Century Plaza Hotel Co. v. City of Los Angeles

• Decision Date: 14 May 1970
• Citation: 87 Cal.Rptr. 166,7 Cal.App.3d 616
• Court: California Court of Appeals
• Parties: CENTURY PLAZA HOTEL COMPANY, Plaintiff and Appellant, v. CITY OF LOS ANGELES and Walter C. Thiel, City Clerk, Defendants and Respondents. Civ. 34667.

Page 166

87 Cal.Rptr. 166

7 Cal.App.3d 616

CENTURY PLAZA HOTEL COMPANY, Plaintiff and Appellant, v. CITY OF LOS ANGELES and Walter C. Thiel, City Clerk, Defendants and Respondents.

Civ. 34667.

Court of Appeal, Second District, Division 4, California.

May 14, 1970.

Rehearing Denied June 1, 1970.

Hearing Denied July 8, 1970.

O'Melveny & Myers, Pierce Works, Allyn O. Kreps and Stanley H. Williams, Los Angeles, for plaintiff and appellant.

Roger Arnebergh, City Atty., Bourke Jones and James A. Doherty, Asst. City Atty's., for defendants and respondents.

Jefferson E. Peyser and Albert G. Evans, San Francisco, amici curiae on behalf of appellant.

DUNN, Associate Justice.

By its taxpayers' action (Code Civ.Proc. § 526a), plaintiff sought to enjoin defendants from the enforcement of ordinance No. 136,900 and for a ruling regarding validity of the ordinance, which was enacted by defendant city to become operative October 1, 1968. The parties stipulated to the few facts necessary to a decision and brief additional testimony was received, following which the trial court held the ordinance was valid. Plaintiff appeals.

The ordinance, a so-called 'tipplers' tax,' added section 21.5.03.1 to the Los Angeles Municipal Code, imposing an excise tax of five percent upon the purchase price of alcoholic beverages sold by a retailer for consumption on the premises where sold. ¹

I. Does The Ordinance Infringe Upon The State's Constitutional Right To Regulate Alcoholic Beverage Sales?

Appellant argues that the ordinance imposes a special local tax on the retail sale of alcoholic beverages and contends that, since there is no limit upon the amount of tax which could be imposed ² and it could be increased until virtually prohibitory, the effect is to regulate alcoholic beverage sales. Regulation of this type is reserved to the state. So goes the argument.

Article XX, section 22 of the state Constitution provides in part: 'The State of California * * * shall have the exclusive right and power to license and regulate the * * * sale (and) purchase * * * of alcoholic beverages within the State * * *. All alcoholic beverages may be bought, sold, served, consumed and otherwise disposed of in premises which shall be licensed as provided by the Legislature * * *. The Department of Alcoholic Beverage Control shall have the exclusive power * * * to license the * * * sale of alcoholic beverages * * * and to collect license fees or occupation taxes on account thereof. * * * The State Board of Equalization shall assess and collect such excise taxes as * * * may be imposed by the Legislature on account of the * * * sale of alcoholic beverages in this State.'

This section was first adopted by initiative in 1932 and acquired its present form by amendments in 1934, 1954 and 1956. Appellant cites us to the legal history of this section (and see: Hammond v. McDonald, 32 Cal.App.2d 187, 89 P.2d 407 (1939)) and the official arguments made for and against enactment pointing out that, before Prohibition, California permitted municipalities to bar the sale or consumption of alcoholic beverages within their boundaries. With repeal, California chose not to reinstate this local option and control was put under state regulation. From this, appellant argues the state's power is exclusive.

We agree that the Constitution gives the state exclusive authority to license and regulate, but the question is, of course, does the ordinance do either. Resolution of this problem is made unnecessary by results reached in our consideration of the next point.

II. Does The Ordinance Represent A Valid Exercise Of The Powers Of A Charter City Over Its Municipal Affairs?

Where the city involved is, as here, a freeholders' charter city availing itself of the 'home rule' provisions of art. XI, §§ 6 and 8 of the California Constitution (City of Los Angeles v. Layton, 269 Cal.App.2d 567, 568, 75 Cal.Rptr. 143 (1969)), it is settled that the only restrictions on the exercise of its power to tax are those limitations appearing in the Constitution and in the charter, itself. City of Glendale v. Trondsen, 48 Cal.2d 93, 98, 308 P.2d 1 (1957).

Article XI, section 8 of the state Constitution authorizing freeholders' charters states: '(j) * * * It shall be competent in any charter framed under the authority of this section to provide that the municipality governed thereunder may make and enforce all laws and regulations in respect to Municipal affairs, subject only to the restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws.' (Emphasis added.) Section 6 of the same article contains similar language. ³ The City of Los Angeles charter contains the authorized provisos.

