R.J. Reynolds Tobacco Co. v. City of Lexington

• Decision Date: 04 October 1918
• Citation: 181 Ky. 503,205 S.W. 592
• Parties: R. J. REYNOLDS TOBACCO CO. v. CITY OF LEXINGTON.
• Court: Kentucky Court of Appeals

205 S.W. 592

181 Ky. 503

R. J. REYNOLDS TOBACCO CO. v. CITY OF LEXINGTON.

Court of Appeals of Kentucky.

October 4, 1918

Appeal from Circuit Court, Fayette County.

Action for injunction by the R. J. Reynolds Tobacco Company against the City of Lexington. From a judgment refusing the injunction and dismissing the petition, the plaintiff appeals. Affirmed.

Allen &amp Duncan, of Lexington, for appellant.

James G. Denny and J. Embry Allen, both of Lexington, for appellee.

MILLER J.

On August 17, 1914, the board of commissioners of the city of Lexington adopted an ordinance prescribing license fees for certain trades and occupations, and amending the general license ordinance then in force. Section 6 of the ordinance as amended reads as follows:

"Every person, firm or corporation engaged in, or acting as agent for, the sale or purchase of goods, grains, tobacco, wares or other merchandise, shall pay an annual license of $25.00. Every person, firm or corporation conducting a tobacco warehouse, where sales or purchases of tobacco are conducted, or tobacco storage houses where tobacco is stored, or rehandled shall pay an annual license of $25.00 per year for each house."

The appellant, R. J. Reynolds Tobacco Company, is a North Carolina corporation, which manufactures tobacco upon a large scale in its factories at Winston-Salem, in that state. It owns certain real estate in Lexington, on which it has constructed and now operates a storage warehouse, and a redrying plant. It buys in Kentucky, annually, large quantities of tobacco, much of which is delivered to it at Lexington, where it is stored in appellant's warehouse and rehandled or redried in its redrying plant. It does not store any tobacco for other persons; it does not handle or redry any tobacco, except its own. The tobacco is bought in the loose-leaf markets in Kentucky, in loose-leaf form, and the redrying process is necessary in order to pack it in hogsheads for the purpose of shipment to its manufacturing plant at Winston-Salem. The city of Lexington, having demanded of appellant that it pay the license fee of $25 imposed by the new ordinance, the appellant declined to pay it, and thereupon brought this action for the purpose of enjoining the city of Lexington from punishing appellant, through the penal processes of its police court, for its failure to pay the tax. The circuit court sustained the ordinance, refused the injunction, and dismissed the petition; and from that judgment the company prosecutes this appeal.

In denying its obligation to pay this license, the appellant contends: (1) That under a proper construction of the ordinance it is not required to pay a license tax; and (2) that, if the ordinance should be construed as requiring the appellant to pay a license tax, the tax is illegal and void.

It is not contended that the appellant is engaged in the business of storing or rehandling tobacco for other owners of tobacco; on the contrary, it is admitted that it stores and rehandles only its own tobacco. The title to the new ordinance in question reads as follows:

"An ordinance prescribing license fees for certain trades, occupations and businesses, fixing the amount of such license fees and prescribing a punishment for the violation thereof and repealing all ordinances in conflict therewith."

Section 1 of the ordinance provides as follows:

"Each and every person, corporation or company which shall engage in, conduct or carry on any trade, occupation, employment or business hereinafter named, shall pay to the city of Lexington a license fee in the respective amounts hereinafter set forth," etc.

Section 2 of the ordinance has been quoted above.

The appellant contends that it was the plain purpose of the board of commissioners to fix and impose license fees only on those who were engaged in the "trade, occupation, employment or business" mentioned, and not to impose a license fee on any person who was not engaged in one or the other of the particular trades, occupations, or businesses enumerated that the purpose of the ordinance was to impose a tax on "business" and not on the mere use of property; and that, unless the use of the property constitutes a "trade" or "business," no tax can be imposed upon it. Carrying out this idea, appellant insists that it is not engaged in the "business" of storing tobacco, nor in the "business" of...