Fox Bakersfield Theatre Corp. v. City of Bakersfield

• Decision Date: 06 October 1950
• Citation: 36 Cal.2d 136,222 P.2d 879
• Court: California Supreme Court
• Parties: FOX BAKERSFIELD THEATRE CORPORATION et al. v. CITY OF BAKERSFIELD. L. A. 21399.

Page 879

222 P.2d 879

36 Cal.2d 136

FOX BAKERSFIELD THEATRE CORPORATION et al. v. CITY OF BAKERSFIELD.

L. A. 21399.

Supreme Court of California, in Bank.

Oct. 6, 1950.

Rehearing Denied Nov. 2, 1950.

Borton, Petrini & Conron, James Petrini, Bakersfield, O'Melveny & Myers, Jackson W. Chance and William W. Alsup, Los Angeles, for appellants.

West, Vizzard, Howden & Baker, James Vizzard and Kelly Steele, City Attorney, Bakersfield, for respondent.

CARTER, Justice.

In an action for declaratory relief, injunction and recovery of taxes paid under protest by plaintiffs, operators of motion picture theatres, the trial court determined that a business license tax levied by defendant city and affecting them was valid. The attack on defendant's tax ordinance includes the charges of discrimination, double taxation, and defective enactment.

The city has had for many years a basic business license tax ordinance, No. 681, which levies a tax for the purpose of revenue rather than regulation. It reaches practically every kind of business conducted in the city. Detailed classifications are made of various kinds of business. In some the license fee is a flat sum and in others is graduated according to the income from the business, or on some other basis. Among those businesses are theatres taxed by section 56 (the same section also includes other things, such as amusement games). The tax on theatres is $104 per annum for 300 seats or less, and $8 for each 100 seats or fraction thereof over 300. Plaintiffs do not question the validity of that tax.

In 1946, an ordinance was adopted which imposed one cent per admission tax on theatres. That ordinance was repealed, and in 1947, an initiative ordinance was adopted, as No. 754, the one here questioned. It is a license tax ordinance for revenue requiring that a license shall be obtained 'by all persons maintaining places of or furnishing amusement or entertainment in the City. Places of amusement or entertainment shall include theatres shows, games, carnivals, spectacles, exhibitions, dances, and other performances furnished or provided at any place or by any person as to which a charge, admission fee, or other sum is required to be paid, whether wholly or partially, for the privilege of seeing, witnessing, being present at, engaging or participating in singly or with another person, or for otherwise being diverted, amused, or entertained.' The tax imposed is one cent 'for each 10 cents or fraction of 10 cents over and above the first 15 cents of the amounts charged and paid for admission to any place, including admission by season ticket or subscription; and 1 cent for each ten cents or fraction of 10 cents over and above the first 15 cents of all sums received from fees and charges after the payment of an admission fee, for the use of property, equipment or facilities within, upon or about any place of amusement or entertainment which is charged and collected by the operator of such place over or above, or as a part of the amount charged for admission to such place;

'(b) 1 cent for each 10 cents or fraction of 10 cents over and above the first 15 cents of amounts charged and received by the operator of any place of amusement, where no admission fee is charged, for the use or operation of property, equipment and/or facilities, and/or the privilege of being in or upon such place of amusement * * *.' The tax is on the privilege of conducting such places of business but shall be collected from the customer. The tax imposed is expressly made in addition to, rather than in lieu of, any other taxes. Hence it is in addition to the general business tax license ordinance No. 681 above mentioned. Where refreshments, food or services are dispensed at any roof garden, cabaret, cafe, restaurant or hotel, or the like, and there is furnished public performance, floor show, dance floor, or other amusement, then it is deemed that 20% of the amount paid by the customer is for entertainment and a tax of 1 cent on each 15 cents of such 20% is levied (see 8(c)). Billiard tables, pool tables and arcades where no admission fees are charged, are exempted from the tax. (Sec. 8(b)). Also exempted are admission fees for entertainment charged by charitable, religious and educational organizations, and those producing nonprofit symphony concert programs (sec. 9(a)); the furnishing of music alone by musicians or mechanically without an admission charge (sec. 9(c)); and, in the sale of alcoholic beveraes and such beverages as are not included in the refreshments covered by section 8(c) unless the charge therefor is included without segregation in the customer's bill.

Invoking the United States Constitution equal protection mandate, U. S. Constitution, Fourteenth Amendment, and similar guarantees under the State Constitution, such as uniformity and equality of operation of laws, see Cal.Const., art. I, sec. 11, 21; art IV, sec. 25(19, 20, 33), plaintiffs assert that the tax levied by ordinance No. 754 is discriminatory and not based upon any proper classification.

