
    No. 6857.
    Louisiana Cotton Manufacturing Company vs. City of New Orleans.
    The constitutional provision granting to ths Legislature the power to exempt from taxation property actually used for church, school, or charitable purposes is an enumeration, and excludes from exemption all property not enumerated.
    A law which commutes the taxes on property not actually used for church, school, or charitable purposes, by authorizing the payment of a small stated sum in place of taxes is as much a violation of the constitution as if it wholly exempted the property from taxation.
    ^PPEAL from the Fifth District Court, parish of Orleans. Rogers, J.
    
      John W. & W. 8. Finney for plaintiffs and appellants.
    
      U. N. Ogden, Attorney General, B. F. Jonas, City Attorney, and 8am. P. Blanc, Assistant City Attorney, for defendant and appellee.
    The opinion of the court on the original hearing was delivered by Manning, C. J., and on the rehearing'by. White, J.
   Manning, C. J.

The plaintiff purchased ground in New Orleans, with buildings and machinery upon it adapted to the manufacture of cotton goods, and commenced their manufacture in 1877. The board of assessors included this property in their assessment at a valuation of forty thousand dollars. In that year the plaintiff paid- one hundred dollars to the State, and the same sum to the City, as a commutation for the taxes which each could claim, under authority of an act of the General Assembly, which exempted any incorporated company, whose-business was the manufacture of cotton or woollen goods, from all taxes, by the payment of the sums above mentioned in due time. Sess. Acts 1875, p. 107. The object of this suit is to annul the assessment of this property, and to prevent the delivery of copies thereof to the Auditor and the Recorder of mortgages.

The exception of no cause of action was pleaded, in this; that even if the property be exempt from taxation, the plaintiff should wait until a tax is demanded before he complains, and Roudanez v. Mayor, 29 Annual, 271 is cited as authority. The dissimilarity in the two cases is manifest. In Roudanez a few persons undertook to prevent the holding of an election to determine whether a tax should bé levied to aid a railway. We held their action premature because none of their rights had been invaded, and the danger they apprehended was too remote to warrant an injunction. In this case a present right is claimed to be affected, and an imminent peril to that right is sought to be averted. The assessment-roll stands in lieu of citation in legal proceedings. If the plaintiff should fail to pay the assessed tax, the deposite of the roll is the first step in a suit to enforce its payment. It was an act which might operate great injury, and he was not bound to wait until another step had been taken towards its infliction.

The defence is based upon the alleged unconstitutionality of the Act which exompts this property from taxation. It is claimed that whed the constitution says, “all property shall be taxed in proportion to its value, to be ascertained as directed by law,” and in the next sentence confers upon the General Assembly the power to exempt from taxation property actually used for church, school, or charitable purposes, that it means, no property shall be exempt except it be used for one of these three purposes. We have heretofore refused to adopt that construction of the constitution. New Orleans v. Davidson, 30 Annual, 554. New Orleans v. Fourchy, Ibid. 910.

In order to authorize the construction of the defendant, one part of the sentence must be expunged, so that it shall read — all property shall be taxed. That such was not the intent of the framers of that instrument is apparent from the permission immediately given to the legislature to exempt something. That the legislative interpretation of that sentence is not as the defendant claims, is exhibited by the frequent exemption of property, not coming within the classes mentioned, and our construction has been in harmony with that interpretation.

The constitution has not commanded that all property shall be taxed, but that none other than an ad valorem tax shall be levied upon it; that is to say, whenever the legislature does, tax property, it must tax it proportionate to its value. If art. 118 of the constitution read thus ; — All property shall be taxed, and the taxation shall be in proportion to its value — the mandate would be unmistakeable. Taxation in proportion to value is the principle asserted in that article as it appears in the constitution. The absence of any prohibition of exemption is marked and significant. The' permission to exempt certain property, because of the use to which it is applied, indicates only that the property thus used may be exempted, but does not exclude the exercise of power to exempt any other.

