Carstairs v. Cochran

Pearce, J., delivered the opinion of the Court. This appeal constitutes the third attack upon the validity of of the Act of 1892, ch. 704, as now amended by the Act of 1900, ch. 320, being secs. 204 to 213, inclusive, of the Supplement to the Public General Code of Maryland, providing for the collection of taxes upon distilled spirits in this State. The appellants admit that all the features of the law which are here assailed upon constitutional grounds, were considered by the Court in Monticello Co. v. Baltimore City, 90 Md. 416, ⁴⁹⁹ and that while the Act was there held invalid, as it then stood, because of the failure to provide for a hearing in respect to the valuation to be placed on the spirits for the purposes of taxation, it was declared to be “ in other, respects free from constitutional objections.” They contend, however, that the sole ground of the decision in that case was the failure to provide for notice of assessment (a defect which has since been cured by the Act of 1900, ch. 320), and that the expression of opinion upon any other point was not involved in the decisive objection on which the judgment was reversed, and was therefore an “obiter dictum” which should not preclude them from asking, or the Court from granting, a reconsideration of what was not then, but necessarily now is, the decisive point in controversy. We cannot agree that the expression of opinion referred to was an obiter dictum.

All the constitutional objections which are here urged, were urged in that case by the late Judge Fisher with all the ability and force for which he was so justly distinguished, and the ruling upon the prayers, which there constituted the single exception, required the consideration by the Court of all those objections. It may be difficult to frame a concise definition of an obiter dictum applicable to every such expression of opinion, and some Courts incline to the rule that the most deliberate expression of opinion, upon a question distinctly raised in the record, and fully argued by counsel, may nevertheless be regarded as a dictum, unless essential to the actual disposition made of the case. But as Bouvier well says : “It is difficult to see why, in a philosophic point of view, the opinion of the Court is not as persuasive on all the points which were so involved in the cause that it was the duty of counsel to argue them, and which were deliberately passed on by the Court, as if the decision had hung upon but one pointand in Maryland the rule is in accord with this view. In Alexander v. Worthington, 5 Md. 489 , it is said: “All that is necessary in Maryland to render the decision of the Court of Appeals authoritative on any point decided, is to show that there was an application of the judicial mind to the ⁵⁰⁰ precise question adjudged and in Michael v. Morey, 26 Md. 261 , it was said that a decision there cited, could not be said to be obiter dictum, “as the question was directly involved in the issues of law raised by the demurrer to the bill, and the mind of the Court was directly drawn to, and distinctly expressed upon the subject.” But as the question here is said to be one of much importance to the owners and custodians of this species of property, and is certainly important to the State, which derives all its needed revenues from taxation, and as it has been argued here with great earnestness and conspicuous ability, we shall state as briefly as possible the reasons which induce us to adhere to the views heretofore expressed.

The provisions of the Act of 1892, ch. 704, were sufficiently detailed in the opinion rendered in Monticello Co. v. Baltimore City, supra, and that statement will be adopted for this case without repeating it here. That Act is assailed here .as it was there, as fundamentally vicious, and upon precisely the same grounds, with the exception of the want of notice of assessment, which has been cured by the Act of 1900, ch. 320. These grounds are twofold ; first, that it lays a tax upon property, and not upon the owner of the property, and second, that it compels one, not the owner of the spirits, to pay the tax due by the owner who is usually unknown to the party compelled to pay. Upon the first of these grounds we said in the Motiticello case: “Taxes of the kind here dealt with, are, under Art. 15, of our Declaration of Rights, levied not on things, but on the oivners of things ; and the value of the things owned fixes the measure of the owner’s liability to contribute in taxes towards the support of the government.

This is an axiom of political economy, no less than a fundamental provision of our organic law. Appeal Tax Court v. Patterson, 50 Md. 366 ; U. S. Elec. Power and Light Co. v. State, 79 Md. 63 . It cannot therefore be presumed that the Legislature deliberately intended to disregard this principle, and to place the tax on the spirits, and not on the owners of them. ‘Every person in the State,’ says the 15th Art. of the Declaration of Rights, ‘or persdn ⁵⁰¹ holding property therein, ought to contribute his proportion of public taxes for the support of government according to his actual worth in real and personal property.’ It is the individual, then, who is in the State, or who holds property therein, that is liable to taxation.

He may be out of the State, he may be a non-resident, but if he has property situate here, he is as much bound to contribute to the support of the government according to the value of that property as though he were permanently domiciled within the limits of the commonwealth. The purpose of the Act, obviously, was to raise a revenue from the owners of a„ class of property which up to the time of its adoption, had not been reckoned in the assessment upon its owners ; and the peculiar nature of the property itself, the known difficulty in tracing its ownership, and the ease and facility with which the title to it is transferable, were all vital elements to be considered in devising a scheme for subjecting the persons who- owned, had possession of, or controlled these distilled spirits, to the obligation of contributing their just share of the public burden. Though the language employed, like that used in many of the other assessment laws, if read literally would indicate an intention to impose the tax on the property, and not on the owner of it, that is not its meaning when considered in connection with the settled policy of Maryland as announced in the Declaration of Rights, and we hold therefore that the tax is upon the owner of the spirits, and not specifically upon the spirits.” We have reproduced this passage from the opinion in the Monticcllo case, as a clear, adequate and satisfactory exposition of the correspondence of the statute, in this regard, with the 15th Article of the Declaration of Rights, upon which, after reconsideration of the subject, we feel we can safely repose. In support of this confidence we may appropriately refer to the language of Appeal Tax Coart v. Patterson, supra, in which the Court, quoting from Cooley on Taxation, declares that protection of the government is the consideration for which taxes are paid ; that this protection may be either to the rights of person, or to the rights in property, and that ⁵⁰² taxes may consequently be imposed when either person or property is within the jurisdiction, and that it is competent for any State to provide that tangible personal property situated within it may be taxed there.

