Hurt v. Cooper, 12376.

Citation113 S.W.2d 929
Decision Date05 February 1938
Docket NumberNo. 12376.,12376.
PartiesHURT et al. v. COOPER et al. McCRAW et al. v. S. H. KRESS & CO. et al.
CourtCourt of Appeals of Texas

Appeal from District Court, Dallas County; Royall R. Watkins, Judge.

Suits by J. W. Cooper and others against Robert L. Hurt and others, and by S. H. Kress & Company and others against William McCraw and others, to enjoin the defendants as public officials from enforcing a legislative enactment. From a decree granting a temporary injunction, the defendants appeal.

Reversed and rendered.

Conforming to answers to certified questions 110 S.W.2d 896.

William McCraw, Atty. Gen., Scott Gaines, Earl Street and Wm. M. Brown, Assts. Atty. Gen., and Greenwood, Moody & Robertson, of Austin, for appellants.

Baker, Botts, Andrews & Wharton and Gaius G. Gannon, all of Houston, Touchstone, Wight, Gormley & Price and Burgess, Chrestman & Brundidge, all of Dallas, James W. Peavy, of Lufkin, Black & Graves, of Austin, W. H. Dannat Pell, of New York City, and William H. Clark, Jr., of Dallas, for appellees.

LOONEY, Justice.

This is an appeal by Honorable Robert L. Hurt, District Attorney of Dallas County, Honorable William McCraw, Attorney General, and Honorable George H. Sheppard, Comptroller of the State of Texas, from a decree in favor of appellees, perpetually enjoining appellants as public officials from enforcing an act of the Forty-Fourth Legislature adopted at its First Called Session (House Bill No. 18, c. 400, 3 Vernon's Ann.P.C. art. 1111d) commonly known as the Chain Store Tax Law.

On original submission, having reached a tentative decision, to the effect that the judgment of the trial court was erroneous and should be reversed and judgment here rendered for appellants, dissolving the injunction issued, and a tentative opinion having been filed, the court deemed it advisable to certify to the Supreme Court for adjudication the issues of law arising in the case. The tentative opinion follows:

Appellees own and operate stores or mercantile establishments within the meaning of section 5 of the statute, Vernon's Ann.P.C. art. 1111d § 5, and are liable for the payment of the filing and license fees prescribed by the Act for the exercise of such privilege, provided the statute is a valid enactment. The statute makes it unlawful for any person, etc., to operate any store or mercantile establishment without a license issued by the Comptroller, requiring the payment of a fillng fee of 50 cents for each store or mercantile establishment operated, stipulating in this connection that the expenses incurred by the Comptroller in administering the Act shall never exceed the amount of filing fees received. The provisions of the statute brought under review are these: "Section 5. Every person, agent, receiver, trustee, firm, corporation, association or copartnership opening, establishing, operating or maintaining one or more stores or mercantile establishments within this State, under the same general management, or ownership, shall pay the license fees hereinafter prescribed for the privilege of opening, establishing, operating or maintaining such stores or mercantile establishments. The license fee herein prescribed shall be paid annually and shall be in addition to the filing fee prescribed in Sections 2 and 4 of this Act. Provided that the terms, `store, stores, mercantile establishment or mercantile establishments,' wherever used in this act shall not include: wholesale and/or retail lumber and building material businesses engaged exclusively in the sale of lumber and building material; and/or oil and gas well supplies and equipment dealers; or any place of business engaged exclusively in the storing, selling, or distributing of petroleum products and servicing of motor vehicles; or any business now paying an occupation tax measured by gross receipts; or any place or places of business used as bona fide wholesale or retail distributing points by manufacturing concerns for distribution of products of their own manufacture only; or any place or places of business used by bona fide processors of dairy products for the exclusive sale at retail of such products. The license fees herein prescribed shall be as follows: 1. Upon one (1) store the license fee shall be One Dollar ($1); 2. Upon each additional store in excess of one (1) but not to exceed two (2), the license fee shall be Six Dollars ($6); 3. Upon each additional store in excess of two (2) but not to exceed five (5), the license fee shall be Twenty-Five Dollars ($25); 4. Upon each additional store in excess of five (5) but not to exceed ten (10) the license fee shall be Fifty Dollars ($50); 5. Upon each additional store in excess of ten (10) but not to exceed twenty (20), the license fee shall be One Hundred Fifty Dollars ($150); 6. Upon each additional store in excess of twenty (20) but not to exceed thirty-five (35), the license fee shall be Two Hundred Fifty Dollars ($250); 7. Upon each additional store in excess of thirty-five (35) but not to exceed fifty (50), the license fee shall be Five Hundred Dollars ($500); 8. Upon each additional store in excess of fifty (50), the license fee shall be Seven Hundred Fifty Dollars ($750); such fees are for the period of twelve (12) months, and upon the issuance of any license after the first day of January of any one year, there shall be collected such fractional part of the license hereinabove fixed as the remaining months in the calendar year (including the month in which such license is issued) bears to the twelve-month period."

