State Ex Rel. Cole v. Keller

• Decision Date: 18 September 1937
• Citation: 129 Fla. 276,176 So. 176
• Parties: STATE ex rel. COLE v. KELLER, Tax Collector.
• Court: Florida Supreme Court

176 So. 176

129 Fla. 276

STATE ex rel. COLE v. KELLER, Tax Collector.

Florida Supreme Court

September 18, 1937

Rehearing Denied Oct. 13, 1937.

Original proceeding in mandamus by the State of Florida, on the relation of Henry H. Cole, against T.C. Keller, as Tax Collector of the City of Tampa, wherein an alternative writ was issued. On motion to quash the alternative writ.

Motion denied.

COUNSEL

C. Fred Thompson, Frank T. Phillips, Claibourne M. Phipps, and Howard P. Macfarlane, all of Tampa, for relator.

Alonzo B. McMullen and Ralph A. Marsicano, both of Tampa, for respondent.

OPINION

TERRELL Justice.

In October, 1936, the city of Tampa had commitments with the Works Progress Administration for projects to be executed within the city amounting to large sums. The city's part on said commitments was approximately $300,000, which had to be raised to complete the projects. It was not included in the annual budget of the city and had to be raised from new sources of revenue.

It was consequently resolved by the board of representatives of the city that the best way to raise this amount of new revenue was to impose an additional license on businesses and professions, including attorneys at law. Ordinance No. 598-A was accordingly enacted, the pertinent part of which relating to professions is as follows:

"Auditors public accountants, auditing companies, physicians and surgeons, whether medical, chiropractic or otherwise attorneys, veterinarians, architects, civil engineers and surveyors, dentists, and other professions which have heretofore been rated as $25.00 or less shall pay, if their income during the preceding year has been in excess of $5,000.00, an additional license tax to be computed as follows:

"Where income from $5,000.00 to $7500.00, an additional tax of ... $50.00 "Where income from $7500.00 to $10,000.00, an additional tax of ... $75.00 "Where income from $10,000 to $20,000.00, an additional tax of ... $125.00 "Where income is over $20,000.00 .. $175.00"

Contemporaneous with the enactment of this ordinance, other ordinances affecting businesses and professions were enacted as part of the same taxing scheme. No license tax on any business or occupation other than those listed above was based upon income except wholesale and retail merchants, and as to them it was based on a percentage of the gross sales.

Relator, a practicing attorney, tendered the respondent $25, being the amount required for a license to practice law in the city prior to passage of Ordinance No. 598-A, and demanded the issuance of a license for the new year. He stated that his gross income exceeded $5,000 per year, but demanded the issuance of a new license on the theory that Ordinance No. 598-A was void. Respondent refused to issue the license except on conditions set out in the ordinance as here quoted. Relator then instituted this proceeding by petition in mandamus, the alternative writ commanding the respondent to issue the lisense on the payment of the sum of $25, notwithstanding Ordinance No. 598-A or show cause why he refused to do so. The case is up for consideration on a motion to quash and a motion to strike certain parts of the alternative writ. Both motions were directed to the same objective, so we treat them as a motion to quash.

It is first contended that Ordinance No. 598-A as applied to relator denies him the equal protection of the law guaranteed by section 12 of the Declaration of Rights, Constitution of Florida, and the Fourteenth Amendment of the Constitution of the United States.

To support his contention, relator relies on Stewart Dry Goods Co. v. Lewis, 294 U.S. 550, 55 S.Ct. 525, 79 L.Ed. 1054 and the following Florida cases: State ex rel. Lane Drug Stores v. Simpson, 122 Fla. 582, 166 So. 227; State ex rel. Lane Drug Stores v. Simpson, 122 Fla. 670, 166 So. 262; State ex rel. Adams v. Lee, 122 Fla. 639, 166 So. 249; Lane Drug Stores v. Lee (D.C.) 11 F.Supp. 672, and Liggett Company v. Lee, 288 U.S. 517, 53 S.Ct. 481, 77 L.Ed. 929, 85 A.L.R. 699.