Preliminarily, it should be observed, in connection with plaintiffs' assertion that as a result of ordinance No. 754, they bear and pay a large proportion of the business license taxes levied and collected by the city and major share of the amusement business taxes, that the amount of taxes paid by them standing alone is not a ground for invalidating the tax, at least unless it reaches the confiscatory or prohibitory point or completely refutes any basis for a classification. Plainly there is discrimination in the taxes imposed by ordinance No. 754 for it does not apply to all business operated in the city. That premise also embraces the fact that plaintiffs bear a greater burden of the taxes than other businesses. The issue is one of whether the classification made by ordinance No. 754 is proper. The law is not, as plaintiffs suggest, that there is a requirement of reasonableness of amount of excise taxes levied for revenue by a municipal corporation in addition to the restrictions imposed by the uniformity and equal protection provisions of the Constitution. Assuming there is power to impose the tax (such power is not questioned here) under the charter, if it is a charter city, or under the statutes, if it is not, the only restrictions on the exercise of that power are the constitution, charter, or statutes, as the case may be, or as expressed in Rancho Santa Anita v. City of Arcadia, 20 Cal.2d 319, 322, 125 P.2d 475, 477, dealing with a non-charter city: 'The taxing power of the city and all limitations thereon are derived from the Constitution and statutes.' It follows, therefore, that short of being confiscatory or prohibitory, there is no rule of law that requires that a tax be reasonable in amount, for the power of taxation is a vital legislative function, Watchtower B & T Soc. v. County of Los Angeles, 30 Cal.2d 426, 182 P.2d 178 and there can be no basis for a court to invalidate an exercise of that power other than the constitutions, state or federal. It has been so held. See Fox v. Standard Oil, 294 U.S. 87, 55 S.Ct. 333, 79 L.Ed. 780; Patton v. Brady, 184 U.S. 608, 22 S.Ct. 493, 46 L.Ed. 713; F. Couthoui, Inc. v. U. S., 54 F.2d 158, 73 Ct.Cl. 363, certiorari denied 285 U.S. 548, 52 S.Ct. 396, 76 L.Ed. 939; Alexander Theater Ticket Office v. U. S., 2 Cir., 23 F.2d 44; Cooley on Taxation (4th Ed.) sec. 72, p. 181; Sunset Nut Shelling Co. v. Johnson, 49 Cal.App.2d 354, 357, 121 P.2d 849; City of Cresent City v. Moran, 25 Cal.App.2d 133, 136, 77 P.2d 281; Roth Drug, Inc., v. Johnson, 13 Cal.App.2d 720, 57 P.2d 1022.

Correctly interpreted, cases such as Hansen v. Town of Antioch, 18 Cal.2d 110, 114 P.2d 329, and the cases there cited, involving a different license tax for itinerant peddlers than that for persons with a fixed place of business, are not to the contrary. In the Hansen case, the court stated that a distinction may be drawn between such merchants, and that the rate of the tax must be reasonable, but what is meant is, that such tax must not be unconstitutionally prohibitory, confiscatory, or discriminatory, and it cannot be upheld under the taxing power, when it is, in reality, merely an exercise of the police power to exclude such peddlers. That is to say, if the constitution forbids the prohibition of such merchants, then that result cannot be achieved indirectly by imposing a destructive tax upon them.

Plaintiff's contention that a double tax has been laid upon them should be first disposed of. As seen from the ordinance, they pay the tax that is levied on all businesses and, in addition, that levied by ordinance No. 754. It is conceded that both taxes are excise rather than property taxes. Taxation, other than of property, upon the same activity or incident for the same purpose by the same taxing agency, more than once in the same period, sometimes called double taxation, standing alone, is not forbidden by the constitutions, state or federal. Ingels v. Riley, 5 Cal.2d 154, 53 P.2d 939, 103 A.L.R. 1; see, Douglas Aircraft Co. v. Johnson, 13 Cal.2d 545, 90 P.2d 572; Flynn v. City and County of S. F., 18 Cal.2d 210, 115 P.2d 3; Illinois C. R. Co. v. State of Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670; Baker v. Druesedow, 263 U.S. 137, 44 S.Ct. 40, 68 L.Ed. 212. It is a factor in determining whether the tax is invalidly discriminatory when it is levied upon some activities but not others, or it may pose a question of substantive due process if its impsition assumes confiscatory or prohibitory characteristics.

Section 102 of the Revenue & Taxation Code, formerly Pol. Code, sec. 3607, states that nothing in that 'division' shall be construed to permit double taxation but that 'division' deals solely with property taxes. Our constitution provides that 'all property' in the state except as otherwise provided 'shall be taxed in proportion to its value'. Cal.Const., art. XIII, sec. 1. And under that provision...