out the state must be expended for a public purpose, whether expended directly by the commonwealth, or indirectly, through various governmental agencies which the general court has established. It cannot authorize those agencies to expend money for a purpose for which it could not itself appropriate public moneys.

Wheelock v. Lowell, 196 Mass. 223, 124 Am. St. Rep. 543, 81 N. E. 977, 12 Ann. Cas. 1109.

In Massachusetts, matters of local government have been largely intrusted to counties and municipalities established as corporations for that purpose. Their authority has usually been limited, and, in the main, confined, to public purposes of a local character.

Willard v. Newburyport, 12 Pick. 227; Northampton v. Hampshire County, 145 Mass. 109, 13 N. E. 388.

There are many public purposes for which they are not ordinarily authorized by law to expend money.

Stetson v. Kempton, 13 Mass. 272, 7 Am. Dec. 145; Tash v. Adams, 10 Cush. 252; Coolidge v. Brookline, 114 Mass. 592; Spaulding v. Peabody, 153 Mass. 129, 10 L.R.A. 397, 26 N. E. 421.

Municipalities, being merely agencies established by the government of the commonwealth, may be at any time wholly or partially destroyed by the general court, and their functions transferred to other agencies operating throughout the commonwealth.

Weymouth & B. Fire Dist. v. Norfolk County, 108 Mass. 142; Com. v. Plaisted, 148 Mass. 386, 2 L.R.A. 142, 12 Am. St. Rep. 566, 19 N. E. 224.

Even the so-called proprietary activities of a municipality are expressions of a public purpose from the point of view of taxation. Cities and towns are protected as private corporations in the ownership of property thus acquired, and they have many of the obligations of private corporations with reference thereto. But they hold such property in the public interest, and expend and raise money by taxation in connection therewith only because of the public purpose involved.

Jones v. Portland, 245 U. S. 217, 62 L. ed. 252, L.R.A.1918C, 765, 38 Sup. Ct. Rep. 112, Ann. Cas. 1918E, 660; Milford Water Co. v. Hopkinton, 192 Mass. 496, 78 N. E. 451.

There can be no question but that Massachusetts could directly operate one of these proprietary public activities in any particular locality; for example,

a local system of water supply or a local street. railway.

Green v. Frazier, 253 U. S. 233, 64 L. ed. 878, 40 Sup. Ct. Rep. 499.

In the metropolitan water and sewerage systems it has long been doing this for a group of municipalities constituting the so-called Metropolitan District. It is now operating the system of the Boston Elevated Railway for a similar district. It is not essential to either of these enterprises that the expenses be apportioned to the communities benefited. If the purpose had not been generally public, the general court would have had no power to pledge the credit of the commonwealth therefor, or pay the expenses thereof, even subject to subsequent reimbursement. The transfer of the burden to the municipalities benefited by means of a special tax was not an essential feature of the validity of these enterprises; it was only a matter of legislative discretion and fair dealing.

Re Kingman, 153 Mass. 566, 12 L.R.A. 417, 27 N. E. 778; Opinion of Justices, 231 Mass. 603, P.U.R.1919D, 612, 122 N. E. 763; Boston v. Treasurer, 237 Mass. 403, 130 N. E. 390.

The statute in question does not deny to the plaintiff in error the equal protection of the laws.

Bells Gap R. Co. v. Pennsylvania, 134 U. S. 232, 33 L. ed. 892, 10 Sup. Ct. Rep. 533; Thomas v. Gay, 169 U. S. 264, 42 L. ed. 740, 18 Sup. Ct. Rep. 340; Cole v. La Grange, 113 U. S. 1, 28 L. ed. 896, 5 Sup. Ct. Rep. 416; F. S. Royster Guano Co. v. Virginia, 253 U. S. 412, 415, 64 L. ed. 989, 990, 40 Sup. Ct. Rep. 560; Re Kingman, 153 Mass. 572, 12 L.R.A. 417, 27 N. E. 778.