The legislature has constantly exercised the power to exempt other property, and has exempted it, as for example, household goods, mechanics’ and labourers’ tools, etc. of a specified value. Besides it is an admitted fact, that all property is not subjected to taxation, notwithstanding the provision of equality and uniformity, or even of universality. The power of the legislature to commute taxes, says Mr. Burroughs, is not restrained by the provision for equality and uniformity. Taxation, 56. This provision does not inhibit the legislature from, nor deprive it of the power of dividing the objeots of taxation into classes, but only commands it to impose the same burthen upon all who are in the same class. New Orleans v. Kaufman, 29 Annual, 283.

The judgment of the lower court was in favour of the defendant, and is erroneous. Therefore

It is ordered and decreed that the judgment rendered below is avoided and reversed, and that the injunction of the plaintiff is maintained and perpetuated, and that the plaintiff recover of the defendants the costs of both courts.

DeBlanc, J.

For the reasons given by me, in “Oity of New Orleans vs. Fourohy,” reported in the 30th A. p. 910,1 respectfully dissent from ■the opinion and decree in this case.

On Rehearing.

White, J.

Section one of act No. 8 of 1875, acts of 1875, page 107, provides as follows :

“ That any and all cotton and woolen factories and mills or establishments for the manufacture of cotton or woolen yarns, which are how in operation or which shall be put in operation at any time within .five years from the passage of this act, whether by an individual or firm ■or incorporated company, shall upon payment of one hundred dollars .at the beginning of each year to the State, and one hundred dollars to the city or parish in which said factory is situated, be exempt from further State, parish, and municipal taxation for a period of twenty .years from the commencement of operations, and no other State, parish, or municipal tax shall be assessed, levied, or collected during the whole ■or such part of the time as said mills or factories shall be used for the .purposes hereinbefore specified on the capital invested or employed in ■the production of said articles, nor on any lands, buildings, machinery, property, franchises, or appurtenances used therefor or therewith and ■necessary thereto.”

Section two provides for notice by the corporation or individual of the commencement of the operations, mentioned in the preceding section, to the Auditor of Public Accounts.

Section three is as follows:

Sec. 3. Be it further enacted, etc., That whenever any individual ■or individuals or incorporated company shall within said period of five years avail himself or themselves of the benefits and advantages conferred by this act, and shall bona tide commence the business of -manufacturing as above indicated, the commutation and immunities granted by this aet shall be in the nature of a contract not to be defeated.

Under these provisions the issues presented are whether the mandate of- the constitution, found in article 118, saying “the General Assembly shall have power to exempt from taxation property actually used for church, school, or charitable purposes,” strikes with constitutional nullity the provisions of the aet of 1875 already quoted — and if not, whether the act of 1875 violates the terms of the same article, saying “ that all property shall be taxed according to value.” With these issues the matters for consideration may, we think, be analyzed and determined by examining and answering the following questions :

1. Does the provision of the constitution, as to exemption, contain an enumeration, and hence a limitation on the power of the General Assembly to exempt from taxation ?

2. If so, does the act of 1875 create an exemption ?

3. If not, is the act of 1875 a specific tax, and therefore a violation •of the ad valorem rule as expressed in the constitution ?

First — That the grant of power to the General Assembly to exempt property actually used for church, school, or charitable purposes, is an enumeration, and hence an exclusion of the power to exempt all property not included in its terms, is now the settled jurisprudence. We recently so held in City vs. St. Anna’s Asylum, ante page 292, and our conclusion in that case was founded on an unbroken current of authority. City of New Orleans vs. Bank of Lafayette, 27 An. 276; City vs. Metropolitan Loan and Savings Bank, 27 An. 646 ; City of New Orleans vs. People’s Bank, 27 An. 648 ; City vs. St. Charles R. R., 28 An. 498 ; City vs. St. Patrick’s Hall, 28 An. 512 ; City vs. Lafayette Insurance Co., 28 An. 756.

This line of adjudicated cases is strenuously attacked as ill-considered and not founded. As a general rule, we would rest content under such circumstances by applying the doctrine of stare decisis in so grave matter as this is, involving the validity of a grant by the Legislature; but because of the earnestness and ability with which the views of counsel have been presented, as well as on account of our former opinion, in which we held the power of exemption to be unrestricted, which we have concluded' was erroneous, we will not be content with invoking stare decisis, but will review the jurisprudence in order to demonstrate the correctness of the theory upon which it is founded. No two principles are more elementary, in construing State constitutions, than those teaching that every power not denied exists, and that where a power, which would if not denied exist, has the methods of or instances when it may be exercised enumerated and defined, the existence of the enumeration is a restriction on the exercise of the power to the cases covered by thd enumeration.

