Title: Hamilton v. City and County of Denver

State: colorado

Issuer: Colorado Supreme Court

Document:

490 P.2d 1289 (1971) Jerry L. HAMILTON et al., Plaintiffs and Appellees, v. The CITY AND COUNTY OF DENVER and Charles L. Temple, as Manager of Revenue of the City and County of Denver, Defendants and Appellants. No. 24769. Supreme Court of Colorado, En Banc. September 20, 1971. Rehearing Denied October 4, 1971. *1290 Wormwood, Wolvington, Renner & Dosh, Laird Campbell, James R. Gilsdorf, Denver, for plaintiffs-appellees. Max P. Zall, City Atty., W. Keith Peterson, Asst. City Atty., for defendants-appellants. DAY, Justice. This is an appeal by defendant-appellant City and County of Denver, hereinafter referred to as the City, from an adverse judgment of the trial court, declaring article 116(c) of the Denver Municipal Code (the Employee's Occupational Privilege Tax) to be invalid when applied to plaintiff-appellees and other members of those classes represented by them. Plaintiffs Gill and Taylor represented in this class action the members of the General Assembly of the State of Colorado. The other plaintiff-appellees represent as a class employees of the state in the classified service, more commonly known as civil service employees. The matter was submitted to the trial court on the single question of whether the taxing ordinance could validly be enforced against the named plaintiffs and against others of the same classes. Following the submission of briefs and oral arguments, the trial court granted the plaintiffs' motion for summary judgment, concluding that as a matter of law: We note first that the issue of the constitutionality of the ordinance has already been resolved by this court in City and County of Denver v. Duffy Storage and Moving Co., 168 Colo. 91, 450 P.2d 339 (1969), appeal dismissed, 396 U.S. 2, 90 S. Ct. 23, 24 L. Ed. 2d 1 (1969). Although concluding, in Duffy, that the so-called "Head Tax" was not violative of the Colorado constitution, we expressly made no determination as to the validity of the tax as applied to specific individuals or classes: The representatives of several classes of state employees, assert that while the ordinance in question may not be unconstitutional on its face, it becomes invalid when applied specifically to them as employees or elected officials of the State of Colorado. Those sections of the ordinance applicable either generally or specifically to our discussion and decision herein are as follows: Article 166C. 2-1: Taking up the discussion of the legal arguments made by the parties, we incorporate therein, where appropriate, the conclusions of law made by the trial court and quoted, supra. The City asserts that the action should have been dismissed by the court below, because the plaintiffs and the members of the classes represented by them had failed to exhaust the administrative remedies provided in the ordinance. In denying Denver's motion to dismiss on this ground, the trial court recognized that a great many employees of the state are either employed *1292 in Denver or carry on a substantial portion of their duties within the city limits, and further that the General Assembly consisted of a fairly substantial number of persons. Therefore, the court concluded, a dismissal would necessarily have resulted in a multiplicity of actions, both civil and criminal, based upon precisely the same legal issues as those presented today, and therefore not furthering the efficient administration of justice. Colorado follows the general rule that the equitable jurisdiction of a court may be invoked to meet the ends of justice in order that a multiplicity of suits may be prevented. Baker v. Atchison, Topeka and Santa Fe Ry. Co., 106 F.2d 525 (10th Cir. 1939). A declaratory judgment is a proper proceeding when the amounts involved are substantial and there is a threat of multiplicity of suits, particularly when the plaintiffs are public employees. See McNichols v. Police Protective Ass'n, 121 Colo. 45, 215 P.2d 303 (1949). Furthermore, as pointed out by the court in its order denying the motion to dismiss, the issues involved in this case are purely questions of law, and no good purpose would be served in requiring the filing of individual claims before the manager of revenue, whose presumed expertise would not be helpful in resolving legal as distinguished from factual issues. In concluding that a dismissal would not be appropriate herein, we find ourselves in agreement with those cases cited in McKart v. United States, 395 U.S. 185, 89 S. Ct. 1657, 23 L. Ed. 2d 194 (1969). In McKart, the government contended that the petitioner was precluded from raising the invalidity of his draft classification because of his failure to exhaust administrative remedies through the selective service system. In rejecting this contention the court said: We conclude that no good purpose would be accomplished by requiring the plaintiffs and those similarly situated to exhaust their administrative remedies before bringing declaratory judgment suit. Other procedural defects alleged by the defendant City and County of Denver are likewise such that we will not consider them in order that we may reach the substantive issues. We turn next to the central issue presented herein. Plaintiffs acknowledge that the Denver tax is valid when applied to the populace as a whole, Duffy, supra. In urging, however, that the decision of the trial court be upheld, plaintiffs