Red Slipper Club, Inc. v. City of Oklahoma City

• Decision Date: 24 July 1979
• Docket Number: No. 50010,50010
• Parties: RED SLIPPER CLUB, INC., a corporation, and Laura M. Riggins, d/b/a Red Slipper Club, et al., Appellees, v. The CITY OF OKLAHOMA CITY, a Municipal Corporation, Appellant.
• Court: Oklahoma Supreme Court

Page 406

599 P.2d 406

RED SLIPPER CLUB, INC., a corporation, and Laura M. Riggins, d/b/a Red Slipper Club, et al., Appellees, v. The CITY OF OKLAHOMA CITY, a Municipal Corporation, Appellant.

No. 50010.

Supreme Court of Oklahoma.

July 24, 1979.

Rehearing Denied Sept. 17, 1979.

Appeal from the District Court of Oklahoma County; Homer Smith, Trial judge.

The City of Oklahoma City appeals a ruling of the trial court finding 1975 city ordinance invalid because such ordinance levies a license tax greatly in excess of the cost of administering the licensing program. AFFIRMED.

Andrew Hamilton, Arthur S. Bay, Jack D. Fisher, Bay, Hamilton, Renegar & Lees, Oklahoma City, for appellees.

Walter M. Powell and Diane L. Davis, Oklahoma City, for appellant.

HARGRAVE, Justice:

The Red Slipper Club is the named appellee representing the holders of a Class C license to operate a private club in the City of Oklahoma City. The appellee originally instituted the action culminating in this appeal to obtain a temporary and permanent injunction enjoining the appellant, City of Oklahoma City, from enforcing city ordinance number 14,172 which increased the annual license fee for private clubs of the class from $600.00 to $1200.00. The suit also sought a declaratory judgment that this private club license fee was arbitrary, prohibitory in amount, and therefore constitutionally unauthorized, and thus, invalid. The trial court denied the temporary injunction, finding no danger of irreparable harm if the injunction did not issue, but did order the $600.00 increased licensing fee to be held in escrow during the pendency of the action. After the hearing on the merits, the court entered an order holding the regulation of private clubs within the city to be within the scope of the city's police power, but held the 1975 amendment raising the license fee to $1200.00 unconstitutional as not based upon the cost of the regulation of that activity. In response to the other issue raised by the appellee, the trial judge found the 1960 ordinance to be within the cost of administration of the licensing activity so near as to be a fairly debatable issue and therefore valid. The City of Oklahoma City appeals this ruling alleging the trial judge erred in holding the appellee overcame the presumption of validity attaching to the municipal ordinance ¹ establishing the $1200.00 fee.

As the issues are narrowed by the parties in the briefing cycle, the determination of this appeal revolves around the question of whether a proper item of cost in the licensing of private clubs is the cost of the City's police patrol division's supervision of these Class C private clubs. Implicit in this statement of the issue on appeal is the assumption that the issuance of a license for a Class C private club (which is a license to operate an establishment within the City wherein intoxicating beverages are consumed) is governed by the general rule that the municipality may not impose a license fee in the exercise of its police power that results in income exceeding the cost of issuing the license and regulating the business as this rule is expressed in Mitchell v. City of Lawton, 124 Okl. 60, 253 P. 999 (1926) and City of Shawnee v. Reid Brothers Plumbing Co., 201 Okl. 592, 207 P.2d 779 (1949). This Court disapproves of the application of an exception to the last mentioned rule sometimes applied in instances where the license is sought for the purpose of operating an establishment wherein spirituous beverages are consumed ², and therefore the rule expressed in the last mentioned cases is applicable to the municipal ordinance in question.

The distinction between the municipality's power to impose police regulations and their power to tax are separate and distinct, and must be examined as distinct concepts. Apache Gas Products v. Oklahoma Tax Commission, 509 P.2d 109 (Okl.1973).

The Ratio legis of a police regulation is the protection of the public and not raising revenue. Mitchell v. City of Lawton, supra; Ex Parte Holt, 74 Okl. 226, 178 P. 260 (1919). Notwithstanding language to the contrary in In Re Skelton Lead & Zinc Company's Gross Production Tax for 1919, 81 Okl. 134, 197 P. 495, 498 (1921), an occupation tax is not equatable with a license tax. The character of a payment to the municipality as a tax or license fee is not changed or determined by the name given it by the legislation involved, but is determined according to the mission given it by the law under which it is levied. In Re Skelton Lead & Zinc Company's Gross Production Tax for 1919, supra. See also, City of Hartshorne v. Marathon Oil Co. (Amoco Production Co.), 593 P.2d 97 (Okl.1979).

Where an ordinance is merely a regulatory enactment under the police power serving the purpose of protection of the public, the license fees charged should not exceed the expense of issuing the license ³ and regulating the business. City of Tulsa v. Metropolitan Jewelry Co., 74 Okl. 107, 176 P. 956 (1919). The determination that an ordinance partakes of the nature of a regulation pursuant to the police power as a revenue raising tax provision should be made, if at all possible, by examining the language of the legislation itself. Generally, if the questioned provision tends toward the prevention of an offense against, or aims at the protection of, the public health, morals, safety, or welfare, then that legislation is referable to the police power as the enacting body. This Court has on occasion refused to characterize a fee denominated a license fee as such where the ordinance under consideration contained no provision which tended to show that its purpose was the regulation of the business affected. Mitchell v. City of Lawton, supra; City of Tulsa v. Metropolitan Jewelry Co., supra.

The fee charged private clubs per year of operation by ordinance number 14,172, enacted as Ch. 20, Sect. 17 of the 1970 Oklahoma City Code appears on its face to be a simple tax, appending no conditions on the privilege to engage in the occupation. Inasmuch as the license fee is levied under the authority of Chapter 5, Sect. 53, wherein are found voluminous restrictions and regulations on the privilege of operating a private club in the City of Oklahoma City, the record demonstrates the fee charged is a regulatory enactment under the police power. License fees will be upheld although the fee charged is in excess of the cost of issuance and supervision of that concern if the revenue derived therefrom is not disproportionate to the cost of issuance. The reasonable amount of the fee depends upon the sound discretion of the legislative body imposing it, and the fee will be presumed reasonable unless the contrary appears upon the face of the ordinance, by law, or established by proper evidence; but if the fee is wholly out of proportion to the expenses involved, it will be declared a tax. City of Shawnee v. Reid Brothers Plumbing Co., 201 Okl. 592, 207 P.2d 779 (1949). Inasmuch as this Court is reviewing the validity of a legislative enactment of the governing body of the municipality, the ordinance will be upheld unless the amount required for the license is clearly arbitrary and unreasonable and as long as it appears there is room for fair debate on that issue, this Court shall not substitute its judgment for that of the municipal legislative body charged with the duty to enact such ordinances. Gant v. City of Oklahoma City, 289 U.S. 98, 53 S.Ct. 530, 77 L.Ed. 1058 (1933).

Turning to the evidence of income and cost of licensing private clubs in the city of Oklahoma City as reflected by the record, we find that under a $1200.00 per-club license fee the income derived from 250 private clubs is over $300,000.00. Cost of the licensing program to the city is $313,213.05 and of that amount, $239,633.45 is the cost to the city per year for 113 patrolmen's Estimated time of one hour per shift per day, three hundred sixty-five days a year. Not included in...