The Court then proceeded to say: “The 15th Article of our Declaration of Rights is apparently a modification of one of the four maxims with regard to taxation in general, laid down by Adam Smith in The Nature and Causes of the Wealth of Nations. That distinguished author’s first maxim is, ‘The subjects of every State ought to contribute towards the support of government as nearly as possible in proportion to their respective abilities ; that is in proportion to the revenue which they respectively enjoy under the protection of the State.’ ” The analogy of thought and expression here is marked and throws a clear light upon the meaniug of our 15th Article. And so in Ward v. Const., 10 B. & C. 625, where a tax was payable by all persons “having or holding lands,” the words were held to apply to all persons receiving the rents and profits, and so to embrace both lessor and lessee, according to the value of their respective estates or interests in the lands. The argument of the appellants upon this point as stated in the language of their brief, is, that this Act compels one person to contribute not his proportion, but another person’s proportion of public taxes for the support of government, by requiring him to act as collector.

But this statement confounds contribution and payment and wholly omits the consideration of the lien given the distiller upon the property in his custody, which effectually protects him against the contribution of another’s .proportion of taxes, while it secures to him the repayment of that which he is required to collect and pay upon the faith of the lien created in his favor. The contribution to public taxes required of every property owner according to his actual worth in real and personal property, necessarily requires uniformity of taxation and though both the standard by which valuation is made, and the rate of tax imposed, be uniform in each class, yet the uniformity required by Art. 15 as a vital element of “just proportion” cannot be attained unless ⁵⁰³ all the tangible property in the State is so valued and assessed, and unless its owner wherever he may be does contribute his proportion according to the value of that property. So far then, from the 15th Article forbidding the tax here sought to be recovered, it imperatively requires that some adequate means be devised for enforcing its payment. In reference to the objection that the Act in question takes one man’s property to pay the debts of another, we said in the Monticello case: “The requirement that the distiller shall pay the tax for the owner is neither unreasonable nor unlawful, because it simply makes him the agent of the State to collect for the State, precisely as a corporation is made an agent to collect from its stockholders the tax due by them on the stock which they hold.

The legislation of 1892 with respect to distilled spirits, is, in this particular, identical with the provisions of the Code relating to the tax on shares of stock, and these latter have been upheld by this Court as valid enactments. Casualty Ins. Co.’s case, 82 Md. 564 ; Amer. Coal Co. v. County Comns., 59 Md. 197 .” By sec. 138 of Art. 81, the tax upon shares of stock in home corporations held by non-residents, is to be levied and collected from such corporation, and may be charged to the account of such stockholders, and shall be a lien on the stocks therein held by them respectively until paid ; and sec. 141 makes a similar provision as to resident stockholders, except that no lien is given as to them.

In 59th Md., supra, the Court said: “The statute having created the duty and obligation to pay, when the shares of stock are assessed to the individual owners, that duty and obligation on the part of the corporation may be enforced by a proper action at law, the plaintiff in such case showing the right claimed to be within the statute.” In the Casualty Co.'s case, supra, the decision in 59th Md. was confirmed and reference was made to Nat. Bank v. Kentucky, 9 Wall. 353 , in which the Court said: “In the case ol shareholders not residing in the State, it is the only mode in which the State can reach their shares for taxation.” And Judge Cooley says on page 373 of his work on taxation: “Statutes ⁵⁰⁴ sometimes provide that tangible personal property shall be assessed wherever in the State it may be, either to the owner himself \ or to the agent or other person having it in charge; and there is no doubt of the right to do this, whether the owner is resident in the State or not,” and numerous cases are cited in support of'this statement of the law. The case of Hartman v. Greenhow, 102 U. S. 684, was much relied on by the appellant to show that the Supreme Court denies this doctrine, but it cannot be properly so regarded. In that case, Hartman was the owner of certain overdue coupons cut from bonds issued by the State of Virginia.

The bonds to which said coupons were originally attached were held by a third party, and Hartman tendered to the treasurer of Richmond these coupons in payment of taxes due by him, they being receivable by law for that purpose. The law however forbid the treasurer to receive such coupons in discharge of taxes, without first deducting the taxes due on the bonds to which the coupons were originally attached, and he claimed the right to make such deduction from these coupons. It was determined that the coupons held by Hartman being negotiable when detached from the bonds, and passing by delivery, ceased to be incidents of the bonds, and were distinct contracts imposing separate obligations upon the State, and that the holder of the contract evidenced by the detached coupons, . could not be required to pay the taxes levied upon the contract evidenced by the bonds, and held by a stranger. But there is no analogy or similarity between that case, which deals with the rights of a holder of a negotiable instrument, and one in which the agent or custodian of another’s tangible property is required to