Com. v. Delaware Division Canal Co. 123 Pa. 594, 2 L. R. A. 798, 16 Atl. 584; Com. v. Martin, 107 Pa. 185; Com. v. Philadelphia County, 157 Pa. 531, 27 Atl. 546.

the 7th section of article 3 of the Constitu- | The act of 1899 is not prohibited class legtion, providing that "the general assembly islation. shall not pass any local or special law; regulating the affairs of counties, cities, townships, wards, boroughs, or school districts; creating offices, or prescribing the powers and duties of officers in counties, cities, boroughs, townships, election or school districts."

This law disregards the provisions of the Constitution, in that it locally regulates the affairs of counties, and is therefore unconstitutional.

The act does not violate the rights of persons or property.

Mitchell, J., delivered the opinion of the

court:

These two cases may conveniently be considered together, as both raise the same quesMorrison v. Bachert, 112 Pa. 322, 5 Atl. tion of the constitutionality of the act of 739; Wheeler v. Philadelphia, 77 Pa. 333; May 2, 1899 (P. L. 184), "to provide revenue Re Ruan Street, 132 Pa. 257, 7 L. R. A. 193, | by imposing a mercantile license tax on ven19 Atl. 219; Re Wyoming Street, 137 Pa. ders of or dealers in goods," etc. The act is 494, 21 Atl. 74; Weinman v. Wilkinsburg & frankly and professedly a revenue act, and E. L. Pass. R. Co. 118 Pa. 192, 12 Atl. 288; therefore we have no complication with quesyars's Appeal, 122 Pa. 266, 2 L. R. A. 577, tions under the police power. The act pro16 Atl. 356; Pittsburgh's Petition, 138 Pa. vides that "each retail vender of or retail 401, 21 Atl. 757, 761; Scranton v. Whyte, | dealer in goods, wares, and merchandise shall 148 Pa. 419, 23 Atl. 1043; Safe Deposit & T. pay an annual mercantile license tax of two Co. v. Fricke, 152 Pa. 233, 25 Atl. 530; doilars, and all persons so engaged shall pay Philadelphia v. Westminster Cemetery Co. one mill additional on each dollar of the 162 Pa. 105, 29 Atl. 349; Chalfant v. Ed-whole volume, gross, of business transacted wards, 173 Pa. 246, 33 Atl. 1048. annually. Each wholesale vender of or Messrs. Alexander Simpson, Jr., and wholesale dealer in goods, wares, and merM. Hampton Todd for appellants Wood etchandise shall pay an annual mercantile license tax of three dollars, and all persons so engaged shall pay one-half mill additional on each dollar of the whole volume, gross, of business transacted annually. Each dealer in or vender of goods, wares, or merchandise at any exchange or board of trade shall pay a mercantile license tax of twenty-five cents on each thousand dollars' worth, gross, of goods so sold."

al.

Messrs. John P. Elkin, Attorney General, Frederic W. Fleitz, M. E. Olmsted, and A. C. Stamm, for appellees:

The act of 1899 does not offend against the constitutional requirement as to uniformity. The subjects of taxation are "persons, property, and business."

State Tax on Foreign-held Bonds, 15 Wall. 300, 21 L. ed. 179.

The tax in question being measured by "each dollar of the whole volume, gross, of business transacted annually," it is, of course, a tax upon business.

Durach's Appeal, 62 Pa. 494. The power of classification for license-tax purposes has always been exercised in Pennsylvania.

The manner in which sales are made has likewise always been a consideration for classification.

Com. v. Delaware Division Canal Co. 123 Pa. 594, 2 L. R. A. 798, 16 Atl. 584; Kittanning Coal Co. v. Com. 79 Pa. 104; Com. v. Delaware & H. Canal Co. 43 Pa. 295.

Treated as a tax on property, there is no objection to the classification provided in the act. The tax on capital stock is a tax on property.

Com. v. Standard Oil Co. 101 Pa. 119; Com. v. New York, P. & O. R. Co. 188 Pa.

