Commonwealth for Use and Ben. of City of Wilmore v. McCray

• Decision Date: 23 June 1933
• Citation: 250 Ky. 182,61 S.W.2d 1043
• Parties: COMMONWEALTH for Use and Benefit of CITY OF WILMORE v. McCRAY.
• Court: Kentucky Court of Appeals

61 S.W.2d 1043

250 Ky. 182

COMMONWEALTH for Use and Benefit of CITY OF WILMORE v. McCRAY.

Court of Appeals of Kentucky

June 23, 1933

Appeal from Circuit Court, Jessamine County.

Proceeding by the Commonwealth, for use and benefit of the City of Wilmore, against C. T. McCray. From a judgment dismissing plaintiff's warrant, plaintiff appeals for a certification of the law.

Judgment reversed, and law certified.

Bailey P. Wootton, Atty. Gen., and W. J. Baxter, Com. Atty., and R J. Denny, both of Nicholasville, for appellant.

John S Deering, of Nicholasville, for appellee.

REES Chief Justice.

Wilmore a town of the fifth class, enacted a license tax ordinance by subsection 39 of which it was provided that each person, firm, or corporation engaged in selling cigarettes, or who at any time offers same for sale, shall pay an annual license tax of $100. This ordinance was enacted under the authority conferred upon cities of the fifth class by section 3637-7 of Carroll's Kentucky Statutes. A warrant was issued against the appellee, who is engaged in the business of selling cigarettes, charging him with a violation of the ordinance, in that he failed to procure a license as provided therein. After being tried and fined in the police court, he appealed to the circuit court, and his demurrer to the warrant was sustained by the circuit judge on the ground that the ordinance under which the warrant was issued was void because same was unreasonable and prohibitive. From the judgment dismissing the warrant, this appeal is prosecuted for a certification of the law.

It is agreed that the appellee cannot profit by the sale of cigarettes if the ordinance is held to be valid and he is compelled to pay the annual license fee of $100 necessary to his right to engage in that occupation. The sole question presented on this appeal is whether the town of Wilmore can impose a license fee on the sale of cigarettes so large as to amount in effect to a prohibition of that business.

Generally, it may be said that the reasonableness of a license fee imposed as a tax is a question for the taxing power, and the courts will not interfere with its discretion, unless the tax amounts to a prohibition of a legitimate business. Fiscal Court of Owen County v. F. & A. Fox Company, 132 Ky. 738, 117 S.W. 296, 21 L.R.A. (N. S.) 83; City of Louisville v. Pooley, 136 Ky. 286, 124 S.W. 315, 25 L.R.A. (N. S.) 582; Sperry & Hutchinson Company v. Owensboro, 151 Ky. 389, 151 S.W. 932, Ann.Cas. 1915A, 373; Tandy & Farleigh Tobacco Company v. City of Hopkinsville, 174 Ky. 189, 192 S.W. 46; Sallsbury v. Equitable Purchasing Company, 177 Ky. 348, 197 S.W. 813, L.R.A. 1918A, 1114. Under this rule the amount of tax which may be imposed upon the right to engage in an ordinary, useful, and harmless business must be reasonable, and the authority of a municipal corporation to impose shall not amount to a prohibition of such business or occupation. However, the rule has no application to a business or occupation which is injurious or offensive to the public. As such an occupation may be prohibited altogether or be allowed on such terms as the lawmaking body sees fit to impose, it follows as a natural sequence that the limitations imposed on the authority to tax a business not harmful to the public do not apply. Thus, having the power to prohibit altogether a business of the former class, such a prohibition may be accomplished indirectly under the police power by imposing a license fee so high as to prohibit its being carried on except at a financial loss; thus taxing it out of existence. Bradford v. Jones, 142 Ky. 820, 135 S.W. 290, 291; Arms v. Town of Vine Grove, 203 Ky. 213, 262 S.W. 11, and cases cited therein. Also see Cooley on Taxation, vol. 4, §§ 1796 and 1798; and 37 C.J. § 42, p. 192.

The question to be determined is thus narrowed down to whether or not the sale of cigarettes comes within that class which allows the exaction of a license fee imposed under the police power so large as to amount to a prohibition of the business. In brief, it may be said that a police regulation presupposes a condition which, unless restricted, guarded, and controlled, will operate to the public disadvantage. The courts have held without exception that the state in the exercise of the police power may license, tax, and regulate the sale of cigarettes, and may go so far as to prohibit their sale altogether. In Gundling v. Chicago, 176 Ill. 340, 52 N.E. 44, 48 L.R.A. 230, it was held that an ordinance regulating the sale of tobacco in one of its forms, that is, cigarettes, was a health and welfare measure within the exercise of the police power. This case was affirmed by the Supreme Court in 177 U.S. 183, 20 S.Ct. 633, 44 L.Ed. 725.

In State v. Nossaman, 107 Kan. 715, 193 P. 347, 348, 20 A.L.R. 921, the court said: "For a number of years there has been a well-settled opinion that the use of cigarettes especially by persons of immature years was harmful, and the courts have recognized that they were deleterious in their effects. Their sale and use have been regulated and prohibited by legislative bodies, and these measures have been upheld as a proper exercise of the police power."

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