City Of Winston v. Beeson

• Decision Date: 03 May 1904
• Citation: 136 N.C. 271,47 S.E. 457
• Parties: CITY OF WINSTON et al. v. BEESON et al.
• Court: North Carolina Supreme Court

47 S.E. 457

136 N.C. 271

CITY OF WINSTON et al.

v.BEESON et al.

Supreme Court of North Carolina.

May 3, 1904.

municipal corporations — license taxes— subjects—trading stamps—"gift enterprise."

1. Code, § 3800, provides that cities and towns may levy taxes for municipal purposes on all persons, privileges, and subjects within the corporate limits liable to taxation for state and county purposes. Revenue Act 1903, pp. 337, 348, c. 247, §§ 51, 76, imposes a license tax of $50 on any person or establishment offering or engaged in selling trading stamps. Winston City Charter, § 65, subsec. 11, provides that each distiller of fruits or grains, compounder of spirituous liquors, and each gift enterprise or lottery, together with each railroad company having a depot or office in the town, shall pay a license tax not exceeding $50 a year; and section 66, subsec. 13, declares that the board of aldermen shall have power to impose a license tax on any business carried on in a city, not enumerated, not exceeding $10 a year. Held that, since the city was limited by its charter in the imposition of license taxes, it was not entitled to impose a license tax of $50 on dealers in trading stamps therein, either under Code, § 3800, or Revenue Act 1903, pp. 337, 348, c. 247, §§ 51, 76.

2. Manufacturers and dealers in trading stamps sold to merchants, to be given to cash customers, and absolutely redeemable in goods offered by the trading stamp concern, without restrictions, except as to the number redeemable at any one time, were not engaged in a "gift enterprise, " within Winston City Charter, § 65, subsec. 11, authorizing the city to levy a license tax on each gift enterprise or lottery, not exceeding $50 per year.

Appeal from Superior Court, Forsyth County; W. R. Allen, Judge.

E. E. Beeson and another were charged with selling trading stamps without having first obtained a license, and from a judgment finding them not guilty the state and the city of Winston appeal. Affirmed.

The defendant the Sperry & Hutchinson Company was tried in the superior court upon appeal from the mayor of Winston, who fined it $20, for issuing and selling to merchants what are known as "trading stamps, " without obtaining a license so to do, contrary to the provisions of an ordinance of that city forbidding the sale of such stamps to merchants or manufacturers, or the use of the same by the latter, without having paid the license tax of $50 imposed by the ordinance for the privilege; and the defendant Beeson was tried for issuing and selling trading stamps as manager and agent of his codefendant, in violation of the said ordinance passed under the authority given in the charter of the city of Winston (section 65, subsec. 11), which is as follows: "Each distiller of fruits or grains, each distiller or compounder of spirituous liquors, each gift enterprise or lottery, each railroad company having a depot or office in town, a license tax of not exceeding $50 a year." It is not claimed by the state that any other special authority has been given by the Legislature, in the charter of Winston, to impose a license tax of $50 upon the defendants, except that contained in the above extract from the charter. Subsection 13 of section 66 of the charter provides "that the board of aldermen shall have the power to impose a license tax on any business carried on in the city of Winston not before enumerated herein, not to exceed ten dollars a year." Priv. Acts 1891, p. 1362, c. 307, as amended by Priv. Acts 1899, p. 206, c. 103. No special reference is made in the verdict to the charter of the city as contained in the two chapters of the acts of 1891 and 1899, above referred to, but it was admitted that the present charter is the one to be found in those two chapters; and counsel referred to the charter in the argument, and especially to the provisions of it which relate to taxation. We will therefore consider it as a part of the case. It may be that, as a section of the charter was put in evidence, we should consider the other sections without any agreement; but, however that may be, we hold that, under the circumstances, the charter as a whole is now before us.