To neutralize the contention of relator respondent relies on Clark v. City of Titusville, 184 U.S. 329, 22 S.Ct. 382, 46 L.Ed. 569; Metropolis Theatre Company v. Chicago, 228 U.S. 61, 33 S.Ct. 441, 57 L.Ed. 730; and like cases.

In the Stewart Dry Goods Case, the court was confronted with a Kentucky statute imposing an excise tax on retail merchants of one-twentieth of one per cent. on the first $400,000, or less, of gross sales, two-twentieths of one per cent. on the excess of the gross sales of over $400,000, and not exceeding $500,000, five-twentieths of one per cent. on the excess of the gross sales of over $500,000, and not exceeding $600,000, and so on at the same rate of increase to $1,000,000, and one per cent. on the excess of gross sales over $1,000,000.

In the application of the statute to the plaintiff the court found the increased rates on gross sales of over $1,000,000, to be determined by applying the rate applicable to each successive bracket, and when so applied, the tax burden on $1,000,000 was not one per cent., but a composite ascertained by adding the total tax for the sales falling within the various brackets and dividing the sum by the dollar value of all sales. When thus applied, the merchant was required to pay .05 per cent. on $400,000 of gross sales, .305 per cent. on $1,000,000 of gross sales and .96 per cent. on $15,000,000 of gross sales.

On the basis of this finding, the court held that such a classification of gross sales for the purpose of an excise tax was arbitrary and violative of the equal protection clause of the Fourteenth Amendment, that it could not be sustained as an excise on the privilege of merchandising because there was no reasonable relation between the amount of the tax and the value of the privilege, and because there was no such relation between gross sales the measure of the tax, and net profits as to justify the discrimination between the tax payers.

In Clark v. Titusville, the court was confronted with an ordinance of the City of Titusville in Pennsylvania imposing a license tax on wholesale and retail merchants. As to retail merchants, the tax was $5 on those whose sales during the preceding year did not exceed $1,000; as to those whose sales ran from $1,000 to $2,500, the tax was $10; as to those whose sales ran from $2,500 to $5,000, the tax was $15; as to those whose sales ran from $5,000 to $10,000, the tax was $25; and so on to a tax of $100 on those whose sales ran to $60,000 or more.

This act was attacked on the ground that merchants in one class would be required to pay at a higher rate than those in another class and that the percentage of tax to sales was greater on merchants in the lower than on those in the higher brackets.

The court upheld the act against both attacks on the ground that all merchants falling within the different brackets were treated alike and that the purpose of the act was to impose a heavier tax as the business increased. The court also held that in any general classification some injustice must be done, that equal protection demands only reasonable uniformity in dealing with parties similarly situated, and that the tax did not purport to be fixed on a percentage of sales.

It will be noted that the grounds of assault on the act in each case was different. The court distinguished them on the ground that it was the purpose of the act in the Titusville Case to impose a larger excise on the larger business which could be accomplished by a graduated tax on gross sales while in the Stewart Dry Goods Case, a tax based on a percentage of gross sales in the manner enforced required the merchant doing the larger business to pay a greater excise in gross amount but larger in proportion to gross sales than that demanded of his smaller competitor.

These cases present a typical instance of resolving the question of constitutional validity on the basis of practical application to the subject affected. Difficulties may be expected to arise in resolving these situations, but each case must turn on its peculiar facts rather than what was said in a prior case. The Federal Supreme Court not only declined to hold that the Stewart Dry Goods Case overruled the Titusville Case, but announced a clear field of operation for both which may be readily perceived if viewed in the light of the assault and the facts affecting them. We thought it proper to discuss these cases at length because of the divergent view of counsel relative to them.

The tax complained of in the instant case being an excise imposed for the privilege of practicing law must be limited in application to relator's income from that business. It does not contemplate income from other sources which are wholly independent of and separate from that obtained from his law practice. Limited in this manner, it might be possible, though we do not decide that question, to uphold the tax on authority of the...