
    GORMAN et v FRIEDLANDER, Treas et
    Ohio Appeals, 1st Dist, Hamilton Co
    Decided Sept 26, 1932
    Robert N. Gorman, Prosecuting Attorney, Cincinnati, and Jack B. Josselson for plaintiff.
    Clifford Cordes, Cincinnati, for defendants, Treasurer, and Auditor of Hamilton County.
    Gilbert Bettman, Attorney General, Columbus, Lewis F. Laylin, Columbus, Raymond J. Kunkel, Cincinnati, and Wm. J. Ford, Columbus, for defendant, State Auditor.
    Washington T. Porter, Cincinnati, and Morrison R. Waite, Cincinnati, for intervening petitioners, the Board of Trustees of Public Library.
   ROSS, PJ.

The question as so presented involves only the recent legislation as it provides for the distribution of the tax upon intangibles.

The right of the Legislature to levy and collect the tax is not challenged. The attack is directed solely to the right of the Legislature to provide for a distribution of such tax to the several counties of the state for local purposes, upon an unjust, inequitable, and unequal basis, which has no uniformity in its operation.

We now reproduce in full the schedule admitted to be a part of the pleading:

ADJUSTMENT OP THE UNDIVIDED CLASSIFIED TAX — MAY, 1932

The following table shows the complete adjustment of the Undivided Classified Tax collected in the Eighty-eight counties of the state as advance payments in 1932, and reported to Joseph T. Tracy, Auditor of State, at the May settlement 1932.

This adjustment was made in accordance with the provisions of Section 7 of Amended Senate Bill No. 323, as passed by the last General Assembly. This table shows the amount of the distributable share of each county, upon which the adjustment is based, as certified by the County Auditors.

The distributable shares represent the money lost to the municipal corporations, school districts, park districts, and sanitary districts of the State, by reason of the removal from the general tax duplicate of all motor vehicles, household goods and furnishings, pianos and musical instruments, moneys, credits, investments in stocks, bonds, joint stock companies and otherwise, and shares of bank stock or capital employed in banking. Such shares also include the money lost to libraries and township parks by reason of the constitutional limitation of the tax rate to fifteen mills.

The amount shown as collected in each county, is the net amount after deduction of the fees of the County Auditor and Treasurer and 1% for the use of the Tax Commission of Ohio.

The proportionate share is the amount of the total net collection in the state, to which each county is entitled at this adjustment.

The last two columns represent the amounts to be paid to the State by counties in which more than the proportionate share was collected, and the amounts to be paid by the State to counties, in which less than the proportionate share was collected.

Joseph T. Tracy, Auditor of State.

In considering this schedule, it is to be noted that the distributable share of each county, set out in the first column, represents the money lost to the municipal corporations, school districts, park districts, and sanitary districts of the state, by reason of the removal from the general tax duplicate of all motor vehicles, household goods and furnishings, pianos and musical instruments, moneys, credits, investments in stocks, bonds, joint-stock companies and otherwise, and shares of bank stock or capital employed in banking. Such shares also include the money lost to libraries and township parks by reason of the constitutional limitation of the tax rate to fifteen mills, and this amount under the law is based upon the tax collection of 1930; and it has been stipulated that the petition alleges that such amounts were produced ■by varying tax rates in the various counties of the state.

Referring again to the schedule, it is obvious that if the tax rate had been somewhat higher, say in Allen County in 1930, the amount of the distributable share of Allen County, as previously defined, would have been consequently larger in proportion, and possibly sufficiently large to eliminate the amount which Allen County is required to pay upon the warrant of the state auditor, which is ascertained by subtracting the proportionate share (column 5) of this county in the entire state intangible tax collection from the net amount collected by the county (column 4). This same reasoning applies to the other fourteen counties showing surpluses in the net amounts -collected in 1932 over their proportionate shares. It must be continuously borne in mind that these proportionate shares are predicated upon the 1930 tax returns, which were governed by the varying rates in the several counties.

It is just as obvious that had the tax rate of 1930 of the counties showing a deficit been smaller they would not have shown as large an aggregate collection as appears in the first column, and their proportionate share would have been consequently smaller and equalized by the net amount collected in 1932.

The result of all this is that it appears that the entire process of distribution of the 1932 collection is affected by and predicated upon the varying tax rates prevailing in the several counties in 1,930. So that the distribution varies like the rate in the county, and the legislation applying to and providing for such distribution of the entire tax collected, while constituting legislation of a general nature, wholly fails to have a uniform operation throughout the state, and thus violates the provision of the Ohio Constitution, Article II, §26:

“All laws, of a general nature, shall have a uniform operation throughout the State

That the power to tax is inherent in the state, and that the Legislature has full authority to levy and collect taxes and distribute same, are axiomatic propositions. Unless limitation be found in the Constitution this power remains unabridged. It may be even exercised arbitrarily, but under the provisions of the Constitution noted such legislation must have a uniform operation, and, if arbitrary, such arbitrariness must have uniformity in operation.

Courts must take into consideration, the result of legislation, and, even though it is manifest that such legislation is highly commendable in other respects, if the result of such legislation is to produce a situation showing a lack of uniformity in the operation of such legislative acts there is no course open but to declare such legislation, in so far as it offends against the constitutional limitation, invalid and void.

The able and ample briefs of counsel note many other arguments pro and con upon other phases of the issues involved. Our conclusion, as above set forth, renders any statement upon these unnecessary.

While this case is presented to the court upon demurrer to the petition as amended, it is our understanding that all parties are agreed that only a question of law is involved, and that the court shall render its final judgment upon the premises presented.

The specific prayer of the petition is only that the auditor and treasurer of Hamilton County be enjoined from honoring any warrant drawn upon them by the auditor of state under the legislation hereinbefore noted.

It is the conviction of this court that principles of equity, the public welfare, and even consideration for the rights of humanity demand that the relief granted should extend no further than to enjoin any action affecting the surplus over the proportionate share of the county in the general fund. To hold otherwise would be to impound the entire tax collected and thus paralyze all of the necessary activities of the political subdivisions affected. Courts cannot close their eyes to calamity and disaster following a given course, and must exercise every prerogative to prevent such a result.

It is the conclusion of this court, therefore, in view of the fact that some distribution of the entire fund shall be made, that pending further legislative action nothing said herein shall affect the right of the political subdivision involved to use that portion of the general fund designated as its proportionate share for local purposes, and that the surplus shall be retained pending action of the Legislature, which shall conform to the limitation imposed by the Constitution of the state of Ohio.

This is in conformity to the legislation in question; the only limitation therein being found in Section 7 of the act, where it is provided that “no distribution of such fund shall be made by any county treasurer until the foregoing requirements 'cf this.section have been fully complied with.” This provision, we find, under the principles previously announced, to be unconstitutional and void.

While the lower court held §§6, 7, and 8 invalid and unconstitutional in toto, we do not go to this extent, as these sections contain the authority for the county oficiáis to make distribution to the local subdivisions, and to such an extent these sections are valid and constitutional, and such officers may proceed thereunder.

It follows that so much of §8 of the act as requires the auditor of state to draw his warrant against 'the so-called surpluses, and the county officers to honor same, is specifically held unconstitutional and void.

Decree accordingly.

HAMILTON and CUSHING, JJ, concur.  