Fleur de Lis Motor Inns, Inc. v. Bair, No. 64747

• Court: United States State Supreme Court of Iowa
• Writing for the Court: UHLENHOPP
• Citation: 301 N.W.2d 685
• Parties: FLEUR de LIS MOTOR INNS, INC., d/b/a Des Moines Hilton Inn, Everett R. Scott and Kenneth K. Fillenwarth, d/b/a Fillenwarth Beach, and Iowa Automotive Wholesaler's Association, Appellants, v. Gerald D. BAIR, Director of Revenue of the State of Iowa, City of Des Moines, Iowa, and City of Arnolds Park, Iowa, Appellees, and Polk County, Iowa, Intervenor.
• Decision Date: 18 February 1981
• Docket Number: No. 64747

Page 685

301 N.W.2d 685 FLEUR de LIS MOTOR INNS, INC., d/b/a Des Moines Hilton Inn, Everett R. Scott and Kenneth K. Fillenwarth, d/b/a Fillenwarth Beach, and Iowa Automotive Wholesaler's Association, Appellants,
v.
Gerald D. BAIR, Director of Revenue of the State of Iowa, City of Des Moines, Iowa, and City of Arnolds Park, Iowa, Appellees,
and Polk County, Iowa, Intervenor. No. 64747. Supreme Court of Iowa. Feb. 18, 1981.

Richard C. Turner, Des Moines, for appellants.

Thomas J. Miller, Atty. Gen., Harry M. Griger, Sp. Asst. Atty. Gen., and Gerald A. Kuehn, Asst. Atty. Gen., for appellee Bair.

M. A. Iverson and R. Michael Hayes, Des Moines City Sols., for appellee City of Des Moines.

W. M. Cornwall, Arnolds Park City Atty., for appellee City of Arnolds Park.

Dan L. Johnston, Polk County Atty., and E. LaVon French, Asst. Polk County Atty., for intervenor Polk County.

Nolden Gentry, Des Moines, for amicus curiae Greater Des Moines Chamber of Commerce.

Roger J. Hudson, Des Moines, for amicus curiae Greater Des Moines Hotel & Motel Association.

Considered by LeGRAND, P. J., and UHLENHOPP, HARRIS, McCORMICK, and ALLBEE, JJ.

UHLENHOPP, Justice.

In this appeal we pass upon the validity of and construe the Iowa local option hotel-motel tax statute. We are in agreement with the trial court's findings and conclusions and therefore consider only the essential

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issues. We use the term municipalities in the sense of both cities and counties.

In 1978 the General Assembly enacted a statute allowing municipalities to impose hotel-motel taxes at their option. The Cities of Des Moines and Arnolds Park adopted such ordinances and the Polk County Board of Supervisors adopted such a resolution. The affected voters in each instance approved the measure. Subsequent to that approval, the General Assembly twice amended the statute.

The portion of the statute of primary importance reads as follows in its amended form. It authorizes municipalities to impose a tax

upon the gross receipts from the renting of any and all [ADDED: sleeping] rooms, apartments, or sleeping quarters in any hotel, motel, inn, public lodging house, rooming house, or tourist court, or in any place where sleeping accommodations are furnished to transient guests for rent, whether with or without meals except the gross receipts from the renting of sleeping rooms in dormitories and in memorial unions at all [ADDED: universities and colleges located in the] state of Iowa [DELLETED: universities and colleges].... "Renting" and "rent" include any kind of direct or indirect charge for such [ADDED: sleeping] rooms, apartments, sleeping quarters, or the use thereof. However, such tax shall not apply to the gross receipts from the renting of a [ADDED: sleeping] room, apartment, or sleeping quarters while rented by the same person for a period of more than thirty-one consecutive days.

§ 422A.1, The Code 1979, as amended by 1979 Sess., 68th G.A., chs. 99, 100. The amendments added the underlined words and deleted the stricken words. The effect of the amendments was to restrict the tax to sleeping rooms in the covered establishments, and to expand the exemption from state university and college dormitories and memorial unions to all those of colleges and universities in Iowa. Additional portions of the amendments clarified when and how the tax was to be imposed, changed, or repealed. Those portions dealt principally with submitting to the voters proposed increases in the tax, prohibiting repeal or reduction of the tax if outstanding obligations were payable from the tax revenues unless funds were set aside and pledged to pay the obligations, authorizing payment from hotel-motel tax revenues of bonds issued for purposes stated in the original act, requiring elections for new bond issues, and making specified bond provisions of the Code applicable to hotel-motel tax bonds.

Plaintiff hotel-motel-resort operators sought a declaratory judgment that the amended statute is unconstitutional in relation to Des Moines, Arnolds Park, and Polk County and that the Des Moines and Arnolds Park ordinances and the Polk County resolution are void. In the alternative, plaintiffs sought a writ of mandamus compelling collection of the tax upon the gross receipts from sleeping rooms in hospitals. The trial court denied plaintiffs' demands, and this appeal by plaintiffs followed.

