I cannot agree with the majority opinion since I think the imposition of the tax is contrary to Sections 170, 184 and 186 of the Constitution, and that it disregards sound public policy and the science of government. I cannot subscribe to the proposition that without some constitutional authority the State may tax itself for itself or tax one department of government to support another department of government, both being creatures of and sustained by appropriations of the state. Certainly, if it is to be done, it ought to be by clear and specific legislation.

It is true that tax exemptions are not to be implied unless it is clearly necessary. It is not necessary to resort to implication in this case although it may well be done. The exemption of the County Board of Education from the tax exists by clear mandate of the Constitution.

Section 170 of the Constitution, quoted in the majority opinion, explicitly exempts all "institutions of education not used or employed for gain by any person or corporation, and the income of which is devoted solely to the cause of education." We have many cases holding private educational institutions exempt from the payment of taxes, but none involving state maintained or public educational institutions, doubtless because it never before occurred to any one that they or their functions were subject to taxation. Educational institutions, whether they be private or public, are put in the same class as "purely public charities," which have been many times held to be free from taxation although not exempted, either expressly or impliedly by the particular statute. Illustrations of exemptions are from the payment of a license to operate a restaurant (Corbin Y. M. C. A. v. Commonwealth, 181 Ky. 384,205 S.W. 388, 1 A.L.R. 264) and from a sales tax on automobiles. Gray *Page 552 v. Methodist Episcopal Church, South, Widows and Orphans Home in State of Kentucky, 272 Ky. 646, 114 S.W.2d 1141.

The writer of this dissent wrote the opinion for the court in City of Louisville v. Cromwell, 233 Ky. 828, 27 S.W.2d 377, holding that a city is not exempt from the payment of this gasoline excise tax or any other except on its property. That decision is still good law. It is in accord with the general authorities cited in the majority opinion holding that cities and counties are not ipso facto exempted from the payment of an excise tax on gasoline used by them. There is a clear difference between a city or county and a board of education in Kentucky. Within the charter rights of a city, and, what amounts to the same thing, powers expressly vested by the legislature in fiscal courts of counties, a city or county is independent of the operations of the state government. But from the beginning, not only in Kentucky but in all other states of this union, the establishment and maintenance of an adequate school system has been recognized as a state government function. Operating and conducting the public school system is the state itself in action. All schools are under the general control and management of the State Board of Education (Section 4377-1, Statutes) and it and the local boards are strictly controlled by acts of the legislature. Section 4399-20 et seq., Statutes. Though the funds are raised by both general taxation by the commonwealth and special taxation by local boards, their expenditure is under the control of the State Board of Education. Section 4399-40, 4399-45, Statutes. Section 183 et seq., Constitution of Kentucky. All public schools of the state, even in cities having unusual powers over their schools, are state institutions and members of boards of education are state officers. City of Louisville v. Commonwealth, 134 Ky. 488, 121 S.W. 411; Middleton v. Middleton, 239 Ky. 759, 40 S.W.2d 311. Title to school property is in the Commonwealth (Section 4399-19, Statutes) and is held by the board in trust for the state. City of Louisville v. Leatherman, 99 Ky. 213,35 S.W. 625, 18 Ky. Law Rep. 124. Unlike a city or county, boards of education do not have any money that can be applied to general purposes. It must all be used for school purposes and the board can incur no expense and make no expenditure except as authorized by the statute; *Page 553 and Section 4370-3 of the Statutes prohibits the use of any part of the common school fund or revenue for any purpose other than the payment of teachers except as may be expressly provided in the School Code of 1934. Another important difference between a city as a municipal corporation and a local board of education as a quasi municipal corporation is that the legislature, except as limited by general statutes, has no control over the expenditure of a city's funds, their disposition or expenditure being entirely within the discretion of its local legislative body, while the school funds are under the control of the state legislature exclusively. Therefore, even though we should ignore the different classification made by Section 170 of the Constitution, there remains the fact that the schools are state institutions and not strictly municipal corporations. Never before so far as my knowledge goes has it ever been contended by one department of the state government that other state institutions are liable for the payment of a tax to support it, and they and their officers are to be penalized for not paying up promptly.

