Wallace, C. J., concurring in the judgment, but dissenting from the opinion in part: The conclusion to which the Court unanimously arrived in the first argument, and to which we all adhere—that these are not cases for equitable interposition by injunction—would seem to render the discussion of any of the other questions which have been argued unnecessary; but inasmuch as by the invitation of the Court a number of able and distinguished counsel participated in the argument, and discussed at great length, both orally and in printed briefs, the constitutionality of those parts of the Political Code prescribing the duties of the State Board of Equalization, and providing for the taxation of credits, I have thought it proper to examine and briefly to state my views on those subjects.
It is unnecessary to consider at length whether the Act, in so far as it creates the State Board of Equalization, is unconstitutional, or whether the Board might exist for some of the purposes specified in the Act without substantial interference with the revenue system of the State, for I am irresistibly driven to the conclusion that all those sections defining its most important duties—in fact, making up in the main the legislative scheme discernible in the Act—are unconstitutional: First, because the Board is invested with [505]the powers of Assessors; and second, because it is authorized to exercise legislative functions.
The Board is not one elected by the people. Two of its members are appointed by the Governor and hold during his pleasure, the Controller of State being ex officio the third member. (Political Code, Sec. 352.) Local Assessors are required to exact from each person, among other things, a statement of ‘ ‘all other facts required by the State Board of Equalization.” (Id., Sec. 3629, subd. 6.) The assessment book in each county must show “the total value of all property after equalization by the State Board,” and “such other things as the Board of Equalization may require.” (Id., Sec. 3650, subds. 13,15.) Each Assessor is compelled to transmit a statement to the Board on the first Monday of July in each year. (Id., Sec. 3655.) The Board is directed “to prescribe rules and regulations to govern Supervisors when equalizing, and Assessors when assessing, ” to equalize the valuation of the property of the several counties in the State, and fix the rate'of State taxation, and to “personally inspect” property in the different counties and “learn the value thereof.’’ (Id., Sec. 3692, subds. 2, 6, 7.) It is authorized to raise or reduce the valuation of property for purposes of taxation in the various districts. (Id., Sec. 3693.) “If the County Auditor fails to forward to the State Board of Equalization the statement provided for in Section 3728, the Board must make the equalization from any information it can obtain.” (Id., Sec. 3694, vide Sec. 3728.) When the equalization is completed, the Clerk of the Board is to transmit to each County Auditor a statement of the “percentum to be added to or deducted from the valuation of the property of the county.” (Id., Sec. 3695.) The Board is to determine and transmit to the Board of Supervisors of each county the rate of State tax to be levied and collected, “which, after [506]allowing for delinquency in the collection of taxes must ” be sufficient to raise the specific amount of revenue directed to. be raised by the Legislature for State purposes. (Id., Sec. 3696.) It is allowed to supply the deficiencies of local Boards of Supervisors in the matter of allowing certain expenses connected with the revenue, and the amount of these expenses thus allowed is to be collected through the Controller from the Treasurers of the counties. (Id., Sec. 3704.) By a certified order sent to the Auditor of any county, it may extend the time fixed by the Political Code for the performance of any act to be done during the assessment. (Id., Sec. 3705.) Its action in fixing the rate of taxation for State purposes is, in the absence of action by the Board of Supervisors, a valid levy of the rate established, which-must be enforced by the local officers. (Id., Sec. 3715.) These are the provisions of the Political Code, which figure most prominently in the reasoning through which my conclusion has been reached, and I have italicized those portions which appear to me most important in the discussion. Article XI, Sec. 13, of the Constitution of the State, is in the following language: “Taxation shall be equal and uniform throughout the State. All property in this State shall be taxed in proportion to its value, to be ascertained as directed by law; but Assessors and Collectors of town, county, and State taxes, shall be elected by the qualified electors of the district, county, or town, in which the property taxed for State, county, or town purposes is situated.”
