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Again, an examination of the act of March 4, 1899, discloses that it did not receive the approval of the governor, but became a law without his signature. While the failure of the executive to approve a bill does not affect its validity if it becomes a law without his approval, the fact remains that one of the great departments of the state gov ernment has withheld its recognition of the statute. The nonapproval of the act by the governor is at least suggestive of doubt in the mind of the executive in the validity of the law. It is also to be noted that the act under consideration is not a part of a general statute embracing a complete system for the assessment and collection of taxes, but is sporadic in its character, and stands separate and apart from all other legislation upon the subject of taxation. Such being its nature, the inference is not strained that it probably did not receive the attention which would have been accorded to it if it had constituted a portion of a general statute regulating the assessment and collection of taxes.

shall provide by law for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes, as may be especially exempted by law." The act in question is subject to the following objections: (1) It violates the rule of the Constitution requiring uniformity and equality in the rate of assessment and taxation; (2) the act is a special law for the assessment of taxes for state, county, township, and road purposes; (3) it grants to one class of citizens privileges and immunities which upon the same terms will not equally belong to all citizens; and (4) it exempts from taxation real estate not held for municipal, educational, literary, scientific, religious, or charitable purposes. If it shall be found upon examination that any one or more of these propositions is true, then the statute must be held invalid. All of the constitutional provisions referred to have been in force since November 1, 1851. But passing from these minor objections Carefully prepared and comprehensive stat- to those arising from the Constitution, it utes regulating the assessment and collec- will be found that, if the statute is to stand, tion of taxes have been adopted by the gen- the Constitution must give way. In other eral assembly from time to time; but from words, to sustain the act the court must, the taking effect of the state Constitution in the language of Judge Story, “abrogate until March 4, 1899, a period of nearly the text, fritter away its obvious sense, and half a century, no statute exempted from as- narrow down its true limitations." The 1st sessment for taxation any real estate on the clause of § 1, art. 10, of the Constitution ground that it was encumbered by a lien of declares that "the general assembly shall a mortgage. This circumstance is not con- provide by law for a uniform and equal rate clusive, but, as evidence of a practical inter- of assessment and taxation." By this clause pretation of the Constitution by the legis- the principle which must govern all legislalature, the failure for so great a length of tion on the subject of the assessment and time to recognize mortgage liens on lands collection of taxes is announced. At the as proper deductions from the value of the very basis of every valid statute of this kind lands for the purposes of taxation is en- lies the condition that the rate of assesstitled to some consideration. It is to be ob- ment and taxation must be uniform and served, too, that this practical interpreta-equal throughout the district or locality in tion of the Constitution as prohibiting such which the tax is levied. An "assessment" deductions is perfectly consistent with the is defined to be a valuation made by authorlanguage of that instrument, and is reason-ized persons according to their discretion, able and natural. Stuart v. Laird, 1 Cranch, as opposed to a sum certain or determined 299, 2 L. ed. 115; Martin v. Hunter, 1 by law. It is a valuation of the property Wheat. 304, 351, 4 L. ed. 97, 109; Cohen of those who are to pay the tax, for the purv. Virginia, 6 Wheat. 264, 418, 5 L. ed. 257, pose of fixing the proportion which each 294; Bank of United States v. Halstead, 10 man shall pay. Under our Constitution the Wheat. 51, 63, 6 L. ed. 264, 267; Ogden v. rule of ratio of valuation of real estate of Saunders, 12 Wheat. 290, 6 L. ed. 632; those who are to pay the tax must be uniMinor v. Happersett, 21 Wall. 162, 22 L. form and equal throughout the state, and ed. 627; People ex rel. Bay City v. State the ratio of taxation must be uniform and Treasurer, 23 Mich. 499; McCulloch v. equal throughout the district or locality afMaryland, 4 Wheat. 316, 4 L. ed. 579; fected. This is the first and paramount reCooley v. Port Wardens, 12 How. 299, 13 L. quirement. The 2d clause of § 1, art. 10, is ed. 996; The Genesee Chief v. Fitzhugh, 12 evidently subsidiary to the first. It relates How. 443, 13 L. ed. 1058; Rogers v. Good-to the means by which a uniform and equal win, 2 Mass. 475; Bingham v. Miller, 17 assessment is to be obtained. The general Ohio, 446, 49 Am. Dec. 471; Franklin Coun-assembly is to "provide such regulations ty v. Bunting, 111 Ind. 143, 12 N. E. 151. as shall secure a just valuation for taxation

