State, ex Rel. v. Glander

Full title: THE STATE, EX REL. WILLIAMS, APPELLANT v. GLANDER, TAX COMMR., APPELLEE

Court: Supreme Court of Ohio

Date published: Jun 25, 1947

148 Ohio St. 188 (Ohio 1947)

74 N.E.2d 82

Opinion

No. 30879

Decided June 25, 1947.

Taxation — Personal property owned by Department of Liquor Control exempt — State may not be sued, when — Section 16, Article I, Constitution — Department of Liquor Control not separate entity but administrative state department — Personal property of department belongs exclusively to state — No duty specially enjoined on Tax Commissioner to tax such property — State not bound by general statute, when — State not "person," "taxpayer" or "corporation" — Section 5320 et seq., General Code — General Assembly to provide revenue to defray expenses of state — Section 4, Article XII, Constitution — Gallonage liquor charge substitute for personal property tax — Section 6064-10, General Code — No citizen or person denied due process or equal protection — General Assembly may determine subjects and methods of taxation — State personal property exempt — Section 5351, General Code — Liquor Control Act (115 Ohio Laws, pt. 2, 118) — General Assembly's plan for taxation, regulation and control of liquor traffic — Question of policy for legislature.

1. Section 16 of Article I of the state Constitution is not self-executing and, in the absence of enabling legislation, suit may not be brought against the state. ( Palmer v. State, 96 Ohio St. 513, approved and followed.)

2. The Department of Liquor Control is an administrative department of state government. It is not a separate entity.

3. The personal property used by the Department of Liquor Control belongs exclusively to the state of Ohio.

4. No duty is specially enjoined upon the Tax Commissioner of Ohio to levy and assess personal property taxes on the personal property held or used by the Department of Liquor Control.

5. Unless the state is expressly named or referred to therein, it is not bound by the terms of a general statute. (Paragraph three of State, ex rel. Parrott, v. Board of Public Works, 36 Ohio St. 409, approved and followed.)

6. Neither the word "person," "taxpayer" nor "corporation," as used in Part Second, Civil, Title I, Taxation, Section 5320 et seq., General Code, is meant to include the state of Ohio.

7. Under Section 4 of Article XII of the state Constitution it is the duty of the General Assembly to provide for raising revenue sufficient to defray the expenses of the state. The state revenue provided in Section 6064-10, General Code, is a proper classification of and substitute for personal property taxes levied and assessed under Part Second, Civil, Title I, Taxation, Section 5320 et seq., General Code.

8. The failure of the state to levy, assess and collect personal property taxes under Section 5320 et seq., General Code, while collecting the tax or charge made under Section 6064-10, General Code, is not a denial of due process or of equal protection of the law to any citizen or person.

9. Under Section 2 of Article XII of the state Constitution, the General Assembly has the power to determine the subjects and methods of taxation and exemption of personal property, limited only by Article I of the state Constitution. (Paragraphs one and two of the syllabus of State, ex rel. Struble, v. Davis et al., Tax Comm., 132 Ohio St. 555, and paragraph one of the syllabus of Zangerle, Aud., v. Republic Steel Corp., 144 Ohio St. 529, approved and followed.)

10. Section 5351, General Code (120 Ohio Laws, 407), exempts from taxation all personal property belonging exclusively to the state of Ohio. (Paragraph five of the syllabus of Federal Public Housing Authority v. Guckenberger, Aud., 143 Ohio St. 251, and paragraph seven of the syllabus of Zangerle, Aud., v. City of Cleveland, 145 Ohio St. 347, distinguished.)

11. Whether the Liquor Control Act (House Bill No. 1, 115 Ohio Laws, pt. 2, 118, and its amendments), creating the Department of Liquor Control enacted pursuant to a proclamation of the Governor, prescribed a wise plan is not for the courts to decide. So long as an act of the General Assembly is constitutional, the question of policy is solely for the legislative branch of our state government to determine. Such act does provide the General Assembly's plan for the lawful taxation, regulation and control of the liquor traffic.

APPEAL from the Court of Appeals for Franklin county.

Appellant, as relator, filed his amended petition in the Court of Appeals for Franklin county, seeking a writ of mandamus commanding the respondent, C. Emory Glander, Tax Commissioner of Ohio, to levy and assess personal property taxes on all personal property "located and used by the Department of Liquor Control in the state of Ohio."

Respondent demurred to the petition, which demurrer was sustained by the Court of Appeals and the amended petition dismissed.

The case having originated in the Court of Appeals the appeal to this court is of right (Section 2, Article IV of the Constitution).

Mr. Meyer A. Cook, for appellant.

Mr. Hugh S. Jenkins, attorney general, and Mr. Aubrey A. Wendt, for appellee.

TURNER, J.

While appellant has argued a number of subsidiary questions, we conclude that there are five principal questions presented by the amended petition and the demurrer thereto, viz:

(1) Is this an action against the state of Ohio?

(2) If this is not an action against the state, does the law specially enjoin upon respondent a duty to levy and assess personal property taxes on all (or any) of the personal property controlled and used by the Department of Liquor Control?

(3) Is the gallonage tax provided for in Section 6064-10, General Code, and/or the markup provided for in Section 6064-3, paragraph 2, General Code, a lawful substitute for general property taxes on personal property held and used by the Department of Liquor Control?

(4) Are either the due process or the equal protection clauses of the state or federal Constitution violated?

(5) Does Section 5351, General Code, authorize immunity from taxation of personal property owned by the state?

(1) Appellant (relator) complains that the Court of Appeals erred in holding that the state of Ohio is not a taxpayer within the purview of Section 5320, General Code, and "in failing to hold that the state of Ohio was subject to taxation insofar as the personal property used in business by the Department of Liquor Control was concerned and in failing, therefore, to overrule said demurrer of the respondent-appellee."

