Eugene Theatre Co. v. City of Eugene

• Decision Date: 23 April 1952
• Citation: 194 Or. 603,243 P.2d 1060
• Parties: EUGENE THEATRE CO. et al. v. CITY OF EUGENE et al.
• Court: Oregon Supreme Court

Page 1060

243 P.2d 1060

194 Or. 603

EUGENE THEATRE CO. et al. v. CITY OF EUGENE et al.

Supreme Court of Oregon.

Argued March 26, 1952.

Decided April 23, 1952.

George Black, Jr., Portland (Black & Kendall, of Portland, and Bryson, Riddlesbarger & Bryson, of Eugene, on the brief), for appellants.

John W. Pennington, of Eugene, for respondents.

Before HAY, A.C.J., and ROSSMAN, LUSK, LATOURETTE, WARNER and TOOZE, JJ.

TOOZE, Justice.

This is a suit brought under the uniform declaratory judgments act, §§ 6-601 to 6-616, incl., O.C.L.A. by Eugene Theatre Company, a corporation, and Western Amusement Company, Inc., a corporation, as plaintiffs, against the city of Eugene, a municipal corporation, and the mayor, city recorder, city manager, city attorney, and chief of police of said city, as defendants, for the purpose of securing a judicial declaration that Ordinance No. 9117 of said city, which levies and imposes what purports to be a license tax upon theatrical and other exhibitions, shows, and public amusements, is unconstitutional and void.

The plaintiff Eugene Theatre Company is an Oregon corporation, and owns and operates two motion picture theaters in the city of Eugene, known respectively as the 'McDonald Theatre' and the 'Rex Theatre'. Plaintiff Western Amusement Company, Inc., is a New Mexico corporation duly authorized to transact business in the state of Oregon, and owns and operates three motion picture theaters in said city of Eugene, known respectively as the 'Mayflower Theatre', the 'State Theatre', and the 'Heilig Theatre'.

On March 8, 1948, the common council of the city of Eugene enacted, and on March 9, 1948, the mayor of said city approved, Ordinance No. 9117, which reads as follows:

'Ordinance No. 9117

'An Ordinance levying and imposing a license tax upon theatrical and other exhibitions, shows, and other public amusements, primarily for regulation, and also for revenue, fixing the amount, and providing for the collection thereof, to be in lieu of all other city licenses upon theatrical and other exhibitions, shows and other amusements, prescribing penalties, and repealing all ordinances and parts of ordinances in conflict herewith.

'The City of Eugene does ordain as follows:

'Section 1. It shall be unlawful for any person, firm, association or corporation, to operate within the City of Eugene, any theatrical or other exhibition, show or other public amusement without having first secured from the City Recorder of the City a license so to do.

'Section 2. The City Recorder shall prepare an application form to be subscribed by applicants, giving the applicant's name or names, residence address or addresses, place of business, the character of entertainment and the period of time which the entertainment will be shown and the admission charged.

'Section 3. If the Recorder shall find that the applicant has complied with all the other ordinances and regulations of the City, he shall thereupon, upon payment to him of $1.00, issue a license to the applicant and keep a suitable record of all of the information contained in the application. So long as the licensee shall comply with all the laws and regulations of the city and with the terms of this ordinance, he shall be permitted to operate in the City of Eugene.

'Section 4. (a) There is hereby levied and imposed upon every theatrical, and other exhibitions, show, and other public amusement operating in the City of Eugene, a license tax for regulatory and revenue purposes.

'(b) Said license tax shall be measured and determined by computing three per cent (3%) upon the total of the admission charges, less all other taxes, collected by the licensee.

'(c) Licensees showing for periods of one day up to two weeks, shall make a daily statement on the following day to the City Recorder of the admission fees collected and accompany the same with a payment of the license tax.

'(d) Licensees operating permanently within the city shall file with the Recorder on or before the last day of each month a statement showing the admission fees collected during the immediately preceding calendar month, together with a computation of the tax under this ordinance and accompany the same with payment of the license tax.

'Section 5. The tax imposed by this ordinance shall be deemed to be held in trust by the licensee until the same shall have been paid to the City Recorder as hereinafter provided.

'Section 6. Any licensees failing to promptly account and remit to the City Recorder the license charge herein provided, shall be personally liable to the City for said funds, and in addition thereto shall be deemed guilty of a violation of this ordinance.

