City of Louisville v. Sagalowski & Son

• Decision Date: 20 January 1910
• Parties: City of Louisville v. Sagalowski & Son
• Court: Kentucky Court of Appeals

Page 324

136 Ky. 324

City of Louisville v. Sagalowski & Son

Court of Appeals of Kentucky.

January 20, 1910.

Appeal from Jefferson Circuit Court (Chancery Branch, Second Division).

SAMUEL B. KIRBY, Judge.

Judgment for plaintiffs, defendant appeals. — Reversed.

CLAYTON B. BLAKEY and ELMER C. UNDERWOOD for appellant.

EUGENE R. ATTKISSON and ALEX G. BARRET for appellees.

OPINION OF THE COURT BY JUDGE O'REAR — Reversing.

This appeal involves the validity of an ordinance of the city of Louisville, which reads as follows: "Every individual, firm or corporation who intends to commence after the first day of September of any year, the business of selling any goods, wares or merchandise, except by sample, shall first obtain a license therefor and pay in advance for the same as follows, viz: If said business is commenced after the first day of September, and before the second of January, said license fee shall be two hundred and fifty dollars. If said business is commenced at any time after the first day of January and before the first day of May, the license fee shall be one hundred dollars. If said business is commenced at any time between the 30th day of April and the first day of August, said license fee shall be fifty dollars. Each license issued under this section shall entitle the licensee to conduct or carry on said business until the first day of the next succeeding September. Each agent or employe who conducts or manages said business, or assists in the conducting or managing said business before a license has been obtained therefor, shall be guilty of a violation of this ordinance, and shall be liable to the penalty hereinafter provided." While this ordinance was before the court for construction in Louisville v. Roberts & Kreiger, 105 S. W., 431, 32 Ky. Law Rep. 182, its constitutionality on the ground now presented seems not to have been raised or considered.

It will be observed that the effect as well as evident purpose of the ordinance was to impose a tax on those itinerant merchants who come in after September 1st — the time of assessing such property for state, county and city taxes, and who would likely leave before the next assessing period came around. The suit was brought by appellees who were merchants opening up after January 1st and before August 1st and who were compelled to pay the license tax imposed by the ordinance or suffer prosecution and fine in the police court, seeking to recover the license taxes paid. A general demurrer to the petition filed by the city was overruled.

The circuit court held the ordinance to be violative of the Constitution in two respects: One, that it was not uniform taxation; and the other that the tax was so exhorbitant as to amount to confiscation.

Resident merchants have to pay a city as well as a county and state tax upon their stocks of merchandise valued as of the 1st day of September of each year. The city rate alone was $1.80 on the $100 of assessed value. The whole tax would be something like $2.50 on $100. The city's contention is that a great many people would open up a business as merchants after September 1st and quit it just before September 1st of the next year so as to escape this tax of $1.80 or $2.50, or whatever it might be. The resident merchants were not only put to a serious disadvantage in the competition which their more favored competitors were thus enabled to give, but the city was defeated in the collection of considerable revenue from a class of merchants who played at hide-and-seek with the tax assessors, with all the advantages on the side of the dodgers.

Appellees assail the ordinance upon the ground that it violates the uniformity clause of the Constitution (section 171, Const.), in that (1) all merchants in the city of Louisville are not required to pay a license tax; (2) even under the ordinance those who are required to pay a license tax are not assessed upon a uniform scale — e. g., $250 a year for those who enter after September 1st and before January 2d, those between January 1st and May 1st $100, and those between April 30th and August 1st $50 is not proportioned as to time, volume of business, or any other reasonable basis. By virtue of section 181, of the Constitution "* * * the General Assembly may by general laws * * * delegate the power to counties, towns and cities, and other municipal corporations, to impose and collect license fees on stock used for breeding purposes, on franchises, trades, occupations and professions." The sources of revenue of cities of the first class are defined by section 2980 of the Kentucky Statutes, being part of the charter of cities of the first class, which reads as follows: "Each city shall raise a revenue from ad valorem taxes and from a tax based on income licenses, and franchises, * * * and may impose license fees on stock used for breeding purposes and on franchises, trades, occupations, and professions." It has been held, construing sections 181 and 171 of the Constitution, that it is competent for the municipalities to select the trades, callings or occupations which they deem proper to lay a license tax upon, and that it is not...