In his amended petition relator alleged "that said Department of Liquor Control is a separate body corporate * * * that the said Department of Liquor Control is engaged in the business of buying, selling and distributing spirituous liquor * * * throughout the state of Ohio * * * that the Department of Liquor Control owns, operates, manages and controls personal property located and used in business in the state of Ohio." (Italics ours.)

The foregoing allegations are incorrect conclusions of law. If they were to be considered as conclusions of fact, we may take judicial notice of their incorrectness as they are allegations respecting the nature and function of a department of state government. The Department of Liquor Control is an administrative department of the state of Ohio. (Section 154-3, Section 6064-3 and Section 6064-8, General Code, inter alia.) Such department is not a corporation of any kind.

Section 1 of Article XIII of the Constitution provides that "The General Assembly shall pass no special act conferring corporate powers," while Section 2 of that Article provides that "corporations may be formed under general laws." We take judicial notice of the fact that the Department of Liquor Control has not been incorporated under general laws. In his reply brief relator admits, "We, of course, admit that there cannot be any special corporation acts today and that the creation of this department was properly made by virtue of the necessity of the regulation of the sale of spirituous liquors. * * *"

Recognizing the weakness of his position in his amended petition, relator here claims (without further amendment) that the state of Ohio comes within the definition of a taxpayer under Section 5320 and elsewhere in the General Code. Relator also contends that the state is "a person doing business in this state." (Italics ours.) Contrary to the allegations of his amended petition relator now says in his brief: "Certainly the state of Ohio owns certain personal property of the Department of Liquor Control * * *." However, relator shuttles back and forth on the question of the ownership of the property sought to be assessed.

Unquestionably the personal property held and administered by the Department of Liquor Control belongs to the state of Ohio.

Section 16 of Article I of the Constitution provides:

"Suits may be brought against the state, in such courts and in such manner, as may be provided by law." This constitutional provision is not self-executing and has not been implemented by legislative action to cover such a case as we have here.

In 37 Ohio Jurisprudence, 268, Section 44, it is said:

"In accordance with the general rule that the state cannot be sued without its consent, suits against officers of the state, as representing the state in action and liability where the state, though not a party to the record, is the real party against which relief is sought and where a judgment for the plaintiff, though nominally against the defendant as an individual, could operate to control the action of the state or subject it to liability, are treated as suits against the state."

In 59 Corpus Juris, 313, Section 468, it is said:

"A suit, involving property in which the state has an undoubted right or interest, and in which no effective decree can be rendered without binding the state itself, is a suit against the state and cannot be maintained without its consent. * * *"

In 49 American Jurisprudence, 304, Section 92, it is said:

"While a suit against state officials is not necessarily a suit against the state, within the rule of immunity of the state from suit without its consent, that rule cannot be evaded by bringing an action nominally against a state officer or a state board, commission, or department in his or its official capacity when the real claim is against the state itself, and the state is the party vitally interested. If the rights of the state would be directly and adversely affected by the judgment or decree sought, the state is a necessary party defendant, and if it cannot be made a party, that is, if it has not consented to be sued, the suit is not maintainable. The state's immunity from suit without its consent is absolute and unqualified, and a constitutional provision securing it is not to be so construed as to place the state within the reach of the process of the court."

In 34 American Jurisprudence, 905, Section 123, it is said:

"The immunity of a state and of the United States from suit prevents mandamus against a public officer, board, or commission where it is in reality a proceeding against either sovereign. * * *"

In the case of Palmer v. State of Ohio, 248 U.S. 32, 63 L.Ed., 108, 39 S.Ct., 16, it was held as shown by the headnotes to the official report:

"The right of individuals to sue a state depends entirely on the consent of that state.

"Whether an amendment of the Ohio Constitution (Article I, Section 16, as amended 1912) gives such consent directly or requires legislation to put it into effect, held a question of local law, in no sense involving rights under the due process clause of the Fourteenth Amendment of individuals suing the state for damage to property.

"The Fifth Amendment relates to federal action only."

The foregoing case grew out of the case of Palmer v. State, 96 Ohio St. 513, 118 N.E. 102, in which it was held:

"1. A state is not subject to suit in its own courts without its express consent.

"2. The provision of the Ohio Constitution, Article I, Section 16, as amended September 3, 1912, that 'Suits may be brought against the state, in such courts and in such manner, as may be provided by law,' is not self-executing; and statutory authority is required as a prerequisite to the bringing of suits against the state."

Correctly construed, we have in the instant case an action whereby it is sought to compel an officer of the state to start in motion the machinery whereby the state is compelled to pay to its subdivisions a tax on its own property or suffer distress of such property.

Being of the opinion that the present action is against the state, the judgment of the Court of Appeals sustaining the demurrer to relator's amended petition should be sustained, unless we find that the General Assembly has by law imposed a duty upon respondent pertinent to the allegations of the amended petition which duty respondent has failed to perform.

(2) We do not mean to be understood as holding that the General Assembly may not by appropriate legislation subject the state's property used by the Department of Liquor Control to the general personal property tax laws. But we do mean to say that up to this time the legislative authority has not done so. In no one of the statutes cited by relator (or in any which we have been able to find on the subject) is the state or Department of Liquor Control mentioned specifically or by necessary implication.

Assuming that the allegations of the amended petition are broad enough to include the state of Ohio as owner of the personal property in question, we call attention to a well settled doctrine in this state (and elsewhere) as set forth in paragraph three of the syllabus in State, ex rel. Parrott, v. Board of Public Works, 36 Ohio St. 409:

"The state is not bound by the terms of a general statute, unless it be so expressly enacted." (Cited with approval in State, ex rel. Attorney General, v. Cincinnati Central Ry. Co., 37 Ohio St. 157, 176; State, ex rel. Ogelvee, Aud., v. Cappeller, 39 Ohio St. 207; State, ex rel. Janes, v. Brown, Secy. of State, 112 Ohio St. 590, 148 N.E. 95; and State, ex rel. Nixon, v. Merrell, Dir. of Highways, 126 Ohio St. 239, 246, 185 N.E. 56.)

