Royalty Service Corporation v. City of Los Angeles

• Decision Date: 25 August 1938
• Docket Number: No. 8800.,8800.
• Citation: 98 F.2d 551
• Parties: ROYALTY SERVICE CORPORATION v. CITY OF LOS ANGELES et al.
• Court: U.S. Court of Appeals — Ninth Circuit

98 F.2d 551 (1938)

ROYALTY SERVICE CORPORATION v. CITY OF LOS ANGELES et al.

No. 8800.

Circuit Court of Appeals, Ninth Circuit.

August 25, 1938.

George A. Judson and Frank M. Willcox, both of Los Angeles Cal. (Ernest K. Hartman, of Los Angeles, Cal., of counsel), for appellant.

Ray L. Chesebro, City Atty., Frederick von Schrader, Asst. City Atty., and Arthur Loveland and George William Adams, Deputies City Atty., all of Los Angeles, Cal., for appellees.

Before DENMAN, MATHEWS, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

This is an appeal from a decree of the District Court in favor of the appellees. The action was brought by the appellant, Royalty Service Corporation, Ltd., a Delaware corporation, for an injunction to restrain and enjoin appellees, City of Los Angeles, James E. Davis, Chief of Police of the City, and Dan O. Hoye, Controller of the City, from enforcing certain provisions of Ordinance No. 76,300 of the City of Los Angeles as against the appellant, a producer of oil. The challenged provisions are set forth in the margin.¹

The bill attacks the ordinance on many grounds, alleging that the same violates certain provisions of both the Federal Constitution and the Constitution of the State of California and also that it conflicts with certain provisions of the Charter of the City of Los Angeles.

The cause having been heard, the District Court made its findings of fact and conclusions of law and entered its decree in favor of the appellees, holding that the ordinance was valid and did not infringe any of the constitutional rights of appellant and that the prayer for injunction should be denied. By the terms of the decree the preliminary injunction entered in the cause was dissolved. Costs were awarded to appellees.

The appellant has specified numerous assignments of error, but none of these challenge in any way the findings of fact made by the court below. The assignments are all directed toward the conclusions of law drawn from these findings. It is contended that the District Court erred in failing to find that the ordinance was invalid and that appellant was entitled to an injunction.

In view of the fact that we think the District Court was without jurisdiction of this cause it is unnecessary for us to consider the mentioned assignments of error. Although the question of jurisdiction was not raised by the parties in the District Court nor in their briefs on appeal it was raised on oral argument before this Court. In any event it is necessarily before us and must be decided. An appellate federal court must, of its own motion and even against the consent or protest of the parties, satisfy itself not only of its own jurisdiction but also of that of the lower court in a cause under review. Mitchell v. Maurer, 1934, 293 U.S. 237, 55 S.Ct. 162, 79 L. Ed. 338; Electro Therapy Products Corporation v. Strong, 9 Cir., 1936, 84 F.2d 766; Miller v. First Service Corporation, 8 Cir., 1936, 84 F.2d 680, 109 A.L.R. 1179; Schell v. Food Machinery Corporation, 5 Cir., 1937, 87 F.2d 385, certiorari denied 1937, 300 U.S. 679, 57 S.Ct. 670, 81 L.Ed. 883.

The jurisdiction of the District Court in this case is predicated upon the provisions of section 24(1) of the Judicial Code, 28 U.S.C.A. § 41(1). This section provides that the District Court shall have jurisdiction of "* * * all suits of a civil nature, at common law or in equity, * * * where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and (a) arises under the Constitution or laws of the United States * * * or (b) is between citizens of different States * * *."

The bill of complaint was filed on September 18, 1936. It contained a general allegation that the matter in controversy exceeds, exclusive of interest and costs, the sum of $3,000. This allegation was denied by the answer. However, the parties filed a stipulation of facts wherein it was agreed, inter alia, "that the value of the matter in dispute * * * exceeds, exclusive of interest and costs, the sum of Three Thousand ($3,000.00) Dollars."

The bill contained a further allegation that "* * * this plaintiff under protest has paid taxes in advance under the terms of said purported ordinance 56,600, now repealed, and said ordinance No. 76,300, subsection 21.124 for the quarter beginning July 1, 1936, in the sum of $3,263.71." (Italics supplied.) The defendants, in answering this allegation, admit "* * that plaintiff has paid fees required by the provisions of Ordinance No. 56,600 and Ordinance No. 76,300 in the total sum of $3,263.71, but alleges that said sum so paid was paid for license fees for five (5) quarters next preceding the quarter commencing October 1, 1936." (Italics supplied.)

