Carolina Music Co. v. Query

• Citation: 6 S.E.2d 473,192 S.C. 308
• Decision Date: 11 December 1939
• Docket Number: 14978.
• Parties: CAROLINA MUSIC CO., Inc., et al. v. QUERY et al.
• Court: South Carolina Supreme Court

6 S.E.2d 473

192 S.C. 308

CAROLINA MUSIC CO., Inc., et al. v. QUERY et al.

No. 14978.

Supreme Court of South Carolina

December 11, 1939

The portions of the decree requested to be reported follow:

Plaintiffs suing in behalf of themselves and all others similarly situated who will come into the action and participate in the costs thereof, challenge the constitutionality of Section 101, page 650, of Act No. 346 of the General Assembly enacted at the 1939 Session. The defendants compose the Tax Commission of the State of South Carolina, which Commission is charged by law with the duty of enforcing the provisions of the Act.

The challenged Statute is as follows:

"§ 101. (1) (a) That every person, firm or corporation owning or maintaining any place of business, or other place, wherein or in connection with which is operated or located any machine for the playing of music, games or amusements, operated by a slot wherein is deposited any coin or thing of value or any machine in which is kept any article to be purchased by depositing any coin or thing of value, shall apply for and procure from the South Carolina Tax Commission a license for the privilege of operating any and every such machine and shall pay for such license a tax of Fifteen ($15.00) Dollars per machine: Provided, That the tax on machines vending any article to be purchased therefrom shall be Ten ($10.00) Dollars per machine: Provided further, That the provisions of this subdivision shall not apply to any machine requiring a deposit of less than five cents: Provided further, That the provisions of this subdivision shall not apply to any billiard or pocket billiard table.

"(b) No machine shall be licensed under this subsection unless said machine shall bear a permanently attached identifying serial number and in making application for license under this subsection, the applicant shall specify the manufacturer's serial number of the machine for which license is desired. The license shall carry the serial number of the machine and no license shall be transferable. It shall be the duty of the person in whose place of business the machine is operated or located to see that the proper State license is attached to the machine before its operation is commenced. Failure to do so shall make such person liable for the penalties imposed in this section."

"(c) Upon application being made for license to operate any machine or apparatus under this section, the Tax Commission is hereby authorized to presume that the operation of such machine or apparatus is lawful and when a license has been issued for the operation thereof, the sum paid for such license shall not be refunded notwithstanding that the operation of such machine or apparatus shall be prohibited."

Plaintiffs take the position that the Act is violative of Article I Sections 5 and 6, and Article X, Sections 1, 2, 3 and 13, of the South Carolina Constitution of 1895, and Article I Section 8, Subsection 3 of the Constitution of the United States, U.S. C.A., and the Fourteenth Amendment to that Constitution. The constitutional provisions of the State Constitution, which are relied upon, relate to "due process of law", "the equal protection of the laws" and the taxation of plaintiffs' property without regard to its value and without uniformity or graduation. The constitutional provisions of the United States Constitution which are relied upon relate to regulation of commerce between the States, "due process of law" and "equal protection of the laws". In addition it is alleged that the tax levied is ambiguous in that it is impossible to say from a reading of the Statute whether the plaintiffs, by virtue of the statutory enactment are required to pay a tax of $15 or $10.

As to the contention last adverted to, the construction which has been placed upon the Act by the Tax Commission is that any machine which vends a tangible article of merchandise which is purchased therefrom by the deposit of a coin or thing of value of 5¢ or more is taxable at the rate of $10 per year and that any machine which does not vend a tangible article of merchandise but which plays music or merely affords amusement upon the deposit of 5¢ or more, is taxable at the rate of $15 per year.

Section 1 (a) of Section 101 of the Act seems clearly to justify the construction placed upon it by the Tax Commission. It is, of course, a familiar principle of law that "the construction given a statute by those charged with the duty of executing it is always entitled to the most respectful consideration, and ought not to be overruled without cogent reasons". Hadden v. South Carolina Tax Commission, 183 S.C. 38, 190 S.E. 249, 253.