The jury returned a special verdict as follows: "That the Sperry & Hutchinson Company is a corporation organized under the laws of the state of New Jersey, and the defendant Ernest E. Beeson is the local agent and manager thereof, located in the city of Winston, North Carolina. That the said defendant Beeson, for and on behalf of his company, located a business in the city of Winston in the following manner: That he first applied to the proper officers, and paid the license fees prescribed by the revenue act for trading stamp companies, and duly received his license for doing business in the said county and state, and then applied to the city of Winston, asking for a license, and offering to pay $10, as prescribed by the ordinances of the city for advertising businesses, whereupon the city, through its officers, declined to grant said license for less than $50. Thereupon the defendants began business in the city of Winston. That said Beeson approached a good many merchants in various businesses in the city of Winston, and entered into contracts with them to use what was known as a 'trading stamp.' That he did on the 30th day of October, 1903, enter into a contract with W. B. Hudson, which contract is hereto attached and made a part of this record, and marked 'Exhibit No. 1.' That, in carrying out said contract with said Hudson and with others, the defendants advertised in the newspapers the business of the said parties with whom it had contracted for one week, had books called 'directories' printed, and circulated throughout the town in the various homes and business establishments in the city of Winston, which books contain the names of the various merchants with whom the defendant company had contracted, and containing an explanation of the business, and having blank leaves diagramed for the par-pose of pasting thereon stamps, which said book is made a part of this record, marked 'Exhibit No. 2.' That the defendant company, in pursuance of this contract marked 'Exhibit No. 1, ' promises and agrees to advertise the business of the parties with whom it contracts in various forms and ways, and to induce persons to go to the store of the said parties with whom it contracts, and there buy goods and make demand upon the merchants for trading stamps. That the defendants sold to the said W. B. Hudson, and proposes to sell to all others, certain trading stamps, and delivered to the said Hudson one pad of trading stamps, containing 900 trading stamps, which are small stamps, about the size of a postage stamp, containing certain numbers, and the name of the Sperry & Hutchinson Company, which stamps are exact in form as those which will be found pasted on the first blank leaf of Exhibit No. 2. That these stamps are sold to the merchants for about one-half cent each, and it contracts that, on demand of customers, the merchants will give, for every ten cents worth of goods which he sells for cash to said customers, one of said stamps. That the customer gathers said stamps in this way, and when he obtains, either through his own purchases, or through the purchases of others, stamps to the number of 990, which are pasted in a book in form as hereto attached, marked 'Exhibit No. 2, ' he then goes to the storehouse of the Sperry & Hutchinson Company, which is established in the city of Winston, and managed by defendant Beeson, and there selects an article of merchandise. That said articles of merchandise consist of furniture, tableware, and other articles of virtue, which are marked as worth one book, worth two books, etc., meaning that 990 stamps aggregated and put in a book constitute one book, and entitles the holder thereof to get any article of his own selection in said store, which is valued and labeled for one book, and so on. That the Sperry & Hutchinson Company purchase their goods and merchandise in large quantities, and the managers of the various stores make requisition to the general house for goods as they are needed in the various establishments. That the said merchandise of the Sperry & Hutchinson Company are such articles as are usually found in stores of general merchandise, and those labeled 'One book' are approximately worth $4.50, those labeled Two books, ' $9.00, etc., and will compare favorably in price with the retail prices of such articles in any other establishment in the city of Winston. That the defendant, in circulating the directory, which is marked 'Exhibit No. 2, ' in order to induce persons to trade with the merchants using the trading stamps, pastes on the first blank page of said directory ten stamps, which is given by defendant company, without consideration, to the persons having the directory. That these and all other stamps issued by merchants are redeemable by the Sperry & Hutchinson Company at its store in Winston, or at any of its various stores throughout this state or the United States, as above stated. That the defendant company has done bsiness in tuhe city of Raleigh for six months, and at this time 14/16 of the stamps issued by the merchants have been presented to and redeemed by the defendant company. That no percentage is found of the number of lapsed stamps, or stamps which are not finally redeemed. That in North Carolina there are at this time storehouses of defendant company located and doing business, among others, in the cities of Raleigh, Greensboro, Durham, and High Point. That there is no time limit to the redemption of said stamps. That they are transferable by those who have them, and are bound, under the contract, to be redeemed, whenever presented in the number above set forth, to any of the various houses of the Sperry & Hutchinson Company. That the contracts of defendant company made in the city of Winston with others, as above set forth, are for a period of...