Mouledoux v. Maestri

• Decision Date: 10 April 1941
• Docket Number: 36147.
• Citation: 197 La. 526,2 So.2d 11
• Court: Louisiana Supreme Court
• Parties: MOULEDOUX et al. v. MAESTRI, Mayor, et al.

2 So.2d 11

197 La. 526

MOULEDOUX et al. v. MAESTRI, Mayor, et al.

No. 36147.

Supreme Court of Louisiana

April 10, 1941

Rehearing Denied April 28, 1941. [Copyrighted Material Omitted]

Francis P. Burns, City Atty., and William F Conkerton and Henry C. Keith, Jr., Asst. City Attys., all of New Orleans (Edward Rightor and E. Howard M'Caleb, both of New Orleans, of counsel), for relators.

deLesseps S. Morrison and Jacob H. Morrison, both of New Orleans, for respondents.

Eugene Stanley, Atty. Gen., amicus curiae.

H W. Robinson, of New Orleans, amicus curiae.

HIGGINS Justice.

Three citizens and taxpayers of the City of New Orleans, State of Louisiana, and a citizen and taxpayer of the Parish of Jefferson, Louisiana, instituted this action against the Mayor and the members of the Commission Council of the City of New Orleans to enjoin the collection of the sales or use tax levied by Ordinance No. 15,201, Commission Council Series, adopted December 12, 1940, under paragraph (f) of Section 1 of Act No. 338 of 1936, which amended the charter of the City of New Orleans (Act No. 159 of 1912), alleging that the Commission Council was without power and authority to adopt the ordinance, that the ordinance was unconstitutional, and that Act No. 338 of 1936 had been repealed by Act No. 82 of 1940.

The defendants pleaded (1) that the plaintiffs had an adequate legal remedy and, therefore, were not entitled to equitable relief through injunction process; (2) that they had failed to allege wherein the ordinance affected or injured them as individuals; (3) that the City had the power and authority to levy and collect such a tax; (4) that the sales or use tax, the collection of which was sought to be enjoined, was constitutional because it was an excise tax imposed upon the purchaser, user, or consumer and not a license tax and, therefore, not prohibited by any provision of the Constitution of Louisiana of 1921; and (5) that Act No. 338 of 1936 (amending the charter of the City of New Orleans, Act No. 159 of 1912) had not been, either expressly or impliedly, repealed by Act No. 82 of 1940.

The trial judge held that the plaintiffs were entitled to the equitable remedy of injunction, because they did not have an adequate legal remedy; that they had sufficient interest in the matter to institute the suit and stand in judgment; and, on the merits, concluded that the ordinance was unconstitutional for the reason that the Legislature is prohibited from surrendering the taxing power of the Sovereign State; that the tax levied was a license tax and, therefore, illegal, because the State had not levied such a tax; and, finally, that the authority of the City to levy and collect the sale or use tax was withdrawn by the Legislature through the repealing clause of Act No. 82 of 1940. The district judge then issued an injunction restraining the City officials from enforcing the ordinance and collecting the tax.

The defendants' application for a suspensive appeal from the judgment was denied by the trial judge and they petitioned this court for writs of certiorari, prohibition and mandamus. We issued an order, under our supervisory powers, directing the district judge and the plaintiffs to show cause why the relief prayed for by the defendants, as relators, should not be granted, and suspended the effect of the judgment of the district court until further orders of this court. In response to the rule issued by us, the learned trial judge and the plaintiffs, as respondents, made proper return by filing in this court the record in the case and briefs in support of their position.

On December 12, 1940, the Mayor and the Commission Council of the City of New Orleans adopted Ordinance No. 15,201, Commission Council Series, pursuant to paragraph (f) of Section 1 of Act No. 338 of 1936, amending the City Charter (Act No. 159 of 1912), levying a sales or use tax of 2 per cent, modified by a 'bracket system', on the sale at retail, the use, the consumption, the distribution, the lease and the storage of articles of tangible personal property, as defined in the ordinance, to be used or consumed in the City, after January 1, 1941.

On December 26, 1940, the Rules and Regulations establishing the 'bracket system' were published showing there would be due no tax on transactions from one cent to twelve cents, one cent on transactions from thirteen cents to sixty-two cents and two cents on transactions from sixty-three cents to ninety-nine cents.

