Court Opinion

ID: 7361416
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:04:17.864587+00
Date Added: 2024-06-11T16:20:39.182268
License: Public Domain

SIMPSON, J.
As shown by the agreed statement of facts, set out in this case, the ordinance of the city of Montgomery provided a regular license for wholesale ■and retail merchants, die amount of the license fee in each case, being regulated by the amount of the stock oi merchandise carried by the merchant, and by another ordinance (§ 905) provided that each person, firm or corporation engaged in any business for which a license is required and failing to pay said license should be fined not less than ten nor more than one hundred dol1 ar s.
Subsequently the city council passed another ordinance, fixing a license fee of one thousand dollars on Trading Stamp Companies (described in the statement of facts), and, later on, another ordinance requiring each merchant, who shall issue any trading stamps, in connection with his business, to pay “a license tax of one hundred dollars,” and fixing a penalty of one hun(ired dollars for each stamp issued without said license. The defendant was tried for this last named offense, admitted the issuing of the stamps, and, on the written request of the defendant, the judge of the city court gave the general charge in favor of the defendant, the jury returned a verdict of not guilty, and the city council brings the case to this court by appeal.
The license of occupations originated in the exercise of police power, by the state and municipalities, and when a license is issued for police purposes; it must be used as a means of regulation only and cannot be used as a source of revenue, and in the case of useful trades, it cannot exceed the amount of the expense of issuing and a reasonable compensation for the expense of municipal supervision. — Van Hook v. City of Selma, 70 Ala. 361.
*555Yet a. custom has grown up, until it is recognized as one of the powers of legislative assemblies to require a license tax of all persons, firms and corporations, pursuing various business callings, and it is called a privilege tax, and is held not to be subject to the constitutional limitations, either as to amount or uniformity. Yet this does not- mean that the power to require a license tax has no rule or limit for its guidance. Although the state may select certain occupations and require those who engage in them to pay a license tax, while those who engage in other occupations are not so required; yet it cannot make a classification which is arbitrary and has no just or reasonable basis. — Judson on Taxation, § 459. “Discrimination between members of the same natural class have been uniformly condemned.” — Id. -
It has been said that a license tax is “either a license, strictly SO' called, imposed in the exercise of the ordinary police power of the state, or it is a-tax, laid in the exercise of the power of taxation,” also that “the pursuit of the ordinary callings of life can only be so far restrained and regulated as such restraint and regulation may be required to prevent the doing of damage to the public, or to their persons. — Tiedeman’s Limitations of Police Powers, p. 273.
It is sometimes difficult to determine, with accuracy, whether a given enactment provides for a license as a police measure, or authorizes it simply as a privilege tax on certain occupations, though it is often important to determine this question), in order to properly pass upon the validity of the law; for the distinction is clearly recognized, and it is also recognized that the amount which may be fixed for a license, under the police power i" limited, as shown in a previous part of this opinion; while a wider latitude is allowed, when it is a revenue measure, and this court has decided that where power is granted to a municipal corporation to license for police purposes merely, it cannot be used, as a source of revenue. — Van Hook v. City of Selma, supra.
And the courts now recognize the right to so combine the police regulations and the taxing power, as to levy a *556license tax to discourage and even break up a business. Cooley on Taxation, (2nd ed.), p. 20.
But this applies only to those lines of business Avhich, Avliiie they are tolerated, are recognized as being hurtful to public morals, productive of disorder, or injurious to public. — Tiedeman on Limitations of Police PoAver, pp. 273, 277, 218; 21 Am. & Eng. Ency. LaAV, (2nd ed.), p. 778. .
Without entering into the various definitions Avhich have been given,, in order to distinguish betAveen a license, Avhich is strictly a police regulation, and one Avhich is simply a privilege tax on the occupation, Ave think it is safe to say that, in this case, there can be no license tax imposed except one Avhich is simply a privilege tax on the business. Not only does the ordinance itself fail to provide for any regulations which Avould indicate an exercise of the police powers, but the character of the business, shoAvs it to be one of the legitimate, and useful lines of trade, Avhich neither the state nor the municipality can subject to police regulations, Avith any color of reason.
Then the question arises can the laAV-maldng department of the government, in providing for privilege occupation taxes, make such discrimination betAveen parties engaged in like lines of business, as to place additional burdens on one, AAdiich place him, to that extent, at a disadvantage, as compared Avith the others.
It is not disputed that the legislative department has the right to select Avhat occupations shall bear a license tax and Avhat one shall not, and it must be left to its discretion as to Avhat is equal and right in that matter, and it is also admitted, as before stated, that by reason of the fact that this is not strictly speaking a tax on property, it does not come Avithin the letter of the constitutional provision Avhich requires that “All taxes levied on property in this state shall be assessed in exact proportion to the value of such property,” (Const. § 211), and, Avhile it may be said that this constitutional provision indicates a general purpose in the constitution to provide absolute uniformity in matters of taxation, and. lo that extent may be looked to in construing other provisions, yet Avithout the aid of other provisions and principles of laAv, it is not controlling in this case.
*557In commenting on this constitutional provision this court has said “So long as the burden falls with equal weight upon every member of a given class, natural and artificial alike, it is difficult to formulate an argument that such levy violates any provision of our own or of the federal constitution.” — Quartlebaum v. State, 79 Ala. 4.
