Davies v. Hot Springs

• Decision Date: 19 January 1920
• Docket Number: 118
• Citation: 217 S.W. 769,141 Ark. 521
• Parties: DAVIES v. HOT SPRINGS
• Court: Arkansas Supreme Court

217 S.W. 769

141 Ark. 521

DAVIES v. HOT SPRINGS

No. 118

Supreme Court of Arkansas

January 19, 1920

Appeal from Garland Chancery Court; J. P. Henderson, Chancellor reversed in part.

Decree reversed in part and modified and affirmed in part.

R. G Davies, for appellants.

The act as well as the ordinance of the city itself is void and unconstitutional. The statute provides an unjust and discriminatory method of classification, which renders it void and exempts from tax persons, firms, etc., who pay a tax to the city or State on gross incomes. The ordinance was not passed according to law nor published as required by law. 56 Ark. 370; 100 Id. 406; 40 Id. 105; 98 Mass 219; 36 Ind. 90; 23 Mich. 457; Dillon, Munic. Corp., § 291 (299). The council had no authority to pass the ordinance, and it is void. 31 Ark. 462; 34 Id 105-8; 27 Id. 467; 64 Id. 363. It also violates section 4 of said act and conflicts with it. 75 Ark. 458. It also violates article 2, section 18 of the Constitution. 61 Ark. 226; 61 Id. 622; 103 Id. 298; 17 R. C. L. 474; 175 Ill. 445-458; 58 Miss. 478, 559; 34 Am. Dec. 636; 90 Ark. 127. It is void as an occupation tax and is opposed to public policy. 17 R. C. L. 480; 177 U.S. 183; 33 Fla. 162; 31 Am. St. 770; 127 Ind. 109; 34 Am. Dec. 628; 23 How. 437; 17 R. C. L. 635.

The ordinance is void both as a tax and as a license. 85 Ark. 509. Taxes can not be imposed as a license. 17 R. C. L. 639. Lawyers can not be thus discriminated against or deprived of a living. 64 Mo. 639; Cooley, Const. Lim., §§ 495-521; 23 Gratt. 564; 4 Wall. 333; 101 Ark. 238. See also 88 Ark. 263; 96 Id. 199; 52 Id. 301; 93 Id. 612.

J. C. Marshall, amicus curiae.

The act is void as well as the ordinance. It exempts certain classes from the tax or license and is contradictory and discriminatory and is indefinite and uncertain in meaning. 49 L. R. A. (N. S.) 955; 57 Id. 348; 43 So. 1015; 51 L. R. A. 896-7; 16 Id. 608; 53 S.W. 882; 31 L. R. A. 522; 61 Ill.App. 374; 73 S.W. 1097; 76 N.E. 1121, etc.

J. H. Carmichael and John F. Clifford, amici curiae.

1. 46 Ark. 471 settles all the questions raised in favor of the city, because the 5th clause of section 3, act 1915, and act 94, Acts 1919, are almost identical, and the ordinance is in substantial compliance with the act, and the city authorities are in better position to make fair and equitable classification than either the court or Legislature. This case has been cited and approved in 124 Ark. 349; 70 Id. 555; 90 Id. 130; 93 Ark. 612; 37 L. R. A. (N. S.) 777.

2. As to the objection of class legislation, see 80 Ark. 333; 112 Id. 14; 52 Id. 228; 117 Id. 54; 85 Id. 512.

3. As to the referendum contention, see 45 Ark. 400; 49 Id. 376; 110 Id. 529; 67 Id. 594.

4. The ordinance is in substantial compliance with the act and such occupation or privilege tax acts have often been sustained. 31 Kan. 151; 47 Am. Rep. 486; 25 P. 232; 12 Id. 310; 86 Id. 162; 10 Id. 99; 7 Id. 625; 89 Id. 10; 53 Id. 985; 30 L. R. A. 422; 17 L. R. A. (N. S.) 898; 184 U.S. 329; 100 N.C. 525.

A. J. Murphy, for appellee.

Neither the act nor ordinance is void for any of the reasons stated by appellants. 46 Ark. 471; 49 L. R. A. (N. S.) 954; 18 L. R. A. 409; 56 Ark. 331; 37 Id. 356.

OPINION

MCCULLOCH, C. J.

