Hamilton v. City and County of Denver

• Court: Colorado Supreme Court
• Writing for the Court: DAY
• Citation: Hamilton v. City and County of Denver, 490 P.2d 1289, 176 Colo. 6 (Colo. 1971)
• Decision Date: 20 September 1971
• Docket Number: No. 24769,24769
• Parties: Jerry L. HAMILTON et al., Plaintiffs and Appellees, v. The CITY AND COUNTY OF DENVER and Charles L. Temple, as Manager of Revenue of the City and County of Denver, Defendants and Appellants.

Page 1289

490 P.2d 1289

176 Colo. 6

Jerry L. HAMILTON et al., Plaintiffs and Appellees, v. The CITY AND COUNTY OF DENVER and Charles L. Temple, as Manager of Revenue of the City and County of Denver, Defendants and Appellants.

No. 24769.

Supreme Court of Colorado, En Banc.

Sept. 20, 1971.

Rehearing Denied Oct. 4, 1971.

Wormwood, Wolvington, Renner & Dosh, Laird Campbell, James R. Gilsdorf, Denver, for plaintiffs-appellees.

Max P. Zall, City Atty., W. Keith Peterson, Asst. City Atty., for defendants-appellants.

DAY, Justice.

This is an appeal by defendant-appellant City and County of Denver, hereinafter referred to as the City, from an adverse judgment of the trial court, declaring article 116(c) of the Denver Municipal Code (the Employee's Occupational Privilege Tax) to be invalid when applied to plaintiff-appellees and other members of those classes represented by them.

Plaintiffs Gill and Taylor represented in this class action the members of the General Assembly of the State of Colorado. The other plaintiff-appellees represent as a class employees of the state in the classified service, more commonly known as civil service employees. The matter was submitted to the trial court on the single question of whether the taxing ordinance could validly be enforced against the named plaintiffs and against others of the same classes. Following the submission of briefs and oral arguments, the trial court granted the plaintiffs' motion for summary judgment, concluding that as a matter of law:

'1. The Denver ordinance does not include the state of Colorado, and the city could not constitutionally tax the state of Colorado, as an employer.

2. The relationship between the plaintiffs and the state, whether characterized as a privilege or right, is a matter of statewide concern and neither local nor municipal as those terms are defined in Article XX of the Constitution of Colorado.

3. The imposition of the tax upon the plaintiffs and those similarly situated, as a condition precedent to employment by the state, is not within Denver's jurisdiction as a matter of local or municipal concern and Denver has no right to impose such a tax upon any employment relation where, as here, the state of Colorado is the employer.

4. The plaintiffs have complied with the constitutional and statutory requirements applicable to membership in the General Assembly and in the classified service, and the city has no authority to impose any additional qualification or requirement and it is immaterial that the additional requirement of paying a tax be a revenue measure.

5. The performance of services by members of the General Assembly is not within Denver in a jurisdictional sense.'

We note first that the issue of the constitutionality of the ordinance has already been resolved by this court in City and County of Denver v. Duffy Storage and Moving Co., 168 Colo. 91, 450 P.2d 339 (1969), appeal dismissed, 396 U.S. 2, 90 S.Ct. 23, 24 L.Ed.2d 1 (1969). Although concluding, in Duffy, that the so-called 'Head Tax' was not violative of the Colorado constitution, we expressly made no determination as to the validity of the tax as applied to specific individuals or classes:

'We state at the outset that what is not involved or intended to be covered in this decision are the rights, exemptions and immunities of the individual employers and employees as they may believe their respective positions to be under the definitions in and the terms of the ordinances. * * *' Duffy, supra.

The representatives of several classes of state employees, assert that while the ordinance in question may not be unconstitutional on its face, it becomes invalid when applied specifically to them as employees or elected officials of the State of Colorado. Those sections of the ordinance applicable either generally or specifically to our discussion and decision herein are as follows:

Article 166C. 2--1:

'The council of the City and County of Denver determines and declares that the performance of services within Denver by an employee for employer as herein defined, for any period of time in a calendar month for wages as herein defined, is the exercise of a taxable privilege, whether or not all or only a part of such services of a natural person are performed within Denver.'

