to the auditor of the State of the amount of business done, upon which a tax of a certain per centum is to be paid to the State, and the road is exempt from taxation for five years, it was held not to apply to county taxes, upon the well-recognized principle that exemption cannot be implied, but must be express, and upon a consideration deemed to be a part of the value of the grant or charter.1 The intent must be clear to exempt from county or city taxation as distinct from State taxation. So, when a tax law required railroads to make reports to the auditor, and pay a certain amount for every passenger transported, with this proviso: "Every railroad paying such tax shall not be assessed with any tax on its lands, buildings or equipments." The city of Alexandria claimed the right to tax a road which had complied with this provision for its real estate in the city and its rolling stock. It was held liable to the tax; it was said that the intention of the legislature was merely to substitute the new mode of taxation, regulated by the number of passengers, in lieu of the old mode of taxation, and not to exempt the road from anything except the old tax for which this was a substitute. If the intention were to exempt from taxation entirely, it must be shown by plain words, not by presumption.3 1 State v. Dulle, 48 Mo. 282; affi'd Lionberger v. Rouse, 43 ld. 67. 2 The Pacific R. R. v. Cass Co. 53 Mo. 26; s. c. Bailey v. Maguire, 22 Wall. 215; City of Dubuque v. Ill. Cent. R. R. Co. 39 Iowa, 56. 3 Orange & A. R. R. Co. v. City Council of A. 17 Gratt. 176; Humphrey v. City of Norfolk, 25 Gratt. 97; The Western Union Telegraph Co. v. City of Richmond, 26 Gratt. 1. 10 CHAPTER IX. LICENSE TAX-TAX ON CIVIL PRIVILEGES AND INCOME. 877. Nature of the License Tax.-Customs are taxes laid upon the importation and exportation of merchandise; an excise tax is the opposite of this—it is an inland imposition on the consumption, generally placed upon it in the hands of the retail dealer.1 This tax is levied almost universally in this country in the form of a license tax. A license is required not only under the taxing power of the State, but also under the police power of the State. The latter is the sovereign power of the State to govern men and things within the limits of its territory for the good of the State. For this purpose it may make, ordain, and establish all kinds of laws, rules, and regulations as to the manner in which persons may conduct themselves or use their property, and as to the manner in which various trades, pursuits, and avocations may be conducted. The object of these laws being to enforce in a specific mode, upon all residents in the State, in the exercise of their rights both of person and property, the observance of the maxim, Sic utere tuo ut alienum non ladas. The laws of health and inspection, laws regulating the sale of intoxicating drinks, the exhibitions of amusements, markets, weights and measures, the occupations of auctioneers and commission merchants, public conveyances, hacks and drays, are examples of the exercise of the police power. The breach of these laws is punished by pecuniary penalties imposed, and sometimes by forfeiture of the property used. As to occupations, a license or permit to engage in the specified calling is required, and a fee is required to be paid to the officers issuing the license as a condition precedent to the exercise of its privileges. When the amount of the fee is only such as would probably cover the expense of enforcing the regulations of the State as to the particular calling, it is under the police power, but when the fee is 'Blackstone, Sharswood's ed. vol. 1, p. 318. Taney, J., License Cases, 5 Wall. 462; Commonwealth v. Alger, 7 Cush. 85; Cooley on Const. Lim. 56, 59. larger than is necessary for such purpose, and is exacted with reference to revenue, the license is issued under the taxing power of the State. This is a most convenient mode of taxation, and is recognized in the Constitutions of most of the States, where it is contrasted with the property tax, in those provisions which limit the power of the State to tax property otherwise than by a uniform system and according to value. But whether mentioned in the Constitution or not, the provisions as to equality and uniformity do not apply to taxes on licenses; only one of the States holds a different doctrine. What occupations may be taxed by requiring a license has not been determined with any degree of certainty. Almost every occupation has been the subject of this tax, and in a recent case, where the Constitution in express terms provided for a license tax on commission merchants, peddlers, &c., and all other business which cannot be reached by the ad valorem system, it was held that a tax might be imposed on all merchants. It was claimed, in a case in Arkansas, that every person had a right to pursue any occupation he thought proper, subject only to such regulations by the State as would protect the rights of others, and that the exercise of this right was not subject to taxation except by express provision of the Constitution. The court held in that case that the privileges which were the subject of taxation were such as were not possessed by all the citizens of the State, but such as were created by the legislative will, such as banking, ferries, roads, &c. A different view is taken in Tennessee of the word privileges used in the Constitution. A license tax was imposed on the privilege of standing stallions and jacks, and it was claimed that such an avocation was not a privilege, but a matter of right to every one. The court held that as to such avocations, when prohibited by law, the license or permission to pursue them became a privilege and the subject of the taxing power of the legislature. A privilege is defined in this State to be the exercise of an occupation or business which requires a license from some proper authority designated by a general law, and not open to all, or any one without a license.1 In Massachusetts, under a provision of its Constitution allowing "the imposition of reasonable duties and excises upon any produce, goods, wares, merchandise, and commodities whatsoever, brought into, 1 Commonwealth v. Moore & Goodson, 25 Gratt. 