All of the foreign authorities and the text books cited in the majority opinion relate to the liability of cities andcounties for such tax except in Idaho, Alabama and Pennsylvania cases. They are clearly distinguishable because of different constitutional and statutory provisions in those jurisdictions. The Idaho case (Independent School District v. Pfost [51 Idaho 240,4 P.2d 895]) merely declares that the legislature could impose a license tax on any individual or corporation "other than municipal." Said the court: "The constitutional inhibition of a license tax against municipal corporations is against a tax of that nature, not against an excise or some other tax not in fact a license tax."

Referring to many cases, including Shanks v. Kentucky Oil Company, 225 Ky. 303, 8 S.W.2d 383, as defining a gasoline tax of this character to be an excise tax, the Idaho court held that the provision of the constitution quoted did not prohibit its imposition upon the fuel used by the school board. The Pennsylvania case (Gulf Refining Company v. School District, supra) is not in point. The statute provided the tax should be payable upon gasoline "sold and delivered to or used by the Commonwealth, and every political subdivision thereof." Act May 21, 1931, P. L. 149, Section 4, 72 P. *Page 554 S. Pa. Section 2611d. The question considered was only whether a school district was a political subdivision, and the court held it was under the definition theretofore made; and in any event the tax was clearly payable by the commonwealth, the schools being regarded as state institutions. No constitutional question was involved or considered. The Alabama case (State Tax Commission v. County Board of Education, supra) considered a statute which specifically provided that a "person" liable for tax on the storage and withdrawal of gasoline for use in motor cars should mean and include "counties, municipal corporations, school boards, or agencies of the State." Gen. Acts Ala. 1935, Section 348, schedule 156, p. 508. It was, therefore, of course, held that a board of education was liable for the tax. The statute in its application to school boards was held constitutional under an amendment to the Constitution which expressly provided for the gasoline excise tax without any exception or exemption. Being an excise tax its imposition was not contrary to another constitutional provision exempting "property, real or personal," of the state, counties and other municipal corporations. Board of Education v. State Tax Commission, 237 Ala. 434, 187 So. 414, 416. The decisions were re-affirmed in County Board of Education v. State, 239 Ala. 276,194 So. 881, which held that the board of education was liable for the statutory penalty for not paying the tax but was not liable for interest on that penalty.

There was no need for an express exemption of public educational institutions to be placed in our gasoline tax statute. The Constitution put it there as it does in many other taxing statutes, e. g., Section 1882, empowering fiscal courts to levy taxes for county purposes. The majority opinion refers to statutory exemption of boards of education from the payment of fees for registering motor cars, of tolls over bridges, and of the tax of $2 per seat for automobiles used in hauling passengers for hire. I do not construe these express exemptions as indicating an intention to impose the gasoline excise tax on school boards. On the contrary, these exemptions show an intention not to tax schools. Likewise, is Section 4281j-2 which exempts educational institutions, the United States, the State, the municipalities and other political subdivisions from payment of the excise tax on electricity, water, gas and telephone and telegraph messages. *Page 555 In State Highway Commission v. County Board of Education,264 Ky. 95, 94 S.W.2d 302, 305, we held the maxim, "expressio unius est exclusio alterius," not applicable where the act providing for the building or purchase of bridges to be paid for by the tolls exempted certain classes of travelers and the question is whether school children and school busses were exempt. The court held that they could travel free of bridge tolls because of the long established public policy contained in statutes providing for free passage over toll highways, even though this right was not given by the act. If these exceptions are not sustained under the exemption provisions of the Constitution, they are unconstitutional classifications and special legislation. If they are under the exemption provisions, so also is the gasoline excise tax.

As has been stated, Section 4370-3 of the Statutes restricts the expenditure of school funds provided by the state to certain administrative costs and teachers' salaries, and to say that the gasoline tax statute includes school boards is to hold that this section of the statute and some others are in part impliedly repealed or amended.

A board of education does not fit into the definition of a person or receiver, dealer or refiner of gasoline, who is made responsible for the tax and who must obtain a license from the Department of Revenue before withdrawing, receiving or importing gasoline. The tax is passed on to the individual consumer. I do not conceive that a school board buying gasoline in wholesale quantities can be classed as a refiner or dealer; yet that is the construction given the statute by the majority opinion. If a board of education wants to save money by buying its gasoline in wholesale quantities, under the opinion it must first secure a permit from the Department of Revenue of the State, execute a bond and make reports in accordance with the statute or become liable for penalties equal to 40% of the tax as the court has held in this case. The board has become subject to criminal prosecution for embezzlement of state funds and is liable to a fine of $1,000 for each purchase and its agents and officers have become subject both to fine and imprisonment. Section 4281g-11, 4281g-12, 4281g-16, 4281g-20. If the Revenue Department has power to withhold or cancel a license to buy gasoline at wholesale, it then has *Page 556 power to interfere with the discretion vested in the boards of education.

