150 P. 273 | Or. | 1915
Lead Opinion
delivered the opinion of the court.
In respect to the matters involved in this action, the City of Portland operates under a charter formulated by an act of the legislative assembly of the state approved January 23, 1903. Section 3 thereof reads thus:
“The City of Portland shall be invested within its limits with authority to perform all public services and with all govermental powers except such as are expressly conferred by law upon other public corporations and subject to the limitations prescribed by the constitution and laws of the state, except as hereinafter provided.”
“To grant licenses with the object of raising revenue or of regulation, or both, for any and all lawful acts, things or purposes, and to fix by ordinance the amount, to be paid therefor, and to provide for the revoking of the same. No license shall be granted to continue for a longer period than one year from the date thereof. All money received from licenses for vehicles of every description, whether for pleasure or for business, shall go to the credit of the street repair fund, but the council may in its discretion set aside the moneys arising from licenses upon bicycles for the construction or repair of bicycle paths.”
The complaint alleges the public municipal character of the plaintiff under the act of January 23, 1903, and amendments thereto, and the corporate entity of the defendant. It states:
“That the defendant is now, and during all the times hereinafter mentioned or referred to has been, engaged in the business of selling and furnishing gas for lighting, heating, fuel and other commercial purposes within the corporate limits of the City of Portland.”
It is further averred that at a general city election on June 5, 1911, the legal voters duly enacted an ordinance entitled:
“An ordinance to provide additional revenue for the City of Portland; to levy a license on the gross receipts of persons and corporations selling gas, natural or manufactured, for lighting, heating, fuel or other commercial purposes within the City of Portland; defining the manner of ascertaining the nature and extent of such gross receipts; defining a person and corporation within the meaning of this ordinance,*198 and providing a penalty for the violation of the provisions of this ordinance.”
This municipal enactment is set out at large in the complaint. After defining the word “person” to include an individual, or copartnership, and “corporation” to mean every corporation, company, association or joint-stock company, other than an individual or co-partnership, the ordinance, in Section 2, reads thus:
“Every person, or corporation, engaged in the business of selling or furnishing gas, either natural or manufactured, for lighting; heating, fuel or other commercial purposes within the City of Portland, shall pay to the City of Portland, a license of three (3) per centum of the gross receipts of such person or corporation received upon its business within the City of Portland, which license shall be paid annually by said person, or corporation, to the treasurer of the City of Portland on the first day of March of each year for the preceding year ending December 31st. Provided that the payment to be made as required by this section and the statement to be made as required by Section 3 hereof on March 1, 1912, shall be upon and cover and embrace the gross receipts of any such person, or corporation, between the date this ordinance takes effect and December 31,1911, ’ ’
In substance, Section 3 requires persons in charge of the business named to .make a sworn statement on or before March 1st of each year of its gross receipts, and declares the 3 per cent demand to be a debt recoverable by an action at law in the name of the City of Portland in any court having competent jurisdiction. A penalty is imposed upon the persons charged with that duty for failure to make the report. It is averred that the resident officers of the defendant company made a statement showing that its gross receipts from June 6,1911, to December 31st of the same year amounted to $587,639.47, but that the defendant has
1. It is contended by the company, and conceded by the city, that the exaction contemplated by the ordinance is a tax, for the reason that no regulation under the police power is attempted by the city enactment. On the contrary, it is confessedly a revenue measure, and this being true, by whatever term it may be characterized, whether license, or public burden, or enforced contribution, it is none the less a tax. The precise question presented is whether the city has the right to levy such a tax.
2, 3. The defendant argues that the exaction attempted was one levied upon the defendant’s franchises; that, inasmuch as these privileges were taxed under the general laws, the assessment of which was adopted as a basis for the city taxes, the demand provided for by the ordinance in question amounted to double taxation in favor of the city. Under Chapter 268 of the Laws of Oregon for 1907, reproduced in Section 3552, L. O. L., as amended by the act of February 26, 1913 (Laws 1913, p. 325), there is included within the terms “land, real estate and real property,” “all franchises and privileges granted by or pursuant-to any law of this state, or municipal ordinance or resolution, owned or used by any person or corporation, other than the right to be a corporation.” The general scheme of state taxation embodied in Chapter 8 of Title XXVIII, L. O. L., especially in Section 3670, requires that all taxes levied by any incorporated city or town shall be imposed upon the property therein respectively assessable according to its valuation as shown by the assessment-roll last compiled by the county assessor, and that they shall be collected by the county tax collector at the rate declared by the city
4. It will be remembered that the statute classifying franchises and privileges as real property excepts therefrom the right to be a corporation. Conceding, then, for the moment that this is a burden imposed
“The franchise to be is generally taxed as a privilege. Doubtless in view of the general rules with respect to taxation of franchises it may also be taxed as property.”