In the case of Van Brocklin v. State of Tennessee, 117 U.S. 151, 29 L.Ed., 845, 6 S.Ct., 670, Mr. Justice Gray said at pages 173, 174: "General tax acts of a state are never, without the clearest words, held to include its own property, or that of its municipal corporations, although not in terms exempted from taxation." The first case cited by Mr. Justice Gray in support of the foregoing statement is that of Lessee of Buckley v. Osburn, 8 Ohio, 180, wherein Judge Hitchcock said at page 187:

"The land in controversy was not the property of an individual, but was the property of the state of Ohio, and it cannot be supposed it was the intention of the state to levy a tax upon its own lands."

Even without benefit of the rule of strict construction which applies to the interpretation and application of tax statutes, we are of the opinion that there is no justification for holding that the state of Ohio is to be considered as a taxpayer or person doing business within this state. Before a writ of mandamus may issue relator must show a clear right thereto. See 25 Ohio Jurisprudence, 997, Section 23, and cases there cited.

Section 12283, General Code, provides:

"Mandamus is a writ issued, in the name of the state, to an inferior tribunal, a corporation, board, or person, commanding the performance of an act which the law specially enjoins as a duty resulting from an office, trust, or station."

In the case of State, ex rel. Stanley, v. Cook, Supt. of Banks, 146 Ohio St. 348, 66 N.E.2d 207, it was held in paragraph seven of the syllabus:

"A writ of mandamus will not issue to compel the observance of law generally, but will be confined to commanding the performance of specific acts specially enjoined by law to be performed. ( Cullen, Vice Mayor, v. State, ex rel. City of Toledo, 105 Ohio St. 545; State, ex rel. Kunick, v. Urner, Aud., 135 Ohio St. 9; State, ex rel. Foster, v. Miller et al., Tax Comm., 136 Ohio St. 295; State, ex rel. White, v. City of Cleveland, 132 Ohio St. 111; State, ex rel. City Loan Savings Co. of Wapakoneta, v. Taggart, Recr., 133 Ohio St. 382; and State, ex rel. Welsh, v. State Medical Board, 145 Ohio St. 74, approved and followed.)"

As there is no duty specially enjoined upon respondent to comply with the writ of mandamus prayed for by relator in his amended petition, the judgment of the Court of Appeals should be affirmed.

(3) There is a further reason for affirming the judgment of the Court of Appeals. The property which relator claims is used in business is already taxed. The respondent has nothing to do with the levy, assessment or collection of these taxes.

Section 4 of Article XII of the Constitution provides:

"The General Assembly shall provide for raising revenue, sufficient to defray the expenses of the state, for each year, and also a sufficient sum to pay the interest on the state debt."

Section 6064-10, General Code, provides in part:

"* * * In any event (a) a sum equal to one dollar for each gallon of spirituous liquor sold by the department during the period covered by the payment shall be paid into the state treasury to the credit of the general revenue fund in the manner provided by law; * * *.

"Whenever, in the judgment of the director of finance, the amount in the custody of the treasurer of state to the credit of the liquor control rotary fund is in excess of that needed to meet the maturing obligations of the department and as working capital for its further operations, the director of finance shall certify the amount of such excess to the department of liquor control and to the auditor of state, and the auditor of state shall thereupon issue an order on the treasurer of state as custodian of moneys collected under the liquor control act for the amount thereby determined, to the general revenue fund of the state and a pay-in order in like amount, in the manner provided by law." (Italics ours.)

In Section 6064-3, General Code, paragraph (2), provision is made for a markup on sales. The proceeds of the markups go to the treasurer of state as custodian (Section 6064-9, General Code) and thence under Section 6064-10, General Code, the excess not needed is to be paid into the general fund of the state.

The Department of Liquor Control is permitted to sell spirituous liquors only (Section 6064-12, General Code).

(4) Appellant presents the following argument: "If this proprietary function of the state of Ohio is permitted to avoid its just share of the expense of running the government of the state of Ohio, an undue burden is thrown on the general taxpayer."

In the case of Carmichael, Atty. Genl. of Alabama, v. Southern Codl Coke Co., 301 U.S. 495, 509, 81 L.Ed., 1245, 57 S.Ct., 868, 109 A. L. R., 1327, Mr. Justice Stone said:

"It is inherent in the exercise of the power to tax that a state be free to select the subjects of taxation and to grant exemptions. Neither due process nor equal protection imposes upon a state any rigid rule of equality of taxation. [Citing cases.] This court has repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption, infringe no constitutional limitation. [Citing cases.]"

We are of the opinion that the foregoing revenue legislation meets the test laid down by Mr. Justice Sutherland in Colgate v. Harvey, Tax Commr., 296 U.S. 404, 422, 80 L.Ed., 299, 56 S.Ct., 252, 102 A. L. R., 54, as follows:

"It is settled beyond the admissibility of further inquiry that the equal protection clause of the Fourteenth Amendment does not preclude the states from resorting to classification for the purposes of legislation. * * *

"But the classification 'must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike. * * * The test to be applied in such cases as the present one is — does the statute arbitrarily and without genuine reason impose a burden upon one group of taxpayers from which it exempts another group, both of them occupying substantially the same relation toward the subject matter of the legislation?"

In the case of State, ex rel. Struble, v. Davis et al., Tax Comm., 132 Ohio St. 555, 9 N.E.2d 684, it was held:

"1. Section 2 of Article XII of the state Constitution requires only lands and improvements thereon to be taxed by uniform rule according to value. By reason of the removal of previous constitutional limitations and restrictions, the power of the General Assembly to determine the subjects and methods of taxation and exemption of personal property therefrom is limited only by Article I of the Constitution of the state.