169, 41 Atl. 594.

And yet the property of some manufacturing companies is taxed, while that of others

is untaxed.

Com. v. Delaware Division Canal Co. 123 Pa. 594, 2 L. R. A. 798, 16 Atl. 584; Com. v. Northern Electric Light & Power Co. 145 Pa. 105, 14 L. R. A. 107, 22 Atl. 839; Com. v. Germania Brewing Co. 145 Pa. 83, 22 Atl. 240; Germania L. Ins. Co. v. Com. 85 Pa. 513; Fox's Appeal, 112 Pa. 337, 4 Atl. 149.

1. The first and most strenuous objection made is that the act violates § 1 of article 9 of the Constitution, requiring that "all taxes shall be uniform upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws," and that it does so because, being a tax upon property, it taxes property at different rates as against retailers and against wholesalers, and again as against those dealing through an exchange or board of trade. The objection is thus clearly summed up with great compactness in the argument of the distinguished counsel for appellant in the first case: "The distinction here made, which is legislatively regarded as the justification for this arbitrary taxation, is not the amount of the property of merchandise venders, not a difference in the amount of the property vended, not a difference in the manner of vending it, not a difference in the persons vending it, but solely a difference in the persons to whom that vending is done." And it is added that the provision in reference to dealers at an exchange is open to the further objection that it is based "exclusively and arbitrarily upon the place where the sales are made, irrespective of those who participate in them, either as venders or as vendees." The foundation on which this argument rests, it will be perceived, is that the tax is laid specifically upon property. Conceding for present purposes that this is its

true character, does the consequence neces- | tax upon property. But it is apparent that sarily follow that it is so wanting in uniform- the learned judge there had in his mind no ity as to transgress the constitutional re- such distinction as that between the tax on strictions? Assuming it to be intended as property as such, and property as an incia tax on property, the basis of distinction in dent of business measurable by the amount the legislative intent, clearly, was property of sales. It had been held in Banger's Apkept for sale by regular dealers in the course peal, 109 Pa. 79, cited by the judge in conof their business, and the tax was graduated nection with the language above quoted, that and classified by the amount and method of a tax on occupations, graduated according the sales. The purpose for which property to the amount earned by each individual, is kept or used has long been a recognized, was an income tax not authorized by law. and to some extent a favorite, basis for dis- This was what the judge referred to, and the tinction in taxation. Thus, household and distinction in his mind was that between a kitchen furniture in private use have been tax on the person of the licensee, as an ocexempted, while the same articles as stock in cupation or income tax, and a tax directly trade have been taxed. Carriages kept for or indirectly upon property. The language pleasure and watches for private use have must be read in connection with the facts been taxed as such, while carriages in livery to which it was applied, and so read it has stables and watches in a jeweler's stock have no bearing on the present question. The debeen exempted or taxed in a different man- cision, however, is exactly in point in favor ner or at a different rate. Other examples of the present judgment; for what it actumight be given, and the very tax in contro- ally decides is that a tax upon venders of versy here, upon dealers, distinguished into merchandise, graduated according to the retailers and wholesalers, has, in one form amount of annual sales, is not unconstituor another closely analogous, been on the tional for want of uniformity. The other statute books so long that it is one of the case relied on by appellant (Williamsport most familiar in the history of our taxation. v. Wenner, 172 Pa. 173, 33 Atl. 544) raised This subject will be further considered la-a very similar question. The city, by orditer on, but enough has been said here, we think, to show that, even as a tax on property, it is not unconstitutional for want of uniformity. But another and even clearer ground upon which this act can be sustained is that the tax imposed is not specifically on property, but on the business of selling.

nance, had imposed a license tax on all per-
sons "doing business," and, after fixing a
definite sum for each kind of a large num-
ber of specified occupations, it grouped to-
gether "merchants of all kinds
butchers

what it really decided was that the grading of the tax on dealers according to the amount of sales did not make it void for want of uniformity. This court, as thus appears, has not decided that a tax such as now before us is a tax upon property, requiring uniformity in the rate. On the contrary, though the question in its present aspect has never been directly discussed, it has in effect been twice decided in favor of the validity of the tax.

