that a poll tax was not a property tax; that there was "no constitutional provision as to the relative amounts to be assessed upon polls and upon property"; and that "a legislative enactment requiring such a distribution of the taxes between polls and estates as would compel a portion of the taxpayers to pay on their property more than others paid on the same amount of property would be in violation of the constitution."

But the chief justice, in delivering the opinion of the majority in the present case and construing the statute directing the assessment of taxes upon public service corporations, not only holds that the act directs that a less amount of tax shall be imposed upon the property of public service corporations than is imposed upon a like amount of property owned by others, but also that the statute so construed would be constitutional; for he decides that the board of equalization were right in taking into consideration the savings bank tax in determining the tax to be assessed upon public service corporations, and this notwithstanding the direct effect of such a method of computation is to permit them to pay some $70,000 or $75,000 less tax each year than other taxpayers are required to pay upon the same amount of property. It is indisputable that such a construction of the statute and method of computation produces this result. The answer to the chief justice's present position is that the statute, if it must be so construed, is clearly unconstitutional; and to use his own language as given in Amoskeag Mfg. Co. v. Manchester, supra, "any scheme of mathematical reasoning which . . . assesses against . . . [the public service corporations of the state] . . . a tax . . . less than that assessed to others upon the same amount of taxable estate, — a result in conflict with the constitution and fundamental principles of justice, — is inevitably unsound and erroneous, either in the theory itself, or in the premises upon which such system is based. . . . If the result is wrong, the reasoning is fallacious. The accuracy of the method is safely and sufficiently tested by the result."

The savings bank tax being a fixed tax, and not one laid according to any rule of proportion or equality, — no matter by what name it may be designated, whether anomaly, excise, or something else, — cannot be taken into consideration in ascertaining the proportional and equal share of the public burden to be assessed upon public service corporations; for, as said in State v. Express Co., 60 N.H. 219, "there can be no proportion or equality between that which is fixed and that which is uncertain and fluctuating." This statement of the court in that case was true when it was made and is true today, as applied to the assessment of proportional and equal taxes upon property, and cannot be belittled or snuffed out by being referred to as being "as self-evident as a preliminary axiom in Euclid."

What has been said as to the savings bank tax applies with equal force to the tax upon fire insurance capital. In neither case are the taxes assessed upon any basis of proportionality or equality to meet the public charges of government, as is the case with those levied upon public service corporations and individuals, and neither should be taken into consideration in assessing the taxes required to be levied upon such corporations or individuals.