"2. In the matter of classification of property for taxation purposes, broad power is conferred upon the Legislature. Its action in that regard will not be set aside by the courts unless the classification attempted results in such discrimination. against members of the same class as to deny them the equal protection of the law." See, also, 61 Corpus Juris, 384, Section 383.

In the case of Zangerle, Aud., v. Republic Steel Corp., 144 Ohio St. 529, 60 N.E.2d 170, it was held in paragraph one of the syllabus:

"Section 2 of Article XII of the state Constitution requires only lands and improvements thereon to be taxed by uniform rule according to value. By reason of the removal of previous constitutional limitations and restrictions, the power of the General Assembly to determine the subjects and methods of taxation and exemption of personal property therefrom is limited only by Article I of the Constitution of the state. State, ex rel. Struble, v. Davis et al., Tax Comm., 132 Ohio St. 555, approved and followed.)"

(5) Section 5351, General Code, provides in part: "Real or personal property belonging exclusively to the state or United States, and public property used for a public purpose, shall be exempt from taxation. * * *" (Italics ours.)

Relator claims that this statute is not applicable because it was adopted prior to the amendment of Section 2 of Article XII of the Constitution permitting classification and exemption from taxation of personal property. In such claim relator is mistaken as the amendment of Section 2 of Article XII of the Constitution became effective January 1, 1934 (see schedule and 115 Ohio Laws, pt. 2, 446), while Section 5351, General Code, was amended and the part above quoted readopted (120 Ohio Laws, 407) and became effective September 3, 1943. The reference to the syllabi of State, ex rel. Struble, v. Davis, supra, and Zangerle, Aud., v. Republic Steel Corp., supra, is appropriate here. Paragraph five of the syllabus of Federal Public Housing Authority v. Guckenberger, Aud., 143 Ohio St. 251, 55 N.E.2d 265, is applicable only to real property which was all that was involved there. Paragraph seven of the syllabus in Zangerle, Aud., v. City of Cleveland, 145 Ohio St. 347, 61 N.E.2d 720, refers only to municipally owned personal property.

In relator's reply brief it is said: "It should be remembered that the relator does not question the general power of the Legislature to exempt personal property from taxation subject to the provisions of Article I of the Constitution." As already pointed out, relator was mistaken in assuming that Section 5351, General Code, was inapplicable because enacted prior to the constitutional amendment.

In 51 American Jurisprudence, 550, Section 557, it is said:

"When public property is involved, exemption is the rule and taxation the exception. Public property is presumed to be exempt from the operation of general property tax laws. Tax statutes are construed not to embrace property of the government or its instrumentalities unless the legislative intention to include such property is plainly and clearly expressed."

We are of the opinion that the personal property here in question is exempt from taxation under Section 5351, supra, and that such exemption does not violate any provision of Article I of the Constitution, at least so long as the gallonage tax under Section 6064-10, General Code, is in effect.

Relator (appellant here) relies strongly on the case of State of Ohio v. Helvering, Commr. of Int. Rev., 292 U.S. 360, 78 L.Ed., 1307, 54 S.Ct., 725, where the state of Ohio sought to enjoin the Commissioner of Internal Revenue and the various collectors throughout the state from collecting taxes imposed by Section 3244, Revised Statutes of the United States (Title 26, Section 205, U.S. Code) and other United States statutes. In the course of the opinion it was said by Mr. Justice Sutherland (p. 370): "Whether the word 'person' or 'corporation' includes a state or the United States depends upon the connection in which the word is found." The court held that under Title 26, Section 205, the state was included within the meaning of the word "person." This certainly is no precedent for saying that the word "person" or "corporation" as used in the Ohio tax statutes pertaining to personal property includes the state of Ohio. We hold that it does not.

In the case of C. A. King Co. v. Horton, 116 Ohio St. 205, 156 N.E. 124, it was held in paragraph three of the syllabus:

"The 'police power' is the power to guard the public morals, safety, and health, and to promote the public convenience and the common good, and is one of the powers not surrendered to the federal government, and therefore remains with the states respectively. It is within the power of the state to devise the means to be employed to those ends so long as they do not go beyond the necessities of the case and have a real and substantial relation to the object to be accomplished."

A writ of error was dismissed by the Supreme Court of the United States, 276 U.S. 600, 72 L.Ed., 725, 48 S.Ct., 322.

In coming to the conclusion, as we do, that the Liquor Control Act does not go beyond the necessities of regulation of the traffic and does have a real and substantial relation to the object to be accomplished, we have in mind not only the enactment and repeal of the 18th Amendment to the federal Constitution but our own former state constitutional provision and legislative enactments in attempts to control the evils growing out of such traffic. The fact, if fact it be, that the Liquor Control Act is no more successful than the 18th Amendment or our own constitutional and statutory provisions, does not authorize this court to add to the taxation provisions adopted by the General Assembly in response to the proclamation of the Governor convening that legislative body for the specific purpose, inter alia, of taxing the manufacture, possession and use of and traffic in spirituous liquors.

Too much emphasis has been placed upon the claimed distinction between the governmental and proprietary functions of state government. No such distinction in respect of federal agencies is recognized by the federal courts. Through various corporations and agencies the federal government is in the market place. An examination of the acts of Congress creating various federal agencies, a long list of which may be found in the congressional directory index of federal agencies, will disclose that the federal government is extensively engaged in commercial transactions in competition with private enterprise.

We have no quarrel with the holdings of the federal courts in respect of such agencies, but we are unable to see the distinction made as to similar state agencies.