of all property, real and personal." The ob- sence of taxation that it be levied with vious meaning of this provision is that com- equality and uniformity, and to this end petent persons shall be appointed or elected that there should be some system of ap as assessors to determine the valuation to portionment. Where the burden is common, be put upon property for the purpose of there should be common contribution to taxation, and that the general mode of pro- discharge it." Cooley, Const. Lim. 6th ed. cedure shall be fixed by law, but none of the 608; 2 Kent, Com. 231; Bright v. McCulregulations so prescribed can change the rule lough, 27 Ind. 223. It is said in Cleveland, of uniformity and equality of valuation im- C. C. & St. L. R. Co. v. Backus, 133 Ind. movably established by the 1st clause of the 513, 535, 18 L. R. A. 729, 33 N. E. 421, 428: section. The danger and abuse against "The 1st clause of this section [§ 1, art. 10, which the Constitution was intended to supra] is certainly complied with when the guard was an arbitrary valuation of prop- same basis of assessment is fixed for all erty by the state. Instead of an arbitrary property, and the same rate of taxation is and perhaps unreasonable assessment by the fixed within the district subject to taxation; law itself, a just valuation was to be se- that is to say, there is uniformity and equalcured. In this connection the term "just" | ity of assessment and taxation when all the is the equivalent of "correct," "honest," property is to be assessed at its true cash "true." Its use requires the valuation of all value, and the same rate is fixed on all propproperty of the same kind in the same tax-erty subject to assessment for the tax." ing district by a uniform and equal standard. And in Willis v. Crowder, 134 Ind. 515, 34 By no rule of constitutional interpretation N. E. 315, the court says: "The taxable can the term "just," as used in the 2d value of property is its fair cash value,—a clause of § 1, be said to qualify or limit fair cash value being the market or usual or restrict the meaning of the words "uni- selling price; and, if there be no market form and equal," used in the first. Under value, then it is the actual value that rules." the act before the court, a lot or tract of The act of March 4, 1899, does not permit land may be assessed for taxation at the an assessment of the mortgaged real estate rate of $1,400, while another lot or tract at its fair cash value, or at any value fixed in the same taxing district, and of the same by the judgment or discretion of the asvalue may be assessed for taxation at the sessors; but it requires that arbitrary derate of $700. The pretext for this viola- ductions shall be made of amounts fixed by tion of the rule of uniformity and equality the legislature, and which have no basis in of assessment is that the second lot is sub- or connection with the nature of the propject to the lien of a mortgage to the amount erty assessed, or even with the encumbrances of $700 or more, while the first is unen- to which it is subject. Under this act, none cumbered. The fallacy of this method be- of the property to which it relates can be comes apparent when it is remembered that assessed at its cash value, as other real general taxes are assessed against property, estate is assessed. The act does not attempt and not against its owners. The tax follows to divide the assessment for taxation, bethe thing against which it is assessed, and tween the mortgagor and the mortgagee, but does, in the ordinary sense, not constitute stops short with the deduction allowed to a debt against the owner. Its claim for the mortgagor or owner of the fee. revenue being paramount, the state has tirely relieves the mortgage interest from nothing to do with questions of title, liens, taxation if the mortgagee is a nonresident, or equities. Before the law, all property or if the mortgage is a school-fund mortstands alike subject to taxation, without gage. But it is claimed that absolute uniregard to the title by which it is held, or the formity and equality of assessment cannot equities with which it is charged. A valid be attained, and therefore the law must be sale for delinquent taxes fuses all rights of satisfied with something less. The answer ownership, extinguishes all equities, and to this proposition is that the obstacles to transfers to the purchaser an unencumbered uniformity and equality contemplated by title in fee simple. The entire legal title the courts which have used this language being in the owner of the lot or tract, and are those which inhere in the nature of the value of the land for taxation being un- things, such as the fallibility of men's judgaffected by the amount of liens upon it, the ment as to values, the mistakes and omisattempted regulation by which the valuation sions of public officers, and the frauds of of the land is made to depend upon the acci- owners. They are never such inequalities dent of the existence of a mortgage lien and differences as are created by the law destroys the uniformity and equality of as- itself. While the efforts of the law to prosessment required by the Constitution, and duce absolute uniformity and equality may therefore cannot be upheld. The general be ineffectual, the Constitution demands doctrine upon this subject is clearly stated that the taxing statutes shall aim at these by Judge Cooley: "It is of the very es-objects, and that such statutes themselves

It en

shall be free from provisions which destroy to a mortgage lien of $700; B's, to a vendor's them.