Mr. Justice Clarke delivered the opinion of the court:

In this proceeding we are asked to review and reverse a judgment of the supreme judicial court of Massachusetts, holding valid an act of the general court (General Act 1919, chap. 314), providing for the distribution of the proceeds of an income tax among the towns, cities, and taxing districts of that state, against the contention that it violates the due process and equal protection of the laws [595] clauses of the 14th Amendment to the Constitution of the United States.

By amendment to the Constitution of Massachusetts, approved by the people. in 1915 (xliv.), the general court was given power to impose a tax at different rates upon income derived from dif

ferent classes of property, but at a rate, amount of the income tax must be so uniform throughout the commonwealth distributed each year. on incomes derived from the same class of property, and to exempt the property producing such income from other taxes. Pursuant to this authority, a law was enacted in 1916 (General Acts 1916, chap. 369), which it is sufficient to describe as taxing, with exceptions negligible here, income received from bonds, notes, money at interest, and debts due the person paying the tax; dividends on shares of any corporations not organized under the laws of Massachusetts; dividends on shares in partnerships, associations, or trusts, the interest in which is represented by transferable shares; and income derived from professions, employments, trade, or business. Intangible property, the income from which is taxed by the act, is practically exempted from local taxation.

It is obvious that it was the purpose of this act to reimburse the various taxing subdivisions until the year 1928, to the extent thought necessary to supply the loss which each would sustain by the withdrawal from its taxing power of the intangible property the income of which was taxed by the state, and that prior to 1928 any excess of the income tax fund over such requirements, and beginning with that year and continuing thereafter, the whole of that fund, should be distributed to such subdivisions in proportion to the amount of the state tax paid by each.

The validity of this act is not assailed. Prior to the enactment of this law, the taxing subdivisions of the state had taxed the real estate and tangible and intangible personal property, within their respective jurisdictions, for both state and local purposes, and the exemption from local taxation of intangible property, provided for in the act, necessarily resulted in an important reduction in their revenues.

The proceeds of the income tax thus provided for were distributed by temporary acts applicable only to the years 1917 and 1918, but in the year 1919 the act was passed, the validity of which is assailed in this proceeding, which provides, in substance: that the state treasurer shall pay to each city, town, and district, from the income tax [596] collected for the year 1919, an amount equal to 90 per cent of the difference between the average amount of the tax levied on tangible and intangible personal property therein in the years 1915 and 1916, and the average that would be produced by a tax upon the personal property actually assessed therein for the years 1917 and 1918 at the average of the rates of taxation prevailing therein in 1915 and 1916. In each succeed ing year, until and including the year 1927, the amount payable was reduced to an amount 10 per cent less than it was for the next preceding year. Any amount collected in any year prior to 1928, in excess of the required payments, must be distributed to the cities, towns, and districts of the state in proportion to the amount of the state tax imposed upon each for such year, and in 1928 and thereafter the whole of the

The petition in the case is one for mandamus, and the essential allegations of it are: that the petitioner, an inhabitant of the town of Brookline, in the years 1919 and 1920, derived income from intangible personal property and otherwise which rendered him subject to the provisions of the Income Tax Act of 1916; that the state tax in Massachusetts is imposed upon towns and cities in proportion to the value of the real estate and tangible personal property and polls taxable therein, without regard [597] to intangible property or incomes taxed; that a sum in excess of one million dollars was raised in the year 1920 by the taxation of the inhabitants of Brookline upon incomes derived during the year 1919 from intangible property located in that town and on other income earned therein, and that as great an amount will be in like manner raised in 1921; that under the distribution statute of 1919 there will be returned to the town of Brookline not more than $500,000 in the year 1920, and in each year thereafter a less amount until, in the year 1928, not more than $250,000 will be returned to it, while other towns, having greater real estate and tangible personal property valuation for taxation, will receive much more than their inhabitants will have contributed to the income tax fund; and that such payments may be used by the cities and towns receiving them, if they so elect, for the exclusive use and benefit of their own inhabitants for local and "proprietary" purposes, which would not in any degree contribute to the benefit of the petitioner, or of the inhabitants of Brookline, or of the citizens generally of the commonwealth. Upon these allegations a writ of mandamus, commanding the respondent not to distribute any of the income tax collected in the years 1920 or 1921, was prayed for.