It was contended at the argument that the State Board of Equalization was established to secure uniformity and equal taxation throughout the State, and the taxation of all property “in proportion to its value,” and therefore it was claimed that its establishment was authorized by the language of this section of the Constitution. Leaving wholly out of view for the moment the last clause of the section, it may be seriously doubted whether the action of the Board [507]according to the requirements of the statute would not have an opposite tendency. It operates not throughout the State as an entirety but in localities within the. State, and there is no limitation upon .the exercise of its discretion. It may raise the valuation of the entire property in Santa Clara County and lower the valuation of the entire property in San Francisco, and this without reference to the fact that an individual taxpayer in the former county may have already been assessed too high, or that an individual taxpayer in the latter county may have already been assessed too low. But irrespective of this injustice likely to accrue to individual taxpayers, the exercise of the power to raise or lower the rate of taxation upon the entire mass of property in each particular locality tends strongly to derange that uniformity and equality in assessments which naturally result from the adoption of local market value as the basis of appraisement. It is indeed self-evident that a revenue system through which the actual cash value of all kinds of property is ascertained by local Assessors must, if honestly administered, produce as nearly a uniform and equal result as any mode of assessment which can be devised; that it fixes the taxation of property “in proportion to its value,” and that its symmetry and completeness must be seriously affected, if not wholly destroyed, by any attempt to reconcile those differences in values which are caused by diversities in business, productive capacity and the geographical situation of the local divisions of a great State-. From this point of view it certainly may be claimed, at least with great plausibility, that the action of the State Board of Equalization, as contemplated by the Act under which it proceeds, tends rather to destroy than promote that equality and uniformity in taxation which it was the design of the Constitution to secure.
But however this may be, the last clause of the section of the Constitution which is inseparably connected with the language to which I have just alluded is clear and decisive. [508]The value of property for purposes of taxation is to be “ ascertained as directed by law,” that is in such mode and manner as the Legislature may prescribe, “ but ” through the instrumentality of Assessors “ elected by the qualified electors” of the assessment district “ in which the property taxed * * * is situated.” The mode and manner in which the valuation is to be ascertained is in a measure, and in a great measure, referred to the legislative judgment, but with the restriction that the officer who is to execute the legislative will in this respect must be one whom the people of the locality to be affected have themselves chosen for that purpose.
It is not necessary to refer to the peculiar condition of property rights in the State existing at the time of the formation of the Constitution, in which condition it is historically well known that this clause had its origin, for the language of the clause itself is so clear that neither argument nor illustration could make it more apparent. To hold, therefore, that in prescribing the mere manner of ascertaining the value of property for purposes of taxation the Legislature is at liberty to supersede the Assessor elected by the people and confer his appropriate functions upon an officer of its own nomination, is to wholly ignore a prominent provision of the Constitution of the State having a known reference to the peculiar local condition of the people by whom that instrument was framed and adopted.
There can be no doubt whatever as to the sense in which the word “Assessors'’ is used in the Constitution. It is used there in connection with a proposed system of taxation; but even aside from the purpose most obvious for which the word was employed, as shown by the context, the term possesses a fixed and ascertained legal signification which exactly expresses the popular understanding of its import. It is defined in various expressions, but all the definitions substantially correspond. Thus: “Those that assess public taxes.” (Jac. [509]Law Dic.) “In our law an Assessor is one who has been legally appointed to value and appraise property, generally with a view to levying a tax upon it.” (Bouvier's Law Dic.) “An officer chosen or appointed to assess property.” (Burrell’s Law Dic.) In other words, an Assessor may be said to be a person charged by law with the duty of ascertaining and determining the value of property as the foundation of a public tax. This duty necessarily involves the exercise 'of judgment. It is the judgment of the officer making the assessment in the first instance. If his judgment as to value is to be subsequently disturbed, or the valuation which he affixed is to be afterwards altered by the action of another person or Board, it is the substitution of their judgment for his, and the person or Board whose judgment is so substituted are necessarily in the exercise of the powers of an Assessor. It is of no avail to designate this power as not in reality a power of assessment, but one of equalization of valuation merely. Its scope and effect is to fix a new and final valuation upon the property to be taxed. It is certainly not the less the power and function of assessment because it assumes at the outset to. set aside a valuation already fixed by the local officer regularly elected for that purpose. It is indeed apparent that if the State Controller and the two executive appointees composing the State Board can be constitutionally empowered to set aside the action of the local Assessors and' substitute their own judgment of value for his or for that of the local Boards of Equalization elected by the people, they may be constitutionally authorized to make the assessments for themselves in the first instance, and so displace the local Assessors and the local Boards altogether.