Appellees successfully contended below, and contend here, that the statute offends a number of constitutional provisions, state and federal; the most pertinent being provisions of our State Constitution, to wit, section 3 of article 1, guaranteeing equal rights and prohibiting special privileges, section 19 of article 1, the "due course of law" provision, section 2 of article 8, requiring occupation taxes to be equal and uniform upon the same class of subjects, and also the "due process" and "equal protection" clauses of the Fourteenth Amendment to the Federal Constitution. However, our opinion is that, unless the statute violates section 2 of article 8, the equal and uniform occupation tax provision of the State Constitution, it does not violate any other constitutional provision, state or federal; but if in conflict with said section 2 of article 8, necessarily, we think it also violates the other constitutional provisions mentioned.

The pertinent part of section 2 of article 8 of the State Constitution reads: "All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax." Under this provision, we think it obvious that the Legislature may validly subdivide or classify an occupation into different subjects, taxing each separately, provided the tax levied on each subject is equal and uniform. The occupation dealt with by the statute in question, described in general terms, is that of merchandizing, classified by the act into eight different brackets or subjects; the tax imposed on each, as is apparent from a reading of the statute, being equal and uniform.

We think the primary purpose of the act was to raise revenues, although the levy is mentioned as a "license fee." The emergency clause reciting the need of additional revenue; amounts levied being far in excess of regulatory needs, and the distribution made after collection, indicate clearly that the act was intended, primarily at least, as a revenue measure. We do not think it a matter of significance that the levy is called a "license fee," as its payment gives the right to carry on the business without the performance of any other condition. See 37 C.J. p. 169, § 6; p. 171 § 7; Hoefling v. City of San Antonio, 85 Tex. 228, 20 S.W. 85, 16 L.R.A. 608; Brown v. City of Galveston, 97 Tex. 1, 75 S.W. 488; Dayton-Goose, etc., R. Co. v. United States, D.C., 287 F. 728. Other authorities to the same effect are abundant.

Being a valid tax-gathering measure, we do not think it should be condemned because incidentally it may also serve a wholesome purpose referable to the police power, thus accomplishing dual results. In Fox Film Corporation v. Trumball, D.C., 7 F.2d 715, 720, this doctrine was approved by a Three-Judge Court; they said: "It is not a valid objection that a law enacted in the exercise of the police power imposes a tax for revenue. That it fulfills two functions—. that of a police regulation and that of raising revenue—makes it none the less legal. The business is more easily regulated where a license is imposed upon those who conduct it. Gundling v. Chicago, 177 U.S. 183, 188, 20 S.Ct. 633, 635 (44 L.Ed. 725); Bradley v. Richmond, 227 U.S. 477, 480, 481, 33 S.Ct. 318, 57 L. Ed. 603."

That the chain store method tends to create a monopoly in merchandizing, we do not think there can be a doubt. The Supreme Court of Indiana, in Midwestern, etc., Corporation v. State Board, 206 Ind. 688, 187 N.E. 882, 887, 191 N.E. 153, used language in point as follows: "The operation of a chain of stores certainly tends toward monopolizing merchandizing. It may be said that size alone tends toward monopoly, and that great stores doing a large volume of business, to some extent at least, tend to monopolize business. But these are limited to one location, and at most serve only those who can conveniently travel to that location, while the chain may reach into every community and thus has greater opportunity to reach the entire consumer field." And again: "If a neighborhood store is located in a community where the volume of business is only sufficient to sustain one store, a chain may establish a store in the community and, by dividing the business with the independent store, create a condition where both are operating at a loss. The chain store's loss may be absorbed by the other...

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11 cases
  • Great Atlantic & Pacific Tea Co. v. Kentucky Tax Com'n
    • United States
    • Court of Appeals of Kentucky
    • 21 Marzo 1939
    ...... 191 N.E. 153; Penney Company v. Diefendorf, 54 Idaho. 374, 32 P.2d 784; Safeway Stores v. City of. Portland, 149 Or. 581, 42 P.2d 162; Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896, 897; Id.,. Tex.Civ.App., 113 S.W.2d 929; Great Atlantic & Pacific. Tea Company v. Spartanburg, 170 ......
  • Aransas County Appraisal Review Bd. v. Texas Gulf Shrimp Co.
    • United States
    • Court of Appeals of Texas
    • 27 Febrero 1986
    ...government. The fact that a statute discriminates in favor of a certain class does not in itself make the statute arbitrary. Hurt v. Cooper, 113 S.W.2d 929, 934 (Tex.Civ.App.--Dallas 1938, no writ). The legislature has broad powers in determining classification for purposes of taxation, and......
  • Belk Bros. Co. Of Charlotte v. Maxwell, 449.
    • United States
    • United States State Supreme Court of North Carolina
    • 1 Febrero 1939
    ...S.E. 918]discussion of the subject and analysis of the authorities see Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896; Id., Tex.Civ. App., 113 S.W.2d 929; Smith Co. v. Fitzgerald, 270 Mich. 659, 259 N.W. 352. It is stipulated in the concluding paragraph of the facts agreed that should liabili......
  • Belk Bros. Co. of Charlotte v. Maxwell
    • United States
    • United States State Supreme Court of North Carolina
    • 1 Febrero 1939
    ...... 291 U.S. 619, 54 S.Ct. 542, 545, 78 L.Ed. 1025. For full. [200 S.E. 918.] . discussion of the subject and analysis of the authorities see. Hurt v. Cooper, 130 Tex. 433, 110 S.W.2d 896; Id.,. Tex.Civ.App., 113 S.W.2d 929; Smith Co. v. Fitzgerald, 270 Mich. 659, 259 N.W. 352. . . ......
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