951. Ante, § 55, and authorities. 3 Mabry v. Farrer, 11 Humph. (Tenn.) 94. * State v. Schlier, 3 Heisk. (Tenn.) 278; 4 Sneed (Tenn.) 193, 258. produced, manufactured, or being within the State," the word "commodities" has always been applied to the privilege of conducting particular branches of business or employment, as the business of auctioneer, tavern-keeper, &c.1 These cases apply to the license tax, as it refers to the privileges treated of in the Constitution of the State; where the Constitution is silent on the subject, the right of the State to exact from its citizens a tax regulated by the avocations they pursue cannot be questioned; the mode of levying the tax and the subjects of the tax are particularly within the province of the legislature.2 $78. License not a Contract.-The question whether the amount required to be paid for a license is a tax, or is paid under the police power, generally arises under the charters of cities, where there is a doubt as to the grant of the power to tax under the charter, but where the grant of the police power is undoubted, and it is sought to justify the exaction under that power. As to the State, when there is no constitutional limitation on the subject, its power is the same in each; it is the exercise of the sovereign power of the State for the good of its people, and they are the exclusive judges as to whether the mode adopted is the proper one to attain that end, always subject to the proviso that no private rights secured by express constitutional provisions, other than those relating to taxation, are violated. A license is a personal privilege. It is not a contract; it is what its name purports, the written evidence of the permission of the State granted to one of its citizens to engage in a particular calling or avocation. The tax paid is not regarded as the consideration which moves the granting of the privilege, but as one of the conditions attached to the exercise of the privilege, a condition which must be complied with to entitle the party to enjoy the privilege at all. This permission may be revoked, annulled or amended at the pleasure of the legislature. In the State of New York the defendants had license to sell liquors under the excise act of 1857, which continued in force until fifty days after the third Tuesday in May, 1866. The act of 1866 created a metropolitan district and board of excise, and required 1 Portland Bank v. Apthorp, 12 Mass. 252; City of Boston v. Schaffer, 9 Pick. 415. 2 Durach's Appeal, 62 Penn. St. 491; Soc. for Savings v. Coite, 6 Wall. 606, 607; Clifford, J., Id. 626, 638. 3 Mayor v. Second Avenue R. R. Co. 32 N. Y. 261; Ash v. People, 11 Mich. 347. This subject is treated of in Chapter XIX, § 132, post. 41 Hening & Munford, 339. A license as a peddler must be obtained by the person using it; a principal cannot take out such license and allow his agent to use it. Temple v. Summet, 51 Miss. 13. On the other hand, a license to a sample merchant, where the statute declares it shall be a personal privilege and not transferable, was allowed to be used by the agent conducting the business for the principal. Myerdock's Case, 26 Gratt. 988. a license to be taken from this board before the expiration of the period fixed for the termination of the license issued under the act of 1857. The defendants sold liquor under the first license after the act of 1866 went into effect, and were held liable for the penalties imposed by the act. The court in that case say of licenses, that they are mere permits to do what otherwise would be an offense against a general law. Where the council of a city by their charter were authorized to grant licenses for the sale of liquors at inns, and had also full authority to levy taxes, by an ordinance passed in April, licenses were issued to certain parties to take effect on the 1st of May following. Before the 1st of May, by another ordinance, the licenses granted were revoked, and licenses were authorized to be issued to those parties upon the payment of a different tax from that imposed under the first ordinance. The action of the council was sustained.2 So where a license to sell liquors is granted for one year, and subsequently the sale of all liquors is prohibited in the State, the license is annulled. Although liquors, the sale of which is prohibited, cannot be taken in execution, they are subject to taxation as property. If the authorities intrusted with the issuing of licenses to dealers in liquors should mistake their powers and refuse to license any one, this does not authorize persons to sell without a license. In many of the cases, although a tax is imposed, the question is treated, in the opinion of the court, as one merely of police regulation, for where the tax is imposed by the State, which possesses both of these powers in their fullest extent, the cases might be treated under either aspect, as exercises of the power of taxation, or the police power. As a further illustration of the principle that the license has none of the characteristics of a contract, when the payment of the tax is made a condition precedent of the exercise of the privilege of conducting a specific calling, and where both the State and a city or a county levy this tax under these circumstances, the party cannot demand his license upon the payment of the State tax, but must pay both State and city tax; he must comply with all the terms prescribed both by State and city to entitle him to pursue his calling. And where the statute requires a party desiring to engage in the business of a distiller to apply to the 5 1 Metropolitan Board of Excise v. Barrie, 34 N. Y. 657; Durach's Appeal, 62 Penn. St. 491; Simmons v. State, 12 Mo. 268; Drysdale v. Pradet, 45 Miss. 445; People v. Com'rs of Police, 59 N. Y. 92. 2 Sights v. Yarnalls, 12 Gratt. 292. Adams v. Hackett, 5 Gray, 597. Dunbar v. Board of Aldermen of Boston, 101 Mass. 317; distinguished from Ingalls v. Baker, 13 Allen, 449. * Commonwealth v. Blackington, 24 Pick. 352. Sights v. Yarnalls, 12 Gratt. 292; Myers v. Spencer, 49 Mo. 342. |