The rule is thus stated by Judge Cooley in his work on Constitutional Limitations : “ Plenary power in the Legislature for all purposes of civil government is the rule. A prohibition to exercise a particular power is an exception. In inquiring, therefore, whether a given statute is constitutional, it is for those who question its validity to show that it is forbidden. I do not mean that the power must be expressly inhibited, for there are but few positive restraints upon the legislative power contained in the instrument. The first article lays down the ancient limitations, which have always been considered essential in a constitutional government, whether monarchical or popular ; and there are scattered through the instrument a few other provisions in restraint of legislative authority. But the affirmative prescriptions and the general arrangements of the constitution are far more fruitful of restraints upon the Legislature. Every positive direction contains an uielication against every thing contrary to it, or which would frustrate or disappoint the purpose of that provision.” P.87.

And, again : “Another rule of construction is, that when the constitution defines the circumstances under which a right may be exercised or a penalty imposed, the specification is an implied prohibition against legislative interference to add to the condition or to extend the penalty to other cases.” P. 64.

In fact, as instruments of construction, these rules have become truisms, and furnish the light by which courts and authors have uniformly guided their judgments and opinions along the narrow and perilous paths of constitutional interpretation. Reading by these rules the declaration that the General Assembly shall have power to exempt from taxation property actually used for church, school, or charitable purposes,” how else can it be qualified than as an enumeration ? The power to exempt would have been all extensive without expression. Is not, therefore, the grant of the power, for the words are “ shall have power,” in particular and specified instances by necessary, by inevitable, by overwhelming inference, a limitation on the exercise of the power other than as specified? Boundless, indeed, would be the field of inquiry if not thus limited. Eor instance, the constitution has called this court into being and fixed the salaries of its members; shall we say that all powers not being denied, therefore because the words in the constitution fixing the salary do not say only that the legislative power to increase at will exists, or conversely speaking, that because the words “ not less” are absent, that the right to decrease at pleasure can be availed of ? Carry the illustration to the other departments of government, and the conclusion seems irresistibly certain, that not only fatal to government but to society and human happiness would be the departure by courts from the familiar rule easpressio uniiis est easclusio alterius, with reference to which the constitutions of all the States of this Union have been adopted and construed for so many years. Nor do these views necessarily conflict with those expressed by this court in the cases New Orleans vs. Fourchy, 30 An. 910, or New Orleans vs. Davidson & Hill, 30 An. 554. Iti those cases, whatever may have been the words in which the thoughts were conveyed, we held in effect —

1st — That the rule of equality and uniformity was not violated by the exclusion from the objects of taxation of five hundred dollars of household and kitchen furniture, operating from the fact of its being an exclusion upon every class of society or condition of life. We say exclusion, because as justly remarked by Judge Cooley in his recent work on Taxation, “ some of these, such as the exemption of household furniture, tools of trade, etc., and the limited personal property which very poor persons may be possessed of, are to be looked upon rather as beiog in the nature of limitations of the general rule than as exceptions from it. The taxation is only over and above what is absolutely needed for the owner’s support.” P. 130.

2d — That even if the provision that “ all property shall be taxed according to value” was mandatory in directing that all property should be taxed, as it did not contain an enumeration of the objects of taxation it left necessarily scope to legislative discretion in defining such objects, which discretion was not transgressed by the exclusion from.', the definition of the objects of taxation $500 of household furniture.