produce or merchandise venders," etc., classified them by the amount The argument that the tax is upon prop- of annual sales, and graduated the tax acerty is based on two cases in this court: cordingly. The court below, in sustaining Allentown v. Gross, 132 Pa. 319, 19 Atl. 269, the tax, used some expressions that it was a and Williamsport v. Wenner, 172 Pa. 173, 33 tax on property; but, as in the other case, Atl. 544,-and not upon the decisions them- clearly with reference only to the argument selves, but upon language supposed to indi- made, that it was a personal license or occucate the ratio decidendi. Both were per cur-pation tax, and therefore, under Banger's iam opinions, in which the grounds of deci- Appeal, 109 Pa. 79, not subject to variation sion were not discussed further than by ap-in amount. This court affirmed the decision, proval of the judgments of the court below. as already said, in a per curiam opinion, and It is necessary, therefore, to examine just what such approval involves. In Allentown | v. Gross, an ordinance had been passed imposing a tax upon all dealers, graduated according to the amount of their gross annual sales, and another ordinance providing for the issue of licenses, inter alia, to hotel and restaurant keepers. The report of the case does not give the latter ordinance, further than the statement that the license was to be "at certain specified rates," presumably based, as under the prior ordinance, on the gross annual sales. The defendant (appellant) was assessed as a restaurant keeper in class 8. His contention, as stated by the learned judge below, was "that the grading of the license tax according to the amount of the gross sales is illegal, because it is not uniform; that all liquor sellers should be required to pay the same amount; and that, by making the amount of sales a basis, it is in effect an income tax. But this is not a taxing of the person of the liquor seller, but of his property, estimated by the volume of the annual sales." This last sentence is the expression on which appellant bases his argument that the tax now in controversy is a

As already said, even regarding it as a tax upon property directly, it could be sustained as a classification according to the use and purposes for which the property is held. But an examination of the details of the provisions of the present act makes it clear that the tax, as held by the learned judge below, is upon the business of vending merchandise, and that the classification is based on the manner of sale, and within each class the tax is graduated according to the gross annual volume of business transacted. This is apparent from the fact that the amount of the tax over the small, fixed license fee is determined in every case by the volume of business, measured in dollars, and the

