MYERS v. OKLAHOMA TAX COMMISSION

MYERS v. OKLAHOMA TAX COMMISSION
1956 OK 291
303 P.2d 443
Case Number: 37308
Decided: 11/07/1956
Supreme Court of Oklahoma

MORRIS T. MYERS, PLAINTIFF IN ERROR,
v.
OKLAHOMA TAX COMMISSION, DEFENDANT
IN ERROR.

Syllabus by the Court.

¶0 1. The graduated gift tax authorized by the Gift Tax Act, 68 O.S.1951 §§ 1041 to 1047, inclusive, is an excise tax and not a property tax, and is not violative of

Appeal from Oklahoma Tax Commission.

Appeal by Morris T. Myers from an order of the Oklahoma Tax Commission assessing additional gift taxes against him for the year 1953, and paid under protest. Order of the Oklahoma Tax Commission affirmed.

Byrne A. Bowman, Oklahoma City, for plaintiff in error.

R.F. Barry, Oklahoma City, for defendant in error.

HALLEY, Justice.

¶1 July 1, 1953, Morris T. Myers, joined by his wife, gave in trust to M.T. Myers, Jr. certain real estate located in Cleveland County, Oklahoma, and on March 15, 1954, Morris T. Myers and wife each made a gift tax return covering the above gift, and each paid a gift tax of $495, on an estimated total value of the land involved of $26,500, less the exclusions of $3,000 for each donee.

¶2 October 20, 1954, the Oklahoma Tax Commission made an additional assessment of $1,160, based upon an adjusted value of $75,000, or an increase in value of $42,500, and notified the donors, who paid the additional gift tax under protest. December 22, 1954, M.T. Myers filed a protest.

¶3 It was stipulated by the parties that the only ground relied upon by protestants in this appeal is:

"The gift tax is imposed at graduated rates
contrary to provisions of Article X, Section 12 of
the Constitution of Oklahoma which permit graduated
taxes to be imposed only on income taxes, estate and
inheritance taxes, and legacy and succession taxes."

¶4 It was further stipulated that if the Gift Tax Act, which is

¶5 A hearing on the protest was held before the Commission on March 1, 1956, and the additional tax of $1,160, plus interest, was held due. Claim to the $495 is waived. We shall refer to the parties as Protestant and the Commission.

¶6 Section 1041 of the Gift Tax Act, supra, provides in subsection (b) that the tax shall apply to all transactions whereby property rights or interests are "donatively passed or conferred upon another, regardless of the means or device employed", and shall apply where the transfer is in trust or otherwise, direct or indirect and whether the property is real, personal, tangible or intangible.

¶7 Section 1042 provides that the tax shall be computed according to a Rate Schedule, beginning with one per cent of taxable net gift not in excess of $10,000 and increased to ten per cent where gift has a value in excess of $10,000,000.

¶8 The protestant asserts three reasons why the Legislature had no right to pass an Act providing for a graduated gift tax. First: Our Legislature had no inherent power to tax and since the graduated gift tax was not provided for in the Constitution the Act providing for such an Act was unconstitutional. Second: Even if there be complete and plenary inherent power to tax without Constitutional empowerment, express empowerment as to certain graduated taxes was intentional exclusion of a graduated gift tax. Third: A graduated gift tax is excluded under the maxim "expressio unius est exclusio alterius."

¶9 The controlling section of our Constitution is Article X, section 12, which is as follows:

"The Legislature shall have power to provide for
the levy and collection of license, franchise, gross
revenue, excise, income, collateral and direct
inheritance, legacy, and succession taxes; also
graduated income taxes, graduated collateral and
direct inheritance taxes, graduated legacy and
succession taxes; also stamp, registration,
production or other specific taxes."

¶10 The protestant has presented an interesting discussion of the chronological development of judicial interpretation of the constitutional power of the Congress of the United States to tax and the "time-place" therein of the adoption of the Oklahoma Constitution. He cites Section 8 and Clause 4 of Section 9 of Article I of the United States Constitution and Pollock v. Farmers' Loan & Trust Co., 1895, 157 U.S. 429, 15 S. Ct. 673, 39 L. Ed. 759; Stanton v. Baltic Mining Co., 1916, 240 U.S. 103, 36 S. Ct. 278, 60 L. Ed. 546; Knowiton v. Moore, 1900, 178 U.S. 41, 20 S. Ct. 747, 44 L. Ed. 969, and other cases in an effort to show what the thinking of the writers of our Constitution was. We cannot agree with his conclusions that those who wrote our Constitution intended to limit our legislators as to items of taxation when it did provide for graduated income taxes, graduated collateral and direct inheritance taxes, graduated legacy and succession taxes. They wanted to remove all questions as to those things which were in controversy in the courts at that time.

¶11 The protestant agrees that a gift tax is an excise tax and is provided for by the Constitution but thinks that the graduated gift tax is not.

¶12 Protestant recognizes that this Court had before it the question here presented in Daube v. Oklahoma Tax Commission, 194 Okl. 487, 152 P.2d 687, decided in 1944, but contends that the question in that case does not adequately and thoroughly consider the question presented in the present appeal, and insists that the opinion in the Daube case should be overruled.

¶13 No decision handed down subsequent to the Daube case, no statute or constitutional provision adopted since then is cited to justify a re-consideration of the questions decided therein.