Be this, however, as it may, our opinion in the present case is not’ predicated on the postulate that all property must be taxed, but that when property is taxed and comes within the general limit of the objects of taxation the only power delegated to the General Assembly to* exclude either persons or classes from the general rule by it adopted is-found in the constitution, that is, property “actually used for church,, school, or charitable purposes.” This may be illustrated by saying that if the constitutional provision were as follows : “ The General Assembly may fix and define the objects of taxation, and shall have power-after so fixing to exempt property actually used for church, school, or charitable purposes,” we would consider an exemption of property included within the defined objects, but not embraced by the enumerated’ power to exempt, as violative of the-constitution. For the power to-define the objects of taxation would be one thing, and that of exempting from the limits as defined and fixed another. The one is the right to say generally the line where taxation begins, the other to deflect that general line as marked by general laws, so as to exclude individuals or classes from their operation. The right to make general laws and the authority to exclude individuals from them, when made, differ in their nature and efféct — in their nature, because the essence of just legislation is universality; in their effect, because universality creates no-contract, and leaves the powers of government to be transmitted unimpaired to each successive repositary of legislative authority. Exemption,, on the contrary, under given conditions enters the domain of contract and contains the germ of destruction to result from the exercise by an agent, the duration of whose mandate is limited, of the power to contract for an immunity which survives the life of the mandatary and divests- the people for the future of an essential faculty of government, the right to-tax.

The argument as to the power of tho General Assembly to further-wise purposes by a judicious use of the right to make exemptions is not cognizable by judicial tribunals. It suffices for them that the constitution has spoken. But if the judicial mind could so forget its duty as to-allow arguments of expediency to enter the scales of justice against the letter of the constitution, it could but be admonished by the history of modern society of the fallacy of the alleged expediency; it could not fail to compensate the possible instrumentality for good of the power to exempt, against the certainty of harm to flow from its untramm-eled use, harm creating favored classes and property, and which imports the power to abdicate the very essence of sovereignty and of all just government, a uniform, equal, and unexempted bearing of the public burdens. If, as we are told, the inhibition of the power to exempt is divesting the General Assembly of its just authority, we can not fail to see that it is. a divestiture in the interest of society to prevent the contractual abandonment of an equally sovereign power against society and in the interest of selected persons or classes.

Third — The power to exempt not being within the legislative authority, except as to enumerated classes, does the act of 1875 create an exemption not covered by the constitutional provision ? Certainly, the property is not either church, school, or charitable, and equally certain is it that the right not to pay taxes is an exemption from taxation. The law conferring the right so defines it; “shall be exempt from taxation” is the language of the statute. But it is said the property is not exempt from taxation; the taxes are simply commuted. That the power to commute is forbidden by the denial of the power to exempt has been determined. City vs. Lafayette Insurance Co., 28 An. 756; City vs. St. Charles Company, 28 A. 498.

It seems obvious that these decisions are founded on reason, for the right to commute being simply an incident of the power to exempt, the-negation of one is the denial of the other. The books, so far as we have been able to examine them, are singularly deficient in definitions of tho-right to commute. Defined from several points of conflicting thought, it may, we think, be said to be “ a payment of a designated sum for the-privilege of exemption, or the selection, in advance, of a specific sum in lieu of an ad valorem tax.” If the first, it is indubitably an exemption ; if the second, and this covers the third inquiry proposed, then it is a-specific tax, and hence violates the rule of ad valorem, which prescribes-that all property shall be taxed according to value. Either point of the dilemma is fatal to the plaintiffs pretensions.

For these reasons, we think our former decree erroneous. It is-therefore set aside, and the judgment below is affirmed with costs.

Dissenting Opinion.

Manning, C. J.

The constitutional mandate, contained in art. 118-;. requires that all taxation of property shall be ad valorem. To my mind, the only difficulty in the present case is presented by the question, whether the provision of the act of 1875, exempting cotton and woollenfactories, etc. from further taxation on the payment of one hundred' dollars to the State, and a like sum to the City or parish, is not a specific tax.

The terms of that Act preclude such a construction. It does not impose a specific tax, to be paid by the property, or its owner, unconditionally and absolutely, but it is an exercise of the legislative power of" exemption, coupling with it a requirement that in order to make that exemption practically operative,' a given sum must be paid into the Treasury. If the decision in the case of St. Anna’s Asylum contains anything repugnant to the opinion read on the first hearing of this cguse, it must have been incidentally stated. At any rate it escaped my notice. I adhere to that opinion.

Concurring Opinion.

Marr, J.