lien of $700; C's, to a mechanic's lien of 2. The act of March 4, 1899, is a special $700; D's to a street improvement lien of law for the assessment and collection of $700; and E's, to the lien of a judgment for taxes for state, county, township, and road $700. Can any reason valid in law, be given purposes and therefore falls within the pro- why A should have the right to a deduction hibition of § 22, art. 4, of the Constitution. of $700 from the value of his lot, as the The very title of the act indicates its spec-basis of assessment and taxation, but that ial character. It is not general either as to the property exempted from assessment and taxation, or the persons who are the objects of its discriminating bounty. It is entitled, "An Act Concerning the Taxation of Real Estate Encumbered by Mortgage.

B, C, D, and E shall be denied that privilege? Why "the amount of such valuation, remaining after such deduction shall have been made, shall form the basis for assessment and taxation for said real estate” in A's case, but that the full amount of the valuation of the lots owned by B, C, D, and E, without any deduction for the liens upon them, should form the basis of such assessment against them, it is impossible to discover. But even as among the favored owners of real estate encumbered by mortgaged liens, the classification is unequal and unjust. If A owns a lot valued for taxation

It does not apply to real estate encumbered by liens generally, but, without reason therefor, is confined exclusively to such real estate as is encumbered by a particular kind of lien. In this respect it favors certain individuals and property, and discriminates against all others of the same class who are similarly situated. It cannot be defended on the ground that there are two separate at $1,400, encumbered by a mortgage lien estates in lands encumbered by mortgage, of $700, he is allowed a deduction of $700. and that this fact constitutes a basis of But if B owns a lot valued at $500, encumclassification. The law declares that for the bered by a mortgage lien of $700, he is alpurpose of taxation the mortgagor shall be lowed a deduction of $250 only. Upon what deemed the owner of real property until natural or reasonable basis do these discrimforeclosure and possession taken by the inations rest? Is not the statute "discrimmortgagee. "In cases of mortgaged real es- inative between individuals of the" SOtate the mortgagor shall, for the purpose called "class, and does it not select some of taxation, be deemed the owner until the for an exceptional burden?" Suppose, howmortgagee shall have taken possession of the ever, the reasons urged in support of the mortgaged premises, after which the mort- statute in question are valid; that as it apgagee shall be deemed the owner." Section plies to all persons belonging to a class into 28, p. 205, Acts 1891 (§ 8438, Burns's Rev. which all property owners of the state may Stat. 1901). It has been held repeatedly by at some time enter, and as it is not in terms this court that a mortgage conveys no es limited to individuals of a class, it is theretate in the lands mortgaged, but simply fore not in conflict with the Constitution. creates a lien. § 1099, Burns's Rev. Stat. All enactments having these qualifications, 1901; Reasoner v. Edmundson, 5 Ind. 393; it is said, are to be regarded as within the Francis v. Porter, 7 Ind. 213; Morton v. limitations of the Constitution. The ownNoble, 22 Ind. 160; Grable v. McCulloh, 27 ers of all real estate encumbered by mortInd. 472; Fletcher v. Holmes, 32 Ind. 497. gage constitute a natural class, and legislaThis being so, what difference is there be- tion applying to all of them is general, and tween the lien of a mortgage on lands and not special. It follows that the owners of other liens? And why should real estate all real estate encumbered by vendors' liens subject to one particular kind of lien be constitute another class just as distinct and separated from other property also subject quite as natural; the owners of real estate to liens of equal dignity, and relieved from encumbered by mechanics' liens, another; equal burdens of taxation? The class to the owners of real estate encumbered by which the owner of the favored real estate street improvement liens, another; and the belongs is that of debtors and owners of real owners of real estate encumbered by judgestate subject to liens. The class to which ment liens, still another. Therefore no obthe property belongs is that of real estate jection could be taken to a further act of encumbered by liens. Why should these the legislature declaring that the owners of classes be subdivided, and one subdivision real estate liable for taxation in the state favored, and the remaining members of of Indiana, being indebted in any sum sethose classes discriminated against? To il cured by a vendor's lien upon real estate, lustrate the practical operation of the stat- may have the amount of such indebtedness, ute, let it be supposed that A, B, C, D, and not exceeding $1,000, deducted from the asE, each, is the owner of a lot of the value sessed valuation of the encumbered premof $1,400 on the same street, in the same ises for the year, and that the amount of block, in the same town. A's lot is subject' such valuation remaining after such de

