City of Portland v. Portland Ry., Light & Power Co.

• Decision Date: 25 April 1916
• Citation: 80 Or. 271,156 P. 1058
• Parties: CITY OF PORTLAND v. PORTLAND RY., LIGHT & POWER CO.
• Court: Oregon Supreme Court

156 P. 1058

80 Or. 271

CITY OF PORTLAND v. PORTLAND RY., LIGHT & POWER CO.

Supreme Court of Oregon

April 25, 1916

In Banc.

Appeal from Circuit Court, Multnomah County; George N. Davis, Judge.

Action by the City of Portland against the Portland Railway Light &amp Power Company. Demurrer to answer overruled, with judgment for defendant for costs, and plaintiff appeals. Affirmed.

The plaintiff city of Portland, a municipal corporation, will be called the city or the plaintiff, and the defendant Portland Railway Light & Power Company, a private corporation, will be referred to as the company or the defendant. All the facts appear in a complaint and answer. The city demurred to the answer; the court overruled the demurrer; the city declined to plead further; the court then entered a judgment awarding to defendant its costs and disbursements; and consequently on this appeal, which is prosecuted by the city, all the affirmative allegations of the answer must be deemed to be true.

The company is engaged in the business of selling electricity for lighting, heating, and power purposes in Portland and elsewhere. The city is attempting to recover from the company 3 per centum of the gross receipts from business done in Portland, together with a penalty of 10 per centum by virtue of an ordinance enacted by the legal voters of the city at a general election held on June 5, 1911. The litigation involves the validity of the ordinance which is numbered 23566 and is entitled:

"An ordinance to provide additional revenue for the city of Portland; to levy a license on the gross receipts of persons and corporations engaged in the business of selling electricity, or electric current, for lighting, heat, power or other commercial purposes within the city of Portland defining the manner of ascertaining the nature and extent of such gross receipts; defining a person and corporation within the meaning of this ordinance, and providing a penalty for the violation of the provisions of this ordinance."

The ordinance is here reproduced in full and reads thus:

"Section 1. The word 'person' when used in this ordinance includes an individual or copartnership. The word 'corporation' when used in this ordinance, includes every corporation, company, association, or joint-stock company, other than an individual or copartnership.

"Sec 2. Every person, or corporation, engaged in the business of selling electricity, or electric current, for lighting heating, power or other commercial purposes within the city of Portland, shall pay to the city of Portland, a license of three (3) per centum of the gross receipts of such person, or corporation received upon its business within the city of Portland, which license shall be paid annually by said person, or corporation, to the treasurer of the city of Portland on the first day of March of each year for the preceding year ending December 31st: Provided, that the payment to be made as required by this section and the statement to be made as required by section 3 hereof on March 1st, 1912, shall be upon and cover and embrace the gross receipts of any such person, or corporation, between the date this ordinance takes effect and December 31st, 1911.

"Sec. 3. For the purpose of ascertaining the amount of the license to be paid as required by this ordinance, it shall be the duty of any such person, and of the president and secretary and treasurer of any such corporation, or such of them as shall reside in this state, or if neither of said officers reside in this state, then the general manager or other officer or agent of such corporation, having general control, management or supervision of its business within this state, to transmit a statement, under oath, of the gross receipts of such person, or corporation from business transacted within the city of Portland during the preceding year ending December 31st of said year. If any person, or corporation, shall fail to make such payment for a period of 30 days from and after such payment is required by this ordinance to be made, and after such license is due and payable as herein provided, the full amount thereof with an addition of ten (10) per centum thereof for such failure shall be due, and shall be collected from such person, or corporation, for the use of the city of Portland, and the same shall be and is hereby declared to be a debt due and owing from such person, or corporation, to the city of Portland. The city attorney of the city of Portland shall commence and prosecute to final determination in any court of competent jurisdiction an action at law to collect the said debt in the name of the city of Portland.

"Sec. 4. If any officer or agent of any corporation subject to the provisions of this ordinance shall fail, neglect or refuse to make or file such annual statement of the gross receipts of any corporation, of which he is such officer or agent, for a period of ten days after the first day of March of each year, or if any person subject to the provisions of this ordinance shall fail, neglect or refuse to make and file an annual statement of the gross receipts of the said person for the said period of ten days after the first day of March of each year, the said officer, agent, or person, as the case may be, shall, upon conviction thereof in the municipal court of the city of Portland, be punishable by a fine of not less than $50.00, nor more than $200.00 or by imprisonment in the city jail for not less than 10 days, nor more than 90 days, or by both such fine and imprisonment: Provided that each day after the expiration of the said period of 10 days, during which the said person or officer or agent, as the case may be, shall so fail, neglect or refuse to make and file such statement shall be considered a separate and distinct offense.

"Sec. 5. This ordinance shall take effect and be in force from and after its passage."

On March 9, 1912, the company filed a statement with the treasurer of the city, showing that it had received from its business within the city from June 6, 1911, to December 31st of that year, the aggregate sum of $995,826.69. The company failed to make any payment to the city and the latter then commenced this action to recover the percentage and penalty provided for by the ordinance amounting to $32,862.28. The complaint recited the ordinance and alleged the amount of the receipts from the business transacted by the company and that the defendant had failed to pay. The answer must be looked to for the remaining facts which are to be considered on this appeal.

We read in the answer that the defendant is engaged in the business of generating, distributing, and selling electric energy in the city and elsewhere in the states of Oregon and Washington. Prior to 1903 five different franchises had been granted by proper municipal authorities in 1882, 1886, 1887, 1890, and 1891, respectively, to certain corporations and persons permitting the erection and maintenance of poles and wires in the streets for the distribution and sale of electricity. The five franchises passed into the hands of the Portland General Electric Company, a private corporation, which in turn transferred its poles and wires and franchises to the defendant in 1906, and ever since that time the latter has exercised the rights, powers, and privileges conferred by the franchises, and the company has been engaged in generating electricity in and outside the city and has been distributing and selling electric energy within and also beyond the municipal limits and in Multnomah, Clackamas, and Marion counties.

A new charter was granted to the city by the legislative assembly in 1903 (Special Laws 1903, p. 3), and section 106 of that charter continues and preserves all franchises, rights, and privileges granted and in actual use. In 1903 an act was passed whereby the right of eminent domain was conferred upon companies engaged in conveying electric energy for distribution and sale, and also providing that any agreement or grant previously made by any municipal corporation of the right to build or maintain any lines of poles and wires for the purpose of conveying electricity in any incorporated city or town "is hereby confirmed." Laws 1903, p. 111; section 6247, L. O. L., amended by chapter 265, Laws of 1911. The business of the company is not confined within the corporate limits of the city, but the defendant conveys, distributes, and sells electric energy beyond the boundaries of Portland, in different parts of Multnomah, Clackamas, and Marion counties.

The board of state tax commissioners made an assessment of the property owned by the company, including real and personal property, rights of way, roadbed, cars, rolling stock, track wagons, horses, office furniture, transmission poles, wires, conduits, machinery, appliances, and all other property of a like or different kind used in carrying on the business of the defendant; in making the assessment the board took into consideration the reports, statements, and returns filed in the office of the board, the earning power of the defendant and its franchises and special franchises, although the franchises and special franchises were not directly assessed, but were only taken into consideration in determining the value of the other property; and in making the assessment the board also capitalized the net earnings of the defendant for the year 1911. The assessments were completed, and the board then certified to the county clerk of Multnomah county the value of defendant's property apportioned to that county, and the county clerk thereupon made the proper apportionment among the cities, towns, districts, road districts, ports, and other municipal taxing agencies within the county, and then the assessor made the proper entries...