I prefer to put my concurrence'in the deoree'just pronounced on the single ground that the commutation authorized by the Act of 1875, is not an exemption from taxation, but is the imposition of a specific tax, which is forbidden by the constitution, article 118.

The constitution of 1812 contained neither grant nor limitation of the power of taxation. Article 127 of the constitution of 1845, of which article 123 of the constitution of 1852 is a literal copy, seems to have had in view no other than the precise objects expressed in its terms; and to have been formed with no other design. These objects were:

1: To formulate the principle of equality and uniformity in taxation :

2: To prohibit specific taxation, by subjecting every species of property taxed to the same rate on valuation:

3 : To authorize an income tax on trades and professions :

4: To recognize the power of the Legislature to select the objects of taxation, and, consequently, in the exercise of its discretion, to exempt from taxation.

The constitution of 1864, article 124, seems to have been framed with the special design of depriving the Legislature of the power to select the objects of taxation, and the consequent power of exemption, except with respect to property actually used for church, or school, or ■charitable purposes.

Article 118, of the constitution of 1868, is copied from article 124, of the constitution of 1864, except that it substitutes the permissive “ may,” for the imperative “ shall,” leaving it discretionary with the Legislature to levy an income tax.

It would seem to be expedient, good policy, to leave some discretion to the Legislature, some power, carefully defined and strictly limited, to exempt from taxation other property besides that actually used for church, school, or charitable purposes ; but a comparison of articles 127, of the constitution of 1845, and 123, of the constitution of 1852> with the corresponding articles 124 of 1864, and 118 of 1868, will demonstrate, as I think, that it was the intention of the framers of the existing constitution to leave no discretion with the Legislature beyond that expressed in its terms. See the dissenting opinions in Eourcby’s case 30 An. 914, 915.

The power to exempt from taxation is a very delicate and a very important one. In my judgment the exigencies of this case do not require a decision as to the extent of that power; and I prefer that it should not be passed upon finally now, because I do not consider it necessary to do so. I apprehend that the tribunals of Louisiana, perhaps some of the decisions of this Court, have been unduly influenced by decisions in other States, and the doctrines enunciated by eminent text-writers on taxation, based upon constitutional provisions and legislation, not identical with, if not materially different from our own ; and that the only safe guide for us is the text of the constitution itself.

Concurring Opinion.

DeBlanc, J.

I concur in the opinion and decree read by Mr. Justice White, for the reasons given by me in the dissenting opinion by me expressed in the case of “City of New Orleans vs. Eourchy.”

Concurring Opinion.

Spencer, J.

I concur in the decree in this case, but prefer to rest my concurrence upon grounds somewhat modified, though, perhaps, not materially different from those expressed by Mr. Justice White.

I adhere to the doctrine in Eourchy’s case, 30 A. p. 910, to the effect that the Legislature is not obliged to make taxation universal; that it may omit or exempt from taxation, by a general provision, the whole or a stated amount of a species of property. Perhaps it would be more exact to say that the Legislature may fix the point where taxation shall begin on any species of property that is taxed, or may omit the species entirely. Thus, it may say that household effects shall only be taxed on the excess of their value over $500; or it may omit it entirely from the list of taxable property. But within the limits that the tax operates on any species of property, no exemption can be made, except for “ church, school, or charitable purposes.” Thus, in the case put, the excess over $500 in value of all household furniture must be taxed equally and uniformly, unless it is “used for church, school, or charitable purposes.”

But, in my judgment, the strongest reason for holding this act relative to taxation of cotton factories unconstitutional is that it in reality imposes a specific tax. The substance and marrow of that act is to fix a specific tax of $100 on cotton factories regardless of value. Plaintiffs can not maintain that it is a license tax for the privilege of carrying on a cotton factory, for if that be so there is no foundation for their claim of exemption from a tax on the property■ itself. Because the Legislature fixes the license of a class of persons pursuing an occupation at $100 is no reason that the property and capital employed in that business be not taxed. The act declares in effect that payment of $100 shall be in discharge and lieu of all taxes upon the property and capital of the factory. It is, therefore, necessarily a tax on the property, and violates article 118 of the constitution, which requires all taxation to be ad, valorem.  