City of Houston v. Harris County Outdoor Advertising Ass'n

• Decision Date: 16 June 1994
• Docket Number: No. A14-92-01123-CV,A14-92-01123-CV
• Citation: 879 S.W.2d 322
• Parties: CITY OF HOUSTON, et al., Appellants, v. HARRIS COUNTY OUTDOOR ADVERTISING ASSOCIATION, et al., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 322

879 S.W.2d 322

CITY OF HOUSTON, et al., Appellants, v. HARRIS COUNTY OUTDOOR ADVERTISING ASSOCIATION, et al., Appellees.

No. A14-92-01123-CV.

Court of Appeals of Texas Houston (14th Dist.).

June 16, 1994.

Rehearing Denied Aug. 4, 1994.

Gilbert D. Douglas, Andrea Chan, Houston, for appellants.

Richard L. Rothfelder, Russell H. McMains, Houston, for appellees.

Before J. CURTISS BROWN, C.J., and MURPHY and ELLIS, JJ.

OPINION

J. CURTISS BROWN, Chief Justice.

This appeal involves the validity of certain assessments levied by the City of Houston pursuant to the City's sign ordinance (the Sign Code). See HOUSTON TEX., SIGN CODE CH. 46. Appellees, Harris County Outdoor Advertising Association (HCOAA) and its individual members brought suit under 42 U.S.C. § 1983, claiming that appellants, the City of Houston, members of the City's Municipal Board on Sign Control, and the City's Sign Administrator (hereinafter referred to as "the City"), violated their constitutional rights by charging excessive operating permit fees for off-premise signs. Appellees sought monetary, declaratory, and injunctive relief. The case was tried before the court which found in favor of appellees and rendered judgment awarding monetary damages and attorney's fees. The court also made extensive findings of fact and conclusions of law, finding that the fees charged by the City between 1985 and 1992 for off-premise operating permits were excessive and in the nature of an unlawful occupation tax in violation of article VIII, section 1(f) of the Texas Constitution and provisions of the U.S. Constitution. The City appeals from the judgment and raises six points of error attacking the court's findings. We affirm.

Appellees are engaged in the business of outdoor advertising which involves the ownership and operation of billboards throughout Houston and the surrounding area. Billboards are "off-premise" signs. See SIGN CODE §§ 4603(2), 4612.

Appellees originally filed this suit on January 9, 1987. In their Original Petition, they alleged that the City's enforcement of the Sign Code, including the assessment of substantial permit fees, was in violation of state and federal law and in violation of the Texas and U.S. Constitutions. Following the enactment of City Ordinance No. 89-767, which doubled the fee for an off-premise operating permit, appellees amended their petition to specifically allege that the City's fees for those permits were excessive and constituted an unauthorized and unlawful tax in violation of the Texas and U.S. Constitutions. Appellees continued to pay under protest one-half of the new fee for an off-premise operating permit to the City and the other half to the registry of the court. By agreed motion, appellees' excessive fee claim was severed and tried before the court beginning on July 20, 1992.

On August 26, 1992, the trial court rendered judgment for appellees. In its Final Judgment, the court found that the City's fees for off-premise operating permits were unreasonably high, unconstitutionally excessive and that $40.00 was a reasonable and constitutional fee. The court awarded appellees $1,403,034.40 as damages. The judgment recites that this figure was computed by subtracting $40.00 (the permit fee declared to be reasonable) from $120.44 (the average permit fee paid by appellees between January 1985 and July 27, 1992) and multiplying that figure by 17,442 (the number of permits purchased by appellees during that period). The court further awarded appellees $326,582.98 in attorney's fees pursuant to 42 U.S.C. § 1988, along with conditional appellate attorney's fees. Finally, in addition to post-judgment interest and court costs, the court awarded appellees $751,732.93, the monies deposited in the registry of the court including interest. The City filed a notice of appeal.

In its first point of error, the City contends that the evidence was legally and factually insufficient to support the trial court's conclusion that the fees for off-premise operating permits constituted an impermissible occupation tax rather than a valid license fee.

As we observed at the outset, the trial court found that a portion of the fees charged by the City for off-premise operating permits constituted an occupation tax and violated article VIII, section 1(f) of the Texas Constitution. That section provides:

The occupation tax levied by any county, city or town for any year on persons or corporations pursuing any profession or business, shall not exceed one-half of the tax levied by the State for the same period on such profession or business.