When the 18th Amendment of the federal Constitution and our so-called prohibition amendment to the state Constitution were repealed, the state of Ohio was faced with an emergency that called for the exercise of its police power. Under such emergency the Governor of Ohio called a special session of the 90th General Assembly. The proclamation therefor reads:

"Under authority granted by Article III, Section 8, of the Constitution of the state of Ohio, the governor thereof is authorized in such cases of emergency, of which he is the judge, to call the general assembly of the state of Ohio into special session.

"In my judgment, as governor of the state, an emergency has arisen wherein the voters by an overwhelming plurality, chose that our state should, in cooperation with the repeal of the 18th amendment to the federal constitution and the repeal of the so-called prohibition amendment to the constitution of Ohio, adopt a proper form of taxation and control of the traffic in alcoholic beverages in the state of Ohio.

"Having, therefore, in mind the expression of the will of the people of our state, it becomes my duty to summon into special session the general assembly of Ohio.

"Now, therefore, I, George White, governor of Ohio, by virtue of the authority vested in me, hereby order that the general assembly of the state of Ohio convene in extraordinary session at the capitol in the city of Columbus at one o'clock p. m., Wednesday, December 6th, 1933, then and there to give consideration to legislation affecting the following matters and none others to wit:

"The consideration and passage of such legislation as may be deemed proper to tax, regulate and control within the state of Ohio, the manufacture, possession, use and traffic in, malt, spirituous and vinous liquors within the state of Ohio." See 115 Ohio Laws, pt. 2, 107.

As a result of such proclamation the General Assembly enacted House Bill No. 1 entitled "An act to provide a system of control of the manufacture and importation of and traffic in beer and intoxicating liquors in this state, including a state monopoly of the distribution and sale of spirituous liquor; for that purpose to create the department of liquor control, to consist of the board of liquor control and the director of liquor control and define their respective powers and duties, to levy a tax on the sale of wine and spirituous liquor and a gross excess profits tax on the manufacture and sale of spirituous liquor, for the use of the general revenue fund of the state; * * * and to declare an emergency." See 115 Ohio Laws, pt. 2, 118.

Whether the Liquor Control Act (House Bill No. 1, 115 Ohio Laws, pt. 2, 118, and its amendments) prescribed a wise plan is not for the courts to decide. So long as an act of the General Assembly is constitutional the question of policy is solely for the legislative branch of our state government to determine. Such act does provide the General Assembly's plan for the lawful taxation, regulation and control of the liquor traffic.

We do not question the power of the federal government to levy and collect the excise taxes, the collection of which was contested in the case of State of Ohio v. Helvering, supra.

Therefore, the judgment of the Court of Appeals should be and hereby is affirmed.

Judgment affirmed.

MATTHIAS, ZIMMERMAN and SOHNGEN, JJ., concur.

WEYGANDT, C.J., HART and STEWART, JJ., dissent.

HART, J., dissenting.

The relator in his amended petition prayed that the respondent be required to levy and assess personal property taxes on all personal property located in Ohio and used by the Department of Liquor Control. The personal property under control of the Department of Liquor Control, consisting of liquors and store fixtures, is located in many counties and taxing subdivisions of the state of Ohio and is, if taxable, subject to a combined county return for taxation by the Tax Commissioner. See Sections 5370, 5372-1, 5376, 5378 and 5395, General Code. If this property is taxable, it is the clear statutory duty of the Tax Commissioner to see that a proper return is made to the various county auditors for that purpose, and to see that the assessment and collection of taxes are enforced. This procedure was followed by the commissioner in a similar situation which gave rise to the case of Hinde Dauch Paper Co. v. Evatt, Tax Commr., 143 Ohio St. 307, 55 N.E.2d 129.

The principal question here involved is whether this property is taxable. In my opinion the question is specifically answered by Section 5328, General Code, which provides that "* * * All personal property located and used in business in this state * * * shall be subject to taxation." See Hinde Dauch Paper Co. v. Evatt, Tax Commr., supra.

Section 5366, General Code, provides:

"* * * 'Taxpayer' means any owner of taxable property and includes first, every person residing in, or incorporated or organized by or under the laws of this state, * * * excepting, in each instance, those hereinafter expressly excluded * * *. 'Taxpayer' excludes all individuals, partnerships, corporations, associations, and joint stock companies * * * in this title defined as financial institutions, as dealers in intangibles, as domestic insurance companies and as public utilities, respectively * * *." (Italics supplied.)

The rule of expressio unius est exclusio alterius does not apply here for the reason that the definition of "taxpayer" is followed by a statement of the persons who shall be excluded from the definition. This exception to the rule is operative where the section of the statute under consideration is followed by a section or a portion of the same section enumerating specific entities to which the statute is not applicable. 37 Ohio Jurisprudence, 557, 558, Section 296, and 783, 784, Section 455; Brenzinger v. American Exchange Bank of Duluth, 19 C. C., 536, 10 C. D., 775, affirmed 66 Ohio St. 242, 64 N.E. 118. An exception in the statute excludes all other exceptions. City of Lima v. Cemetery Assn., 42 Ohio St. 128, 51 Am. Rep., 809. Since certain owners of property are specifically excluded from the definition of "taxpayer" by Section 5366, General Code, all other owners of personal property are necessarily included in the definition.

In the case of State of Ohio v. Helvering, Commr., 292 U.S. 360, 78 L.Ed., 1307, 54 S.Ct., 725, the United States Supreme Court had before it the question whether the Department of Liquor Control of Ohio was subject to federal taxation and the court was confronted with the problem of interpreting a section of the federal code and determining whether the word "person" used in the statute should be construed as meaning and including a partnership, association, company or corporation as well as a natural person. In that case Mr. Justice Sutherland, writing the opinion for the court, held that a state is a "person" within the meaning of the statute and concluded as follows: "We prefer, in the light of the foregoing examples, to place our ruling upon the broader ground that the state itself, when it becomes a dealer in intoxicating liquors, falls within the reach of the tax either as a 'person' under the statutory extension of that word to include a corporation, or as a 'person' without regard to such extension."

