City Council of Montgomery v. Kelly

• Decision Date: 01 February 1905
• Citation: 38 So. 67,142 Ala. 552
• Parties: CITY COUNCIL OF MONTGOMERY v. KELLY.
• Court: Alabama Supreme Court

38 So. 67

142 Ala. 552

CITY COUNCIL OF MONTGOMERY v. KELLY.

Supreme Court of Alabama

February 1, 1905

Appeal from City Court of Montgomery; William H. Thomas, Judge.

William Kelly was fined for the violation of an ordinance of the city of Montgomery. From a judgment finding defendant guilty, he appealed to the city court, and from a finding of not guilty the city appeals. Affirmed.

Defendant was arrested and fined by the recorder of the city of Montgomery for issuing trading stamps, checks, or devices of like kind to his customers, without having obtained a license therefor, as provided by an ordinance of the city council of Montgomery. He appealed to the city court of Montgomery where the case was tried de novo. In the city court the case was tried upon agreed statement of facts, and upon said facts the court gave the general affirmative charge in favor of the defendant, at his request.

Ray Rushton, for appellant.

Hill Hill & Whiting, for appellee.

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, the amount of the license fee in each case being regulated by the amount of the stock of merchandise carried by the merchant; and by another ordinance (section 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 $10 nor more than $100. Subsequently the city council passed another ordinance, fixing a license fee of $1,000 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 $100 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, 45 Am. Rep. 85. Yet 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 has 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 is 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 regulation and the taxing power as to levy a license tax to discourage and even break up a business. Cooley on Taxation (2d Ed.) p. 20. But this applies only to those lines of business which, while they are tolerated, are recognized as being hurtful to public morals, productive of disorder, or injurious to the public. Tiedeman on Limitations of Police Power, pp. 273, 277, 278; 21 Am. & Eng. Ency. Law (2d Ed.) p. 778.

Without entering into the various definitions which have been given in order to distinguish between a license which is strictly a police regulation and one which is simply a privilege tax on the occupation, we think it is safe to say that in this case there can be no license tax imposed except one which is simply a privilege tax on the business. Not only does the ordinance itself fail to provide for any regulations which would indicate an exercise of the police powers, but the character of the business shows it to be one of the legitimate and useful lines of trade, which neither the state nor the municipality can subject to police regulations with any color of reason. Then the question arises, can the lawmaking department of the government, in providing for privilege occupation taxes, make such discrimination between parties engaged in like lines of business as to place additional burdens on one, which place him, to that extent at a disadvantage, as compared with the others? It is not disputed that the legislative department has the right to select what occupations shall bear a license tax and what ones shall not, and it must be left to its discretion as to what 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 within the letter of the constitutional provision which 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, while it may be said that this constitutional provision indicates a general purpose in the Constitution to provide absolute uniformity in matters of taxation,...