American Can Co. v. City of Tampa , 152 Fla. 798 ( 1942 )

American Can Company filed its bill of complaint in the Circuit Court to restrain the City of Tampa from collecting ad valorem and excise or license taxes on certain properties owned by it and used as an industrial plant as contemplated by Section 12 of Article IX, of the Constitution. The City moved to strike that portion of the bill relating to excise taxes and to dismiss the entire bill for want of equity. Several taxpayers and a bond holder petitioned to intervene and be made parties defendant. The trial court denied the motion to dismiss but granted the motion to strike the allegations relating to excise taxes. The petitions to intervene were also denied.

American Can Company entreats us to review by certiorari that portion of the chancellor's decree striking the allegations of the bill of complaint relating to excise taxes. The City of Tampa and petitioners entreat us to review that portion of the chancellor's decree denying the petitions to intervene and the motion to dismiss the bill of complaint.

Epitomized, American Can Company seeks an adjudication of this question: Does the exemption from taxation provided in Section 12 of Article IX, of the Constitution apply to both ad valorem and excise or license taxes or is it limited to ad valorem taxes? The City of Tampa and the petitioners to intervene seek an adjudication of the question of whether or not an industrial plant as contemplated by Section 12 of Article IX, of the Constitution is exempt from taxes to pay the principal and interest on bonds that were outstanding at the time the said constitutional amendment was adopted.

In a very comprehensive opinion prepared by Mr. Justice WHITFIELD and filed December 31, 1942, this Court held that Section 12 of Article IX was limited in its application to ad valorem taxes and had no application to excise or license taxes. We also held that bond contracts of the City of Tampa outstanding at the time said amendment was adopted were protected by the contract clause of the Federal Constitution and that the industrial plant of American Can Company was subject to taxes to pay the principal and interest of such bonds.

On petition for rehearing, the case has again been reviewed and a majority of the Court have reluctantly reached the conclusion that this holding was erroneous. Section 12 of Article IX in effect provides that for a period of fifteen years, certain industrial plants established in this State on or after July 1, 1929, "shall be exempt from all taxation" except that no such exemption shall extend beyond the year 1948. The amendment names the businesses such plants must engage in and they are not to be those in competition with businesses already here.

What effect should be given to the words "shall be exempt from all taxation" as employed in the amendment? The answer to this question will determine the first question with which we are confronted. Ad valorem and excise taxes are two separate and distinct taxes authorized by different provisions of the Constitution (Sections 1 and 5, Article IX, Constitution of Florida) but the word "taxation" is a generic term and has been frequently construed to include both when not qualified. In City of Jacksonville v. Continental Can Company, 113 Fla. 168,151 So. 488, we held that Section 12 of Article IX should be construed to effectuate the intent of the people in approving it. If this rule is to guide us other rules of interpretation can shed little if any light on our interpretation. A literal interpretation can leave no doubt that both ad valorem and excise or license taxes were included in "all taxation." The fact that the amendment speaks in the imperative and the fact that its purpose was to induce the establishment of industrial plants in Florida not to compete with those presently here strengthens rather than detracts from the literal interpretation.

In his message to the 1929 session of the Legislature the Governor strongly advocated the amendment in question as a counterpart to our agricultural development, to utilize our excess labor and to enlarge the home market for our produce. He limited his recommendation to industries not competing with those already in the State and recommended that they be relieved from taxes for a period of years. The amendment in other words was an outright bid to a species of business not heretofore located in Florida to come and enjoy freedom from "all taxation" for a period of fifteen years. Another significant fact is that Section 14 of the same article exempting moving picture studios from taxation and adopted four years later limited the exemption to "all ad valorem taxation."

It appears from the Senate Journal that as originally introduced in the Senate, the amendment in question provided exemption from "all taxation, including privilege and license taxes of every character." The words "privilege and license taxes of every character" were stricken by amendment leaving exemption from "all taxation" without qualification as to ad valorem or exercise taxes. Admitting for argument that it would be reasonable to say that in adopting this amendment, the Legislature intended to limit the exemption to ad valorem taxes, it would be just as reasonable to say that the words of the amendment were superfluous since exemption from "all taxation" was retained and the latter would certainly be in harmony with the purpose of the amendment. We cannot escape the conclusion that exemption from "all taxation" means exemption from both ad valorem and excise taxes for revenue purposes.