The State Board of Equalization, composed of the Controller and the executive appointees, is likened in the argument made for the defendants to the local Boards of Equalization, composed of the members of the Boards of Supervisors in the several counties, and it is claimed that [510]the repeated decisions of this Court sustaining the authority of the latter go far to uphold the constitutional validity of the former. I am not impressed with the supposed analogy between the two Boards. I have said already in substance in reference to the State Board, that the power to ‘equalize ” is the power to assess, and that a Board of officers who alter valuations for the purpose of taxation, though called a “Board of 'Equalization,” are in reality a “Board of Assessors.” The local Boards of Equalization or of assessments are composed wholly of officers elected by the people, and quoad the subject matter intrusted to them they are Assessors within the meaning of the Constitution. Attention, however, is called to the fact that it is the habit to elect these officers not for the county at large but by the districts into which the county is subdivided for this purpose, and that it is the practice of each member of the Board to act in equalizing values not alone in the district from which he is elected, but throughout the entire county. However this may be, it is to be remarked that in the local Boards the entire people of the county are represented by officers chosen by themselves, while the State Board has no constituency—its.members are. not elected by the people to perform the duties of Assessors; two of them hold only at the pleasure of the Executive, and the Controller, who is ex officio a member of the Board, holds only by legislative designation, as the Treasurer or Attorney General might have held—none of them having ever been elected by the people as an Assessor. The local Boards of Assessors, called “ Boards of Equalization,” and the State Board of Assessors, called the “ State Board of Equalization,” are therefore wholly unlike in their respective organizations, and derive their respective claims of authority from entirely distinct sources—the former from election by the people, the latter only from legislative designation, or executive appointment. As I have said already, the State Board has no constituency—it represents nobody. Under [511]the name of equalization it assumes to assess property and fix values for the purpose of taxation throughout the entire State without having received a single vote at the hands of the people for such an office.
That the State Board cannot become Assessors without the warrant of the popular choice for that office is, therefore, clear under the clause of the Constitution already referred to, and which clause, it may be remarked, is in its general characteristic entirely in accord with the great principle broadly underlying the entire system of our Government, that there should be a corelation between taxation and representation. Indeed a general and persistent opposition to any invasion of that principle has always characterized the people of this country. A reference to this principle in American government will sufficiently account for the provision in our organic law, that for the purpose of taxation property shall be valued by officers elected by the qualified electors in the town, county, or district in which it is situated. It is incumbent upon the Courts to give full force and effect to that provision, and not to permit it to be frittered away under any pretexts. It may be urged, and the argument is not without force, that the Legislature might have effected a complete separation between State and local taxes, in their assessment and collection, and that so far as the revenue for the support of the State Government was concerned, the “district” mentioned in the Constitution might have been coextensive with the limits of the State. But no such legislation has taken place. State taxes are collected through local officers. Thus one system is applied to the assessment of property and the collection of revenue for all purposes; and if the system be altered in any part the entire machinery is affected. And if the State had been constituted one revenue district for the purpose of State taxation, the Assessors and officers charged with the duty of equalizing assessments within that district must [512]have been elected by the people. In People v. Hastings, 29 Cal. 450, Mr. Justice Rhodes, in delivering the unanimous opinion of this Court, holds the following language:
“Section thirteen of Article XI of the Constitution of the State is as follows: ‘Taxation shall be equal and uniform throughout the State. All property in this State shall be taxed in proportion to its value, to be ascertained as directed by law; but Assessors and Collectors of town, county, and State taxes shall be elected by the qualified electors of the district, county, or town in which the property taxed for State, county, or town purposes is situated.’ The requirement that the value of the property to be taxed shall be ascertained as directed by law, means that the property shall be assessed for the purpose of taxation, and that the taxes may be levied only after the property has been so assessed. An assessment, made as directed by law, is an indispensable basis for the support of the tax that may be levied upon it. The constitutional requirements are not satisfied merely by an assessment made in the manner directed by law, but it is also provided that the Assessors of town, county, or State taxes shall be elected by the qualified electors of the district, county or town in which the property to be taxed is situated—that is to say, that the assessment must be made by a person elected as an Assessor by the qualified electors of such district, county or town. A tax, in order to be valid, must rest upon an assessment made in the mode prescribed by law, and by an Assessor elected as provided for by the Constitution. This proposition requires no argument, for it arises from the plain and unmistakable import of the terms employed in the section cited.”