reduce the people, while considering so grave and important a proposition, to the ridiculous attitude of saying to the legislature: 'You shall not discriminate between single individuals or corporations, but you may divide the citizens up into different classes, as the followers of different trades, professions, or kinds of business, or as the owners of different species or descriptions of prop

another, as much as you please, provided you serve all of the favored or unfavored classes alike;' thus affording a direct and solemn constitutional sanction of a system of taxation so manifestly and grossly unjust that it will not find an apologist anywhere,—at least outside of those who are the recipients of its favor. We do not believe the framers of that instrument intended such a construction, and therefore cannot adopt it." I have been unable to find a single decision, state or Federal, in which an arbitrary classification such as that created by the act of March 4, 1899, has been sustained. Neither is any decision of this character referred to in the prevailing opinion. On the other hand, the reported cases condemning such rules of assessment and taxation are numerous and emphatic. "This is a domain from which special and local legislation is utterly excluded whenever the legislative end can be effected by a general law." State ex rel. Van Riper v. Parsons, 40 N. J. L. 1, 9. “Interdicted local and special laws are all those that rest on a false or deficient classification.

duction shall have been made shall form of uniformity can as well be applied to such the basis for assessment and taxation for a classification as any other, and thus the said real estate for that year. Then other constitutional provision be saved intact. separate acts fixing deductions of $1,500 for Such a construction would make the Constiindebtedness secured by mechanics' liens, tution operative only to the extent of pro$250 for indebtedness secured by street im-hibiting the legislature from discriminating provement liens and $100 for indebtedness in favor of particular individuals, and would secured by judgment liens, must also be unobjectionable. Could such legislation be defended? If not, by what argument can a classification which selects as the objects of its favoritism one set of debtors, and excludes all others, notwithstanding their situation is in every legal aspect undistinguishable from that of the favored individuals, be saved from the condemnation under the Constitution? The very just and sensible re-erty, and legislate for one class, and against marks of Dixon, Ch. J., in Knowlton v. Rock County, 9 Wis. 421, are entirely pertinent here: "It is contended in argument," says the court, "that as those provisions fixed one uniform rate without the recorded plats, and another within them, thus taxing all the property without alike, and all within alike, they do not infringe the Constitution. In other words, that for the purpose of taxation the legislature have the right arbitrarily to divide up and classify the property of the citizens, and, having done so, they do not violate the constitutional rule of uniformity, provided all the property within a given class is rated alike. The answer to this argument is that it creates different rules of taxation, to the number of which there is no limit, except that fixed by legislative discretion, while the Constitution establishes but one fixed, unbending, uniform rule upon the subject. It is believed that if the legislature can by classification thus arbitrarily, and without regard to value, discriminate in the same municipal corporation between personal and real property within, and personal and real property without, a " State ex rel. Van Riper v. recorded plat, they can also by the same Parsons, 40 N. J. L. 1. "There must be submeans discriminate between lands used for stantial distinction, having a reference to one purpose and those used for another, the subject matter of the proposed legislasuch as lands used for growing wheat, and tion, between the objects or places embraced those used for growing corn or any other in such legislation and the objects or places crop, meadow lands and pasture lands, cul- excluded. The marks of distinction on which tivated and uncultivated lands, or they can the classification is founded must be such, classify by the description, such as odd-in the nature of things, as will in some reanumbered lots and blocks, and even-num-sonable degree, at least, account for or jusbered ones, or odd and even numbered tify the restrictions of the legislation.” sections. Personal property can be class- State ex rel. Richards v. Hammer, 42 N. J. ified by its character, use, or descrip- L. 435, 440. "Such law must embrace all, tion, or, as in the present case, by its loca- and exclude none, whose condition and tion; and thus the rules of taxation may wants render such legislation equally necesbe multiplied to an extent equal in number sary or appropriate to them as a class." to the different kinds, uses, descriptions, and State ex rel. Randolph v. Wood, 49 N. J. L. locations of real and personal property. We 85, 7 Atl. 286. "The classification must be do not see why the system may not be car- so general as to bring within its limits all ried further, and the classification be made those who are in substantially the same situby the character, trade, profession, or busi-ation or circumstances." Lippman v. Peoness of the owners. For certainly this rule 'ple, 175 Ill. 101, 106, 51 N. E. 872. "A law