And, in another case, in Avhich it was decided that this and another similar provision did not apply to a privilege tax required of corporations, Brickell, C. J., said, “We may concede that, Avhen a tax is imposed on avocations or privileges, or on the franchises of corporations it must be equal and’uniform. The equality and uniform ity consists in the imposition of the like tax upon all who engage in the avocation, or Avho may exercise the privilege taxed.” — Phoenix Carpet Co. v. State, 118 Ala. 151-2.
As a constitutional warrant for this expression of the Chief Justice, our constitution provides that among the inalienable rights of every citizen “are life, liberty, and the pursuit of happiness.” — Const. Ala. § 1; also “that the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty and property, and, when the government assumes other functions it is usurpation and oppression.” Const. Ala. § 35.
While the XIV amendment to the constitution of the United States prohibits a state from making or enforcing “any laAv Avhich shall abridge the privileges or immunities of citizens,” etc. The Supreme Court of the United States has declared that “The legislature may not. under the guise of protecting the public interests, arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful occupations.” Lawton v. Steele, 152 U. S. 137.
While perfect eouality, in taxation of any kind is unattainable, yet “When., for any reason, it becomes discriminative between individuals of the class taxed, and selects some, for an exceptional burden, the tax is deprived of the necessary element of legal equality, and be*558comes inadmissible.” — Cooley on Taxation, (2nd ed.), p. 169, (3rd ed.), pp. 259-260.
In a case in Kentucky, where the statute required druggists to pay a license fee of $50.00 for retailing-liquors, in addition to the regular druggist’s license, the supreme court, while holding that, as a police measure, the subject being spirituous liquors, the license could be sustained, yet as a revenue measure, it would be unlawful “to single out * * * any particular commodity * * or encumber with a special tax any part * * of the druggists’ trade properly embraced in the conduct of his business as a whole.” “The legislature, taxing the whole, cannot again tax the parts * * -* This would be such an arbitrary method of taxation as to be a violation of the Bill of Rights.” — Commonwealth v. Fowler, 96 Ky. 166, 170.
“A city cannot divide a single taxable privilege, and require a separate license for each of the elements.” — 2 Cooley on Taxation, (3rd ed.), p. 1103, and note 1; Ex parte Sims, 40 Fla. 432; Canova v. Williams, 41 Fla. 509.
The effort to fix a discriminative license tax on department stores is declared by the supreme court of Missouri to be a violation of the Bill of Rights. — State ex rel Wyatt v. Ashbrook, 77 Am. St. Rep. 765, 776-7; see also City of Chicago v. Netcher, (Ill.), 55 N. E. Rep. 707.
The liberty which is so sedulously guarded by the constitutions of the United States, and of this and other states comprehends more than the mere freedom from personal restraint. It includes the right to pursue any useful and harmless occupation, and to conduct the business in the citizens own way, without being discriminated against either by being prohibited from engaging in it or by being burdened with discriminative taxation. If it be allowed that an additional burden may be placed upon a merchant who- chooses to advertise his business' by offering a small gratuity to customers in the shape of these trading stamps, it would be equally lawful to place an extra burden on one who advertises, his business in the papers, or. one who offers, out of his own stock, a certain gratuity to every one purchasing goods *559to a certain amount, or one who erects a handsome sign in front of his store, etc.
So long as his manner of conducting his business does not offend public morals and work an injury to- the public, it is his constitutional right to pursue, on terms equal to that allowed to others in like business, even though his methods may have a tendency to draw trade to him, to the detriment of competitors. — Young v. Commonwealth, (Va.) 45 S. E. Rep. 327; State v. Dalton, 22 R. I. 77; People ex rel Madden v. Dycker, 72 N. Y. App. Div. Sup. Ct. 308; People v. Gillson, 109 N. Y. 389; Long v. State, 74 Md. 565; Ex parte McKenna, 126 Cal. 429.
The only cases so far as we have been able to ascertain, in which the courts take a different view of the general subject of trading stamps are Lansburgh v. Dist. Columbia, 11 App. Cases D. C. 512, which was founded on a statute defining what a “gift enterprise” is, (and the court suggested that, even, in that case, the statute would not be operative in cases of a sale of some lawful article, accompanied by a gift *' * * where there was no chance * * * - and the gift was not the real object of the purchase), and Fleetwood v. Read, (S. Ct. of Washington), 47 L. R. A. 205, which is not supported bv any authority.
In tlie case, now under consideraton, the defendant with other merchants, paid the regular license tax assessed in accordance with the amount of stock carried, and the ordinance in uuestion, required of any merchant-who issued trading stamps an additional license of $100.00 without regard to the amount of stock carried, and it also made him liable to a fine of $100.00 for each stamp issued, without license.
It will be noticed that this license was, not for engaging in any business, but for the manner in which he chose to conduct the business already licensed.
This is such a palpable attempt under the guise of a license tax, to fix a penalty on the merchant, for conducting his business in a certain way, that, under the authorities heretofore cited, we hold it to be unconstitutional and void. Our own court has decided that the trading stamp business is not a gift enternrise or lottery. — State v. Shugart, 138 Ala. 86.
*560As to the powers granted by the city charter of Montgomery, we have not deemed it necessary to go into an exhaustive discussion, although it lies upon the surface that said charter itself provides, “that but one license shall be collected or required of any person, firm or cor-' poration, or for any particular trade, occupation, business or profession using but one place of business in carrying on such business, trade, occupation or profession.” Acts, 1894-5, p. 635, § 10.
The judgment of the court is affirmed.
McClellan, C. J., Tyson and Anderson, J.J., concurring.