Plaintiffs' contention based upon the alleged ambiguity of the Act cannot be sustained.

The contention that the statute violates the "due process" and "equal protection" clauses of the State and Federal Constitutions apparently is based upon the view that the statute discriminates against plaintiffs, who sell or operate only music producing machines, as compared with owners or operators of slot machines which vend a tangible article of merchandise, the former being required to pay $15 per year for each machine, whereas the latter are required to pay only $10 per year per machine. Complaint is further made that no tax is imposed upon machines which require a deposit of less than 5¢ for this operation, whereas a tax is imposed upon those requiring 5¢ or more. It is alleged that this is an arbitrary and unreasonable classification.

Yet these are precisely the type of distinctions which the law is often called upon to make. "It is only a difference in numbers which marks the moment when day ends and night begins, when the disabilities of infancy terminate and the status of legal competency is assumed. It separates large incomes which are taxed from the smaller ones which are exempt, as it marks here the difference between the proprietors of larger businesses who are taxed and the proprietors of smaller businesses who are not." Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 873, 81 L.Ed. 1245, 109 A.L.R. 1327.

In the case of Gundling v. City of Chicago, 177 U.S. 183, 20 S.Ct. 633, 635, 44 L.Ed. 725, the Court had before it a Chicago ordinance requiring a special license for the sale of cigarettes, the fee for which was $100 per year. The ordinance was attacked upon the grounds, inter alia, that it contravened the due process and equal protection clauses of the Federal Constitution. It was contended that the ordinance discriminated against vendors of cigarettes. In overruling these contentions the Federal Court said:

"Regulations respecting the pursuit of a lawful trade or business are of very frequent occurrence in the various cities of the country, and what such regulations shall be and to what particular trade, business, or occupation they shall apply are questions for the state to determine, and their determination comes within the proper exercise of the police power by the state, and unless the regulations are so utterly unreasonable and extravagant in their nature and purpose that the property and personal rights of the citizens are unnecessarily, and in a manner wholly arbitrary, interfered with or destroyed without due process of law, they do not extend beyond the power of the state to pass, and they form no subject for Federal interference. ***

"It is not a valid objection to the ordinance that it partakes of both the character of a regulation and also that of an excise or privilege tax. The business is more easily subjected to the operation of the power to regulate where a license is imposed for following the same, while the revenue obtained on account of the license is none the less legal because the ordinance which authorized it fulfils the two functions, one a regulating and the other a revenue function. So long as the state law authorizes both regulation and taxation, it is enough, and the enforcement of the ordinance violates no provision of the Federal Constitution."

Statutes imposing a tax or license either upon automatic vending machines or their proprietors have been sustained in the comparatively few cases in which the question has arisen. And the exemption of certain kinds of such machines has been held not to constitute an unlawful discrimination. For example, in the case of Ex parte Walker, 121 Tex.Cr.R. 145, 52 S.W.2d 266, a tax upon the operation of various vending machines but exempting pay telephones and gas meters was held not to offend a provision of the Texas Constitution requiring the taxes be equal and uniform upon the same class of subjects, the exemption not being an unlawful discrimination against the operators of the slot machines in favor of the telephone and gas companies.

A later Texas statute exempting "pay toilets and/or sanitary drinking cup vending machines which are operated with coins" was held not to amount to an unlawful discrimination. Ex parte Day, 127 Tex.Cr.R. 379, 76 S.W.2d 1066.

Other cases from Texas, Alabama, Arkansas and Virginia upholding the validity of statutes imposing licenses upon the operation of vending machines, which statutes contained various exemptions, are to be found in an Annotation in 111 A.L.R., at page 756.

The General Assembly of South Carolina has made a distinction in the amount of license required from operators of machines dispensing music on the one hand and machines dispensing tangible articles of merchandise on the other. It has further made a distinction, between machines requiring a deposit of less than 5¢ for their operation on the one hand and more than 5¢ on the other. The very fact that such distinctions are made is the best evidence that the Legislature took into consideration certain factors of...