Lyons v. City of Minneapolis, 36196

• Decision Date: 19 March 1954
• Docket Number: No. 36196,36196
• Citation: 241 Minn. 439,63 N.W.2d 585
• Parties: LYONS et al. v. CITY OF MINNEAPOLIS et al.
• Court: Minnesota Supreme Court

Page 585

63 N.W.2d 585

241 Minn. 439

LYONS et al. v. CITY OF MINNEAPOLIS et al.

No. 36196.

Supreme Court of Minnesota.

March 19, 1954.

Syllabus by the Court.

Ordinances imposing a licensing requirement under the police power are presumed to be valid as a legitimate exercise thereof. Those attacking the validity of such ordinances have the burden of proving the fees to be so excessive as to constitute a revenue measure. License fees must be reasonable, but the amount of the fee is largely a matter within the discretion of the municipal authorities, and courts will not hold them unreasonable unless they are palpably so. Held, plaintiffs failed to submit evidence sufficient to overcome the presumption of validity of the gasoline filling station license fees imposed under Minneapolis City Charter and Ordinances (Perm. Ed.) 47:7.

Hadlick & Diessner, Minneapolis, for appellants.

John F. Bonner, City Atty., Palmer B. Rasmusson, Asst. City Atty., Minneapolis, for respondents.

NELSON, Justice.

This proceeding was brought under the uniform declaratory judgments act, M.S.A. c. 555, to determine the validity of the license-fee schedules imposed under Minneapolis City Charter and Ordinances (Perm. Ed.) 31:5 and 47:7. Plaintiffs contend that these license fees applicable to gasoline filling stations are unreasonable and invalid on the ground that they constitute a revenue-producing measure amounting to a tax. Plaintiffs, as copartners, have operated a gasoline filling station at 3551 Lyndale avenue south, Minneapolis, since 1947. The trial court made findings and judgment was entered pursuant thereto holding that Ordinance 31:5, which provided for an increase in license fees, was invalid as a revenue measure, but sustaining Ordinance 47:7 as providing a valid licensing fee under the police power.

This appeal by plaintiffs concerns only the validity of Ordinance 47:7, which provides for the fee of $30 per station with $5 additional for each pump in excess of one, the city not having taken an appeal from the lower court's determination of the invalidity of Ordinance 31:5.

Between the years 1920 and 1925, the license fee for the operation of gasoline filling stations in Minneapolis was $25 per station and $5 for each pump in excess of one. In 1925 the fee was increased to $30 per station with $5 for each pump in excess of one. In 1927 the fee was again increased and fixed at $100 per station and $5 for each pump in excess of one. This ordinance was held invalid as a revenue measure in 1929, and the city then reverted to the former license fee of $30 and $5.

In December 1936 the city council of Minneapolis enacted a comprehensive ordinance entitled:

'An ordinance for preventing of fires within the City of Minneapolis, providing for licenses, regulating the storage, use, handling and sale of flammable liquids and substances and prescribing penalties for violation thereof.'

This ordinance, identified in the permanent compilation of ordinances of Minneapolis as Ordinance 47:7, contains 87 regulatory sections, of which only §§ 3, 14, 15, and 16 are relevant to this case. Section 16 of this ordinance imposes fees of $30 per station and $5 additional for each pump in excess of one, which had been the fees charged since 1929.

On December 17, 1947, the city council passed Ordinance 31:5 which provided a general increase by one-third of all license fees, thereby raising the gasoline station license fees to $40 per station and $7 for each pump in excess of one. Since 1947 a license fee of $89 had been exacted from plaintiffs on their eight-pump station under Ordinance 47:7, but they refused to pay the fee of $89 required for 1952 under Ordinance 31:5, thus precipitating this action.

Plaintiff Glenn H. Lyons testified that any inspectiosn relating to quality of gasoline, accuracy of pumps, and adequacy of air compressors were made by state inspectors, M.S.A. §§ 296.01 to 296.49, 239.01 to 239.51, 183.375 to 183.58, not by city inspectors. He also testified that no periodical inspections were made by the city fire marshal at plaintiffs' station.