Upon demurrer the petition was dis-, statement, it may plainly be derived missed.

This statement of the case shows that it is admitted: that the Income Tax Act of 1916 is a valid law; that the contention is, only, that the Act of 1919, providing for distribution of the tax, is unconstitutional; and that this contention rests wholly upon the allegation of the petition that such amount of the income tax collected by the state from the plaintiff in error and from other inhabitants of Brookline as may be returned to any other subdivision thereof, may, if the subdivision so elects, be used for local or "proprietary" purposes such that no benefit whatever will accrue. from the expenditure of the tax to the plaintiff [598] in error or to other inhabitants of the town of Brookline, or to the inhabitants of the state in general. It is argued that from these conditions it must follow that the plaintiff in error and other inhabitants of Brookline are taxed for the exclusive benefit of the inhabitants of other subdivisions of the state, and that this violates the due process of law clause; or, if not that, the equal protection of the laws clause of the 14th Amendment to the Constitution of the United States, and that therefore the proposed distribution of the tax should be restrained.

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The relation of the power of the Federal courts to the taxing systems of the states has been the subject of much discussion in the opinions of this court, notably in the following cases: M'Culloch v. Maryland, 4 Wheat. 316, 428-432, 4 L. ed. 579, 606-608; Providence Bank v. Billings, 4 Pet. 514, 563, 7 L. ed. 939, 956; State Tax on Foreign-held Bonds, 15 Wall. 300, 319, 21 L. ed. 179, 186; Davidson v. New Orleans, 96 U. S. 97, 105, 24 L. ed. 616, 620; Kirtland v. Hotchkiss, 100 U. S. 491, 497, 25 L. ed. 558, 561; Memphis Gaslight Co. v. Taxing Dist. 109 U. S. 398, 400, 27 L. ed. 976, 977, 3 Sup. Ct. Rep. 205; Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232, 237, 238, 33 L. ed. 892, 895, 10 Sup. Ct. Rep. 533; Merchants & M. Nat. Bank v. Pennsylvania, 167 U. S. 461, 463, 464, 42 L. ed. 236-238, 17 Sup. Ct. Rep. 829; Henderson Bridge Co. v. Henderson, 173 U. S. 592, 615, 616, 43 L. ed. 823, 831, 832, 19 Sup. Ct. Rep. 553; Travellers' Ins. Co. v. Connecticut, 185 U. S. 364, 371, 46 L. ed. 949, 954, 22 Sup. Ct. Rep. 673; Phillip Wagner v. Leser, 239 U. S. 207, 220, 60 L. ed. 230, 237, 36 Sup. Ct. Rep. 66.

While the nature of the subject does not permit of much finality of general

from the cases cited that since the system of taxation has not yet been devised which will return precisely the same measure of benefit to each taxpayer or class of taxpayers, in proportion to payment made, as will be returned to every other individual or class paying a given tax, it is not within either the disposition or power of this court to revise the necessarily complicated taxing systems of the states for the purpose of attempting to produce what might be thought to be a more just distribution of the [599] burdens of taxation than that arrived at by the state legislatures (4 Pet. 517; 15 Wall. 319; 109 U. S. 400; 185 U. S. 371, supra); and that where, as here, conflict with Federal power is not involved, a state tax law will be held to conflict with the 14th Amendment only where it proposes, or clearly results in, such flagrant and palpable inequality between the burden imposed and the benefit received, as to amount to the arbitrary taking of property without compensation,-"to spoliation under the guise of exerting the power of taxing." 134 U. S. 237; 173 U. S. 615; 239 U. S. 220, supra. For other inequalities of burden or other abuses of the state power of taxation, the only security of the citizen must be found in the structure of our government itself. So early as 4 Pet. 563, supra, it was said by Chief Justice Marshall: "This vital power [of taxation] may be abused, but the Constitution of the United States was not intended to furnish the corrective for every abuse of power which may be committed by the state governments. The interest, wisdom, and justice of the representative body, and its relations with its constituents, furnish the only security, where there is no express contract, against unjust and excessive taxation, as well as against unwise legislation generally."