On December 31, 1940, the Commission Council adopted an amendatory ordinance, No. 15,224, Commission Council Series, correcting certain errors and omissions in the original ordinance. In accordance with sub-paragraph (f), Section 2, Ordinance No. 15,201, the Commissioner of Public Finance prepared the schedule of the amounts to be collected from purchasers, users, consumers, and lessees in respect to any transactions upon which the sales or use tax was imposed by the provisions of the ordinance, and the schedule was duly unanimously approved by the members of the Commission Council on January 7, 1941.

The ordinance places personal liability for the payment of the tax upon the purchasers, users, consumers, and lessees of tangible property and makes the dealer the agent of the City for the collection and remittance of the tax to it. The dealer is made responsible to the City, both civilly and criminally, in the event of his failure to collect and remit the tax. He is not allowed to assume the tax himself and is also prohibited from absorbing it.

In this court, the Mayor and the members of the Commission Council state that they are not urging the exceptions filed in the district court and they confine their brief to the merits of the controversy.

The members of the Fire Department of the City of New Orleans, appearing through an amicus curiae, join the City authorities in upholding the legality and constitutionality of the sales or use tax ordinance, declaring that they have an interest in the matter because they have obtained a judgment in this court against the City for an increase in salary voted to them under a constitutional amendment, and that the City has been condemned to pay the back increase salary as well as the future salary on the increase basis and there is presently due them approximately $200,000 which the City proposed to pay to them, according to the 1941 budget, from a part of the funds realized through the sales or use tax. In this brief it is also stated: 'The Sales Tax involved in the instant case was intended to provide for the emergency during 1941, of the need of funds with which to carry on unemployment relief involving in excess of 20,000 residents of the City and their families; the requirements of the Sewerage & Water Board for extension of water mains for the rapidly growing City; the back pay of the Firemen and Police; and other urgent public needs.' It is conceded that the revenues from the tax are dedicated to public purposes.

There is not any question raised as to the legality of the ordinance on account of irregularity in the procedure of adopting it.

We have no right to review the policy or wisdom of legislation because our jurisdiction is confined to determining the applicability, legality or constitutionality of laws. Lionel's Cigar Store v. McFarland, 162 La. 956, 967, 111 So. 341.

The respondents first contend that the general taxing power conferred upon the City of New Orleans was so extraordinary as to be equivalent to the surrender and abandonment of the taxing power by the Legislature to the City and that such legislation is in the teeth of Article X, Section 1 of the Constitution of 1921, as amended, which expressly prohibits the Legislature from surrendering the taxing power vested in it by the Sovereign State. On the other hand, they maintain that if the court were to hold that the Legislature constitutionally delegated taxing power to the City of New Orleans, such power was inadequate to confer upon the City the right and the authority to levy and collect the alleged sales or use tax.

The Constitutions of Louisiana of 1898 and 1913 contain Article 224, which reads as follows: 'Art. 224. The taxing power may be exercised by the General Assembly for State purposes, and by parishes and municipal corporations and public boards, under authority granted to them by the General Assembly, for parish, municipal, and local purposes, strictly public in their nature.'

Section 5 of Article X of the Constitution of 1921 contains the following provision: 'Parochial and municipal corporations and public boards may exercise the power of taxation, subject to such limitations as may be elsewhere provided in this Constitution, under authority granted to them by the Legislature for parish, municipal and local purposes, strictly public in their nature. The provisions of this section shall not apply to, nor affect, similar grants to such political subdivisions under other sections of this Constitution which are self-operative.' (Italics ours.)

Paragraph (e), Section 1 of Act No. 159 of 1912, a legislative act and the charter of the City of New Orleans, provided: 'The city shall also have all powers, privileges and functions which, by or pursuant to the Constitution of this State, have been, or could be, granted to or exercised by any city.'

The Legislature, in subparagraph (f) of Section 1 of Act No. 338 of 1936 (amending Act No. 159 of 1912), broadened the City's taxing power by providing that: 'The City of New Orleans shall have the right to levy, impose and collect any and all kinds and classes of taxes or licenses or fees that may be imposed that are necessary for the proper operation and maintenance of the municipality, provided same is not expressly...