rate at which it is to be levied is according 2. The further objection is made that the to the manner of sale. The act divides vend- tax is not to be "levied and collected under ers of merchandise into four classes,-retail- a general law," as required by § 1, art. 9. ers in general, wholesalers in general, re- This objection is founded on those sections tailers at an exchange or board of trade, of the act which provide for a difference in wholesalers at an exchange or board of trade. the number and mode of appointment of the For each of these classes a uniform rate is appraisers in the counties generally and in fixed per dollar of business transacted. Such cities of the first class. In the counties they a tax is "uniform upon the same class of are to be appointed annually by the county subjects," within the requirements of the commissioners, while in cities of the first Constitution. It is not necessary at this class they are to be appointed by the auditor late day to enter on a defense of classifica- general and the city treasurer jointly, are tion. In reference to subjects of taxation it to be five in number, to hold office for three has always existed, and the power is explic-years, and not all to be of the same political itly recognized in the section of the Consti- party. Certain variations in the duties of tution which requires uniformity. In Dur- the treasurers in hearing appeals, etc., are ach's Appeal, 62 Pa. 491, it was said by involved in these differences in regard to apSharswood, J..-certainly as strict a con- praisers. These differences, however, are all structionist as ever sat on this bench: "In merely incidental to the purpose of the statthe legitimate exercise of the power of taxa-ute,-to provide revenue. All the provition, persons and things always have been, sions relating to the tax itself, the classes and may constitutionally be, classified. No of persons subject to it, and its amount in one has ever denied this proposition." In each case, the mode of assessment and the Com. v. Delaware Division Canal Co. 123 Pa. duties of assessors in relation to it, and the 594, 620, 2 L. R. A. 798, 16 Atl. 584, our late right of ultimate appeal by the citizen to brother Clark said: "The new Constitution the court, are uniform, and prescribed by a does not withdraw the power of classifica- general law applicable alike over all the tion from the legislature. . . . The state. The sole variations are in the numpower to impose taxes for the support of the ber and mode of appointment of the appraisgovernment, subject to the limitations of ers. The generality of the law is not dethe Constitution, still belongs to the legisla- stroyed by such slight differences in its mature. The selection of the subjects, their chinery of application. In Com. v. Delaclassification, and the methods of collection ware Division Canal Co. 123 Pa. 594, 2 L. R. are purely legislative matters." And in Sea- A. 798, 16 Atl. 584, already cited, the act of bolt v. Northumberland County Comrs. 187 1885 had classed loans, money at interest, Pa. 318, 41 Atl. 22, it is said: "Classifica- etc., together at a uniform rate of taxation, tion is a legislative question, subject to ju- and it was objected (see p. 616, 123 Pa. and dicial revision only so far as to see that it is p. 802, 2 L. R. A. and p. 586, 16 Atl.),that all founded on real distinctions in the subjects other subjects are valued and taxed by the classified, and not on artificial or irrelevant local assessors, while corporate loans, withones used for the purpose of evading the con- out being valued, are directed to be assessed stitutional prohibition. If the distinctions by the treasurer of the corporation which isare genuine, the courts cannot declare the sued them. But this court held that "a classification void, though they may not con- mere diversity in the methods of assessment sider it to be on a sound basis. The test is and collection violates no rule of constitunot wisdom, but good faith in the classifica- tional right, if when they are applied there tion." The division of venders into whole- is substantial uniformity in the result." sale and retail is perhaps the most obvious There are counties of large population and and familiar that could be made. It is business where the work of assessment is founded on a known or presumed difference necessarily greater in amount and imporin the percentage of profit to bulk of sales, tance than in the average counties of the and has been on our statute books for more commonwealth. The legislature might have than a century. It is equally clear that the recognized the necessity for a somewhat difsubclassification of dealers at an exchange or ferent system of assessment in such cases, board of trade is not based merely on loca- and classified them accordingly. But it tion, as complained, but on the mode of sale. found a classification of cities already made, Such dealers are not supposed, in the ordin- well suited to the requirements of the occaary course of their business, to carry an ac- sion, and adopted it pro tanto for the purtual stock of goods in a store or defined lo- poses of the act. It was entirely competent cation, with its accompaniments of rent, to do so. The basis of classification of cities clerk hire, expenses of delivery, etc., but to is entirely germane to such use. They deal largely, if not entirely, on samples, or- are divided into classes for the purpose of ders, bills of lading, warehouse receipts, etc., legislation with reference to their municiby which title passes without actual hand- pal and governmental functions, and the ling of the goods. If such differences in the highest of these is taxation, the power of manner of transacting the business exist, taking the property of the citizen without they are a legitimate basis for classification, his consent for purposes he may or may not and whether they do in fact exist is a ques- approve. The city of Philadelphia, the only tion for legislative determination. We are present city of the first class, has always, unable to see that the classification in the both before and since the Constitution of act before us violates the constitutional re- 1874, had its own special system of municiquirement of uniformity. pal taxation; and the state might well

adopt a special system for the assessment and classification prepared by them. The and collection of its own tax from the same act enacts that the appraisers shall be appopulation in the same territory without pointed by the county commissioners, except thereby destroying either the uniformity of in cities of the first class, in which they are the tax or the generality of the law. to be appointed by the auditor general and the city treasurer. In cities of the first class five such appraisers are to be appointed, whereas in the other counties of the state only one is appointed for each county.

IOWA SUPREME COURT.

S. C. CAMPBELL, Exr., etc., of Frank C. County in favor of plaintiffs in an action Stewart, Deceased, et al., Appts.