The application of this summary of the law renders our conclusion not doubtful.

The income tax involved is uniform in its application to all income within the description of the act of all inhabitants of the state, without regard to the taxing subdivision in which they may reside. It is collected by the state, and the capital value producing the tax is practically exempted from other taxation. The tax was authorized by the people of the state, and the act was given form by the legislature, for the purpose of correcting flagrant inequalities of taxation, resulting from what the supreme judicial court, in the opin

This presumption of legality is a sound and strong one, and is amply sufficient to prevail over the effect of the admitted allegation of the petition.

The case presented is clearly not one of that extreme inequality in taxation of which the Federal courts should lay hold, but involves rather a question of state policy, of a character which the people have been satisfied to leave to the judgment, patriotism, and sense of justice of representatives in their state legislature.

ion in this case, called the "coloniza- distributed to them. Every presumption" of wealthy owners of intangible tion is in favor of legality, in the absecurities in [600] towns and cities sence of evidence to the contrary." which had exceptionally low rates of taxation, "brought about by avoidance and evasion, legal and illegal, of the tax laws prevailing before the enactment of the Income Tax Law." Report to the senate and house of representatives of Massachusetts by "The Joint Special Committee on Taxation," January 31, 1919. The report just referred to was made after an elaborate study of the subject of the distribution of this income tax, in the progress of which largely attended public hearings were held in many cities of the state, and it recommended the law assailed, in substantially the form in which it was enacted. The plan of returning the tax to the various taxing districts in which those who paid it resided, which is so strongly urged in [602] STATE OF OKLAHOMA, Comargument, was carefully considered, and was rejected, as expensive and difficult,

The judgment of the Supreme Judicial Court of Massachusetts is affirmed.



if not impracticable, of application, and STATE OF TEXAS, Defendant; the United

as calculated to ignore the considerations which led to the enactment of the law, and to restore the evils and inequalities of taxation which it was devised to correct. It is also apparent that this distribution law should not be considered as an isolated provision, but as an important part, which it clearly is, of an elaborate and involved system of state taxation, which would be seriously affected by the granting of such a writ of mandamus as is prayed for.

States of America, Intervener.

(See S. C. Reporter's ed. 602.)

[No. 23, Original.]

June 1, 1921.

Order announced by Mr. Justice McKenna:

Upon application of A. E. Pearson, R. R. Bell, Susie Shaw, Georgia Darby, Mrs. John Mounts, Henry G. Beard, and the Silver Moon Oil Company, claimants of certain tracts or parcels of land purchased by Fred Capshaw from the United States of America under patent dated February 17, 1920:

Accepting as true, as we must, the allegation of the petition, admitted by the demurrer, that the local subdivisions of the state may, "if they so elect," devote the money derived from the income tax through the distribution provided It is ordered that the receiver be and for in the act assailed, to purposes he is hereby authorized and directed to which might not confer any certain ben- sink a well for oil and gas upon the land efit upon the plaintiff in error or per- described in said patent at such place sons in like situation, yet, it must be as the receiver shall select, provided said accepted, on the other hand, that it is applicants shall pay in advance from entirely clear that there are many pur- time to time, as required, the cost and poses to which these subdivisions may expense of sinking the same and bringdevote the money, "if they so elect," ing it into production. The said well which would be of such state-wide in- shall be operated by the receiver as he fluence that the plaintiff in error and operates wells on other lands in the those similarly situated would very cer- riverbed area, and he shall conserve and tainly be benefited [601] by the expend- dispose of the proceeds of the oil and iture of it. It must be said also in this gas as in the case of wells on other case, as was said by the supreme judicial lands in the riverbed area, and shall recourt of Massachusetts, in the decision imburse the said Pearson et al., out of of a similar case, Duffy v. Treasurer, 234 Mass. 42, 25 N. E. 135: "There is nothing on this record to justify the assumption that the several municipalities design to devote to other than public use any portion of the income tax thus

