
    Fox v. Frank, Treas., et al.
    
      (Decided October 23, 1935.)
    
      Mr. Carl I). Sheppard and Mr. Jonathan Taylor, for plaintiff.
    
      Mr. John W. Bricker, attorney general, and Mr. E. G. Schuessler, for defendants the Tax Commission of Ohio, and Winters Sampson, as sales tax supervisor.
   Washburn, J.

This cause is before this court upon an appeal from the Common Pleas Court. It is an action by the plaintiff upon behalf of himself and a large number of others similarly situated, as members of a farmers’ co-operative marketing corporation, owning a market place in the city of Akron, in which is afforded space to its members to sell farm products produced upon their respective farms and sold directly to consumers and retailers, to enjoin the Tax Commission of Ohio and the enforcement officers thereof from enforcing against the plaintiff and others similarly situated the provisions of the sales tax act, and to declare such act to be null and void by reason of being unconstitutional.

The cause has been submitted in this court upon an agreed statement of facts.

Such statement of facts discloses that the plaintiff is a vendor of property produced upon his farm and sold at retail at his fixed place of business in the city of Akron, without his having a license therefor as required by the sales tax act, and that he does not collect from those to whom he sells his produce the tax which he is required to collect by such act, and that he does not cancel any prepaid tax receipts as required by the act; that he has been arrested upon the affidavit of an agent of the Tax Commission of Ohio for failing to comply with the act in the foregoing particulars; that the enforcement officers threaten to continue to arrest him for each such sale made by him, if he continues to fail to comply with the act, and threaten to proceed against'him under Section 5546-9a, General Code, of said act and make assessments against him for his violations of such law and collect the same by the sale of his property; that to comply with the act and the fules of the Tax Commission made thereunder, it will be necessary for him to employ a bookkeeper, at an expense to him, for the purpose of keeping books of account and records of sales; that he is a member of and is president of the Summit Growers Market Company, a corporation, which owns a produce market in Akron, in which is invested about $150,000 and at which his sales are made; and that there are 400 other members of the company, all of whom are farmers who conduct a similar business in the market and are similarly failing to comply with the act, and against whom similar action is threatened by the defendant Tax Commission.

We assume that if this cause involved the payment of a tax by plaintiff, and plaintiff had no remedy at law for restitution which he could enforce if the tax he paid were afterwards held to be invalid, a court of equity would have jurisdiction to enjoin the threatened collection of the tax or threatened criminal prosecution for failure to pay the same.

We assume also that if this were an action to prevent the collection of a tax from the plaintiff as a taxpayer, and were properly brought upon behalf of other taxpayers similarly situated, the resulting multiplicity of actions would be sufficient to uphold the jurisdiction of a court of equity to grant a remedy by injunction against the enforcement of the law by criminal proceedings, without taking into consideration the provisions of Section 12075, General Code.

But neither of such assumptions is warranted by the agreed facts in this case; by such facts neither the plaintiff nor any of those he assumes to represent challenge the right of the state to compel them to fay a tax upon purchases made by them. Only the state’s right to compel them to collect the tax from the purchasers of goods sold by them and secure the payment of the same to the state is challenged.

No part of the agreed facts shows that the plaintiff and those in whose behalf he sues are taxpayers in the sense in which that term is used in the laws and decisions of this state, unless it be the statement in the agreed facts that the authorities threaten to proceed under Section 5546-9a, General Code, to make an assessment against plaintiff for the amount of tax he has failed to collect, and if he does not exercise his rights under that section as to the correction of the amount of such assessment, including an appeal to the Common Pleas Court under Section 5611-2, General Code, then the authorities threaten to proceed to collect such assessment by a sale of his property as upon execution.

The procedure referred to in such statement merely provides a remedy in addition to criminal prosecutions, by which the plaintiff may be compelled to collect the tax from those to whom he makes sales, and pay the same to the state. He is prohibited by the .act from paying the tax himself instead of collecting it from purchasers, and said procedure provides for the assessment of a penalty against him for his failure to comply with the law, and is no more a tax than is a fine assessed against him under the criminal provisions of the act, and it does not constitute him a taxpayer who is entitled, under Section 12075, General Code, to enjoin the collection of an illegal tax.