Fundamentally there is a clear distinction between an excise tax and a general (ad valorem) tax though the decisions and statutes frequently disregard this distinction. The nomenclature employed by the Legislature is not necessarily conclusive. If the tax is imposed solely or primarily for the purpose of raising revenue and merely grants the person taxed the right to conduct a business or profession, it is not an excise but is a general tax regardless of the name by which it is called but if the tax is imposed for nothing more than the cost of issuing the license and for inspecting and regulating the business it is an excise tax regardless of the name by which it may be designated. If the object of the tax is to pay the cost of issuing the license and for inspecting and regulating the business and a limited revenue is incidentally raised, this alone will not always deprive it of its excise character. If the business is one that does not involve public health, comfort, safety, morals or welfare, an excise tax for inspecting and regulating cannot be imposed, but it is nevertheless subject to an occupation tax for raising revenue, barring constitutional exemption. If on the other hand, the business is deemed inherently dangerous to public health or morals and requires a larger excise tax than is imposed on other occupations, it may be imposed under the police power and may not be called a general tax. Since the amendment speaks in the imperative, was limited to a period of years, and was designed to attract a particular class of industries to the State, we think it exempts from excise taxes designed to raise revenue, but that it does not exempt from such a tax for inspection and regulation and the cost of the license.

We rested the answer to the second question on the premise that bonds of the City outstanding at the time American Can Company made its purchase and erected its industrial plant were protected by the contract clause of the Federal Constitution and to relieve it of taxes to pay interest and sinking fund on such bonds would be violative of the contract clause of the Federal Constitution. Folks v. Marion County, 121 Fla. 17,163 So. 298, and other decisions construing the homestead amendment (Section 7 of Article X of the Constitution) were relied on.

There might be substance to this contention if these bond contracts were in fact impaired by the exemption in question. The people have a right to make reasonable exemptions from taxation if contract rights are not impaired thereby. The record shows conclusively that the exemption in this case does not have such effect. When the lands in question were purchased by American Can Company, they were marsh or overflowed lands of speculative value and were assessed at a negligible sum. Acting on the invitation offered by the amendment, American Can Company improved its lands, erected a valuable industry thereon in which it employs more than 200 workers and has a weekly payroll, of $7500, none of which was contemplated when the outstanding bonds were issued but which in reality adds materially to their security.

The rule is well settled that the imposition of taxes on or exemption of property from taxation is within the sovereign power of the State and one who invokes the contract clause of the Federal Constitution to defeat it carries the burden of showing conclusively that he has a contract right that has been impaired by the exemption. Arkansas Southern Railway Co. v. Louisiana and Arkansas Railway Co., 218 U.S. 431,31 Sup. Ct. 56, 54 L. Ed. 1097; Gilman v. Sheboygan, 67 U.S. 510,17 L. Ed. 305, Sovereign Camp W.O.W. v. Boring, 121 Fla. 781,164 So. 859. The record here fails completely to meet this standard. In fact it shows conclusively that no bond or other contracts are in anywise impaired.

Nor do we think the homestead amendment and the cases construing that are in any sense analogous to the amendment in question and certainly they offer no guide for its interpretation. The homestead amendment at one swoop withdrew the homestead of the head of each family to the value of $5000 from taxation for all time. In the aggregate, this withdrawal amounted to many millions of dollars and on its face had the effect of impairing outstanding bond contracts. It had always been subject to taxation and was in contemplation when outstanding bond contracts at the time of its adoption were made.

The industrial amendment had a maximum life of fifteen years and was limited to industries established on or after July 1, 1929. It had to do with property that had yet to be produced and brought into the State, had never been subject to taxation anywhere, and could not have been in contemplation when outstanding bond contracts were made and was consequently not obligated to pay them. The rationale supporting the two amendments is so widely at variance that we perceive no theory on which the cases affecting the homestead amendment could in anywise influence the interpretation of the amendment under consideration.

In justice to our Brother Sebring, it should be said that since the filing of the original opinion herein, he was by plebiscite of the people, translated to this Court to succeed our Brother Whitfield, who voluntarily retired January 4, 1943. He (Sebring) is therefore not responsible for the error we are correcting. We think the question here involves good faith on the part of the State to carry out its promise and since this element was by press of circumstances overlooked, we are faced with the alternative of eating crow or perpetuating the error. It is better to eat crow than it is to perpetuate an error. The crow is not rationed and the approval of conscience will more than compensate for the eating.

American Can Company's petition for certiorari is therefore granted and the petition of the City of Tampa and others is denied. That portion of the circuit court's order which denied defendants' motion to dismiss the bill of complaint is affirmed, that portion which sustained plaintiff's motions to strike the several petitions to intervene is affirmed, and that portion which sustained defendants' motion to strike the allegations and prayers of the bill of complaint regarding license taxes is reversed. The net result is that our opinion of December 31, 1942, is receded from in so far as it applies to ad valorem taxes, and it is modified to harmonize with the views expressed in this opinion in so far as it applies to excise taxes the chancellor will be governed accordingly.

It is so ordered.

BUFORD, C. J., BROWN, CHAPMAN and SEBRING, JJ., concur.

THOMAS and ADAMS, JJ., dissents, adheres to original opinion.