The terms of the act are such as to show that boards of education were not intended to be included. The statute throughout refers to liability and duties of a "person," which is defined in Section 4281g-1 to "mean and include any individual or individuals, association, firm, co-partnership, corporation, receiver, trustee, conservator, or other officer appointed by any State or Federal court." In the year 1863, a general taxing statute provided that all property should be assessed for taxation and the tax paid by the "owner or possessor thereof." It excepted property used for religious and educational purposes and that owned by the United States. All the property of the City of Louisville was assessed for taxation for state and county purposes under that statute. Judge Robertson, writing in City of Louisville v. Commonwealth, 1 Duv. 295, 62 Ky. 295, 85 Am. Dec. 624, pointed out that general law concerning persons may include corporations and that each state and county is a quasi corporation and each is in law a person; that without qualification or exception taxation of property of all persons would include municipal as well as private corporations. Drawing a distinction between a private and a public corporation, he wrote:

"But a municipal corporation, like a State, a county, or the city of Louisville, is much more than a person. While nominally a person, it is vitally a political power; and each, in its prescribed sphere, is 'imperium in imperio.' All are constituent elements of one total sovereignty. The city of Louisville, to the extent of the jurisdiction delegated to it by its charter, is but an effluence from the sovereignty of Kentucky, governs for Kentucky, and its authorized legislation and local administration of law are legislation and administration by Kentucky through the agency of that municipality. The tax law of Kentucky constructively applies to persons only, and not at all to political bodies exercising in different degrees the sovereignty of the State. Were this not true, then — the statute literally embracing all persons, and the State being, in one sense, a person — her capital and penitentiary and other public property would, like the estate of a natural person, be subject to assessment for taxation; and so, too, would the courthouses and jails and poor-houses of all the counties in *Page 557 the State. But neither the State nor a county has ever been considered a person contemplated by any tax law ever enacted. And does not the only reason for their constructive exclusion equally exempt the municipal property of Louisville, used for the convenience and facility of its local government? We think so, and, without elaborate argument, we so adjudge."

It was held that the specification of certain exceptions did not imply that the legislature intended that municipal property used for purposes of local government should be subjected to taxation, and that "to assume the converse would involve the absurdity of taxing the public property of the State and the counties."

The court did not think the legislature was guilty "of the folly of expressly exempting that which no rational construction could have made subject to the tax law." It was, therefore, held that the city's property necessary or useful to the administration of the municipal government and devoted to that use was exempt from state taxation, even though the statute did not so provide.

The Supreme Court has recently held the government not to be a "person" entitled to maintain an action for damages within the meaning of the Antitrust Act providing that "any person" injured by reason of anything forbidden by the Act may sue therefor and recover threefold damages sustained by him. U.S. v. Cooper Corporation, . . . U.S. . . ., 85 L. Ed. 607.

Moreover, it is a general rule of statutory construction that no act of the legislature is to be construed to be in derogation of sovereignty unless the intention of the legislature to effect that purpose is clearly expressed. 59 C. J. 1121. And as said in 59 C. J. 1103: "The state and its agencies are not to be considered as within the purview of a statute, however general and comprehensive the language of such act may be, unless an intention to include them is clearly manifest, as where they are expressly named therein, or included by necessary implication."

Under that rule, this court has held that Section 1820 of the Statutes which provides against another ferry being operated within one mile of an existing ferry is not operative or binding upon the state, which *Page 558 could, through its highway department, establish a free ferry right up against one operating under a franchise from a county court. State Highway Commission v. Smith, 250 Ky. 269,62 S.W.2d 1044. Also, that the state is not within the purview of a statute authorizing clerks to collect $5 on each action commenced in the circuit courts. Commonwealth v. Allen, 235 Ky. 728, 32 S.W.2d 42.

What has been said becomes more certainly sound when we consider Section 184 of the Constitution which provides that money raised for school purposes shall be irrevocably dedicated to those purposes and without diversion to any other. It provides, "any sum which may be produced by taxation or otherwise for purposes of common school education, shall be appropriated to the common schools, and to no other purpose."

