Bichmond.

WILLIAMSON V. MASSEY, auditor.

April 29.

Absent Moncure, P.*

1. The act of March 28, 1879, in relation to the settlement of the State debt, which provides that all obligations created under this act shall be forever exempt from all taxation, direct or indirect by the State, is not in violation of article 10, 1, of the Constitution of Virginia.

2. The overdue coupons upon bonds issued under said act of March 28, 1879, are receivable for all taxes levied by the State, including the capitation tax; and the auditor is bound to receive them, when offered in payment of taxes returned delinquent to his office.

This was an application to this court by William Williamson for a mandamus to John E. Massey, auditor of public accounts of the State of Virginia, requiring him to receive in payment for certain taxes due from Williamson to the State, past due coupons taken from the bonds of the State issued under the act of March, 28, 1879. Williamson had been returned delinquent for State taxes of 1878, on real estate $4.90 and the interest and redemption fee, made the amount due on these taxes $6; and for capitation tax $1 on which was twelve cents costs; the whole amount of taxes, interest and redemption fee making $7.12. To pay this sum he tendered to the auditor four coupons of $1.50 each and $1.12 in money. The auditor refused

*He considered himself interested in the question.

1880. April Term.

Term.

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1880. to receive coupons in payment of the capitation, and April one-fifth of the property tax; and he also refused to receive said coupons without retaining ten cents on William- each coupon, as a tax assessed thereon. The grounds on which he based his refusal to receive the coupons, Massey, and insisted on taxing them, are set out in his answer to the rule nisi, made upon him; and they are fully stated in the opinion of Judge Anderson.

V.

auditor.

Johnston, Williams & Boulware, for the petitioner.

The Attorney-General, for the auditor.

ANDERSON, J. By the act of the general assembly of Virginia, to provide a plan of settlement of the public debt, approved March 28, 1879, it was enacted § 1, "That to provide for funding the debt of the State, the governor is hereby authorized to create bonds of the State, registered and coupon, dated the 1st day of January, 1879, the principal payable forty years thereafter, bearing interest at the rate of three per cent. per annum for ten years, and at the rate of four per centum per annum for twenty years, and at the rate of five per centum per annum for ten years, payable in the cities of Richmond, New York or London, as hereinafter provided, on the 1st days of July, and January of each year, until the principal is redeemed." "The coupons on said bonds shall be receivable at and after maturity for all taxes, debts, dues and demands due the State, and this shall be expressed on their face. The holder of any registered bond shall be entitled to receive from the treasurer of the State a certificate for any interest thereon, due and unpaid, and such certificate shall be receivable for all taxes, dues and demands due the State, and this shall be expressed on the face of the registered bonds, and on the face of such certificate.

1880. April Term.

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All obligations created under this act shall be forever exempt from all taxation, direct or indirect by the State or by any county or corporation therein, and this shall be expressed on the face of the bonds." "The bonds Williamhereby authorized shall be issued only in exchange for the outstanding debt of the State, as hereinafter pro- anditor. vided." Bonds were issued under this act and in conformity with its requirements.

1878.

1878.

The auditor in his answer to plaintiff's petition, admits that the said William Williamson is indebted to the State of Virginia for taxes for the year 1878, as follows; for capitation tax, the sum of $1, and for tax on property, the sum of $5.40, amounting with interest to $7.12 as shown by the tax bill filed with the petition, and that the said petitioner was returned delinquent for the nonpayment of said taxes, on the day of And he also admits that the said William Williamson tendered to him as auditor aforesaid, on the 20th day of April, 1880, six dollars in coupons past due, taken from bonds issued under the act of 28th March, 1879, aforesaid, and $1.12 in money, full payment of the taxes aforesaid, and demanded of him a receipt for the same; and that he refused to receive and receipt for the said coupons and money in full discharge of said taxes. And he assigns the following reasons for his refusal :

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"First. Because, under the law of the State, the bonds from which said coupons were taken are liable to taxation under the laws and Constitution of the State, and this respondent is required to deduct the amount of said tax from said coupons, when received by him, which tax the aforesaid petitioner refused to pay or allow to be deducted from said coupons.

"Secondly. Because the Constitution of the State and the laws of the State, dedicate the aforesaid capitation tax of $1, and one-fifth of the property tax

V.

Massey,

1880. aforesaid, amounting to $1.08, to public schools, and April must be collected in money; otherwise, the provision Term. of the Constitution respecting the school fund will be William- defeated."

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auditor.

In support of his first reason, he relies on § 1, Art. Massey, X. of the Virginia Constitution; which is in the following words: "Taxation, except as hereinafter provided, whether imposed by the State, county or corporate bodies, shall be equal and uniform, and all property, both real and personal, shall be taxed in proportion to its value, to be ascertained as prescribed by law. No one species of property from which a tax may be collected, shall be taxed higher than any other species of property of equal value."

The right to exempt from taxation is a right which is incident to the legislative prerogative. It is essential to the welfare of the State that the power of exemption should be vested in the government, and it is as inherent in the legislative department as the power of taxation, and may be exercised by the legislature at its discretion, except where it is clearly forbidden by the organic law. Judge Cooley, a distinguished jurist, and one of the soundest, and most eminent writers on constitutional limitations, and other branches of the law, says, "The general right to make exemptions, is involved in the right to apportion taxes, and must be understood to exist wherever it is not forbidden," and cites numerous authorities in support of the doctrine.

And the same doctrine was held by this court, in the City of Richmond v. The Richmond & Danville Railroad Company, 21 Gratt. 604, with even greater strength of expression. Judge Staples, delivering the opinion of the court, said, "The power of exemption, as well as the power of taxation, is one of the essential elements of sovereignty. The right of the legislature to surrender

the power of taxation in specific cases, has been the 1880. April subject of one of the ablest and most exhaustive judi- Term. cial discussions ever known in the supreme court ofthe United States, and is now regarded as established Williamupon the most solid foundations of public policy and expediency."

Is it forbidden by the above clause in the Virginia Constitution? In State v. North, 27 Mo. R. 464, it was held "that the provision in the Constitution of that State, which declares that all property subject to taxation shall be taxed in proportion to its value (substantially the same that is contained in the clause of the Virginia Constitution above cited), does not require that all property in the State shall be taxed; but that when any species of property is selected for taxation, it shall be taxed in proportion to its value." And such we think is the meaning of the clause in the Virginia Constitution above cited. It was not intended to require the legislature to tax all the property in the State, and forbid its exercising its inherent power, when necessary for the public interest, and promotive of a sound public policy, to exempt certain property from taxation, but only to prescribe a rule by which the legislature should be guided, in apportioning taxation, that all property taxed should be taxed in proportion to its value. That it does not mean to take from the legislature its important inherent power of exercising a discretion, when in its wisdom it may be deemed beneficial to the public, of exempting certain property from taxation, is more apparent when read in connection with the first clause in the sentence, which declares that taxation "shall be equal and uniform"; and then follows the clause in question, separated from it only by a comma, "and all property not only personal property, or only real property, but "all property, both real and personal, shall be taxed VOL. XXXIII-31

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V.

Massey, anditor.