City of Seattle v. State, 35885
| Decision Date | 07 December 1961 |
| Docket Number | No. 35885,35885 |
| Citation | 367 P.2d 123,59 Wn.2d 150 |
| Court | Washington Supreme Court |
| Parties | CITY OF SEATTLE, a Municipal Corporation, Respondent, v. STATE of Washington, Appellant. |
John J. O'Connell Atty. Gen., Henry W. Wager, Asst. Atty. Gen., for appellant.
A. C. Van Soelen, Corp. Counsel, Jerry F. King, Assistant, Seattle, for respondent.
This is an appeal by the defendant (appellant), state of Washington, from a judgment entered by the Superior Court for Thurston County, which provided that certain excise taxes assessed against and paid by the plaintiff (respondent), city of Seattle, be refunded.
The plaintiff paid excise taxes assessed, as measured against certain revenue of the Seattle Water Department, under the public utility tax, RCW chapter 82.16, and imposed upon certain activities of the Seattle Park Department under RCW chapter 82.04, the business and occupation tax. These taxes were paid under protest, and the plaintiff petitioned the Tax Commission of the State of Washington for a refund. The petition was denied and, upon appeal by the plaintiff to the Superior Court for Thurston County, the trial court held that the revenue of the water department, in question, was not part of its 'gross operating revenue' against which the tax was to be measured and that the particular activities of the park department were not taxable under the business and occupation tax. Judgment was entered for the plaintiff. This appeal followed.
The issue which relates to the taxes assessed, as measured against the water department revenue, may be disposed of summarily. Both parties have agreed, and we hold, that this part of the action is controlled by our recent decision in King County Water Dist. No. 68 v. Tax Commission, 158 Wash. Dec. 275, 362 P.2d 244, 245 (1961), which involved facts almost identical to those present in the instant case with relation to the assessment under the public utility tax. We there held that revenue received by a water district from prospective customers as reimbursement for construction and installation of facilities for serving such prospective customers, did not constitute consideration for delivery of water by the district and, therefore, did not constitute part of 'gross operating revenue' within the meaning of the section defining that phrase. RCW 82.16.010(12). The judgment of the trial court, as it relates to this issue, was correct.
The business and occupation tax was imposed upon the following activities of the Seattle Park Department: (a) Towel and suit rentals and property checking services at bathing beaches and at an indoor pool; (b) pony rides for children at a recreation park; (c) space rental for mobile concession vehicles stationed on park department property; and (d) use of field houses by private groups. The tax was measured against the amount of the charges, fees and rental prices accruing from the above services and activities, which amount is designated by the defendant as 'gross income' within the meaning of the statute.
At the trial, the plaintiff offered proof that the park department operates at a loss in any given year and, specifically, that each of the above activities is conducted at a loss in any given year. The defendant rested its case without submitting any proof.
In holding that the amount paid for the taxes should be refunded, the trial court found that the fees and rental prices charged by the park department for the above services were imposed solely for the purpose of defraying part of the cost of the services and that the activities are not engaged in for the financial 'gain, benefit, or advantage of the taxpayer or of any other person or class, directly or indirectly.' The trial court reasoned that the purpose to obtain an intangible, nonmonetary benefit, by engaging in these activities, is not the sort of purpose or 'object' which gives rise to a 'business' activitty within the meaning of the statute.
The section of the statute which is most pertinent to the issues in the case is the one which defines the term 'business.' RCW 82.04.140 provides:
"Business' includes all activities engaged in with the object of gain, benefit, or advantage to the taxpayer or to another person or class, directly or indirectly.'
As a municipal corporation is a taxable 'person' under RCW 82.04.030, the above activities...
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