'.4--5 In the event an employer is exempt withholding provisions herein, the employee of such exempt employer shall make and file with the manager a monthly return for the preceding clendar month in such manner and upon such forms as the manager may prescribe, commencing on the first day of February, 1969, the first of each month thereafter, and at the same time such employee shall pay to the manager the tax herein imposed for the said preceding calendar month.'

'.28 Violations: Evasion of Collection of Tax.

.28--1 It shall be a violation of this article for any taxpayer to refuse to make any return provided to be made in this article, or to make any false fraudulent return or any false statement in any return or to fail or refuse to make payment to the manager of any taxes collected or due the city, or in any manner to evade the question of payment of the tax or any part thereof imposed by this article, or for any reason to fail or refuse to pay such tax or evade the payment thereof, or to aid or abet another in any attempt to evade the payment of the tax imposed by this article. Any corporation making a false return or a return containing a false statement shall be guilty of a violation of this article.

.28--2 Penalty. Any person who shall violate any of the provisions of this article shall be guilty of a violation thereof.

.28--3 Each and every 24 hours continuous of any violation shall constitute a distinct and separate offense.'

Taking up the discussion of the legal arguments made by the parties, we incorporate therein, where appropriate, the conclusions of law made by the trial court and quoted, Supra.

I.

The City asserts that the action should have been dismissed by the court below, because the plaintiffs and the members of the classes represented by them had failed to exhaust the administrative remedies provided in the ordinance. In denying Denver's motion to dismiss on this ground, the trial court recognized that a great many employees of the state are either employed in Denver or carry on a substantial portion of their duties within the city limits, and further that the General Assembly consisted of a fairly substantial number of persons. Therefore, the court concluded, a dismissal would necessarily have resulted in a multiplicity of actions, both civil and criminal, based upon precisely the same legal issues as those presented today, and therefore not furthering the efficient administration of justice.

Colorado follows the general rule that the equitable jurisdiction of a court may be invoked to meet the ends of justice in order that a multiplicity of suits may be prevented. Baker v. Atchison, Topeka and Santa Fe Ry. Co., 106 F.2d 525 (10th Cir. 1939). A declaratory judgment is a proper proceeding when the amounts involved are substantial and there is a threat of multiplicity of suits, particularly when the plaintiffs are public employees. See McNichols v. Police Protective Ass'n, 121 Colo. 45, 215 P.2d 303 (1949). Furthermore, as pointed out by the court in its order denying the motion to dismiss, the issues involved in this case are purely questions of law, and no good purpose would be served in requiring the filing of individual claims before the manager of revenue, whose presumed expertise would not be helpful in resolving legal as distinguished from factual issues. In concluding that a dismissal would not be appropriate herein, we find ourselves in agreement with those cases cited in McKart v. United States, 395 U.S. 185, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969). In McKart, the government contended that the petitioner was precluded from raising the invalidity of his draft classification because of his failure to exhaust administrative remedies through the selective service system. In rejecting this contention the court said:

'The question of whether petitioner is entitled to exemption as a sole surviving son is, as we have seen, solely one of statutory interpretation. The resolution of that issue does not require any particular expertise on the part of the appeal board; the proper interpretation is certainly not a matter of discretion. In this sense, the issue is different from many Selective Service classification questions which do involve expertise or the exercise of discretion, both by the local boards and the appeal boards. Petitioner's failure to take his claim through all available administrative appeals only deprived the Selective Service System of the opportunity of having its appellate boards resolve a question of statutory interpretation. Since judicial review would not be significantly aided by an additional administrative decision of this sort, we cannot see any compelling reason why petitioner's failure to appeal should bar his only defense to a criminal prosecution.' McKart v. United States, Supra, 395 U.S. at 197--199, 89 S.Ct. at 1665.

We conclude that no good purpose would be accomplished by requiring the plaintiffs and those similarly situated to exhaust their administrative remedies before bringing declaratory judgment suit. Other procedural defects alleged by the defendant City and County of Denver are likewise such that we will not consider them in order that we may reach the substantive issues.

II.

We turn next to the central issue presented herein. Plaintiffs acknowledge that the Denver tax is valid when applied to the populace as a whole, Duffy, supra. In urging, however, that the decision of the trial court be upheld, plaintiffs argue that the imposition of the tax upon them unlawfully interferes with the operation of the state government by adding new and additional qualifications upon the relationship between the state and its employees, a status of...