International Trading Stamp Co. v. City of Memphis

• Decision Date: 02 April 1898
• Citation: 47 S.W. 136,101 Tenn. 181
• Parties: INTERNATIONAL TRADING-STAMP CO. et al. v. CITY OF MEMPHIS et al.
• Court: Tennessee Supreme Court

47 S.W. 136

101 Tenn. 181

INTERNATIONAL TRADING-STAMP CO. et al. v. CITY OF MEMPHIS et al.

Supreme Court of Tennessee.

April 2, 1898

Appeal from chancery court, Shelby county; Sterling Pierson, Judge.

Application of the International Trading-Stamp Company and others against the city of Memphis and the city council for an injunction. The writ was granted; a demurrer to the bill was overruled and a motion to dissolve the injunction was refused. On failure of complainants to furnish increased bond, the injunction was dissolved. From the decree overruling the demurrer, defendants appeal. Affirmed.

Carroll Chalmers & McKellar and Metcalf & Walker, for appellants.

John H Watkins, for appellees.

WILKES J.

The complainant stamp company and certain merchants doing business in Memphis filed this bill against the city council and city of Memphis seeking to enjoin the passage of an ordinance pending before the council imposing a privilege tax upon the company of $500, and upon each merchant of $250, for engaging in what is styled the "trading-stamp business," and declaring the doing of such business without license a misdemeanor upon the part of the company and the merchants. An injunction was granted, and served upon the members of the council. The defendants moved to dissolve the injunction, and also demurred to the bill on various grounds. The chancellor overruled the demurrer, and refused to dissolve the injunction. On motion, the penalty of the bond was increased to $10,000, and complainants declined to give it, and the injunction was dissolved. From the decree overruling the demurrer, the chancellor granted an appeal to the defendants, and they have assigned errors.

While the errors assigned are eight in number, only one question is presented, and that is whether a court of chancery should enjoin a city council from passing such an ordinance under its legislative power. It is conceded that a court of chancery may restrain the enforcement of an illegal or ultra vires ordinance after it is passed. Bradley v. Commissioners, 2 Humph. 428; Lynn v. Polk, 8 Lea, 127; Public Ledger Co. v. City of Memphis, 93 Tenn. 81, 23 S.W. 51; Deems v. Mayor, etc., of Baltimore (Md.) 30 A. 648.

It is insisted that this ordinance, if passed, would be ultra vires and void, because it attempts to create a privilege, and tax it, and make its pursuit without payment of tax a misdemeanor, when the legislature has not so provided. The contention is that the legislature alone can create a privilege, and authorize its taxation, and that a municipal corporation cannot make any occupation a privilege, nor impose a tax upon it, unless it has first been so declared by the legislature. This, we think, is correct. Mayor, etc., v. Althrop, 5 Cold. 554, 558, 559; Fulgum v. Mayor, etc., 8 Lea, 640.

It is insisted that the legislature has not made the trading-stamp business a privilege, nor imposed a tax upon it, and an attempt to do so by the city council of Memphis would be an act ultra vires and beyond its power, and that such action may be enjoined to prevent irreparable mischief and damage. It appears that the legislature, at its special session in 1898, did pass a bill declaring that trading-stamp agencies and merchants doing business by or through such agencies should pay a tax for such privilege; and the bill is published as an act of the extra session of 1898. But it appears from the journals of the house that the bill was vetoed by the governor as unconstitutional, and was not passed over his veto; so that it has no force or vitality, and is improperly published as an existing law.

It is next contended that under section 4, c. 84, Acts 1893, the city of Memphis was empowered to levy privilege taxes, and hence the legislative council was acting within the scope of its authority. This section is as follows: "Sec. 4...