Although a state may have certain immunities because of its sovereignty, it is, nevertheless, a "corporation" and may waive its sovereign rights through the action of its legislative branch. Judge Davis, in the case of Overholser v. National Home for Disabled Volunteer Soldiers, 68 Ohio St. 236, at page 249, 67 N.E. 487, 96 Am. St. Rep., 658, 62 L.R.A., 936, quoting from Cooley on Torts, said:

"Even the state or the general government may be guilty of individual wrongs; for, while each is a sovereignty, it is a corporation also, and as such capable of doing wrongful acts * * *."

"A state is a corporation. It is a legal being, capable of transacting some kinds of business like a natural person, and such a being is a corporation." 13 American Jurisprudence, 155, Section 3; State of Indiana v. Woram, 6 Hill (N.Y.), 33, 40 Am.Dec., 378.

"A state, as a political corporation, has the right * * * to institute a suit in any of its courts, * * * whether it is required by its pecuniary interests or the general public welfare. It possesses this right both in its sovereign capacity and by virtue of its corporate rights." 49 American Jurisprudence, 292, Section 80; State v. Ohio Oil Co., 150 Ind. 21, 49 N.E. 809, 47 L.R.A., 627.

Furthermore, the Department of Liquor Control of the state of Ohio comes within the term of "every person * * * doing business in this state." (Section 5366, General Code). The Department of Liquor Control, although a department of the state, is an individual entity representing the state even though its property is owned by the state. The members of the Board of Liquor Control are appointed by the Governor of the state. Section 6064-1, et seq., and particularly Section 6064-8, General Code, confer authority upon the Department of Liquor Control to "establish and maintain a state monopoly of the distribution of such liquor and the sale thereof in packages or containers; and for such purpose to manufacture, buy, import, possess, and sell spirituous liquors in the manner provided in the Liquor Control Act * * * to borrow money to inaugurate and carry on its business, * * * to make and enter into leases and contracts of all descriptions within the scope of its functions as defined in the Liquor Control Act, and to acquire and transfer title to personal property * * *." (Italics supplied.)

It is further provided by Section 6064-8, General Code, that "any and all obligations of the department created under authority of this paragraph shall be a charge only upon the moneys received by the department from the sale of spirituous liquor pursuant to the Liquor Control Act and its other business transactions in connection therewith, and shall not be general obligations of the state of Ohio." (Italics supplied.)

Under the provisions of Section 6064-10, General Code; these moneys are paid to the Treasurer of State as a custodian thereof. That section provides further that:

"The moneys in the custody of the Treasurer of State for the use of the Department of Liquor Control shall be known as the 'liquor control rotary fund' and shall be disbursed on the order of the Auditor of State, in form prescribed by him, on the Treasurer of State as custodian as aforesaid, pursuant to vouchers or invoices signed by the Director of the Department of Liquor Control, and approved by the Director of Finance as provided in Section 154-28 of the General Code, in such form as the Auditor of State shall prescribe."

Section 6064-10, General Code, provides further that: "Whenever, in the judgment of the Director of Finance, the amount in the custody of the Treasurer of State to the credit of the liquor control rotary fund is in excess of that needed to meet the maturing obligations of the department and as working capital for its further operations, the Director of Finance shall certify the amount of such excess to the Department of Liquor Control and to the Auditor of State, and the Auditor of State shall thereupon issue an order on the Treasurer of State as custodian of moneys collected under the Liquor Control Act for the amount thereby determined, to the general revenue fund of the state and a pay-in order in like amount, in the manner provided by law."

This court will take judicial notice that the official report of the state treasurer shows that there was turned over to the general revenue fund of the state of Ohio from the liquor control rotary fund, pursuant to Section 6064-10, General Code, as profit in the operation by the department of its liquor stores last year, more than $13,000,000. This sum is in addition to the revenues collected by the board for the state of Ohio in the form of gallonage tax, the tax on beer and malt beverages, license and permit fees and sales tax collected from hotels, taverns and restaurants on sales of liquor by the drink, in a further total sum of more than $40,000,000.

The relation of the state to the Department of Liquor Control and its property is not unlike the relationship of the state to the state housing authorities whose property this court has held to be taxable. In both instances, the property is not directly owned by the state but by the department or the authority over which the state exercises certain supervisory powers.

Unless all "taxpayers" or "persons" are classified alike with respect to the taxation of a given type of property, there is a violation of the equal-protection clause of the Fourteenth Amendment to the federal Constitution and the equality protection clause of Section 2, Article I of the Ohio Constitution. The personal property used in business by the Department of Liquor Control in the operation of state liquor stores must be taxed in the same manner as that of any other "taxpayer" or "person" to meet constitutional requirements, because there can be no classification of taxpayers with respect to the same type of personal property although there may be a classification of types of personal property subject to taxation. This principle is supported by the cases of State, ex rel. Struble, v. Davis et al., Tax Comm., 132 Ohio St. 555,

9 N.E.2d 684, and State, ex rel. Hostetter, v. Hunt et al., Exrs., 132 Ohio St. 568, 9 N.E.2d 676. Courts should construe Sections 5320 and 5366, General Code, so as to permit their constitutional operation. There can be no constitutional justification for taxing the property of a permittee of the Department of Liquor Control, who purchases his stock of liquor from the department, and at the same time relieve from taxation the property of the liquor store operated, perhaps next door, by the department engaged in identical private business.

