City of Phoenix v. Phoenix Newspapers, Inc.
| Decision Date | 30 March 1966 |
| Docket Number | No. 7334,7334 |
| Parties | CITY OF PHOENIX, a municipal corporation, and Alexander A. Cordova, City Assessor and Ex Officio Tax Collector of the City of Phoenix, Arizona, Appellants and Cross-Appellees, v. PHOENIX NEWSPAPERS, INC., an Arizona corporation, Appellee and Cross-Appellant. |
| Court | Arizona Supreme Court |
Merle L. Hanson, City Atty., Phoenix, John R. Franks, former City Atty., assisted by Ben C. Pearson and Robert J. Backstein, Asst. City Attys., for appellants-cross-appellees.
Gust, Rosenfeld & Divelbess, by John C. Wesley, Phoenix, for appellee-cross-appellant.
Phoenix Newspapers, Inc., plaintiff, brought this action in Superior Court of Maricopa County against the City of Phoenix to recover excise taxes paid to the defendant under protest. In its amended complaint plaintiff described itself as a corporation duly organized and existing under the laws of the State of Arizona, having its principal place of business in the city of Phoenix, Maricopa County, State of Arizona. The amended complaint also stated the following:
'III
'Plaintiff is presently, and at all times hereinafter referred to has been conducting a publishing business within the City of Phoenix, State of Arizona, and is duly licensed under Section 11 of Ordinance No. G--93 of the City of Phoenix, to engage in the publishing business in Phoenix.
'IV
'Plaintiff is engaged in the business of publishing the Arizona Republic, Phoenix Gazette, and the Arizona Weekly Gazette, selling advertising therein to both local and national advertisers, and selling the papers to readers both within and without the corporate limits of the City of Phoenix.
'* * *'
The plaintiff is licensed under Section 11 of Ordinance G--93. Ordinance G--93 is:
'An Ordinance Imposing a License Tax for the Privilege of Engaging in and Carrying on any Business within the city of Phoenix; Providing for Licenses and Fixing the Amount of License Tax upon said Businesses; Providing for the Collection and Paying of such Tax; Providing Penalties for the Violations of the Provisions hereof; Repealing all Ordinances and parts of Ordinances in Conflict herewith; Fixing an Effective Date; and Declaring an Emergency.'
The plaintiff was taxed pursuant to Section 2(b)7 of the Ordinance, which reads as follows:
'(a) * * *
'(b) At an amount equal to one-fourth of one per cent of the gross proceeds of sale or gross income from the business upon every person engaging or continuing within the City of Phoenix in the following businesses:
Defendants, city of Phoenix, a municipal corporation, hereinafter referred to as the City, and Alexander A. Cordova, City Assessor and Ex Officio Tax Collector of the City of Phoenix, caused an audit to be made on the plaintiff's records during January 1960 for the period from January 1, 1957 through December 31, 1959. During the entire audit period, the plaintiff in computing and remitting its tax to the City deducted from its gross income revenue from national advertising. From May 1, 1958 through December 31, 1959, plaintiff in computing and remitting its tax to the City deducted from its gross income revenue received from sales of newspapers outside the corporate limits of the City.
On February 11, 1960, the City issued and served on the plaintiff its debit voucher No. 1127 assessing the plaintiff an additional $17,583.10, representing tax on the above items deducted by the plaintiff in computing and remitting its tax. On February 23, 1960 the plaintiff paid under protest the above assessment and thereafter petitioned the defendants for a hearing requesting that the privilege tax be redetermined and corrected.
and Redetermination' the plaintiff described its business as follows:
'The Company conducts a publishing business at 120 East Van Buren St., Phoenix, Arizona which is duly licensed under Sec. 11 of Ordinance No. G--93, * * *'
A hearing was duly had and, by an Order dated July 12, 1960, the defendants upheld the assessment. Thereafter the plaintiff commenced this action in Superior Court to recover the taxes paid under protest and other taxes not paid under protest. Both plaintiff and defendants filed motions for summary judgment. The Superior Court ruled that plaintiff was exempt from the payment of tax upon that portion of gross income or gross proceeds of sales derived from sales of newspapers outside the corporate limits of the city of Phoenix, and that the plaintiff was exempt from the payment of tax upon that portion of gross income or gross proceeds of sales derived from sales of national advertising. The court also held that the plaintiff could not recover taxes not paid under protest. From this judgment the plaintiff appeals.
A judgment was rendered in favor of the plaintiff in the amount of $17,583.10. From this judgment the defendants appeal.
The defendants maintain the trial court erred in granting summary judgment for plaintiff, for the reason that income derived from sales of national advertising and sales of newspapers without the corporate limits of the city of Phoenix should be included in the measure of the tax which was gross income or gross proceeds of sales.
Defendants contend the tax involved is an excise tax levied upon the privilege of engaging in business within the city of Phoenix, as distinguished from a poll or ad valorem tax; that a privilege license tax is not a sales tax and should not be enforced in the same manner as a sales tax but that the tax should be collected for all business done whether inside or outside the corporate limits of the city.
The plaintiff contends that Ordinance G--93, as amended, does not include in its measure of tax the amount of gross income or gross proceeds of sales made outside the limits of the city, and it is the position of plaintiff that Ordinance G--93, Section 2(b)7 applies only to business conducted within the limits of the city itself.
We have held Ordinance No. G--93 to be constitutional. It taxes not sales, but rather the privilege of engaging in a business in the city of Phoenix. City of Phoenix v. Borden Co., 84 Ariz. 250, 326 P.2d 841; City of Phoenix v. Arizona Sash, Door & Glass Co., 80 Ariz. 100, 293 P.2d 438. See also, Arizona State Tax Commission v. Ensign, 75 Ariz. 220, 254 P.2d 1029. This Court, in the case of City of Phoenix v. Borden Co., supra, Sec. 2(c) of Ordinance G--93, held that the tax applied only to proceeds of sales or gross income from business engaged in within the corporate limits of Phoenix, and not to retail sales beyond its corporate limits. In Borden, the City argued that the tax applied to selling of taxable personal property by the company, both within and outside the city limits. This Court disagreed with that contention and concluded the tax applied only to the gross proceeds of sales or gross income from business within the city.
The identical language is used in Sec. 2(c) and Sec. 2(b) of Ordinance Co. G--93, with the exception that the tax rate is different in each section. Since the language is identical in each section of the Ordinance, although it applies to different types of business, it would seem to follow that the tax under Sec. 2(b)7...
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