In their appeal plaintiffs raise three issues, but two of them are determinative: (1) whether the 1979 legislative amendments to the statute nullified prior imposition of the taxes in Des Moines, Arnolds Park, and Polk County, and (2) whether sleeping rooms in hospitals are taxable under the statute.

I. Validity of existing taxes after 1979 amendments. The statutory amendments mainly clarified legislative intent in the original enactment and strengthened the original bond provisions probably to make bonds acceptable to underwriters. They did not increase or decrease the hotel-motel tax rate in any city or county or impose or terminate the tax in any city or county which had not done so itself. We have no doubt that these amendments from their effective date were intended to apply prospectively to all Iowa hotel-motel tax ordinances and resolutions, whether then existing or thereafter adopted. § 4.5, The Code; Benton County v. Wubbena, 300 N.W. 168 (Iowa 1981). The amendments did not require that then existing hotel-motel taxes be readopted, and we agree with the trial court that the General

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Assembly intended those taxes should continue in effect and be subject to the statute as amended. Cf. Board of Park Commissioners v. City of Marshalltown, 244 Iowa 884, 849, 58 N.W.2d 394, 397 (1953) (no implied repeal). The initial question is whether the General Assembly had power to impose the amendments on municipalities which had already adopted the tax. We are not dealing here with a claim by bondholders that the obligation under their bonds has been impaired. See 56 Am.Jur.2d Municipal Corporations § 100, at 157 (1971). See also §§ 4.10, 4.13, The Code.

A. The seat of the taxing power in Iowa is the General Assembly. That body could enact a compulsory hotel-motel tax throughout the state, and it could subsequently modify or repeal the tax. As stated in 71 Am.Jur.2d State and Local Taxation § 90 (1973):

The grant by the legislature of the taxing power to municipalities is subject to revocation, modification, and other legislative control. It is not a contract, and may be withdrawn by the legislature at any time. Such right of revocation or modification is subject, however, to the right of creditors of the municipality to have such power exercised for the purpose of satisfying their claims. It should be noted, in this connection, that if the legislature confers the power of taxation upon a municipal corporation, the power so delegated continues until it is recalled, and the mere failure of the legislature to exercise a part of its power cannot be construed as an impairment or diminution of that which it has lawfully delegated to a subordinate agency of taxation, for the ideas of propriety, expediency, and policy which influence all schemes of taxation may not be identical in the municipal council and the legislature of the state.

Accord, 64 C.J.S. Municipal Corporations § 1984 (1950). See also Williamson v. New Jersey, 130 U.S. 189, 199, 9 S.Ct. 453, 457, 32 L.Ed. 915, 919 (1889); Zoercher v. Agler, 202 Ind. 214, 225, 172 N.E. 186, 190 (1930); Realty Owners' Protective Alliance, Inc. v. City of New Orleans, 165 La. 159, 162, 115 So. 444, 444-45 (1927); Board of Supervisors v. Hubinger, 137 Mich. 72, 77-78, 100 N.W. 261, 263 (1904); Bryson City Bank v. Town of Bryson City, 213 N.C. 165, 167, 195 S.E. 398, 399 (1938); Wilkes-Barre Appeal, 208 Pa.Super. 424, 427, 222 A.2d 499, 501 (1966); Memphis Union Station Co. v. City of Memphis, 161 Tenn. 203, 208, 30 S.W.2d 240, 242-43 (1930); Danville Traction & Power Co. v. City of Danville, 168 Va. 430, 435, 191 S.E. 592, 594 (1937).

Based upon the general taxing authority of the General Assembly, we hold that the Assembly had power to enact the amendments and make them applicable prospectively in municipalities although those units had previously imposed the tax under the statute in its original form. The voters' imposition of the tax was subject to the power of the General Assembly to modify or repeal the tax. See Pidgeon-Thomas Iron Co. v. Garner, 495 S.W.2d 826, 829-30 (Tenn.1973). The Assembly's exercise of its power would be valid unless it cut across some particular constitutional limitation.

B. The operators claim that application of the amendments to the municipalities which had already imposed the tax, without new tax elections in those municipalities, would cut across two clauses in the Iowa Constitution: article I, section 6 ("All laws of a general nature shall have a uniform operation"), and article III, section 30 ("where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State"). They arrive at this conclusion by the following reasoning.

The municipalities which vote to impose the tax after the amendments were enacted voluntarily accept the amendments by their vote. The municipalities which voted the tax under the original act, however, never voluntarily accepted the amendments; the amendments were forced upon them. Those municipalities, the operators claim, have thus been set apart as a class, contrary to the clauses prohibiting special or discriminatory legislation.

Initially the argument has appeal, but it cannot withstand close analysis under this

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record. In deciding this constitutional issue, we do not...