Knoxtenn Theatres v. Dance

• Decision Date: 16 January 1948
• Parties: KNOXTENN THEATRES, Inc., et al. v. DANCE et al.
• Court: Tennessee Supreme Court

208 S.W.2d 536

KNOXTENN THEATRES, Inc., et al. v. DANCE et al.

Supreme Court of Tennessee.

January 16, 1948.

Rehearing Denied February 28, 1948.

Appeal from Chancery Court, Knox County; S. E. Hodges, Special Chancellor.

Suit by KnoxTenn Theatres, Inc., and others against J. W. Dance and others. From the decree, complainants appeal.

Affirmed.

Cates, Fowler, Long & Fowler, of Knoxville, for appellants.

Charles L. Cornelius of Nashville, amicus curiae.

Clyde W. Key, of Knoxville, for appellees.

TOMLINSON, Justice.

The only question on this appeal is whether the Chancellor erred in dismissing complainant's bill attacking the constitutionality of Chapter 776, Private Acts of 1947. Each of the four assignments of error insists that the Act violates Article I, Section 8, Article XI, Section 8 of the Constitution of the State and the 14th Amendment to the Federal Constitution, being the due process and equal protection clauses.

The act applies only to Knox County on a population classification. It levies a tax of one cent for each twenty cents or major fraction thereof paid for an admission ticket to a place of amusement in Knox County. The tax is levied on and required to be paid by the person purchasing the admission ticket. The operator is required to collect the tax when he receives the admission fee and delivers the ticket in exchange, and is also required to keep certain records so that there may be ascertained the amount of tax which should have been collected. Penalties are imposed for failure to collect and pay over at specified times this tax. All such taxes collected on places of amusement located within the limits of a municipality of Knox County must be paid to and is the property of that municipality for use in the operation of its government. If the place of amusement is located in the county outside of municipal boundaries the tax is to be paid to and be the property of Knox County for use in paying expenses of its government.

Appellants say that this act violates the constitutional provisions mentioned in that, they say, "the right to be admitted thereto and to attend such amusements is a natural right which is not subject to be declared a privilege and taxed as such". In passing, it is appropriate to observe that many of the natural rights of man have necessarily been regulated by laws enacted under the police powers and under the power to raise revenue.

Upon many occasions there has been presented to this Court for decision the question of the extent of the power of the legislature to declare privileges under Article II, Section 28 of the Constitution providing that "the Legislature shall have power to tax Merchants, Peddlers and Privileges, in such manner as they may from time to time direct". There is so wide a variety of facts in these cases as to make them exactly appropriate in the instant case only in so far as they declare principles. In Jenkins v. Ewin, Clerk, 55 Tenn. 456, 478, this Court, considering this constitutional provision, held "that the power of the Legislature to tax merchants, peddlers, and privileges, is unlimited and unrestricted, and might be exercised in any manner and mode in their discretion". In the case of Burke v. Memphis, 94 Tenn. 692, 695, 30 S.W. 742, this Court said that: "A privilege is whatever the legislature chooses to declare and tax as such". Then followed the line of cases of which Trentham v. Moore, 111 Tenn. 346, 353, 76 S.W. 904, 905, is representative, wherein it was held that "the Legislature cannot tax a single act, per se, as a privilege, inasmuch as such act, in the nature of things, cannot, in and of itself, constitute a business, avocation, or pursuit". This would seem to limit the privilege to something that constituted a business or avocation. However, in Ogilvie v. Hailey, 141 Tenn. 392, 397, 210 S. W. 645, 647, this Court had under consideration a special act which levied a privilege tax "on automobiles * * * used for pleasure" in Davidson County. Priv. Acts 1915, c. 407. This Court upheld the act, saying: "It is next insisted that the use of automobiles for pleasure cannot be declared a privilege, inasmuch as such use is not the pursuit of any business or occupation, and it is sought to limit a privilege to such pursuits. While some of our older cases apparently justify these arguments, later decisions of this court declare that the doing of a single act may be declared a privilege. * * * In view of our later decisions, we have no hesitation in holding that the Legislature may declare it to be a privilege to operate pleasure cars over the turnpike roads of our counties." While this case is not entirely in point here in that it involved the use of the public roads of the county, it is important here in that (1) it definitely overrules the insistence that nothing but a business or occupation may be declared a privilege and (2) holds that the pursuit of a pleasure may be taxed as a privilege and that a single act may be taxed as such. Subsequently, in H. G. Hill Co. v. Whitice, 149 Tenn. 168, 175, 258 S.W. 407, 409, this Court declared that: "The power of the Legislature to declare and tax privileges is unlimited. Its discretion in this regard cannot be restrained or controlled by the courts." In Foster & Creighton Co. v. Graham, 154 Tenn. 412, 429, 285 S.W. 570, 575, 47 A. L.R. 971, it was held that: "The Legislature has unlimited and unrestricted power to tax privileges, and this power may be exercised in any manner or mode in its discretion." In view of these holdings, there seems to be no escape from the conclusion that under Section 28 of Article II of our Constitution the legislature may impose a tax to be paid by the purchaser of a ticket for admission to a theatre or picture show or other place of amusement, the operation of which has by the legislature been declared to be a taxable privilege.

The act is assailed also upon the theory that it confers upon Knox County and Knoxville benefits not made available to any other of the counties or cities of the State and imposes upon those attending amusements in Knox County a burden not so imposed elsewhere in the State and, therefore, violates the constitutional provisions referred to. It is a fact that special benefits are conferred by the act upon Knox County and its municipalities only, and that burdens in the form of a tax applicable to that county alone are imposed upon those attending theatres, picture shows, etc., in that county. When that reason is assigned for an attack upon the constitutionality of a special act as violative of these constitutional provisions, the issue cannot be determined until after it is ascertained whether the act primarily affects the county or municipality in its governmental or political capacity or whether primarily, rather than as a resulting incident, it affects the citizens of the governmental unit involved in their individual relations. This controlling distinction is clearly stated in our case of Darnell v. Shapard, 156 Tenn. 544, 552, 553, 3 S.W.2d 661, thus: "The determination of the validity of acts of the Legislature attempting a classification of the counties of the state is largely influenced by the character of the legislation. If an act of the Legislature affects particular counties as governmental or political agencies, it is good. It is good if it affects only one county in this capacity. No argument is required to sustain such an act. If, however, an act of the Legislature primarily affects the citizens of particular counties or of one county in their individual relations, then such classification must rest on a reasonable basis, and, if the classification is arbitrary, the act is bad." Attention was again called to this controlling distinction in State ex rel. Bales v. Hamilton County, 170 Tenn. 371, 374, 95 S.W.2d 618, 619, in this language: "A distinction is to be drawn, however, between legislation primarily designed to affect the governmental agency as such and legislation designed primarily to affect the employees or citizens of such governmental agency as individuals".

The special act attacked in this case clearly reflects it as a fact that it is "not designed primarily to affect" those attending theatres, etc., in Knox County, but that its primary purpose is to raise revenue for Knox County and its municipalities by the collection of the tax levied by this act. "The collection of taxes is beyond question a governmental function". Southern v. Beeler, Atty. Gen., 183 Tenn. 272, 285, 195 S.W.2d 857, 863. The burden of paying the tax is the resulting incident of that primary purpose. It results that under the controlling distinction as restated in Darnell v. Shapard, supra, and in State ex rel. Bales v. Hamilton County, supra, this act does not offend these constitutional...