Sonitrol Northwest, Inc. v. City of Seattle

Decision Date21 November 1974
Docket NumberNo. 43249,43249
Citation84 Wn.2d 588,528 P.2d 474
PartiesSONITROL NORTHWEST, INC., a Washington corporation, Appellant, v. CITY OF SEATTLE, a municipal corporation, Respondent.
CourtWashington Supreme Court

Trethewey & Brink, Joseph H. Trethewey, Joseph C. Calmes, Seattle, for appellant.

J. P. Harris, Corp. Counsel, E. Neal King, Asst. Corp. Counsel, Seattle, for respondent.

WRIGHT, Associate Justice.

In this case, the constitutionality of City of Seattle's ordinance No. 62662 is being challenged as unconstitutionally vague and unequally applied as between appellant's burglar alarm system business and appellant's competitors who provide other types of burglar prevention services. The sole issue for our determination is whether ordinance No. 62662 violates the equal protection clause found in Const. art. 1, § 12. We believe the issue should be answered in the negative and affirm the trial court in upholding the ordinance.

Appellant (Sonitrol) is engaged in the business of monitoring sounds at its customers' places of business. These sounds are transmitted over telephone lines leased from Pacific Northwest Bell Telephone Company to either appellant's central monitoring office or to various telephone answering services in the city. The monitoring is done during the period the clients' businesses are closed and is designed to detect unauthorized activity. Suspicious sounds are reported to the police. From the beginning of 1970 until present, appellant has paid taxes to City of Seattle under section 5(g) of ordinance No. 62662 (Seattle Municipal Code 11.12.050(g)) which levies a tax

Upon everyone engaged in the business of operating or conducting a fire alarm system, district telegraph or burglary and police alarm system for hire, a fee or tax equal to seven percent of the total gross income from such business in the city; provided, that the minimum fee or tax shall not be less than one hundred dollars per tax year;

At trial, appellant sought to enjoin further collection of taxes and recover taxes paid under the ordinance. The gist of appellant's argument was that taxation of its business at a rate 70 times that of competitors dealing in local alarms of foot patrols, violates the equal protection clause found in Const. art. 1, § 12. 1 The trial court upheld the ordinance and dismissed the action. Sonitrol appealed.

To comply with the equal protection provision found in Const. art. 1, § 12, a classification must meet and satisfy three requirements. First, legislation must apply alike to all persons within a designated class. Second, there must be reasonable grounds for making distinctions between those who fall within the class and those who do not. Third, the disparity in treatment must be germane to the object of the law in which it appears. State ex rel. Bacich v. Huse, 187 Wash. 75, 80, 59 P.2d 1101 (1936); Texas Company v. Cohn, 8 Wash.2d 360, 376, 112 P.2d 522 (1941); H. & B. Communications Corp. v. Richland, 79 Wash.2d 312, 316, 484 P.2d 1141 (1971).

There is no unequal treatment of members of the same class in the instant case so the first requirement, Supra, is satisfied.

We believe the second and third requirements, Supra, are met because the alleged preferred competitors of appellant, i.e., local alarm merchants and foot patrolmen, are in a functionally separate class from appellant.

Legislative bodies have very extensive powers to make classifications for purposes of legislation. Armstrong v. State, 61 Wash.2d 116, 121, 377 P.2d 409 (1962); Oil Heat Institute v. Town of Mukilteo, 81 Wash.2d 7, 11, 498 P.2d 864 (1972); Black v. State, 67 Wash.2d 97, 100--101, 406 P.2d 761 (1965); Hemphill v. Tax Commission, 65 Wash.2d 889, 891, 400 P.2d 297 (1965); Clerk v. Dwyer, 56 Wash.2d 425, 435, 436, 353 P.2d 941 (1960); Aetna Life v. Washington Life, 83 Wash.2d 523, 526, 520 P.2d 162 (1974).