is not always general because it operates | 278, 36 N. E. 365. The statute which was upon all within a class. There must be back | held constitutional in that case permitted of that a substantial reason why it is made every debtor in the state to deduct the to operate only upon a class, and not gen- amount of his debts from the sum of his erally upon all." Ex parte Jentzsch, 112 credits, the excess of the latter only being Cal. 468, 32 L. R. A. 664, 665, 44 Pac. 803. subject to assessment and taxation. What"The conclusion is that, although a law is ever may be said of that statute in other general and constitutional when it applies respects, the classification of the persons equally to all persons embraced in a class who might avail themselves of it was genfounded upon some natural or intrinsic or eral, and in striking contrast with that of constitutional distinction, it is not general the act before us. or constitutional if it confers particular 8. The privilege of the deductions authorprivileges or imposes peculiar disabilities or ized by the act of March 4, 1899, is confined burdensome conditions, in the exercise of a to a particular class of debtors, and does common right, upon a class of persons arbi- not, upon the same terms, equally belong to trarily selected from the general body of all the citizens of the state. The privilege those who stand in precisely the same rela- granted is that of a special mode of assesstion to the subject of the law." Pasadena ment, which admits of a reduction of the v. Stimson, 91 Cal. 238, 27 Pac. 604. "This valuation of real estate for the purposes of classification, however, must be founded up-taxation. The terms upon which this privion differences which are either defined by lege may be claimed are such that only a the Constitution or natural, and which will very limited class of debtors comes within suggest a reason which might rationally be them. The great body of the citizens of the held to justify the diversity in the legisla-state are by those terms excluded from the tion." Darcy v. San José, 104 Cal. 642, 38 Pac. 500. "While the classification was in itself arbitrary, as in this case, the law did not include all who came within the arbitrary classification thus made." Ex parte Jentzsch, 112 Cal. 468, 32 L. R. A. 664, 665, 44 Pac. 803. “Everyone has a right to demand that he be governed by general rules, and a special statute that singles his case out as one to be regulated by a different law from that which is applied in all similar cases would not be legitimate legislation, but an arbitrary mandate, unrecognized by the law. The state, it is to be presumed, has no favors to bestow and designs to inflict no arbitrary deprivation of rights. Special privileges are always obnoxious, and discriminations against persons or classes are still more so, and, as a rule of construction, are always to be leaned against, as probably not contemplated or designed." Cooley, Const. Lim. 393, 395. See also Bank of the State v. Cooper, 2 Yerg. 599, 24 Am. Dec. 517; Officer v. Young, 5 Yerg. 320, 26 Am. Dec. 268; Griffin v. Cunningham, 20 Gratt. 31; Arnold v. Kelley, 5 W. Va. 446; Lewis v. Webb, 3 Me. 326; State v. Ellet, 47 Ohio St. 90, 21 Am. St. Rep. 772, and notes, 23 N. E. 931; State v. Hinman, 65 N. H. 103, 23 Am. St. Rep. 22, and notes, 18 4. The practical effect of the act is to exAtl. 194; State ex rel. McCue v. Sheriff of empt from taxation property not used for Ramsey County, 48 Minn. 236, 51 N. W. municipal, educational, literary, scientific, 112; Hogg v. Mackay, 23 Or. 339, 19 L. R. religious, or charitable purposes, and for A. 77, 31 Pac. 779; State v. Gardner, 58 this reason it conflicts with § 1, art. 10, of Ohio St. 599, 41 L. R. A. 689, 51 N. E. 136; the Constitution, and is void. The constituWashington University v. Rouse, 8 Wall. tional rule requires that all property, real 444, 19 L. ed. 500. The partial legislation and personal, shall be valued for taxation, of the act of March 4, 1899, is not sanc- except such only for the purposes above tioned by anything said by this court in named as may be especially exempted by Florer v. Sheridan, 137 Ind. 28, 23 L. R. A. law. It seems clear that, if $700 may be

benefit of the privilege secured to the few. All who are not indebted at all, and who own land, must be assessed upon the full valuation of that land. All landowners who are indebted, but whose debts are not secured by mortgage on their lands, are excluded. All who are indebted, and whose lands are encumbered by liens, other than mortgage liens, are shut out. All citizens who own no real estate, but who hold mortgaged goods and chattels, are denied the privilege. The law which grants the privilege to the few denies it to all others as certainly as if it declared in so many words that they should not enjoy it. And just in proportion as the terms on which such privileges are granted are made special and individual, the number of citizens who come within them is reduced. The vice of this statute, as has been pointed out elsewhere in this opinion, is in the classification. It attempts to create a class within a class. The terms upon which the privilege is granted are too narrow. It is not sufficient that any citizen of the state may possibly at some time fall within the description of the favored class. If this were so, classifications might be made which would not include a score of citizens in the state.

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