the net proceeds, for the moneys so advanced and paid by them for drilling the well and bringing it into production; the remainder of such proceeds to be retained by him, subject to the order of the court.



STATE OF TEXAS, Defendant; the United States of America, Intervener.

(See S. C. Reporter's ed. 603.)

[No. 23, Original.]

June 1, 1921.

Order announced by Mr. Justice McKenna:

Upon motion of Luther Eoff, claiming to be the owner of an oil and gas lease upon a certain tract of 500 acres of land described in his motion, situate on the flood plain on the south side of Red river, in range 15 west;

It is ordered that the receiver be and he is hereby authorized and directed to sink a well for oil and gas upon the land described in said motion at such place as the receiver shall select, provided said applicant shall pay in advance from time to time, as required, the cost and expense of sinking the same and bringing it into production. The said well shall be operated by the receiver as he operates wells on lands in the riverbed area, and he shall conserve and dispose of the proceeds of the oil and gas as in the case of wells on lands in the riverbed area, and shall reimburse the said Eoff out of the net proceeds for the moneys so advanced and paid by him for drilling the well and bringing it into production; the remainder of such proceeds to be retained by the receiver, subject to the order of the court.



STATE OF TEXAS, Defendant; the United States of America, Intervener.

(See S. C. Reporter's ed. 603, 604.)

[No. 23, Original.]

June 1, 1921.

Order announced by Mr. Justice McKenna:

Upon motion of J. R. Armstrong et al., and upon the assent of the receiver, it appearing that the receiver has in his hands a fund of approximately fifty thousand dollars, being part of the proceeds derived by him from the production of Receiver's Wells Nos. 157, 162, and 170, operated by him for said Armstrong and for one C. J. Benson, under whom he claims by assignment;

It is ordered that Frederick S. Tyler, Esq., be and he is hereby appointed a special master to hear and report to this court for determination the claim of said J. R. Armstrong [604] to have said fund turned over to him as purchaser of said wells; and said master shall hear and report on said claim and on all other claims that may be presented against said fund.

Said master shall have authority to issue process of subpoena to compel the attendance of witnesses, and it shall be his duty to give notice to all parties concerned, to fix the time and place of hearing, and adjourn the same from time to time if necessary; and he shall report all the evidence taken, together with his findings of fact, conclusions of law, and recommendation in the premises, for the ultimate consideration and action of this court.

If, for any reason, the said Frederick S. Tyler, Esq., shall be unable to act as such special master, or to complete his duties as such, a special master to act in his place shall be named by the Chief Justice or the senior Associate Justice of this court.



STATE OF TEXAS, Defendant; the United
States of America, Intervener.

(See S. C. Reporter's ed. 604, 605.)
[No. 23, Original.]

June 1, 1921.

Order announced by Mr. Justice McKenna:

Upon considering the fifth report of the receiver, filed herein May 26, 1921, it is ordered:

(1) That until further order all development work by the receiver (except as prescribed in certain other orders made this day) shall be confined to the completion of the wells in the riverbed area, about twelve in number, work upon which already has been begun.

(2) That the receiver be and he is hereby authorized and directed to collect, withhold, and impound three sixteenths of the gross proceeds of gas produced by wells within the receivership area from and after June 1, 1921.

(3) That the receiver be and he is hereby authorized to publish a notice in four daily newspapers, two circulating in Texas and two circulating in Okla

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