The test for purposes of classification is merely whether 'any state of facts reasonably can be conceived that would sustain (the classification).' Allied Stores of Ohio v. Bowers, 358 U.S. 522, 79 S.Ct. 437, 3 L.Ed.2d 480 (1959); Hemphill v. Tax Commission, Supra. For example, in Clark v. Dwyer, Supra, this court sustained a classification distinction based on color of apples. This court stated in Clark at page 436 of 56 Wash.2d, at page 947 of 353 P.2d:

The legislature has chosen to make a distinction between these products on the basis of color. The plaintiffs do not deny the propriety of such distinctions in the grading of apples. Unquestionably, the law applies alike to all members of the same class. The growers of red and partial red varieties are in one class and the growers of yellow and green varieties are in the other. The latter varieties comprise only five per cent of the total applies grown and marketed in this state. It may well be that the legislature found that the marketing of applies designated as C grade in standard Washington apple boxes had no adverse effect on the market value and reputation of the fancy grades of yellow and green varieties and, therefore, no change in the grading system for these apples was needed. The legislature may have found it to be a fact that color differences in the yellow and green varieties of applies are much less pronounced than in the red and partial red varieties, and have little significance in the mind of the purchaser.

In any event, there can be no doubt that a distinction exists, and the complaint does not show that it is an arbitrary or unreasonable distinction. The allegations, therefore, do not show that the act denies the plaintiffs the equal protection of the laws nor grants to others special privileges and immunities.

The legislature has even broader discretion and greater power in making classifications for taxation than it has for regulation. Texas Company v. Cohn, Supra. For purposes of excise taxes on businesses, a classification based solely on a difference in the method of operation of a particular kind of business is permissible. Texas Company v. Cohn, Supra; H. & B. Communications Corp. v. Richland, Supra.

In the instant case, there are substantial functional differences between the local alarm and foot patrol type burglar alarm businesses vis-a-vis a centrally monitored system such as appellant's business. For example, in the case of a local alarm system, there is a one-time installation. After the system is turned over to the customer, participation by the seller of the alarm is over. Not by any means can a local alarm installer be considered as 'operating or conducting a . . . burglary and police alarm system for hire'. (Ordinance No. 62662) The functional disparity, between appellant's system and a foot patrol system, is even more pronounced. In the latter case, unlawful entry into a premises is perceived by human senses; and analyzed and verified by human judgment. On the other hand, appellant's electronic system detects any and all sounds and once the decibel level reaches a certain threshold, the system automatically activates either an answering service or the listening staff at appellant's central monitoring station. We believe that the differences in the manner of installation, detection, monitoring and alarming of appellant's system and his competitor's is sufficient, under Texas Company v. Cohn and Hemphill v. Tax Commission, Supra, to uphold the excise tax classification in ordinance No. 62662.

In the case of the excise tax in ordinance No. 62662, the object sought is the raising of revenue and so long as the rate is not so excessive as to be confiscatory, the tax is valid. Texas Company v. Cohn, Supra; Oil Heat Institute v. Mukilteo, Supra. In Texas Company v. Cohn, Supra, we stated at 376 of 8 Wash.2d, at 529 of 112 P.2d:

The familiar rule that legislative classification, in order to come within constitutional limitations, must bear some reasonable relation to the object of the law in which it appears, originated in cases construing regulatory laws, where it has a natural and logical application. A statute prescribing a regulation in the exercise of the police power has a definite object which concerns the public health, safety, morals, or the like. If such a statute is not universal in its application, but applies only to a particular class, then, in order to satisfy constitutional requirements, the regulation of those within the class, as distinguished from those excluded therefrom, must tend to accomplish the object of the statute. When the rule is applied to a tax law, however, it should be done with due appreciation of the fact that usually the principal object, and very often the sole object of such a law, is to raise revenue for the support of the taxing government. Thus, the state may constitutionally tax one class and exempt other classes if the classification reasonably tends, in some lawful way, to facilitate the raising of revenue.

In the instant case, not only is the 7 per cent tax on gross income constitutionally permissible, we believe that the uniqueness, complexity, high initial capitalization and the economics of scale of appellant's business places appellant in a...

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27 cases
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    ...classification is challenged, it is presumed that facts sufficient to justify the classification exist. Sonitrol Northwest, Inc. v. Seattle, 84 Wash.2d 588, 528 P.2d 474 (1974); Aetna Life Ins. Co. v. Washington Life and Disability Ins. Guar. Ass'n, supra; State v. J-R Distributors, Inc., 8......
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