argue that the imposition of the tax upon them unlawfully interferes with the operation of the state government by adding new and additional qualifications upon the relationship between the state and its employees, a status of statewide and not local concern. Although we find ourselves in agreement with the contention that the conditions of state employment, or election to state office, are to be limited to those either prescribed in the constitution, enumerated in applicable statutes, or implemented, where *1293 applicable, by the state civil service commission, it has not been demonstrated nor can we rationalize logically in what way the imposition of the tax upon state employees interferes with or adds additional qualifications for state employment. Payment of the tax is not a prerequisite to being appointed or elected, nor does continuation to the state position depend on payment of the tax. Whether the individual employee is in default has not been shown by the record either to be known to or any concern of the state. This court has previously commented on what constitutes those areas over which a municipality may legitimately exercise control: We have also consistently upheld the right of home rule municipalities to enact taxes applicable to local matters. See City and County of Denver v. Duffy Storage and Moving Co., supra; Post v. City of Grand Junction, 118 Colo. 434, 195 P.2d 958 (1948); Jackson v. City of Glenwood Springs, 122 Colo. 323, 221 P.2d 1083 (1950); Ping v. City of Cortez, 139 Colo. 575, 342 P.2d 657 (1959); City of Englewood v. Wright, 147 Colo. 537, 364 P.2d 569 (1961). A situation analogous to the one here before us was presented in Post v. Grand Junction, 118 Colo. 434, 195 P.2d 958. In Post, the city imposed an occupational tax upon all persons engaged in the sale of liquors. In upholding the right of the city to enact such taxing legislation for its own benefit, we commented as follows: Applying this reasoning to the instant case, we note that, for example, employment in the classified civil service of the state is based upon Colo.Const. art. XII, § 13, which provides in pertinent part: Plaintiffs Gill and Taylor are state senators whose qualifications are set forth in the constitution as follows: We perceive nothing in the above, or other applicable statutes and constitutional provisions to preclude a city such as Denver from applying appropriate taxes such as the one herein to those employees of the state physically employed within the confines of the city. It has long been well established that reasonable, non-discriminatory taxes may be imposed by one governmental unit upon the employees of another, where not precluded by applicable law. For example, in determining whether the City of Columbus could levy an income tax on compensation earned by a nonresident for services paid by a state institution and performed on state property located within city boundaries, the Ohio Supreme Court, through Judge Taft, spoke as follows: After the decision in Graves v. People of State of New York ex rel. O'Keefe, supra, a great many different situations have reached the same result. See e. g. Metcalf v. Mitchell, 269 U.S. 514, 46 S. Ct. 172, 70 L. Ed. 384 (1926), (upholding federal tax on income from contract with state); James v. Dravo Contracting Co., 302 U.S. 134, 58 S. Ct. 208, 82 L. Ed. 155, 114 A.L.R. 318 (1937) (upholding state tax on income from contract with federal government); Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S. Ct. 623, 82 L. Ed. 907 (1938) (upholding federal tax on income from lands leased from state); Helvering v. Gerhardt, 304 U.S. 405, 58 S. Ct. 969, 82 L. Ed. 1427 (1938) (upholding federal tax on salary of state employee); Marson v. Philadelphia, 342 Pa. 369, 21 A.2d 228 (1941) (upholding city income tax on state officers and employees); Fordham and Mallison, Local Income Taxation (1950), 11 Ohio State Law Journal, 217, 254. In McConnell v. City of Columbus, supra, the court addressed itself to the argument that inasmuch as state employees are employed on state property, the city is providing no services nor conferring any benefits upon such employees, and therefore the tax could not be levied against them, by stating: In 1943, the Supreme Court of Pennsylvania met logically a question similar to the one presented herein when it considered whether a Philadelphia income tax could validly be applied to a New Jersey resident employed by the Federal Government at the Philadelphia Navy Yard on League Island, a tract of land in Philadelphia. That court commented appropriately: In the instant case, we conclude that the application of the Denver "head tax" to members of the enumerated classes in no way interferes with, or imposes a condition precedent to, employment by the state. The employee is taxed because he is physically present within the taxing jurisdiction of Denver, which furnishes such employee the same facilities and services which are available to its permanent residents, and for which such employees are required to pay a reasonable share. We find ourselves in agreement with the New Jersey Supreme Court which commented as follows when an interstate carrier asserted the illegality of the state tax burden as an interference with interstate commerce: The judgment of the lower court is reversed and the cause remanded with directions to enter judgment consonant with the views expressed herein. LEE and KELLEY, JJ., dissent.