Supply Laundry Co. v. Jenner

• Decision Date: 25 June 1934
• Docket Number: 25102.
• Citation: 34 P.2d 363,178 Wash. 72
• Parties: SUPPLY LAUNDRY CO. et al. v. JENNER et al.
• Court: Washington Supreme Court

34 P.2d 363

178 Wash. 72

SUPPLY LAUNDRY CO. et al. v. JENNER et al.

No. 25102.

Supreme Court of Washington

June 25, 1934

Department 1.

Appeal from Superior Court, Thurston County; John M. Wilson, Judge.

Action by the Supply Laundry Company and others against T. M. Jenner and another, tax commissioners of the state of Washington. From a judgment of dismissal, plaintiffs appeal.

Affirmed.

John H. Dunbar, of Olympia, for appellants.

Roberts & Skeel, of Seattle, G. W. Hamilton and R. G. Sharpe, both of Olympia, for respondents.

STEINERT Justice.

This is an action to enjoin the enforcement of certain provisions of the occupation tax act passed at the Extra-Ordinary Session of the Legislature in 1933 (Laws 1933, Ex. Sess., p. 157). The court sustained a demurrer to the complaint and entered a judgment of dismissal, from which this appeal was taken.

During the regular session of the Legislature held in 1933, an act was passed initiating an occupation tax. Chapter 191, p. 869, Laws 1933. A suit to test the constitutionality of that act was instituted, resulting in a decision of this court which upheld the act. State ex rel. Stiner v. Yelle, 174 Wash. 402, 25 P.2d 91, 93.

The original act of 1933 contained a sectional provision imposing upon every person engaging or continuing, within this state in the business of rendering, performing, or selling services, professional or otherwise, a tax measured by the gross income of the business. That section, together with one relating to agriculture, was vetoed by the Governor of the state. Subsequent to the decision in the Stiner Case, the Legislature, in extraordinary session passed the amendatory act involved in this action. Section 2-a(1) of the latter act, so far as it is material here reads as follows:

'From and after the first day of January, 1934, and until the thirty-first day of July, 1935, there is hereby levied and there shall be collected from every person engaging or continuing within this state in the business of pendring or performing services, professional or otherwise, * * * an annual tax or excise for the privilege of engaging in such business; * * * for the purposes of this act a person engaged in a business or profession shall include all persons whose services are paid from public funds holding any public office or any public position or employment with the State of Washington or any political subdivision thereof, whose monthly salary exceeds $200.00 per month.'

It will be observed that by this act the Legislature restored, and extended in certain respects, one of the provisions of the former act which the Governor had previously vetoed.

By section 2-a(2) of the amendatory act it was provided that it should not apply to persons acting solely in the capacity of employee or servant who received a fixed wage or salary or a compensation determinable according to an agreed plan or formula, and who had no direct interest in the income or profits, or liability for expenses or losses, as such, resulting from the transaction of the business; nor to gross income derived from the lease or rental of real estate, but not excepting gross income derived from engaging in a hotel, warehouse, or storage business, or from any business wherein a mere license to use of enjoy real property is granted.

The appellants in this case are, respectively, a corporation engaged in the business of rendering services in the operation of a laundry, a public officeholder under a political subdivision of the state and whose salary exceeds the sum of $200 per month, a practicing attorney under the laws of, and within, the state of Washington, and an insurance agent doing business within the state.

The appellants' contention is that the classification made by the amendatory act, with reference to the persons taxed and those not taxed, is arbitrary and violative of the equal protection clauses of the state and Federal Constitutions (Const. Wash. Amend. 14; Const. U.S. Amend. 14).

The substructure of this opinion is founded upon the recent case of State ex rel. Stiner v. Yelle, supra. That was an En Banc decision, in which was expressed a wide divergence of opinion. Although the present writer entertained and expressed a view dissentient with that of the majority upon the questions there presented, that decision is, nevertheless, now the law of this state. It was therein held that the occupation tax was an excise tax, and not a property tax, and that, therefore, the uniformity clause contained in the Fourteenth Amendment of our Constitution (being now article 7, § 1) did not apply. With the nature of the tax thus definitely settled, the court invoked the principle that the Legislature in such case had a very broad power, and that we, as a court, could not interfere with that power except for arbitrary action, clear abuse, or constructive fraud appearing on the face of the act or from facts from which we may take judicial notice, quoting from Brown-Forman Co. v. Kentucky, 217 U.S. 563, 30 S.Ct. 578, 54 L.Ed. 883, as follows:

'A very wide discretion must be conceded to the legislative power of the state in the classification of trades, callings, businesses, or occupations which may be subjected to special forms of regulation or taxation through an excise or license tax. If the selection or classification is neither capricious nor arbitrary, and rests upon some reasonable consideration of difference or policy, there is no denial of the equal protection of the law.'

To this may be added the following quotation from the same court:

'The fact that a statute discriminates in favor of a certain class does not make it arbitrary, if the discrimination is founded upon a reasonable distinction. * * * 'A very wide discretion must be conceded to the legislative power of the state in the classification of trades, callings, businesses, or occupations which may be subjected to special forms of regulation or taxation through an excise or license tax. If the selection or classification is neither capricious nor arbitrary, and rests upon some reasonable consideration of difference or policy, there is no denial of the equal protection of the law.'

'It is not the function of this Court * * * to consider the propriety or justness of the tax. * * * Our duty is to sustain the classification adopted by the Legislature if there are substantial differences between the occupations separately classified. Such differences need not be great.' State Board of Tax Com'rs v. Jackson, 283 U.S. 527, 537, 538, 51 S.Ct. 540, 543, 75 L.Ed. 1248, 37 A. L. R. 1464.

While we agree with the authorities cited by appellants to the effect that the classification adopted by the Legislature may not be a palpably arbitrary one, but must rest upon some ground or difference having a fair and substantial relation to the object of the legislation, we cannot, in the light of the Stiner Case, accept appellants' statement that the classification made in the later...