'Section 7. Nothing herein contained shall be deemed to impair or lessen the regulatory provisions of the various ordinances of the city with respect to the amusements herein licensed. Provided, however, that no other or further license charge shall be imposed upon any licensee hereunder.

'Section 8. That all ordinances and parts of ordinances in conflict herewith, and particularly Ordinance No. 8460 and Ordinance No. 8519 and Ordinance No. 9111, are hereby repealed.

'Section 9. Any person, firm, association or corporation violating any of the provisions of the Ordinance, either of wilful or intentional omission or wilful and intentional commission, shall upon conviction thereof before the Municipal Court, be subject to a fine of not to exceed $200.00, and upon default in payment thereof may be imprisoned in the City jail for one day for each $2.00 of fine unpaid, and such conviction shall automatically suspend the license of such person, firm, association or corporation until such fine shall have been paid or served in full, and all amounts due as taxes and licenses from such person, firm, association or corporation shall have been paid in full.

'Approved by the Mayor this 9th day of March, 1948.

'[Sgd.] Earl L. McNutt

Mayor

'Passed by the Common Council this 8th day of March, 1948.

'[Sgd.] Henry F. Beistel

City Recorder'

Pursuant to the provisions of the city charter of said city, this ordinance became effective thirty days following the date of its approval.

Plaintiffs procured licenses as required by the provisions of §§ 1, 2, and 3 of the ordinance. Some additional 58 licenses were issued to others under the ordinance.

Upon the hearing before the trial court, evidence was introduced, most of which was directed to the purposes of the ordinance. The trial court held the ordinance to be constitutional and valid, and denied injunctive relief to plaintiffs. Plaintiffs appeal.

The problem before this court for solution is the constitutionality of this ordinance, and it must be solved largely, if not entirely, by considering the provisions of the ordinance in the light of such powers as are vested in the city of Eugene by its charter. The testimony of witnesses as to the motives, intents, or purposes of the common council in the adoption of this legislation is wholly immaterial. The intent and purpose of the ordinance itself is material. However, we need not concern ourselves on this appeal with rules of statutory construction in an endeavor to ascertain the intent and purpose of this enactment, because it is agreed between the parties that the primary purpose thereof is to raise revenue. Even aside from this, the ordinance on its face clearly discloses its principal purpose. It is almost wholly, if not exclusively, a revenue-producing law.

Plaintiffs in their briefs indulged in considerable argument in their endeavor to show that this ordinance is in truth a revenue-producing measure, rather than a regulatory law, but all of such argument was unnecessary. The defendants have never contended that the enactment was other than what it purports to be; viz., a regulatory and revenue-producing ordinance. This is demonstrated by the following quoted from defendants' brief:

'It is apparent from a reading of Ordinance 9117 that it is the intention of the Common Council to require a license for the privilege of conducting theatrical and other exhibitions, shows and other public amusements as a regulatory matter, and also to obtain revenue in the form of an occupation tax from persons, firms and corporations operating said amusements within the City of Eugene. It is submitted that it is obvious that this was the intention of the Common Council, as the ordinance expressly states that it is 'for regulation and also for revenue.' There has never been any contention by the Council or the defendants in this suit that the ordinance was enacted solely for the purpose of regulation. * * *

'It is elemental municipal law that the amount of a pure license fee for regulatory purposes only must bear some reasonable relationship to the cost of regulation. Defendants are cognizant of this general rule of law and agree with it.

'The defendants do not contend that this ordinance is valid solely as a regulatory ordinance. * * *' (Italics ours.)

We agree with plaintiffs that, if this enactment were merely a regulatory ordinance, it would be unenforceable and void. The amount of money involved would render it so. Defendants do not contend otherwise. It is well established that a license imposed for regulatory purposes should not materially exceed the expense of issuing the license, and of necessary inspection and regulation of the business licensed. It is obvious that the fees imposed by the instant ordinance are far in excess of what might be deemed reasonably necessary for purposes of regulation. Starker v. Scott, 183 Or. 10, 21, 190 P.2d 532; In re Fine, 124 Or. 175, 177, 264 P. 347; Ellis v. Frazier, 38 Or. 462, 63 P. 642, 53 L.R.A. 454; In re Wan Yin, D.C., 22 F. 701, 703.

The real gist of the problem now before this court for solution is to be found in plaintiffs' second proposition viz.:

'As a tax for revenue for general city purposes, the 3 per cent tax exacted by this Ordinance 9117 is beyond the power of the City council of...