The Court of Appeals held that the property in question was not taxable because the state is not bound by the terms of a general statute unless the state is expressly named therein. Courts have held that a state, as a sovereignty, is not within the purview of a statute however general and comprehensive the language of the statute may be, unless the state is expressly named therein. This rule is applicable to states as governmental units, not to states when engaged in private enterprise. 49 American Jurisprudence, 235, Section 14. But contracts of the state are interpreted in the same manner as contracts of individuals, and the law which measures individual rights and responsibilities measures, with few exceptions, those of the state whenever it enters into an ordinary business contract. In the case of State, ex rel. Nixon, v. Merrell, Dir., 126 Ohio St. 239, 185 N.E. 56, this court in construing Section 8324, General Code, held that it applied to the state and allowed a contractor's lien against state property, although the state was not expressly named in the statute. It will be noted that in every case cited by the Court of Appeals in support of the rule applied by it, the courts dealt with a situation which had to do with a governmental activity. As a general rule, statutes of limitation do not apply to a state when suing in a sovereign capacity, in the absence of any express provisions in the statute to the contrary, but it is significant that according to some cases the statute does apply where the state engages in business in competition with its citizens. Calloway v. Cossart, 45 Ark. 81; Governor, for use of Thomas, v. Woodworth, 63 Ill. 254; Brown v. Trustees of Schools, 224 Ill. 184, 79 N.E. 579, 115 Am. St. Rep., 146.

In the early case of State v. Exr. of Buttles, 3 Ohio St. 309, this court made the observation that, "when the state appears in her courts as a suitor, to enforce her rights of property, she comes shorn of her attributes of sovereignty, as a body politic, capable of contracting, suing, and holding property, subject to those rules of justice and right, which in her sovereign character she has prescribed for the government of her people."

In the case of State, ex rel. Crabbe, Atty. Genl., v. Middletown Hydraulic Co., 114 Ohio St. 437, 151 N.E. 653, this court held:

"Whatever may have been the capacity in which the state functioned in the construction of the Miami and Erie Canal for the purpose of a navigable highway across the state for the use of the general public, its function now, since the abandonment of the canal as a navigable highway, is that of a commercial proprietor, engaged in the operation of a great power plant for the sale of power and water to private individuals, and the rights of the state, as such proprietor, in this particular property, which have not heretofore been judicially determined, but are to be determined now for the first time, should be and will be measured by rules that are applicable to proprietors generally and applicable to like transactions between private individuals."

If there is legislative authority for the taxation of the property in question as here contended, it must necessarily follow that there is, by implication at least, authority to enforce the collection of such taxes by all appropriate means.

When the state or a department of the state engages in private business, there is no sound reason why it should not bear the burdens of private business and contribute to the public revenues. The taxing subdivisions of the state and their taxpayers should not be obliged to furnish to such business institutions located therein and the people employed by them, free public service such as fire and police protection, the use of public streets and highways, the public schools, the public libraries and public institutions generally dependent upon local public revenues.

The Tax Commissioner claims that the taxable personal property owned and used by the Department of Liquor Control is specifically exempted from taxation by Section 5351, General Code, which provides that "real or personal property belonging exclusively to the state or United States, and public property used for a public purpose, shall be exempt from taxation." (Italics supplied.) But this court has heretofore held on numerous occasions that legislative authority to enact Section 5351, General Code, is limited by Section 2, Article XII of the Constitution, authorizing the General Assembly to exempt from taxation only "public property used exclusively for any public purpose." No distinction is made in the Constitution between real and personal property.

In the case of Columbus Metropolitan Housing Authority v. Thatcher, Aud., 140 Ohio St. 38, 42 N.E.2d 437, involving the exemption of realty, this court held that public property may not be exempted from taxation unless it is used exclusively for a public purpose. Judge Turner, in the course of his opinion in that case, said:

"The question before the Board of Tax Appeals was whether the property belonging to appellant is used exclusively for any public purpose. Unless the property is exclusively so used, it may not be exempted from taxation. * * *

"Appellant claims exemption under Section 5351, General Code. While this section reads, 'Real or personal property belonging exclusively to the state or the United States, and public property used for a public purpose shall be exempt from taxation,' yet this language is to be read in the light of the Constitution of Ohio and this court will not assume that the Legislature intended to violate any constitutional limitation. * * *

"That it is the duty of this court to give a statute a constitutional construction, if possible, needs no citation of authority. If we were to hold Section 5351, General Code, invalid, appellant would fail. However, we hold that Section 5351 is not invalid and that it authorizes the exemption only of public property used exclusively for any public purpose."

A like holding was made by this court in the cases of Dayton Metropolitan Housing Authority v. Evatt, Tax Commr., 143 Ohio St. 10, 18, 53 N.E.2d 896, 152 A. L. R., 223; Youngstown Metropolitan Housing Authority v. Evatt, Tax Commr., 143 Ohio St. 268, 55 N.E.2d 122; and Federal Public Housing Authority v. Guckenberger, Aud., 143 Ohio St. 251, 55 N.E.2d 265. In the latter case this court specifically held:

"The first part of Section 5351, General Code, exempting from taxation real or personal property belonging exclusively to the state or the United States is limited by the terms of Section 2 of Article XII to property used exclusively for any public purpose."

In the course of his opinion in that case, Chief Justice Weygandt said:

"As previously observed with reference to the latter part of this section [5351, General Code], the entire statute is based upon Section 2 of Article XII of the Constitution of Ohio which authorizes the passage of general laws to exempt 'public property used exclusively for any public purpose.' It is fundamental that a statute may not exceed the breadth of the constitutional provision upon which it is bottomed. The latter contains no suggestion that property may be exempted simply by virtue of exclusive ownership by the state or the United States. Not only must the property be owned by the public but it must be used exclusively for any public purpose. Hence, if it be owned exclusively by the state or the United States but not used exclusively for a public purpose, the General Assembly is without power to exempt it. * * * Therefore the effect of Section 5351 must be limited to property belonging exclusively to the state or the United States and used exclusively for any public purpose."

Although the judgment in the case last cited was reversed by the Supreme Court of the United States, 323 U.S. 329, 89 L. Ed., 274, 65 S.Ct., 280, the construction given to Section 5351, General Code, by this court was not questioned. The Supreme Court based its reversal upon the proposition that the Congress of the United States had inherent power to exempt United States property located in any state.