And the author, indorsed by many precedents, makes a clear discrimination between the franchise to be and the franchise to do. The legislative assembly has observed the same distinction, putting the latter in the category of real property and leaving the question open as to the former. As stated by Mr. Justice Matthews in Memphis R. Co. v. Commissioners, 112 U. S. 609 (28 L. Ed. 837, 5 Sup. Ct. Rep. 299):
“The essential properties of corporate existence are quite distinct from the franchises of the corporation. The franchise of being a corporation belongs to the corporators, while the powers and privileges, vested in and to be exercised by the corporate body as such, are the franchises of the corporation.”
Looking at the matter of franchise as one of property from the ad valorem viewpoint, and remembering that according to its charter the city is invested within its limits with “all governmental powers,” we hold that it would be admissible to tax as property that part of the defendant’s franchise authorizing it to be a corporation; for that is expressly excluded by the state legislation from the category of real property.
5. The city, however, has not attempted to impose an ad valorem tax even upon the franchise of the defendant to be a corporation. Stripped of the euphemism
*203 “The annual license fee required by the act of 1903 to be paid by corporations is a business or excise tax on the right to be or exercise the powers of a corporation, and is in no sense a tax on property; nor is it a tax on the business or franchise which the corporation, when organized, may exercise. * # The right to be a corporation, or do business as such, rests entirely within the discretion of the state, and it may therefore require it to pay a specified sum each year, or at stated intervals, for the privilege. The payment of such fee or tax, however, does not exempt the corporation from other forms of taxation. It may be also required to pay a tax on its tangible property and a tax on its intangible property or franchise, the latter to be in proportion to its income or measured in any other way the lawmaking power may adopt.”
In New Jersey v. Anderson, 203 U. S. 483 (51 L. Ed. 284, 27 Sup. Ct. Rep. 137), the question was about the nature and validity of the franchise tax imposed by the State of New Jersey upon the Cosmopolitan Power Company, a corporation. The company was organized under the laws of that state, had its principal office there, but had no property in New Jersey. It conducted all its business and had all its holdings in the State of Illinois. Much like the ordinance here in question, the New Jersey statute required the company to make a statement of its business and pay a license fee or franchise tax of a certain per cent on its capital stock. Having failed to render the statement, the authorities levied a tax and presented the claim to the assignee in bankruptcy of the company. The Supreme Court of the United States, speaking by Mr. Justice Dat, after discussing the question, says:
“Without undertaking to analyze these numerous cases or to harmonize the views expressed by different' judges, we think the weight of judicial decision in that state favors the view that this is a tax imposed upon the right of the corporation to continue to be a corpora*204 tion, with, power to exercise its corporate franchises, based upon the amount of its capital stock issued and outstanding.”
It is well established by the authorities that it is not double taxation to impose an ad valorem tax upon the property of a corporation or individual and likewise to prescribe a tax for the use of the same property all for the purpose of revenue. The one is a direct property tax, and the other is a privilege or occupation tax. The rule is thus succinctly stated in Section 1410, Dillon on Municipal Corporations (5 ed.):
“The state or the municipality under statutory authority may collect an ad valorem tax upon property used in a calling and may at the same time impose a license tax on the. pursuit as a condition of the right to carry on that pursuit, and the fact that both the property and the business or pursuit are taxed does not constitute double taxation”: Goldsmith v. Huntsville, 120 Ala. 182 (24 South. 509); Kents v. Mobile, 120 Ala. 623 (24 South. 592); Florida Cent. & P. R. Co. v. Columbia, 54 S. C. 266 (32 S. E. 408); Ex parte Hoffert (S. D.), 148 N. W. 20 (52 L. R. A. (N. S.) 949); Salt Lake City v. Christensen Co., 34 Utah, 38 (95 Pac. 523, 17 L. R. A. (N. S.) 898); Jackson v. Neff, 64 Fla. 326 (60 South. 350); Mark v. District of Columbia, 37 App. D. C. 563 (37 L. R. A. (N. S.) 440); Blackrock Copper M. & M. Co. v. Tingey, 34 Utah, 369 (98 Pac. 180, 131 Am. St. Rep. 850, and note, 28 L. R. A. (N. S.) 255).
We conclude, therefore, that the inclusion of its franchises, except the right to be a corporation, in the category of real property, does not exempt the defendant from the character of exaction for revenue purposes set out in the ordinance here involved. We hold, also, that the city legislation provided for an occupa
Reversed.
Rehearing
Argued March 3, affirmed April 25, 1916.
On Rehearing.
(156 Pac. 1070.)
delivered the opinion of the court.