The term 'municipal affairs' has indistinct outlines and no precise, inflexible definition is available. As noted in Pac. Tel. & Tel. Co. v. City & County of San Francisco, 51 Cal.2d 766, 771, 336 P.2d 514, 517 (1959): '(3) It is likewise settled that the constitutional concept of municipal affairs is not a fixed or static quantity. It charges with the changing conditions upon which it is to operate. What may at one time have been a matter of local concern may at a later time become a matter of state concern controlled by the general laws of the state.' (And see: 3 Witkin, Summary of Cal.Law, 7th ed., 1974--1976, Constitutional Law § 164.)

Under the rule stated in Bishop v. City of San Jose, 1 Cal.3d 56, 81 Cal.Rptr. 465, 460 P.2d 137 (1969) the questions to resolve are: is there a conflict involved? does the legislation disclose an intent to preempt the field? The Supreme Court said (pp. 61--63, 81 Cal.Rptr. p. 468, 460 P.2d p. 140):

'(1) * * * As to matters which are of statewide concern, however, home rule charter cities remain subject to and controlled by applicable general state laws regardless of the provisions of their charters, if it is the intent and purpose of such general laws to occupy the field to the exclusion of municipal regulation (the preemption doctrine). * * *

'(2) As is made clear in the leading case of Pipoly v. Benson (20 Cal.2d 366, 125 P.2d 482) Supra, local governments (whether chartered or not) do not lack the power, nor are they forbidden by the Constitution, to legislate upon matters which are not of a local nature, nor is the Legislature forbidden to legislate with respect to the local municipal affairs of a home rule municipality. Instead, in the event of conflict between the regulations of state and of local governments, or if the state legislation discloses an intent to preempt the field to the exclusion of local regulation, the question becomes one of predominance or superiority as between general state laws on the one hand and the local regulations on the other. (See also e.g. Galvan v. Superior Court (1969) 70 Cal.2d 851, 856--866, 76 Cal.Rptr. 642, 452 P.2d 930; Abbott v. City of Los Angeles (1960) 53 Cal.2d 674, 681--684, 3 Cal.Rptr. 158, 349 P.2d 974, 82 A.L.R.2d 385; Chavez v. Sargent (1959) 52 Cal.2d 162, 176--177, 339 P.2d 801; Agnew v. City of Los Angeles (1958) 51 Cal.2d 1, 5, 330 P.2d 385; Wilson v. Beville (1957) 47 Cal.2d 852, 856--861, 306 P.2d 789; Eastlick v. City of Los Angeles (1947) 29 Cal.2d 661, 665--666, 177 P.2d 558, 170 A.L.R. 225; Southern California Roads Co. v. McGuire (1934) 2 Cal.2d 115, 123, 39 P.2d 412.)

'(3) If resolution of that question requires a determination as to whether the matter regulated is a state or a municipal affair, then, as declared in Professional Fire Fighters, Inc. v. City of Los Angeles (1963) 60 Cal.2d 276, 294, 32 Cal.Rptr. 830, 841, 384 P.2d 158, 169, 'Because the various sections of article XI fail to define municipal affairs, it becomes necessary for the courts to decide, under the facts of each case, whether the subject matter under discussion is of municipal or statewide concern.' * * *

'(5, 6) In exercising the judicial function of deciding whether a matter is a municipal affair or of statewide concern, the courts will of course give great weight to the purpose of the Legislature in enacting general laws which disclose an intent to preempt the field to the exclusion of local regulation (see Ex parte Daniels (1920) 183 Cal. 636, 639--640, 192 P. 442, 21 A.L.R. 1172), and it may well occur that in some cases the factors which influenced the Legislature to adopt the general laws may likewise lead the courts to the conclusion that the matter is of statewide rather than merely local concern. However, the fact, standing alone, that the Legislature has attempted to deal with a particular subject on a statewide basis is not determinative of the issue as between state and municipal affairs, nor does it impair the constitutional authority of a home rule city or county to enact and enforce its own regulations to the exclusion of general laws if the subject is held by the courts to be a municipal affair rather than of statewide concern; stated otherwise, the Legislature is empowered neither to determine what constitutes a municipal affair nor to change such an affair into a matter of statewide concern.'

There is no doubt that taxation for revenue for municipal purposes ordinarily is a 'municipal affair.' City of Glendale v. Trondsen, Supra, 48 Cal.2d at p. 98, 308 P.2d 1; City of Grass Valley v. Walkinshaw, 34 Cal.2d 595, 599, 212 P.2d 894 (1949); Ex parte Braun, 141 Cal. 204, 74 P. 780 (1903); Brewer v. Feigenbaum, 47 Cal.App.2d 171, 174--175, 117 P.2d 737 (1941). But, under the ruling in Bishop, this court must determine if the city's tax measure here falls within that classification.

In 1955 the Legislature added Part 14 to the Revenue and Taxation Code, being sections 32001--32556, inclusive, entitled 'Alcoholic Beverage Tax Law.' To this, in 1959, was added section 32010 reading as follows:

'The taxes imposed by this part are in lieu of all county, municipal, or district taxes on the sale of beer, wine or distilled spirits.

'This sect...