Gutknecht v. City of Sausalito

• Decision Date: 19 November 1974
• Citation: 43 Cal.App.3d 269,117 Cal.Rptr. 782
• Court: California Court of Appeals Court of Appeals
• Parties: Harold GUTKNECHT, an Individual dba Swensen's Ice Cream Shoppe, Plaintiff, Appellant and Respondent, v. CITY OF SAUSALITO, a municipal corporation, Defendant, Respondent and Appellant. SALT'S OF SAUSALITO, LIMITED, a Delaware corporation, dba H. Salt, Esq. Fish& Chips Shop, Plaintiff, Appellant and Respondent, v. CITY OF SAUSALITO, a municipal corporation, Plaintiff, Respondent and Appellant. Civ. 32394.

Page 782

117 Cal.Rptr. 782

43 Cal.App.3d 269

Harold GUTKNECHT, an Individual dba Swensen's Ice Cream Shoppe, Plaintiff, Appellant and Respondent, v. CITY OF SAUSALITO, a municipal corporation, Defendant, Respondent and Appellant.

SALT'S OF SAUSALITO, LIMITED, a Delaware corporation, dba H. Salt, Esq. Fish& Chips Shop, Plaintiff, Appellant and Respondent, v. CITY OF SAUSALITO, a municipal corporation, Plaintiff, Respondent and Appellant.

Civ. 32394.

Court of Appeal, First District, Division 2, California.

Nov. 19, 1974.

Edgar B. Washburn, Landels, Ripley & Diamond, San Francisco, for Gutknecht and Salt's of Sausalito.

Bagshaw, Martinelli, Corrigan & Jordan, San Rafael, for City of Sausalito.

TAYLOR, Presiding Justice.

These cross-appeals arise from an action by plaintiffs, food take-out businesses, ¹ challenging the validity of the City of Sausalito's ² business license ordinance and seeking refund of the license taxes paid. The trial court upheld the ordinance and denied the refunds, except for that portion resulting from a retroactive application. The Merchants contend that the ordinance is unconstitutional for vagueness and denial of equal protection, and is merely a subterfuge for eliminating them from the City. The City contends that the retroactive aspect of the tax was proper. We conclude that the ordinance is constitutional, and that the retroactivity of the tax was properly limited to the then current tax year.

The City of Sausalito adopted Ordinance No. 716 on August 6, 1968, providing for the licensing of various businesses within the City, and requiring the payment of a license tax prior to issuance of the business license. Although some businesses were charged a flat rate license tax, under section 23 of the ordinance most businesses were required to pay a $25 annual registration fee plus a percentage of gross receipts. The ordinance contained five separate business classifications, and the percentage of gross receipts to be paid by a business establishment as a license tax depended upon its classification. For gross receipts under $500,000, per year, the percentage charged ranged from $.125 per $1,000 gross revenue in Class 'E' to $2.50 per $1,000 gross revenue in Class 'D.' Among the elements considered in determining the tax rates were business profitability, volume and anticipated revenue, and in the case of Class 'D,' the amount of litter created by the take-out food establishments.

On August 4, 1970, the City adopted Ordinance No. 764, amending the basic business license tax ordinance to increase the tax on take-out food establishments from $2.50 to $52.50 per $1,000 of gross receipts. ³ This increase was intended by the City to recover the portion of the cost of litter removal attributable to take-out food establishments. The ordinance provided that the increase should apply retroactively to April 1, 1970. The Merchants subsequently initiated the present action challenging the validity of Ordinance No. 764.

The Merchants' first contention is that the term 'take-out food' is too vague and ambiguous to be valid for taxing purposes. ⁴

In a leading case dealing with the concept of vagueness or ambiguity, the United States Supreme Court stated that '. . . a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law.' (Connally v. General Const. Co. (1926) 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322.) Civil statutes as well as criminal statutes must be sufficiently clear to provide a standard against which conduct can be uniformly judged by courts and administrative agencies. (Morrison v. State Board of Education, 1 Cal.3d 214, 231, 82 Cal.Rptr. 175, 461 P.2d 375.)

Admittedly, if doubt exists as to the construction of a taxing statute, the doubt should be resolved in favor of the taxpayer (Hassett v. Welch (1938) 303 U.S. 303, 314, 58 S.Ct. 559, 82 L.Ed. 858).

