Great Atlantic & Pacific Tea Co. v. City of Spartanburg

• Decision Date: 20 July 1933
• Docket Number: 13673.
• Citation: 170 S.E. 273,170 S.C. 262
• Parties: GREAT ATLANTIC & PACIFIC TEA CO. v. CITY OF SPARTANBURG. SOUTHERN GROCERY STORES, Inc., v. SAME.
• Court: South Carolina Supreme Court

170 S.E. 273

170 S.C. 262

GREAT ATLANTIC & PACIFIC TEA CO. v. CITY OF SPARTANBURG.

SOUTHERN GROCERY STORES, Inc., v. SAME.

No. 13673.

Supreme Court of South Carolina

July 20, 1933

Appeal from Common Pleas Circuit Court of Spartanburg County; T. S Sease, Judge.

Action by the Great Atlantic & Pacific Tea Company and by the Southern Grocery Stores, Inc., against the City of Spartanburg. From an order overruling demurrers of defendant defendant appeals.

Reversed.

The ordinance directed to be reported follows:

MEAT MARKETS--

Meat markets or butcher shops, for each place of business selling from

refrigerator counter at retail only, of $3,000 gross sales or less,

per annum $25.00

For each additional $1,000 or fractional part thereof .................. 5.00

Meat markets or butcher shops selling from refrigerator, at retail

only, of $5,000 gross sales or less, per annum ....................... 50.00

For each additional $1,000 or fractional part thereof .................. 5.00

MERCHANTS--

Merchants retail, operating or maintaining one store or place of

business, except such as are specifically taxed by this ordinance,

for which a special license shall be collected, as follows:

On gross sales of $5,000 or less, per annum ............................ 7.50

For each additional $1,000 of gross sales, or fractional part thereof .. 1.50

Merchants, retail, operating or maintaining two stores or places of

business, under the same general management, supervision or

ownership, except such as are specifically taxed by this ordinance,

for which a special license shall be collected, for the additional

store or place of business, in excess of one, in addition to the tax

imposed on one store as above specified, as follows:

On gross sales of $5,000 or less, per annum ............................ 15.00

For each additional $1,000 of gross sales, or fractional part thereof .. 3.00

Merchants, retail, operating or maintaining three stores or places of

business, under the same general management, supervision or

ownership, except such as are specifically taxed by this ordinance,

for which a special license shall be collected, for the additional

store or place of business, in excess of two, in addition to the tax

imposed on two stores as above specified, as follows:

On gross sales of $5,000 or less, per annum ............................ 30.00

For each additional $1,000 of gross sales or fractional part thereof ... 5.00

Merchants, retail, operating or maintaining four stores or places of

business, under the same general management, supervision or

ownership, except such as are specifically taxed by this ordinance,

for which a special license shall be collected, for the additional

store or place of business, in excess of three, in addition to the

tax imposed on three stores as above specified, as follows:

On gross sales of $5,000 or less, per annum ............................ 60.00

For each additional $1,000 of gross sales or fractional part thereof ... 5.00

Merchants, retail, operating or maintaining five stores or places of

business, under the same general management, supervision or

ownership, except such as are specifically taxed by this ordinance,

for which a special license shall be collected, for the additional

store or place of business, in excess of four, in addition to the

tax imposed on four stores as above specified, as follows:

On gross sales of $5,000 or less, per annum ............................ 90.00

For each additional $1,000 of gross sales or fractional part thereof ... 5.00

Merchants, retail, operating or maintaining more than five stores or

places of business, under the same general management, supervision

or ownership, except such as are specifically taxed by this

ordinance, for which a special license shall be collected, for each

additional store or place of business, in excess of five, in

addition to the tax imposed on five stores as above specified, as

follows:

On gross sales of $5,000 or less, per annum ............................ 100.00

For each additional $1,000 of gross sales or fractional part thereof ... 5.00

Merchants, wholesale, for each store or place of business, except such

as are specifically taxed by this ordinance, for which a special

license shall be collected, as follows:

On gross sales of $25,000 or less, per annum ........................... 25.00

For each additional $1,000 of gross sales or fractional part thereof ... .50 The one-year period for computing the total annual gross sales to determine the basis for ascertaining the amount of tax due shall be from October 20th to the following October 19th, both dates inclusive. Both cash and credit sales shall be counted in computing the total annual gross sales.

Lyles & Daniel, of Spartanburg, for appellant.

Nicholls, Wyche & Russell and Perrin & Tinsley, all of Spartanburg, and C. W. Tillett, of Charlotte, N. C., for respondent.

BLEASE Chief Justice.

Each of the respondents operates a group of retail grocery stores in the city of Spartanburg; the first operating six stores and the second seven. Each paid the business license tax imposed by a certain ordinance of the city under protest, and within the statutory time brought suit to recover the amount paid, on the ground of the alleged invalidity of those sections of the ordinance under which they were taxed.

The demurrers of the city of Spartanburg to the complaints were overruled by orders of Circuit Judge Sease, and the appeals are from those orders.

Since the questions raised in both cases are identical, the parties have agreed that the decision in the first case, that of the Great Atlantic & Pacific Tea Company, respondent, against the City of Spartanburg. appellant, shall also be determinative of the other case.

The exceptions of the appellant are three in number, and the respondent proposed three additional grounds for sustaining the order of the circuit judge, but all the counsel agree in their printed briefs that there is only one point in the case, and that is whether the ordinance, which is challenged, was within the authority granted by the state to municipalities to impose license taxes embodied in section 7433 of the Code.

So much of the ordinance as is questioned in this appeal, set out in the complaint, should be reported. It classifies meat markets into two classes, and merchants into seven classes, which may be briefly designated as follows: Meat markets: (1) Operating from refrigerator counter; and (2) operating from refrigerator. Merchants: (1) Retail merchants operating one store; (2) retail merchants operating two stores; (3) retail merchants operating three stores; (4) retail merchants operating four stores; (5) retail merchants operating five stores; (6) retail merchants operating more than five stores; and (7) wholesale merchants.

The ordinance imposes a different tax upon each classification, and the license is graduated in accordance with the amount of gross business done.

The city of Spartanburg contends that it has the authority to classify businesses for the purpose of imposing license taxes, and, so long as the ordinance makes a proper classification--that is, a classification which has a reasonable basis--and the license taxes are graduated on each class according to the gross income of the business taxed, such taxes are within the proper exercise of the authority granted to municipal corporations under section 7433.

The respondent contends that the license taxes imposed herein are graduated, not only according to the gross income of the business taxed, but are graduated also upon the number of stores operated as a business, and with this view the trial court agreed.

As this court views the question presented, it is one of importance to the municipalities of the state, and, reduced to its last analysis, is: Has a municipality, vested with the powers contained in section 7433 of the Code, the authority to make distinctions and classifications in imposing license taxes?

The respondent, if we understand its position correctly, does not question the power of the state to place "chain stores," as they are commonly called, into a different classification from that of an individual store for the purposes of taxation. It admits that the State has such power, which it can confer upon municipal corporations if it wills to do so.

But if this power in the state is not conceded by the respondent, it is well settled by the decisions of the United States Supreme Court in what are referred to as "the...