TEX. CONST. art. VIII, § 1(f).

This provision prohibits a municipality from levying an occupation tax where no such tax has been previously levied by the State. Hoefling v. City of San Antonio, 85 Tex. 228, 20 S.W. 85, 88-89 (1892); Pierce v. City of Stephenville, 206 S.W.2d 848, 850 (Tex.Civ.App.--Eastland 1947, no writ). As the trial court correctly found, the State of Texas has not levied an occupation tax on the off-premise sign industry. Therefore, if the fees for off-premise operating permits constitute an occupation tax, as the trial court found, the City violated article VIII, section 1(f) by levying such a tax on appellees.

To determine whether an exaction authorized by statute or ordinance constitutes an occupation tax or a license fee, the test is whether the primary purpose of the exaction, when the statute or ordinance is considered as a whole, is for regulation or for raising revenue. Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896, 899 (1937); City of Fort Worth v. Gulf Refining Co., 125 Tex. 512, 83 S.W.2d 610, 617 (1935). If the primary purpose of the exaction is for regulation, then it is a license fee; however, if the primary purpose of the exaction is to raise revenue, then it is an occupation tax, regardless of the name by which it is designated. Hurt, 110 S.W.2d at 899; City of Fort Worth, 83 S.W.2d at 617.

The City concedes that whether an exaction is for regulation or for raising revenue, involves the question of reasonableness and presents a question of fact. Statutes or ordinances imposing license fees under the police power to regulate are prima facie valid and are presumed to be reasonable. Id. at 618. Courts ordinarily will not interfere with this police power. Id. Before such legislation will be declared void, the unreasonable and oppressive nature of the exaction must be clearly apparent from the record. Id. To be reasonable, a license fee cannot be excessive nor more than reasonably necessary to cover the cost of granting the license and of exercising proper police regulation, or it must bear some reasonable relationship to the legitimate object of the licensing ordinance. Id. [emphasis added] The nature of the business sought to be controlled and the necessity and character of the police regulations are the dominating elements in determining the reasonableness of the sum to be imposed. Id. (citation omitted) What would be fair and reasonable in one kind of business might well be considered unfair and unreasonable in another kind. Id. The burden of proving unreasonableness or oppressiveness is on the one who asserts it, usually the licensee. Id.

We hold that appellees have met their burden. As we stated, this case was tried before the court which made extensive findings of fact and conclusions of law. In particular, the trial court found no direct relationship between the payment of fees for off-premise operating permits and the receipt of services. The court also found that the revenue from such fees exceeded the reasonable costs of regulation. ¹ The City attacks this finding and others relating to the court's determination that the fees in issue were an occupation tax. In a non-jury case, the trial court's findings of fact and conclusions of law have the same force and dignity as does a jury verdict on special issues. Buzbee v. Castlewood Civic Club, 737 S.W.2d 366, 368 (Tex.App.--Houston [14th Dist.] 1987, no writ). Findings of fact are reviewable for legal and factual sufficiency of the evidence supporting them and conclusions of law are reviewable when attacked as a matter of law, but not on grounds of factual sufficiency. Id.; Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App.--Houston [1st Dist.] 1986, writ ref'd n.r.e.).

When both legal and factual sufficiency points are raised we must first examine the legal sufficiency. Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400, 410 (Tex.1981). In reviewing a "no evidence" point, we are to consider only the evidence and inferences that tend to support the trial court's findings and disregard all evidence and inferences to the contrary. Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988). A "no evidence" point of error must be sustained when the record discloses one of the following: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla of evidence; or (4) the evidence establishes conclusively the opposite of a vital fact. Otis Elevator Co. v. Joseph, 749 S.W.2d 920, 923 (Tex.App.--Houston [1st Dist.] 1988, no writ) (citing Commonwealth Lloyd's Ins. Co. v. Thomas, 678 S.W.2d 278, 288 (Tex.App.--Fort Worth 1984, writ ref'd n.r.e.)). If there is any evidence of probative value to support the trial court's findings, we must uphold the findings and overrule the points of error. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).

If the findings are supported by legally sufficient evidence, we must then review the factual sufficiency of the evidence by weighing and considering the evidence, in support of, and contrary to, the challenged findings. Id. The trial court's findings must be upheld unless they are so against the great weight and preponderance of the evidence as to be manifestly...