Court Opinion

ID: 9729866
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:51:03.356719+00
Date Added: 2024-06-11T18:26:01.828094
License: Public Domain

BEACH, J.
I dissent.
The majority makes the same error made by the trial court and the city review board. They all assume without authority, explanation or reference to specific definitions in any part of the city ordinance, any statute or decision that appellant Olson Farms (Olson) is “engaged in the business” of lending money. Clear and solid demonstration of this basic fact is an absolute prerequisite to the imposition of the tax under Los Angeles Municipal Code section 21.108.1 Olson is not seeking an exemption from the tax. Rather, the City of Los Angeles is seeking to apply the tax to one who is not clearly in the money-lending business. Accordingly, the burden is on the City of Los Angeles to demonstrate that the operative facts making applicable section 21.108 of its tax ordinance are clear, unambiguous and unequivocal. (County of Los Angeles v. Jones (1939) 13 Cal.2d 554 [90 P.2d 802].) The record before us does not demonstrate that to be the case.
Section 21.108, subsection (c) under which the city seeks to tax Olson requires at least three essential parts for its application. They are; (1) being “engaged in the business” of lending money (2) to a subsidiary and (3) dealing confined to the subsidiary.
Parts (2) and (3) above are stipulated facts. But part (1) is not. The loan of money to the subsidiaries was an activity by Olson with its subsidiaries. But an activity is not necessarily a business. Although the activity is done as part of another business, it still does not make Olson “engaged in the business” of lending money. Olson is in the wholesale egg-selling business. It paid the legitimate tax on its wholesale sale of eggs under the gross receipts tax. (§ 21.166.) No one, the city review board, the trial court or the majority opinion, explains clearly how the bare fact of an incidental activity with its subsidiary justifies the conclusion that it is thereby proven or established as a matter of law that Olson was also “engaged in the business” of lending money.
The majority discounts as a test the use of the fact that no profit was made. By doing so it also diminishes the fact that the purpose of engaging in a business is to make a profit. Thus the majority equally rejects as irrelevant, the helpful guide of considering the purpose of Olson’s activity. That purpose was accom*534modation to another rather than becoming a money lender.2 I respectfully suggest that in this regard the majority errs.
Although profitmaking or receipt of other benefit or advantage may not be the sole determining factor or even in combination with other elements the most important, yet it is nonetheless more important than the majority allows. Courts in other cases defining the terms “being in business” or “business” have used the “profit” test primarily, if not exclusively, e.g., City of Los Angeles v. Cohen (1954) 124 Cal.App.2d 225 [268 P.2d 183]; other cases, for example, allude to profit-making as a secondary aid or construe other benefits as equivalent to taxable “profit,” Union League Club v. Johnson (1941) 18 Cal.2d 275 [115 P.2d 425]; or distinguish mere “incidental activity” from “profitmaking activity,” Child v. Warne (1961) 194 Cal.App.2d 623 [15 Cal.Rptr. 437]; City of Los Angeles v. Clinton Merchandising Corp. (1962) 58 Cal.2d 675 [25 Cal.Rptr. 859, 375 P.2d 851].
Subsection (c) of section 21.108 provides that “all interest and other charges received as a result of the activity described in subsection(a) shall be included in the gross receipts . . .” (to be taxed under § 21.166). There are two significant features in this phrase: (1) the activity described refers to subsection (a). There, the imposition of the tax is described as applicable not in terms of persons who engage in an “activity” but expressly to persons “engaged in the business. ” As explained, that feature is a predicate, not here demonstrated present, to the section’s application. We lack fact applied to clear authority. (2) Olson did not make a charge for its services nor did it retain the interest collected but merely handled it by passing it on in full to the bank. The collecting and handling of money, which is not a charge for interest nor received for any other services even though it results from the activity of aiding its subsidiaries, is not necessarily “business” income or receipt gross or otherwise. (City of Los Angeles v. Clinton Merchandising Corp., supra, 58 Cal.2d 675.) It is not received from “being engaged in the business.”
I would reverse the judgment.

 All references to “section” followed by number are to Los Angeles Municipal Code sections.

The ordinance lists the taxable businesses and the form of tax applicable to them by the nature of the business. Section 21.108 is entitled “Money Lenders,” and is located between the provisions applicable to “Laundry, Cleaning, Dyeing,” etc. (§ 21.102) and “Cashing Checks” (§ 21.108.1) businesses.