In Connally, supra, 269 U.S. at 391--392, 46 S.Ct. at 127--128, the United States Supreme Court stated that '(t)he question whether given legislative enactments have been thus wanting in certainty has frequently been before this court. In some of the cases the statutes involved were upheld; in others, declared invalid. The precise point of differentiation in some instances is not easy of statement. But it will be enough for present purposes to say generally that the decisions of the court, upholding statutes as sufficiently certain, rested upon the conclusion that they employed words or phrases having a technical or other special meaning, Well enough known to enable those within their reach to correctly apply them (citations), or a well-settled common law meaning, notwithstanding an element of degree in the definition as to which estimates might differ (citations), or, as broadly stated by Mr. Chief Justice White in United States v. Cohen Grocery Co., 255 U.S. 81, 92, 41 S.Ct. 298, 301, (65 L.Ed. 516), 'that, for the reasons found to result Either from the text of the statutes involved or the subjects with which they dealt, a standard of some sort was afforded. " (Emphasis added.)

We find appropriate standards in both the test of the ordinance and the common, everday understanding of the term 'take-out food.'

Ordinance No. 716, as amended by Ordinance No. 764, defines 'take-out food' to be all food prepared or served for immediate consumption off the premises. Included in this definition are three factors which must be weighed in the determination of whether the food is sold for immediate consumption. These are:

1) manner of service of the food or beverage;

2) the packaging provided;

3) the condition of the food or beverage.

On examination of Mrs. Wilma S. Young, Deputy City Clerk in charge of administering the business license tax, the Merchants posed a series of hypothetical questions which generally focused on specific factors, rather than a combination of the three. This approach attempted to fragment the concept of 'for immediate consumption off the premises' into a hard test which could be applied in all cases.

The requirement for certainty is not intended to demand that statutes be subject to absolute 'yes-no' or 'on-off' precision. Reasonable certainty is all that is required (People v. Victor, 62 Cal.2d 280, 300, 42 Cal.Rptr. 199, 398 P.2d 391). 'It is not required that a statute, to be valid, have that degree of exactness which inheres in a mathematical theorem. It is not necessary that a statute furnish detailed plans and specifications of the acts or conduct prohibited. The requirement of reasonable certainty does not preclude the use of ordinary terms to express ideas which find adequate interpretation in common usage and understanding.' (Smith v. Peterson, 131 Cal.App.2d 241, 246, 280 P.2d 522, 525.)

A certain amount of discretion must be exercised by the City administration in determining whether a food product is sold for immediate consumption off the premises. This, however, does not render the ordinance invalid. (Cf. Henry's Restaurants of Pomona, Inc. v. State Board of Equalization, 30 Cal.App.3d 1009, 1020, 106 Cal.Rptr. 867). We agree with the City that when the record is read in its entirety, there is sufficient evidence to conclude that the three factors, as set forth in Ordinance No. 716, provide a reasonably certain standard by which to judge whether food is 'take-out.'

We further note that a statute or an ordinance can be sufficiently certain if it employs words of long usage (Lorenson v. Superior Court, 35 Cal.2d 49, 60, 216 P.2d 859) or if the subject matter itself affords some standard (Connally v. General Const. Co., supra). While the concept of 'take-out food' or 'fast food' may be a relative newcomer to the American scene, we may take judicial notice (Evid.Code, §§ 452(g), 459) of the fact that it is now a wide-spread all-pervasive concept. The term 'take-out food' is in common usage, and because of its reference to a particular method or type of food service, has acquired a common understanding. This understanding, along with the basic subject matter to which it refers, lend themselves to a reasonable and practical construction of Ordinance No. 716.

We find further support for this conclusion in the case of Henry's Restaurants of Pomona, Inc. v. State Board of Equalization, 30 Cal.App.3d 1009, 106 Cal.Rptr. 867, in which the plaintiff challenged the constitutionality of Revenue and Taxation Code section 6359. Section 6359 generally exempts 'food products' for human consumption from taxation, but excludes from the exemption the following: '. . . (c) when the food products are ordinarily sold for immediate consumption on or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the location, even though such products are sold on a 'take out' or 'to go' order and are actually packaged or wrapped and taken from the premises of the retailer. . . .'

While the court was not called upon to rule on the certainty of the term 'take-out food,' it is used by the court throughout the opinion. Reference is made to 'take-out' customers, 'take-out' sales, and 'take-out' food. If the term is inherently ambiguous, it is doubtful that the court would have used it with such facility. We likewise have no trouble with the term and regard it as sufficiently clear and unambiguous. We further note that the court specifically had no problem with the term 'immediate consumption,' which is also a key term in the instant case.

As was stated in Henry's Restaurants, supra, 'The section appears reasonably to facilitate the efficient collection of tax . . ..

'(The City) . . . was not required to be totally omniscient in writing a statute which would meet all claims of inequality, particularly in such a rapidly evolving field as food purveying.' (Supra, at...