6,7. The opinion which was delivered to-day in Portland v. Portland Ry., L. & P. Co., 156 Pac. 1058, is de
8. Supplementing, however, the discussion concerning the cotention of the city that Sections 3 and 74 endow the city with authority to pass the ordinance, attention is now called to Section 5 of Article XI of the State Constitution:
“Acts of legislative assembly incorporating towns and cities shall restrict their powers of taxation. * * ’ ’
The ordinance in question was submitted to the legal voters at a time when the legislative charter of 1903 was still in force. The charter of 1903 was enacted by the legislature prior to the adoption of the constitutional amendments known as Section 2 of Article XI
9. The contention, persistently made by the city, that it is not necessary to trace its right to legislate to some provision of its charter, is set at rest by Robertson v. Portland, 77 Or. 121 (149 Pac. 546). A charter is requisite now to the same extent as it was before the adoption of Section 2 of Article XI and Section la of Article IV, as those sections now appear in our Constitution. The power of a city to enact or amend its charter is conferred by Section 2 of Article XI, and the very language of that section implies the necessity of a charter. Section la of Article IV does not empower a city or other municipality to take unto itself any municipal authority; the words “local, special and municipal legislation,” found in this section of the Constitution, do not mean that a municipality can legislate unto itself a power to legislate: State ex rel. v. Port of Astoria, 79 Or. 1 (154 Pac. 399, 407). None but a city or town can legislate unto itself a power to legislate, and that privilege exists because of Section 2 of Article XI.
Dissenting Opinion
delivered the following dissenting opinion:
The opinion of Mr. Justice Harris on rehearing, affirming the Circnit Court in sustaining the demurrer to the complaint, is based upon the views he expressed in Portland v. Portland Ry., L. & P. Co. An analysis of this latter opinion shows that it depends very largely, if not exclusively, upon the new matter in the answer. In the present case the issue of law is waged upon a demurrer to the complaint. That pleading contains no intimation of the various defenses set up in the other case. The only feature in common between these two cases is the applicability of subdivision 21 of Section 73 o'f the Portland charter, stating the powers of the council and reading in part thus:
“To grant licenses with the object of raising revenue or of regulation or both for any and all lawful acts, things or purposes and to fix by ordinance the amount to be paid therefor, and to provide for the revoking of the same. No license shall be granted to continue for a longer period than one year from the date thereof.”
The opinion seems strictly to construe the term “license,” and to teach that the only way in which the city could exercise the authority conferred by the subdivision quoted would be to say that it shall be unlawful for any person or corporation to sell gas in the City of Portland without paying a license of 3 per cent of the gross receipts of the business, and to impose a
“A power to license should be used only for regulation unless there is something in the language of the grant or the circumstances of the case clearly indicating that it was also intended to be used for the purpose of revenue.”
Taking the language of his opinion thus quoted as the reason for his judgment, we have ample ground to distinguish the instant case from the question under his consideration. Since the present Portland charter gives authority to impose licenses “with the object of raising revenue or of regulation or both,” the Laundry Casé is no obstacle to the purpose of the ordinance in question, for the intention to provide revenue by a license system is plainly expressed in the excerpt quoted above. The present case would be like Reser
“A license is a right granted by some competent authority to do an act which without such authority would be illegal.”
This is sound lexicology, but it is curious to observe that in that very case the count refused to enjoin the collection of what was called “a license tax,” an exaction practically the same as the city would enforce in the present instance.
To place the decision on a strict technical definition of the word “license,” without regard to the wider scope of the charter provision, is in my judgment to sacrifice substance for form. The declared object of the provision, among others, is that of raising revenue. It may be coupled with regulation, or not, in the discretion of the council. The power may be applied to lawful acts, things, or purposes. These are lawful to begin with, and it is not necessary, for revenue purposes, at least, to declare them unlawful as a means of collecting taxes. In construing this statute we must look at the substance as well as the letter. As said bv Mr. Justice Holmes in Galveston etc. Ry. Co. v. Texas, 210 U. S. 217 (52 L. Ed. 1031, 28 Sup. Ct. Rep. 638):
“Neither the state courts nor the legislatures, by giving the tax a particular name, or by the use of some
True, it is that, if the city chose to do so, it could grant a permit to a person or corporation to sell gas within the municipal boundaries, providing a certain fee was paid for the privilege, and could enforce the same by some form of punishment, including the revocation of the license. Even then payment of the fine would not liquidate the tax imposed. But these powers and the manner of their exercise are permissive. Considered as a revenue measure, the subdivision mentioned establishes an occupation tax. Invested as it is with authority to perform all public services and with all governmental powers, the City of Portland could provide any other lawful procedure for enforcing the payment of the impost upon the occupation of the defendant. As well it might, it has chosen a means of collection by an action against the delinquent who fails to pay the license charge prescribed by the ordinance. The same result is attained as though it had chosen to issue a paper to be styled “a license to sell gas,” and provided for a fine or other lawful punishment for doing business without sucha document. The legislation devised by the city to enforce the occupation tax under the name of license is within the reason and spirit of subdivision 21 of Section 73. The question of the tax being’ exorbitant and confiscatory is not before us in this suit. We are not at liberty to divine what defenses the defendant may be able to present, nor to suppose they will be the same as those urged in the other case. The complaint states a cause of action and is not amenable to the general demurrer.
For these reasons, I am unable to assent to the conclusion reached by my learned Brother.