Pharr Road Inv. Co. v. City of Atlanta

• Decision Date: 07 November 1968
• Docket Number: No. 24900,24900
• Citation: 224 Ga. 752,164 S.E.2d 803
• Parties: PHARR ROAD INVESTMENT COMPANY v. CITY OF ATLANTA.
• Court: Georgia Supreme Court

Page 803

164 S.E.2d 803

224 Ga. 752

PHARR ROAD INVESTMENT COMPANY v. CITY OF ATLANTA.

No. 24900.

Supreme Court of Georgia.

Nov. 7, 1968.

Syllabus by the Court

1. The charter powers granted to the City of Atlanta (Ga.L.1937, p. 1502; 1963, p. 2296, § 2) authorize a revenue producing tax and the ordinance adopted in pursuance of such powers is not ultra vires and unlawful.

2. An occupation or business tax measured by gross receipts is not an income tax.

3. The classification of businesses and occupations based on the 'ability to pay as determined by nationwide averages' and graduations within such classes based on gross revenue is not a violation of the due process and equal protection clauses of the State and Federal Constitutions or of the uniform taxation clause of the State Constitution.

4. The ordinance under attack does not violate the ex post facto provisions of the State and Federal Constitutions.

5. The exemption of 'any individual, association, estate or trust holding stocks, bonds, or other type of securities for personal investment purposes' in this ordinance does not violate the due process and equal protection clauses of the State and Federal Constitutions or the uniformity of taxation clause of the State Constitution.

Richardson, Chenggis & Constantindes, Platon P. Constantindes, Chamblee, for appellant.

Henry L. Bowden, Ferrin Y. Mathews, Atlanta, for appellee.

UNDERCOFLER, Justice.

Pharr Road Investment Company filed suit against the City of Atlanta seeking to enjoin it from enforcing the provisions of a business and occupation license ordinance approved on July 2, 1968, after this court had declared the prior ordinance of the city which levied and assessed license fees upon businesses and occupations for 1968 unconstitutional and void. Pharr Road Investment Co. v. City of Atlanta, 224 Ga. 403, 162 S.E.2d 333. The petitioner alleges that the defendant has notified it that the provisions of the ordinance of July 2, 1968, will be enforced by requiring that licenses thereunder be obtained by July 25, 1968, and on failure to comply with the ordinance the petitioner will be subjected to the imposition of the penalties provided therein and prosecuted for doing business without a license. The petitioner comes within the provisions of said ordinance and brings this action on behalf of itself and all persons as defined in said ordinance.

The ordinance provides for 8 separate classes of businesses and occupations determined by nationwide averages of ability to pay. As its basis for determining the license fee, the ordinance employs the dual factors of the number of employees and the taxable gross revenue. Both factors are applied in graduations so that as the number of employees or gross revenues becomes larger it places the business in a higher bracket and the license fee is increased, but the increase declines with each higher bracket. The employee factor is applied alike to all classes. The graduations of the revenue factor are alike for all classes, but the license fee rates are progressively higher in each of the 8 classes.

The defendant filed a motion to dismiss and strike the complaint as a whole and each of its several paragraphs because of failure to state a claim upon which relief can be granted. The trial judge sustained the motion on each ground thereof and dismissed the petitioner's complaint. The appeal is from that judgment.

1. The petitioner admits that the City of Atlanta has power under its charter to assess a license tax for regulatory purposes but contends it does not have authority to assess a business license tax for revenue purposes. It maintains that the ordinance under attack levies a revenue producing tax rather than a fee for regulatory purposes and is therefore ultra vires and unlawful.

The charter of the City of Atlanta (Ga.L.1937, p. 1502; 1963, p. 2296, § 2) provides: 'The mayor and board of aldermen shall have full power and authority to require any person, firm, corporation or company engaged in, prosecuting or carrying on, or who may engage in, prosecute or carry on any trade, business, calling, avocation or profession, to register their names and business, calling, avocation or profession annually, and to require such person, company or association to pay for such registration and for license to engage in, prosecute or carry on such business, calling or profession aforesaid, such fee, charge or tax, as said mayor and board of aldermen may deem expedient for the safety, benefit, convenience and advantage of said city. Said tax, registration fee or license herein provided for shall be imposed in the discretion of the mayor and board of aldermen.'

This provision is essentially the same charter provision contained in the charter of the City of Atlanta enacted in 1874 (Ga.L.1874, pp. 116, 122), and as was said in Peginis v. City of Atlanta, 132 Ga. 302, 303, 63 S.E. 857, 858, 35 L.R.A.,N.S., 716: 'The powers of a municipal corporation are limited to those expressly granted or conferred by necessary implication. The collection of a business tax on occupations which are per se useful and lawful, although the method of doing so is called a license, is quite distinct from the granting of a license, strictly so called, to conduct an occupation of an entirely different character, granted under the power of necessary police regulation and control of certain pursuits. In the former class the tax or charge is imposed for the purpose of collecting revenue; and although the mode of doing so is frequently called licensing, the real purpose is to enforce the collection of the municipal revenue. * * * What has been already said, based on general principles, is made more clear in regard to the City of Atlanta by an examination of the provisions of its charter. (Acts 1874, pp. 116, 122, Code of Atlanta, sec. 64 et seq.). They show on their face a clear line of demarkation between taxes imposed on ordinary useful occupations which are lawful per se, although the mode of collection is termed granting a license, and other occupations of a different character.'

Accordingly, we hold that the charter powers granted to the City of Atlanta authorize a revenue producing tax such as enacted by the ordinance in question and is not ultra vires.

2. Petitioner contends that the defendant is attempting to assess an income tax on all businesses and occupations within its territorial limits which power it does not have vested or granted to it by virtue of its charter of incorporation as amended. This contention is without merit. This court has held that 'a tax on a business or occupation because measured in part by the number of pieces of property used in said business or occupation, although the pieces of property are subject to ad valorem taxation, is not a tax on property within the meaning of that term.' City of Atlanta v. Georgia Milk Producers Confederation, 187 Ga. 117, 118, 200 S.E. 712, 713. By the same reasoning we hold that a business tax measured by gross revenue is not a tax on income. See also Atlanta National Building & Loan Ass'n v. Stewart, 109 Ga. 80, 35 S.E. 73, and Mutual Reserve Fund Life Ass'n v. City Council of Augusta, 109 Ga. 73, 35 S.E. 71, where it was held that a tax measured by the gross receipts of a business is an occupation or business tax.

3. Petitioner contends that Sections 2 G, 3, Schedule 'A' and Schedule 'B' (1-8) of the ordinance violate the equal protection and due process of the laws clauses of the State and Federal Constitutions (Art. I, Sec. I, Pars. II, III, Ga.Const.1945, Code Ann. §§ 2-102, 2-103; 14th Amend., U.S.Const. Code § 1-815), and the uniform taxation clause of the State Constitution (Art. VII, Sec. I, Par. III, Const.1945, Code Ann. § 2-5403) because 'there is no reasonable basis for differentiating, in the determination of...