It is apparent that at the time the pleadings were drawn the plaintiff and the defendants were in agreement that the taxes so paid in advance in the sum of $3,263.71 were paid for a period or periods up to and including October 1, 1936.²

The District Court, in its findings of fact, found that the plaintiff was a Delaware corporation and a resident of that State and that the defendants were residents and citizens of the State of California. There is no finding or conclusion of law that the matter in controversy exceeded in value the requisite jurisdictional amount. There is, however, a finding that "* * * under the provisions of this ordinance No. 76,300 plaintiff paid under protest to the City of Los Angeles for license fees the sum of $3,263.71 for five quarterly payments, beginning July 1, 1936, and has fully complied with all the provisions of said ordinance." (Italics supplied.)

It thus appears, both by the pleadings and by the findings of fact, that at the time the complaint was filed, September 18, 1936, there were no taxes due the City of Los Angeles. If the finding of the District Court is correct, and, in the absence of any statement of the evidence or an agreed statement of the case, it must be so considered, it is evident that not only were no taxes due on September 18, 1936 but none would be due until October 1, 1937.

Whatever may have been the rule enunciated in some of the earlier federal cases, it is settled by the recent decision of the Supreme Court in the case of Healy v. Ratta, 1934, 292 U.S. 263, 54 S.Ct. 700, 78 L.Ed. 1248, that where a plaintiff is seeking to enjoin the enforcement of a tax statute the value of the matter in controversy is to be measured by the amount of the tax due from the plaintiff or demanded of him and does not include any penalty or loss of business which the payment of the tax would avoid.³ See, also, Henneford v. Northern Pac. Ry. Co., 1938, 303 U. S. 17, 58 S.Ct. 415, 82 L.Ed. 619; Grosjean v. Musser, 5 Cir., 1935, 74 F.2d 741; Vicksburg, S. & P. Ry. Co. v. Nattin, 5 Cir., 1932, 58 F.2d 979; Cook's Estate, Trustees, v. Sheppard, D.C.Tex.1934, 8 F.Supp. 21, affirmed Barwise v. Sheppard, 1935, 293 U. S. 527, 55 S.Ct. 145, 79 L.Ed. 637.

It is also settled by the recent decision of the Supreme Court in the case of McNutt v. General Motors Acceptance Corporation, 1936, 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135, that under section 37 of the Judicial Code, 28 U.S.C.A. § 80,⁴ a plaintiff must plead the essential jurisdictional facts and must carry throughout the litigation the burden of showing that he is properly in court; that the District Court is vested with the authority to inquire at any time whether these conditions have been met; and that the authority so vested in the court by the statute "precludes the idea that jurisdiction may be maintained by mere averment or that the party asserting jurisdiction may be relieved of his burden by any formal procedure." (page 785.)

In the case at bar there are no allegations that there was any tax due the City of Los Angeles at the time of the commencement of the action. Jurisdiction of the federal courts depends on the situation as it exists at the time the suit is brought and subsequent events neither confer nor divest it. Mutual Life Ins. Co. v. Rose, D.C.Ky.1923, 294 F. 122; Cohn v. Cities Service Co., 2 Cir., 1930, 45 F.2d 687; Ford, Bacon & Davis, Inc., v. Volentine, 5 Cir., 1933, 64 F.2d 800. There can be no assumption that because a tax was levied in the past against the appellant in a sum sufficient to satisfy the federal jurisdictional requirement that a like tax will be assessed in the future. Citizens' Bank of Louisiana v. Cannon, 1896, 164 U.S. 319, 17 S.Ct. 89, 41 L.Ed. 451. Any action by appellees to compel compliance by appellant with the taxing ordinance for periods subsequent to those for which the tax has been paid is at most conjectural. Healy v. Ratta, supra.

As has been previously noted, the parties entered into a stipulation that the value of the matter in dispute satisfied the jurisdictional amount. Equity Rules 75 and 77, 28 U.S.C.A. following section 723, require that a statement of the evidence or an agreed statement of the case, in order to be properly a part of the record on appeal, be authenticated by the court or judge. It was held in Hughes v. Reed, 10 Cir., 1931, 46 F.2d 435, that "evidence" as used in rule 75 is not confined to testimony of witnesses. There is no statement of the evidence or agreed statement of the case incorporated in the record now before us. The stipulation is not authenticated by the court or judge below, and there is no showing other than that made by the clerk's certificate that the same was ever before the District Court. We do...