Fredericksburg v. Sanitary Grocery Co.

Citation168 Va. 57
PartiesCITY OF FREDERICKSBURG v. SANITARY GROCERY CO., INC.
Decision Date11 March 1937
CourtSupreme Court of Virginia

Present, Campbell, C.J., and Hudgins, Gregory, Browning, Eggleston and Spratley, JJ.

1. LICENSES — Municipal Corporations — Chian Store Tax — Reasonableness of Classification — Case at Bar. — In the instant case plaintiff assailed the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm.

Held: That the classification was neither capricious nor arbitrary.

2. LICENSES — Municipal Corporations — Chain Store Tax — Sustained if Substantial Differences Exist between Occupations Separately Classified — Case at Bar. — In the instant case plaintiff assailed the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm.

Held: That it was the duty of the Supreme Court of Appeals to sustain the classification if there were substantial differences between the occupations separately classified, and such differences need not be great.

3. LICENSES — Classification — Illegality — Burden of Proof. — In order to render a classification for license taxation illegal, the party assailing it must show that the business discriminated against is precisely the same as that included in the class which is alleged to be favored.

4. LICENSES — Municipal Corporations — Chain Store Tax — Presumptions and Burden of Proof as to Legality of Classification — Case at Bar. — In the instant case plaintiff assailed the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm.

Held: That the burden was on plaintiff to show an illegal and capricious classification, for the tax and classification complained of stood fortified by the presumption of correctness and legality.

5. LICENSES — Municipal Corporations — Chain Store Tax — Discretion of Council as to Extent and Amount — Case at Bar. — In the instant case plaintiff attacked the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee of $250 for each store in excess of one.

Held: That the extent and amount of the taxation, whether reached by arranging in grades or degrees, or by a different process, was a matter for the discretion of the city council, in the exercise of the general power of taxation granted by the State to the city through its charter.

6. LICENSES — Municipal Corporations — Chain Store Tax — Cation of City Not Reclassification in Absence of Affirmative State ActionCase at Bar. — In the instant case plaintiff assailed the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm, and contended that the State having already classified merchants generally for the purpose of taxation and such classification being dissimilar to that adopted by the ordinance, it was not within the power of a city to classify chain stores as such for such purpose — that the city could not classify and could not reclassify.

Held: That the State having made no classification with respect to chain stores as such, the action of the city was not a reclassification.

7. LICENSES — Municipal Corporations — Chain Store Tax — Authority of City under Charter Not Exceeded — Case at Bar. — In the instant case the city, under a charter provision authorizing it to levy a license tax on any person or corporation conducting any business or profession except when prohibited by general law, adopted an ordinance impsing on every person or corporation operating two or more stores under the same general management or ownership, a license tax for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm.

Held: That the city had not exceeded its lawful authority.

8. TAXATION — Classification — Validity — Classification According to Occupation. — The taxing power of a state cannot be exercised upon persons grouped according to their complexions, but it can be exercised if they are grouped according to their occupations, for while the one mode would be discriminatory, arbitrary, capricious and illusory, the other satisfies the constitutional requirements of equality, uniformity and reasonableness.

9. LICENSES — Municipal Corporations — Chain Store Tax — Validity — Case at Bar. — In the instant case plaintiff assailed the validity of an ordinance imposing on every person or corporation operating two or more stores under the same general management, supervision or ownership, a license fee for each store in excess of one, which license fee was in addition to a tax levied on every merchant or mercantile firm.

Held: That there was reasonable ground for the classification, that it was based upon read distinction and therefore was not arbitrary or capricious, and being proper and legal possessed the requisite uniformity.

Error to a judgment of the Corporation Court of the city of Fredericksburg. Hon. Frederick W. Coleman, judge presiding. Judgment for plaintiff. Defendant assigns error.

The opinion states the case.

C. O'Conor Goolrick, for the plaintiff in error.

F. M. Chichester and A. Coulter Wells, for the defendant in error.

BROWNING, J., delivered the opinion of the court.

In this case the City of Fredericksburg complains of the action of the corporation court of that city in overruling its motion to quash the application of the Sanitary Grocery Company, Inc., for the correction of an alleged erroneous assessment of license taxation, and requiring the city to restore to the applicant taxes in the sum of $1,000, which it had theretofore collected from it on account of such taxation.

The effect of the action of the court is to nullify and void the license tax feature of the city's ordinance which was adopted by its council on December 13, 1932, and which is as follows:

"On every person, firm or corporation, opening, operating or maintaining two or more stores or mercantile establishments in this city under the same general management, supervision or ownership, the following license fees: On two stores or more, $250 for each store in excess of one.

"The license fee herein prescribed shall be paid annually and shall be in addition to the license prescribed by section 8, and by any other section of this ordinance." Section 8 of the ordinance, referred to, leview a graduated tax on "every merchant or mercantile firm," based on purchases.

It is thus seen that here is assailed the power of the city to classify and tax, as such, the comparatively modern set-up in mercantile life known as the chain store.

While this is the debut, in this court, of this question in its entirety, it does not present an untraveled or unmarked course, for other courts have gone the way, notably the Supreme Court of the United States.

The legislative body of the city in this case derives its authority to enact the ordinance complained of from its charter, the appropriate provisions being these:

Section 22 of chapter 3, after providing that, "The council shall have all the general powers vested in it by the Constitution and laws of the State," provides that it shall further have power:

"(a) To levy, assess and collect taxes, and to borrow money within the limits provided by the Constitution of Virginia and by the statute laws of the Commonwealth."

Section 32, chapter 7, of the charter, is as follows:

"In the execution of its powers and duties, the City Council may levy and collect taxes, annually, by assessment in said City on all subjects, the taxation of which by cities is not forbidden by general law, to such extent as they shall deem necessary to defray the expenses of the same, and in such manner as they shall deem expedient (in accordance with the laws of this State and the United States)."

Section 33, chapter 7, is as follows:

"The City Council may levy a tax or license on any person, firm or corporation conducting any business or profession whatsoever in this City, except when prohibited by general law, whether a license may be required therefor by the State or not, and may exceed the State license, if any be required."

The ordinance is attacked by the Sanitary Grocery Company, Inc., as "an effort to enact chain store legislation and as such has violated the rule of uniformity and has enacted a hybrid ordinance which is unreasonable, impracticable, violative of the policy of the State, destructive of rights and liberties of its citizens, discriminatory, on its face is double taxation, confiscatory and violative of constitutional and legislative grants."

The city epitomizes its position with the assertion that "there are only two real issues in this case, to-wit:

"(1). Does section 10 of the License Tax Ordinance constitute a division of plaintiff's business into its constituent elements with the levy of a separate tax on each element or incident thereof?

"(2). Is the City prohibited from classifying chain stores as such, because the Commonwealth has not adopted a similar classification?"

The city admits that it cannot subdivide an existing State classification so as to levy a separate tax on each subdivis...

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    ...within the reach of its lawful powers are matters beyond the scope of judicial inquiry." City of Fredericksburg v. Sanitary Grocery Co. , 168 Va. 57, 68, 190 S.E. 318 (1937) (citation and internal quotation marks omitted).Accordingly, we do not recite, and do not consider, International Pap......
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