Likewise, the Supreme Court of the United States has repeatedly held that state property, otherwise immune from federal taxes, loses such immunity when used in a private enterprise. The case of Ohio v. Helvering, supra, involved the validity of a tax imposed by the federal government on the sale and distribution of intoxicating liquor by the state of Ohio through its Department of Liquor Control. The state, represented by its able then Attorney General, John W. Bricker, claimed that the property was exempt from the tax sought to be imposed upon it because it was used by the state in performing a purely governmental function in the exercise of its police power; and that the state was not a "person" or a "body corporate or politic" within the definition of those terms as used in Title 26, Section 11, U.S. Code (Revised Statutes Section 3140), identical claims now made by the Attorney General in the instant case. The United States Supreme Court denied those claims and, in the course of his opinion in that case, Mr. Justice Sutherland said:

"[The state of Ohio] seeks to invoke a principle, resulting from our dual system of government, which frequently has been announced by this court and is now firmly established, that 'the instrumentalities, means and operations whereby the states exert the governmental powers belonging to them are * * * exempt from taxation by the United States.' * * * But, by the very terms of the rule, the immunity of the states from federal taxation is limited to those agencies which are of a governmental character. Whenever a state engages in a business of a private nature it exercises nongovernmental functions, and the business, though conducted by the state, is not immune from the exercise of the power of taxation which the Constitution vests in the Congress. * * * If a state chooses to go into the business of buying and selling commodities, its right to do so may be conceded so far as the federal Constitution is concerned; but the exercise of the right is not the performance of a governmental function, and must find its support in some authority apart from the police power. When a state enters the market place seeking customers it divests itself of its quasi-sovereignty pro tanto, and takes on the character of a trader, so far, at least, as the taxing power of the federal government is concerned."

To the same effect, see South Carolina v. United States, 199 U.S. 437, 50 L.Ed., 261, 26 S.Ct., 110 (holding property of the South Carolina Liquor Dispensary System subject to federal taxation); Helvering, Commr., v. Powers, Exr., 293 U.S. 214, 79 L. Ed., 291, 55 S.Ct., 171 (holding the incomes of trustees of the Boston elevated railway system, taken over by the state of Massachusetts, subject to federal taxes); and New York v. United States, 326 U.S. 572, 90 L.Ed., 326, 66 S.Ct., 310 (holding sales of water from Saratoga Mineral Springs owned by the state of New York subject to federal taxes). See annotation, 163 A. L. R., 538, 542.

New York sought strenuously to make the case last above cited a test case and have the court overrule the doctrine announced in South Carolina v. United States, supra. To accomplish that purpose it sought the aid of other states. The attorneys general of 45 other states, including Ohio, filed briefs amici curiae in support of the claims of New York, including the identical claims and defenses made by the appellee in the instant case, but the court in a six to two decision, one justice. not participating, reaffirmed the doctrines of the former cases in that court. Mr. Justice Frankfurter wrote the majority opinion with concurring opinions written by Chief Justice Stone and Mr. Justice Rutledge.

To me the analogy of these cases in determining the questions here involved is most persuasive. The property here sought to be taxed as personal property is the liquor in state warehouses and the liquor and store fixtures and equipment of the state liquor stores located throughout the state. I agree that any property. of the Department of Liquor Control used by it in its function of liquor traffic control, such as its general office furniture and fixtures and other property used in connection with the granting or revoking of liquor permits and the collection of the various excise taxes levied against the liquor traffic, is exempt from taxation because such use is for a public purpose. But, in my judgment, the property used by the department in carrying on the business of retail sales of liquor stands in a different category.

This property owned by the state and used in a private business enterprise is not exempt from taxation and should be taxed under Section 5328, General Code, by virtue of which "all personal property located and used in business in this state shall be subject to taxation." This court expressly so held in the case of Hinde Dauch Paper Co. v. Evatt, Tax Commr., supra. See, also, Board of Financial Control of Buncombe County v. Henderson County, 208 N.C. 569, 181 S.E. 636, 101 A.L.R., 783; Sanitary Dist. of Chicago v. Carr, Treas., 304 Ill. 120, 136 N.E. 479; City of Eugene v. Keeney, 134 Ore., 393, 293 P. 924.

The reason for the tax exemption of state property is that the imposition of a tax has a tendency to interfere with the sovereign status of a state by interfering with or hindering the state in its governmental functions. Such, for instance, would be a tax upon its state house, its public schoolhouses, its public parks or its revenues from taxes. Clearly, a tax on a commercial business operated by a state can have no such effect, especially where the state, as here, is protected against liability beyond the revenues arising from the business itself. Where the reason for the invalidity of a tax fails, the invalidity itself must fail.

The imposition of taxes on the increasing activities of states and other governmental units in the field of commercial enterprise is becoming a matter of sheer necessity for the protection of the public revenues. In this connection, Mr. Justice Frankfurter in the course of his opinion in the case of New York v. United States, supra, observed: "In the older cases, the emphasis was on immunity from taxation. The whole tendency of recent cases reveals a shift in emphasis to that of limitation on immunity."

Mr. Justice Rutledge in a concurring opinion in the same case said: "The shift from immunity to taxability has gone too far, and with too much reason to sustain it, as respects both state functionaries and state functions, for backtracking to doctrines founded in philosophies of sovereignty more current and perhaps more realistic in an earlier day. Too much is, or may be, at stake for the nation to permit relieving the states of their duty to support it, financially or otherwise, when they take over increasingly the things men have been accustomed to carry on as private, and therefore taxable, enterprise."

In my opinion, the demurrer to the amended petition should have been overruled.

WEYGANDT, C.J., and STEWART, J., concur in the foregoing dissenting opinion.