Another filling station operator, called by plaintiff, testified that there had been a fire inspection and a check as to debris, rubbish, etc., a month before trial.

Plaintiff called Nathan Harris, research engineer for the city council of Minneapolis, for cross-examination under the statute to determine the costs of all departments connected with the execution of the ordinance. Harris, however, had not been served with a Subpoena duces tecum, and since he did not have the necessary documentary evidence and records with him, he was dismissed with the request to testify later when he had obtained the desired information. Although Harris did later return to the courtroom, he was not again called to testify.

Plaintiff served a Mr. Ackerman of the bureau of records with a subpoena to furnish certain data, but he also was not called upon to testify.

The only testimony of any probative consequence submitted by plaintiff was in connection with the department of licenses, weights, and measures of Minneapolis. Marjorie Carlson, a clerk in that department testified that the total number of licenses issued for all categories was 46,944 in 1950 and 28,198 in 1951, of which 887 were for gasoline-station licenses in 1950 and 832 in 1951. (The difference in the total license figures was due to the biennial issuance of bicycle licenses.) She further testified that the total cost of operating the department of licenses, weights, and measures was $57,548 in 1950 and $57,554 in 1951, with estimated expenses for 1952 being $64,831, this latter increase being due to an increase in salaries. The witness Carlson stated, however, that the figures given by her covered only that One department and had no relation to expenses in connection with the issuance of licenses by the city council, publication of city council proceedings, granting or denying licenses, or performing the necessary regulatory functions, and she knew nothing about the procedure for fire inspections preliminary to license issuance.

Plaintiffs rested, relying only on the above testimony. The city rested without calling any witnesses or submitting any evidence of its own.

To require a license as a condition precedent to the right or privilege of carrying on certain types of business is a legitimate exercise of the police power. The general rule is that, to be held reasonable, a license fee should be intended to cover the expenses of issuing, the services of officers, and other expenses directly or indirectly imposed or incurred. State ex rel. Remick v. Clousing, 205 Minn. 296, 285 N.W. 711, 123 A.L.R. 465; City of Mankato v. Fowler, 32 Minn. 364, 20 N.W. 361; 4 Dunnell, Dig. & Supp. § 6800. But, as it is almost an impossibility to impose a license fee which exactly equals the necessary costs of issuance and regulations, it is generally held in our decisions that to be upheld as a valid exercise of the police power a fee need not be so restricted in amount as to eliminate any reasonable revenue which is purely incidental to the issuance of the license and regulation of the business. Crescent Oil Co. v. City of Minneapolis, 177 Minn. 539, 225 N.W. 904; 4 Dunnell, Dig. & Supp. § 6800: 33 Am.Jur., Licenses, § 43.

Of course, if a business has potentialities of developing or degenerating into a nuisance, the protection of the public welfare may justify, from a police-power standpoint, the imposition of a license fee large enough to operate as a restraint to those who might otherwise engage therein, 4 Dunnell, Dig. & Supp. § 6800; but we must assume that this would not be the case in a lawful trade or business in the nature of a gasoline fillign station. However, the business of operating gasoline filling stations is fraught with some possibility of danger to the public because of the handling of flammable liquids and the fact that at times debris gathers on the premises, and therefore the duty of a large city to protect the physical well-being of its residents and to promote the public safety necessitates that the cost of passing upon the locations of these stations, as well as the necessary inspections and supervision, be included as a part of the expense of regulation.

In order to successfully contest this ordinance plaintiffs are confronted with some basic rules in regard to the construction of such ordinances by the courts. As stated in State v. Taubert, 126 Minn. 371, 372, 148 N.W. 281, 282:

'Ordinances as well as statutes are presumed to be valid and are not to be set aside by the courts unless their invalidity is clear.'

This rule has been repeatedly enunciated by this...