In People v. Sargent, 44 Cal. 430, the doctrine of the case of People v. Hastings, supra, on this point, was reaffirmed here. If, then, under the sections of the Political Code [513]under consideration the State Board of Equalization possesses in substance the powers of Assessors; if it be found, upon examination, that under those sections the Board can change the results arrived at by the Assessors in the valuations of property within their several districts, then unquestionably there is a virtual transfer of the power of assessment, because to change a valuation is certainly, so far as the taxpayer is concerned, to fix a valuation, and to fix a valuation as a basis for the levy of a tax is an assessment.
The Board is authorized to prescribe rules for the government of Assessors in the performance of their duties, and by these rules the valuation of property may be materially affected. The mode prescribed by the Board for ascertaining the cash value of property may be entirely different from that which, but for its interference, would have been adopted by the Assessor, and thus the assessment is, or may be, practically made by the Board, and not by the Assessor. But this transfer of power is seen more conspicuously in other sections of the Code. There being but one assessment, which is the basis of both local and State taxation, the process of equalization, in the manner prescribed by the law, cannot be applied without a disturbance of local valuation. Thus, if the Assessor of San Francisco is directed to add twenty per centum to his valuation of the real property in his district, then not only does the valuation quoad that species of property become that of the Board, and not of the Assessor; but the relative valuations of different classes of property within the same assessment district are necessarily disturbed and altered, the practical result of which is that the owners of real estate will pay a higher tax by twenty per centum, as compared with the owners of personal property in the same district, than they would have paid but for the interference of the State Board. And in the process of [514]equalization the Board is governed by no rules except those of its own creation. Its members are required, personally, to inspect the property in the different counties of the State; in other words, individually to perform a most important function of the duties which are, by law, devolved upon the elected Assessors; and upon the knowledge thus acquired, and, in one conjuncture, “upon any information it can obtain,” the so-called equalization by the Board may be founded. This is, after all, really to confer upon the Board the power of original assessment, which is made to supply the place of the assessment by constitutional officers elected by the “qualified electors. ” The subject need not be pursued further. In effect, and to all substantial intents and purposes, those sections of the Code which I have considered constitute the State Board of Equalization a Board of Assessors, and in my judgment are in conflict with the plain provisions of the Constitution.
I am also of opinion that those parts of the law which undertake to vest in the Board the authority and duty to fix the rate of taxation amount to a delegation of legislative power, and are therefore a violation of the Constitution. The portions of the Constitution thus violated are the following :
Article III. “The power of the Government of the State of California shall be divided into three separate departments—the legislative, the executive, and judicial; and no person charged with the exercise of powers properly belonging to one of these departments shall exercise any functions appertaining to either of the others, except in the cases hereinafter expressly directed or permitted.”
Article IV, Section 1. “The legislative power of this State shall be vested in a Senate and Assembly, which shall be designated the Legislature of California, and the enacting clause of every law shall be as follows: ‘The people of the [515]State of California, represented in Senate and Assembly, do enact as follows.’ ”
These provisions of the Constitution are merely declaratory of the most essential principle and the principle most jealously guarded in the American system of Government. It would be useless to enter into an extended argument or to cite authorities in support of a proposition which has been so frequently declared and enforced by the judiciary of the American States that it has really become axiomatic. The application of the principle to the case at bar is the only point upon which anything need be said. How taxation is one of the necessary attributes of sovereignty and the power to lay taxes under our system is one of the powers of Government which does not belong to either the executive or the judicial department, but is vested in the Legislature. “The power of taxation is a necessary incident to sovereignty, and under our system of Government it pertains to the legislative department, for the levying a tax is necessarily a legislative act.” (People v. McCreery, 34 Cal. 454.) And that the right to exercise this power cannot be delegated is another proposition so self-evident that I need not delay to consider it in detail, but may confine myself to an inquiry as to whether there has been an attempted delegation of the power of taxation to the State Board. After having performed the functions of assessments (under the name, however, of equalizing assessments) that body is directed to fix the rate “of State taxation,” which, “after allowing for delinquencies in the collection of taxes, ” must be sufficient to produce the “amount of revenue directed to be raised by the Legislature for that purpose.” If the discharge of this duty involved nothing moro than an arithmetical computation based upon the total assessed value of the property in the State, it would be an act of a merely executive nature, and, in my opinion, not open to objection of a constitutional character. As for [516]example, if the Board was only required to ascertain by calculation, and thereupon to declare what rate of taxation upon the total assessed valuation