¶14 Let us consider the three contentions made by protestant. He insists that the Oklahoma Legislature has no inherent power to tax and cites in support of this contention Simpson v. Hill, 128 Okl. 269, 263 P. 635, 56 A.L.R. 706, wherein this Court announced that the Legislature has no inherent power to convene because it has only such powers "as are given it expressly, or by clear implication, in the Constitution." This case is relied upon to destroy the holding in the earlier case of In re Harkness' Estate, 83 Okl. 107, 204 P. 911, 42 A.L.R. 399, where it is stated in the first paragraph of the syllabus:

"A state has inherent power to impose an
inheritance tax."

¶15 He insists that the above statement in the Harkness case is mere dictum. Dictum or not, we are of the opinion that the Legislature not only has the inherent power to provide for a graduated gift tax but has that power under the Constitution for it is an excise tax. We think that Simpson v. Hill, supra, had to do with the division of powers between the legislative and executive branches of government and is not in point here.

¶16 We said in the aforementioned case of Daube v. Oklahoma Tax Commission [194 Okl. 487, 152 P.2d 689]:

"But an inherent power in the Legislature cannot be
excluded by mere implication arising from the fact
that the Constitution granted specific powers but
failed to mention or provide for such inherent power.
If such power is to be excluded by implication the
express powers enumerated should be accompanied by
negative terms whereby such exclusion would arise by
reasonable implication. In Macmillan Co. v. Clarke,
184 Cal. 491, 194 P. 1030, 17 A.L.R. 288, it was said
that express enumeration of powers is not exclusive
of others not named unless accompanied by negative
terms. That applies particularly in this case."

¶17 There is nothing in the Constitution of Oklahoma that says a graduated Gift Tax is not permissible.

¶18 As to protestant's second contention that even if there be complete and plenary inherent power to tax without constitutional empowerment, express empowerment as to certain graduated taxes was an intentional exclusion of a graduated gift tax. With this we cannot agree. Our view on this question is sustained by numerous cases cited at page 860 of 100 A.L.R., and we quote the note writer's statement found on that page:

"Again, as said in Cooley on Taxation, 4th ed. §
131: `Limitations or restrictions upon the exercise
of this essential power of sovereignty can never be
raised by implication, but the intention to impose
them must be expressed in clear and unambiguous
language;' it being further declared that any
limitation on the exercise of the power of taxation
must be imposed by the Constitution of the state. See
Philadelphia, W. & B.R. Co. v. Maryland (1850) 10
How. (U.S.) 376, 13 L. Ed. 461, which has been
followed in many later cases, in which it was held
that the taxing power of the state is never presumed
to be relinquished, and that it exists unless the
intention to relinquish it is declared in clear and
unambiguous terms admitting of no other reasonable
construction.

"Pursuant to these general statements, it is
generally held that a constitutional provision for
the taxation of `property' or other enumerated
subjects is not exclusive of the power of the
legislature to tax other subjects."

We think the proper rule is found in Achenbach v. Kincaid, 25 Idaho 768, 140 P. 529, 533, and is:

"As to the question of taxation: The Legislature
possesses plenary power, except as such power may be
limited or restricted by the Constitution. It is not
necessary that the Constitution shall contain a grant
of power to the Legislature to deal with the question
of taxation. It is sufficient proof of its power if
there be found in the Constitution no prohibition
against what the Legislature has attempted to do."

By merely mentioning certain subjects for taxation certainly showed no intention to exclude others.

¶19 The protestant's third contention is that a graduated gift tax is excluded under the maxim "expressio unius est exclusio alterius." As has been previously shown in the Daube case, supra, the express enumeration of powers is not exclusive of others not named unless accompanied by negative terms. There are no negative terms in our Constitutional provision on this subject. This position is sustained by 82 C.J.S., Statutes, § 333 b, p. 668:

"The maxim, Expressio unius est exclusio alterius,
that the mention of one thing in a statute implies
the exclusion of another, is merely an auxiliary rule
of statutory construction, to be applied with great
caution; it is not a rule of substantive law, or a
constitutional command. The maxim is not of universal
application, or conclusive as to the meaning of a
statute; and it does not constitute a formula for
construction to be arbitrarily applied. * * *",

and 16 C.J.S., Constitutional Law, § 21, p. 90:

"* * * The maxim should be applied with caution to
provisions of constitutions relating to the
legislative branch of the government, since it cannot
be made to restrict the plenary power of the
legislature or to control an express provision of the
constitution."

These statements are supported by Mercantile Incorporating Co. v. Junkin, 85 Neb. 561, 123 N.W. 1055; Reed v. Bjornson, 191 Minn. 254, 253 N.W. 102; Earhart v. Frohmiller, Ariz., 178 P.2d 436; State ex rel. Normile v. Cooney, 100 Mont. 391, 47 P.2d 637.

¶20 Our Gift Tax Act has been in effect for some sixteen years and no doubt much revenue has been collected from this source. The period of time that an Act has been in effect has often been considered in passing upon the constitutionality of such law. 11 Am.Jur., Constitutional Law, Section 83, page 704. Gift taxes were doubtless imposed for the purpose of preventing the avoidance of estate and income taxes by gifts inter vivos and there is no prohibition upon them being graduated.

¶21 We conclude that the presumption of the constitutionality of our Gift Tax Act has not been overcome and that such Act is constitutional. The judgment of the Tax Commission is affirmed.