In the absence of statutory authority, it is a general rule that one may not enjoin the enforcement of a statute or a part of a legislative act on the ground that it is unconstitutional, unless a showing is made that his property rights will be injuriously affected by such enforcement. Under the agreed facts, the property rights of the plaintiff can be injuriously affected only by that part of the act which requires him to collect the tax from purchasers and pay the same to the state, and by the provisions incident thereto, and therefore the agreed facts are such as to limit the plaintiff’s complaint of unconstitutionality to the part of the sales tax act, the enforcement of which may injuriously affect his property rights as a vendor of the produce of his farm; and the complaints of those on whose behalf he sues are likewise so limited. If that part of the act which affects plaintiff as a vendor violates either the Constitution of the United States or the Constitution of the state of Ohio, we are of the opinion that a court of equity can afford him relief by injunction.

Furthermore, the trend of modern decisions, especially those of the Supreme Court of the United States, seems- to be such as to warrant the conclusion that jurisdiction in equity may be based upon the fact that it is a class suit; but in view of the conclusions we have reached, we do not find it necessary to make such an exhaustive and critical examination of the authorities as would enable us to definitely so decide.

In any view, if a property right of plaintiff as a vendor is infringed, the circumstances are such as render Ms remedy at law inadequate, and lie is entitled to the judgment of the court as to whether it will exercise its equity powers in his behalf.

What property right of the plaintiff, as a vendor, is affected by the act?

Plainly, in connection with the subject we are considering, Ms right to sell the produce of his farm is a property right, because without that right the value of his produce would be lessened, if not destroyed.

The right to sell his produce is not denied him, but if he exercises that right other than upon his farm, he is required by the act to take out a license and collect from purchasers the tax prescribed, and pay the same to the state.

To comply with such requirements, he must apply for a license and pay a fee of $1, and purchase tax receipts in an amount sufficient to supply the normal requirements of his business; and when a sale is made, he must collect from the purchaser the tax which the consumer is required to pay, and cancel tax receipts of the face value of the tax, and keep such a record of his sales as the Tax Commission requires, and account to the state for the tax he collects. On his purchase of tax receipts he is allowed a 3 per cent discount, and he is reimbursed for any unused or spoiled tax receipts.

Do these requirements of the vendor violate any provisions of the state or national Constitutions ?

Before considering this question, it may be well to point out that the power of the state to tax the consumer is not involved in this action, nor is there involved the validity of the parts of the act which affect the rights of the consumer only, and therefore plaintiff, as a vendor, cannot be heard to claim that Section 2, Article XII of the Constitution of Ohio, which limits the power to tax property in excess of one per cent of its true value in money, has been violated, even if the tax against the consumer is a property tax, and not, as it is declared by the act to be, an excise tax; bnt if that question were involved, we are of the opinion that the instant tax is a tax on the right to acquire property by purchase for use or consumption, and is therefore an excise tax, which is authorized by Section 10, Article XII of the Constitution of Ohio.

It is for the Legislature to determine the subjects of excise, and the judicial branch of the government will not interfere with such determination except possibly in cases where there is a manifest abuse of the exercise of such power by the Legislature; and we are of the opinion that there is no such abuse in the act in question.

What constitutional rights of the vendor are violated by the act in question?

The Constitution of the United States forbids the enforcing of a law which abridges the privileges or immunities of citizens or deprives any person of his property rights without due process of law, and by the Constitution of Ohio a citizen has an inalienable right to acquire and sell property and hold the same inviolate, subject only to the public welfare, and an inalienable right to seek and obtain happiness and safety; and it is claimed that the act in question violates these and other constitutional provisions.