would produce a sum equal to the ascertained amount by law directed to be raised for State purposes, it would be but an agency or instrument by which the legislative will and the legislative judgment, already expressed upon the statute book, would be carried into effect. But the scope" of its power as defined in the Code goes clearly beyond this limit, and requires of the Board the exercise of its own discretion and its own judgment in a calculation of probabilities which it is required to make for itself, an estimate or mere conjecture of the amount of taxes that will remain unpaid after the work of collection is finished, and the levy by the Board of a tax sufficient to cover such delinquency as its judgment may anticipate. That this is the real nature of the power asserted for the Board cannot be doubted upon considering the provisions of the statute under which it proceeds. Indeed, much of the argument of one of the learned counsel who defended the constitutionality of the Act practically conceded this point, for it went to show that in the levy of fifty cents upon the one hundred dollars made by the Board to raise money for State purposes, its judgment was exercised with a degree of circumspection which deserved to be commended, that it might tuell have fixed the rate much higher than fifty cents, etc.—all which, is no doubt true, for undoubtedly there was as much power, as much authority in the Board, to fix the rate upon one hundred dollars at fifty dollars at fifty cents. But with whatever degree of moderation or of wisdom the very estimable gentleman who now compose the State Board may have, in fact, proceeded, their action in fixing the rate of taxation in the exercise of their own judgment and to cover their own estimate of delinquencies to occur, was the usurpation upon their part of those powers to be exercised only by the legislative department of the Government. It is
With reference to the question of the assessment, for the purposes of taxation, of credits, or what have been termed in argument “solvent debts,” the proposition contended for by the counsel who assail the validity of the tax, seems to be that the wealth of the State is not increased by local credits, and, therefore, that such credits ought not to be included in the aggregate of the taxable property within the State. This proposition may be entirely sound in a politico-economical point of view; indeed, I am not aware that it has ever- been seriously contraverted by political economists, and so far as my investigation has extended, it has been uniformly accepted by the Legislatures of the other States of the Union.
While, however, it is doubtless true that the material wealth of the State is not increased by such credits, it by no means results that these credits are not to be dealt with as legitimate objects of taxation. So far as an argument may be drawn from the legislation of the other States, it must be acknowledged that all the precedents are in favor of treating such credits as constituting property for purposes of taxation. At the same time, in order to secure as nearly as may be equality in taxation and to prevent double taxation, it has been the practice, in some form, to allow a deduction of the amount of each crecit from the debtor’s estate— in other words, to treat each credit as the taxable property [519]of the creditor in making the assessment.' It may well be admitted that to tax property purchased on credit, and also the credit itself, to their full value in the hands of both debtor and creditor, is flagrantly unjust and a clear violation of the proposition, the soundness of which I have conceded; but this, while it goes to show that in this State the Legislature has disregarded a fixed axiom in political economy, does not prove as a judicial proposition that credits are not property, nor that they should absolutely escape taxation. Indeed it would be difficult to maintain that a citizen whose wealth consists wholly of obligations for the payment of money loaned should not in common with other citizens contribute his pro rata share to the support of the Government by which his person and property are protected. The remedy, however, for any supposed injustice of the kind specified, is not with the Courts but with the Legislature. That absolute equality in the burden of supporting the Government, however desirable, is unattainable by even the most carefully adjusted system of taxation is a truth which all human experience has demonstrated; but while this is the case there is no doubt that such equality may be approximated so as to eradicate from our financial system the odious injustice of double taxation, and at the same time to compel the money lender to contribute his just proportion of the general taxation imposed. It is not, howrever, for the judicial department of the Government to project or perfect a system of finance.
If the system adopted by the Legislature operates injustice to any person or class of persons, we cannot for that reason interfere, unless it also appear that some provision of the Constitution has been violated in the enactment of the law; all else is mere legislative policy with which we cannot interfere; hence we have no more authority to say that that species of property known as solvent indebtedness is not taxable to the creditor, because it might amount to “double [520]taxation, ” than we have to declare that the amount of his debts should be subtracted from the value of the debtor’s assessable property. The latter would seem the more just mode of procedure, but neither can be judicially prescribed. My conclusion on this point is that in so far as the Code requires credits to be assessed as property for the purposes of taxation it is not in contravention of the Constitution.
These are the general views I entertained upon the first argument of these causes; but the pressure of the business of the Court at that time prevented me from entering upon a discussion of the questions involved in these appeals.
I am of opinion that the orders below should be reversed, because the cases here are not of equitable cognizance, nor remediable by injunction.