Appellants are citizens of the city of Hot Springs, severally pursuing various avocations of business, trade and profession, and they instituted this action in the chancery court attacking the validity of an ordinance of said city, imposing a tax on occupations. Section 1 of the act of February 19, 1919 (General Acts 1919, page 82), which is the source of the power of a municipality to impose an occupation tax, reads as follows:

"That hereafter any city council or board of commissioners of any city of the first and second class shall have the power to enact, by a two-thirds vote of all the members elected thereto, an ordinance or ordinances requiring any person, firm, individual or corporation who shall engage in, carry on, or follow any trade, business, profession, vocation or calling within the corporate limits of such city, except such persons, firms, individuals or corporations who pay a tax to the city or State on gross incomes, to take out and procure a license therefor and pay into the city treasury before receiving same, such a sum or amount of money as may be specified by such ordinance or ordinances for such license and privilege. The city council or board of commissioners shall have the right to classify and define any trade, business, profession, vocation or calling and to fix the sum or amount any person, firm, individual or corporation shall pay for such license required for the privilege of engaging in, carrying on, or following, any trade, business, vocation or calling, based on the amount of goods, wares or merchandise carried in stock in any business, or the character and kind of trade, business, profession, vocation or calling, but no classification shall be based upon earnings or income; and shall have the full power to punish for violation of such ordinance or ordinances. Provided, no person, firm, individual or corporation shall pay a license fee or tax mentioned in this act in more than one city in this State, unless such person, firm, individual or corporation maintains a place of business in more than one city, and the license charged and collected shall be for the privilege of doing business or carrying on any trade, profession, vocation or calling in the city where such trade, business, profession, vocation or calling is situated. Provided further, that neither the above limitation as to the amount of license nor anything contained herein shall be construed as a limitation or restriction upon the power of such city to tax, license, regulate or suppress any trade, business, profession, vocation or calling in any case where power has been previously, or may hereafter be, conferred by any other laws or statutes."

The attack is on the validity of the statute itself as well as the ordinance in question passed by the municipality. It is conceded to be within the power of the legislative branch of our State Government to pass laws authorizing municipal corporations to provide by ordinances for the enforcement of a tax on occupations, including professional, trade and business avocations of all kinds. This court has expressly decided that under the Constitution now in force that power exists. Little Rock v. Prather, 46 Ark. 471; Fort Smith v. Scruggs, 70 Ark. 549, 69 S.W. 679; Laprairie v. City of Hot Springs, 124 Ark. 346, 187 S.W. 442; Pine Bluff Transfer Co. v. Nichol, 140 Ark. 320, 215 S.W. 579.

Section 5, article 16 of the Constitution expressly provides that the General Assembly shall have power to tax privileges, and in section 23 of article 2 it is provided that "the General Assembly may delegate the taxing power, with the necessary restriction, to the State's subordinate political and municipal corporations." Unlimited power of taxation is an essential attribute of sovereignty and self-imposed restrictions must be found in the organic law of the sovereign State to find justification for declaring the imposition of a particular kind of tax to be unauthorized. This principle is so well settled that it needs no citation of authority to support it.

It is claimed, however, that the statute provides an unjust and discriminatory method of classification which renders it void. In consideration of that question it must be remembered that the provision of the Constitution with respect to uniformity in taxation applies only to a property tax, and has no reference to the taxation of privileges. Fort Smith v. Scruggs, supra. The State having the power to tax privileges, it necessarily follows that it may make its own selection of the privileges to be taxed, and the omission from the list to be taxed of any number of occupations does not constitute an unlawful discrimination. Ex parte Byles, 93 Ark. 612, 126 S.W. 94. The only restriction which the law imposes on the exercise of the power is that there shall not be a discrimination between persons in like situations and pursuing the same class of occupation. Waters-Pierce Oil Co. v. Hot Springs, 85 Ark. 509, 109 S.W. 293.

It is contended that the whole statute is rendered void by the exemption from the tax of "persons, firms, individuals or corporations who pay a tax to the city or State on gross incomes." The argument is that this is an unjust exemption which constitutes a discrimination against the same class of persons or corporations who are not compelled by statute to pay a tax to the city or State on gross incomes and that this avoids the whole statute. It is not correct to say that the exemption in favor of those who pay a privilege tax on incomes to the city or State is an unjust exemption and amounts to an unlawful discrimination. This is not a property tax, but is a tax on privileges, and the exemption from its operation of one who pays for a privilege in another form, and on a different basis, does not necessarily constitute an unjust classification. It does not follow, however, that, even if the exemption were found to be void, it would affect the validity of the statute in other respects, for, if the imposition of the tax on some classes of privileges fails, this does not affect the validity of the tax on other privileges. Fort Smith v. Scruggs, supra. The striking out of an exemption could not be made to operate so as to bring under the operation of the statute privileges which the statute had exempted. Ex parte Deeds, 75 Ark. 542, 87 S.W. 1030. But the striking out of a whole class by reason of exemptions would not defeat the statute as a whole so far as it operated on other classes. In other words, because the...