Section 4370-3, Statutes, to which I have referred, is in full accord with that constitutional provision, and prohibits the expenditure of school funds for anything other than specified by the School Code of which it is a part. This court has consistently guarded the school funds from any diversion. Thus, in City of Louisville v. Leatherman, supra, the court laid down the rule that the appropriation of any part of the school fund — either to the payment of general taxes for the support of the state government or to the payment of special assessments for street improvements — is an appropriation thereof to other than common school purposes and is, therefore, forbidden by Section 184 of the Constitution. This was pointed out in Wilson v. Board of Education, 226 Ky. 476,11 S.W.2d 143, holding unconstitutional a statute which undertook to authorize school districts to pay their proportionate part of public improvements in front of their property. If there is any difference between paying for a street adjacent to the school house and paying to build highways throughout the state (and likewise adjacent) it is in favor of the street assessment.

The opinion permits and adjudges the diversion of school funds not only for a state tax but for the payment of a penalty of 20% thereon because it was not paid when it was supposed to be due, plus another penalty of 20% because the Finance Commissioner and Revenue Department sued to recover it although the Board had previously filed a suit testing the question and asking *Page 559 injunctive relief. For good measure 6% interest upon the whole was added. The old dictum that "The power to tax is the power to destroy" is applicable here, for if the Revenue Department should perform its full duty and impose all the civil and criminal penalties provided for in the statute against the county board of education, then there would be little left for school purposes.

I do not agree that there was an implied appropriation of part of the school fund to the payment of the tax because the legislature authorized the transportation of the children. If such an appropriation can be implied and such liability imposed by implication and interpretation, then we may wonder how many other departments of the state will rise up and demand a slice of the school fund that they may have more money to spend for their respective objects.

There remains to be considered Section 186 of the Constitution which provides: "Each county in the Commonwealth shall be entitled to its proportion of the school fund on its census of pupil children for each school year."

It is conceded to be true by the demurrer that hauling children to school by the Kenton County Board is so great that it will take $1 per year per pupil to pay the gasoline tax. The per capita appropriation and distribution by the state to the local school revenues for the years 1936 and 1937 was only $11.66. Thus there is retained by the state for the purpose of building highways almost 10% of the sum allotted to the Kenton County Board of Education as its constitutional share of the state school revenues. As elaborately emphasized in Talbott v. Kentucky State Board of Education, 244 Ky. 826,52 S.W.2d 727, the distribution of these revenues must be equal and uniform, and an act undertaking to provide otherwise to aid the poorer counties was unconstitutional. It is conceded to be true in this case that the result of having to pay these taxes back to the state will reduce the terms of common schools of the county from 9 to 8 months.

It has been suggested that to exempt school boards from the tax may result in the evasion of payment on gasoline used privately. Of course, that is an administrative and legislative matter and not a judicial one. However, machinery does exist for exempting the *Page 560 United States government and here it may be observed that there is no such exemption stated in the statute. Express exemption is not necessary, for a statute imposing such an excise tax and containing no specific provision for exemption could not be enforced as to a sale to the United States government. Panhandle Oil Company v. State of Mississippi, 277 U.S. 218,48 S. Ct. 451, 72 L. Ed. 857, 56 A.L.R. 583.

The identical gasoline held to be taxable in this case was exempted by the federal government of the payment of the 1 cent per gallon imposed by the federal statute. 26 U.S.C.A. Int. Rev. Code, Sections 3412, 3442, and it was so reported to the proper governmental agency. Moreover, Section 4281h-1, Statutes, which was enacted at the same Extraordinary Session of the legislature that enacted the gasoline tax under consideration, relieved from such a tax fuel used in motor vehicles other than those described in 4281g-1, etc., and set up machinery for the granting of exemption permits to users of gasoline in such instrumentalities. Therefore, it does not appear that there is any insuperable barrier to the granting of the exemption and the protection of the legitimate revenues.

Finally, it should not be overlooked that excepting teachers' salaries most of the other school expenses are "fixed charges" and not subject to material deduction; hence the payment of taxes to build and maintain highways must result in reducing teachers' salaries or, alternatively in reducing the length of the school term.

The kernel of this dissent may be stated in this sentence: There is no statute authorizing the exaction of the tax from the school board; but were it otherwise such a statute would invade the various sections of the Constitution referred to.

I, therefore, respectfully dissent from the majority opinion; and am authorized to say that Chief Justice Rees and Judge Perry concur. *Page 561