But these guaranties are general, and are not absolute and unlimited, in the sense that the Legislature may pass no law which interferes with or affects them. Moreover, they are a part of the same Constitution which confers upon the Legislature, as an attribute of sovereignty, the power to tax, and we must recognize that fact and construe such general guaranties in connection with such general power to tax and with the more specific provisions of the Constitution relating to taxation.

It is universally recognized by the courts that the enjoyment of the general constitutional rights herein-before referred to is subject to such reasonable regulations as the Legislature deems and the courts determine are essential to the safety, health, peace,.good order and welfare of the state, and that the enjoyment of such rights is subject to such conditions and curtailment as the Legislature may make and the courts determine to be reasonable in the exercise of the taxing power of the state.

Where the enjoyment of rights so guaranteed is interfered with by the Legislature in the exercise of its taxing power, the courts recognize that the Legislature has a wide discretion and will not declare an act of the Legislature to be unconstitutional on the ground that such interference is unreasonable and excessive, unless it is clearly unduly oppressive; and as the power to tax, which, as an attribute of sovereignty, is conferred by the people upon the Legislature, is one of the highest prerogatives of government, all doubts as to the constitutionality of a taxation act of the Legislature are resolved by the courts in favor of the constitutionality of the act.

The acts complained of by plaintiff in the agreed facts are substantially the same as those that were complained of by another vendor whose complaints were passed upon by the Supreme Court of the United States; the difference in the complaints being that in the instant case plaintiff is required to purchase tax receipt stamps, which was not required of the vendor in said other case. The Supreme Court of the United States held that:

“A state law requiring retailers of gasoline to collect from purchasers a tax of 1‡ per gallon upon such gasoline sold by them as they have reason to believe the purchasers will use in motors on the highways of the State, and requiring the retailers to register, and to report and pay over each month the taxes accruing on sales made, under penalty of a fine, held, not violative of the retailers’ rights under the due process clause of the Fourteenth Amendment.” Pierce Oil Corp. v. Hopkins, County Clerk, 264 U. S., 137, 44 S. Ct., 251, 68 L. Ed., 593.

Practically the same contention could have been made in the case of Marion Foundry Co. v. Landes, Aud., 112 Ohio St., 166, 147 N. E., 302, in which employers were held responsible for the collection of an excise tax which their employees were required to pay, and as to which the employers were required to report to the taxing authorities and were also required to deliver, to their employees from whom the tax was collected, receipts for such tax. While it does not appear that the employers urged that such requirements violated their constitutional rights, their attack on the law was solely on constitutional grounds, and the court held the law to be constitutional.

As has been said, in the instant case there is the added requirement that plaintiff purchase tax receipt stamps; but applying to the act involved in this case the settled principles hereinbefore referred to, we hold that the requirements that, as conditions to the exercise by plaintiff of his right to sell the produce of his farm other than on his farm, he obtain a license, collect the tax on sales made by him to consumers, and secure the payment of the same to the state by the purchase of tax receipts, are not unreasonable regulations of his enjoyment of the aforementioned rights guaranteed to him by the Constitutions; and speaking generally as to other claims of plaintiff, we do not find that any of his rights growing out of the agreed facts or incidental thereto are so regulated or injuriously affected by any of the provisions of said act as to violate any of the provisions of the Constitutions.

As has been said, it is established by the courts of this state that every possible presumption is in favor of the validity of an act of the Legislature. This attitude of the judiciary towards a co-ordiuate branch of the state government is recognized as a sound public policy, and its observance by-the courts of the state inferior to the Supreme Court is especially appropriate in view of the fact that the people have amended the Constitution so as to require the concurrence of all but one of the judges of the Supreme Court to declare unconstitutional an act of the Legislature. The fact that the people have thus limited the power of the highest court in our judicial system, justifies courts inferior thereto in refusing to declare an act of the Legislature unconstitutional except when there is no doubt that the act violates a plain and specific provision of the Constitution.

Finding on the issues in favor of the defendants, the petition of the plaintiff is dismissed, at his costs.

Petition dismissed.

Funk, P. J., and Stevens, J., concur.  