The Best Foods, Inc. v. Christensen

• Decision Date: 06 February 1930
• Docket Number: 4961
• Court: Utah Supreme Court
• Parties: THE BEST FOODS, Inc., v. CHRISTENSEN, State Treasurer, et al

285 P. 1001

75 Utah 392

THE BEST FOODS, Inc., v. CHRISTENSEN, State Treasurer, et al

No. 4961

Supreme Court of Utah

February 6, 1930

Rehearing Denied March 13, 1930.

Appeal from District Court, Third District, Salt Lake County; D. W Moffat, Judge.

Consolidated suits by The Best Foods, Inc., the Owen Woodruff Company, I C. Calkins, and Nellie M. Adams, respectively, against A. E Christensen, State Treasurer, and others. Judgment for plaintiffs, and defendants appeal.

REVERSED.

George P. Parker, Attorney General, and Byron D. Anderson, Assistant Attorney General, for appellants.

Badger, Rich & Rich, of Salt Lake City, for respondents.

ELIAS HANSEN, J. CHERRY, C. J., and EPHRAIM HANSON and FOLLAND, JJ., concur, STRAUP, J. dissenting.

OPINION

ELIAS HANSEN, J.

This appeal requires that we answer but a single question, viz. Do the provisions of chapter 91, Laws Utah 1929, violate section 5, art. 13, of our state Constitution? Each of the four plaintiffs brought a suit in the district court of Salt Lake County to enjoin the treasurer and auditor of the state of Utah, the county commissioners of Salt Lake county, and the board of commissioners of Salt Lake City from enforcing the provisions of chapter 91, Laws Utah 1929. The plaintiff, The Best Foods, Inc., is a manufacturer of oleomargarine in New Jersey, Illinois, and California. The plaintiff, Owen Woodruff Company, is a wholesale distributor of oleomargarine with its principal place of business at Salt Lake City, Utah. The plaintiff I. C. Calkins is a retail merchant, and as such sells oleomargarine at Salt Lake City, Utah. The plaintiff Nellie M. Adams is a consumer of oleomargarine. She resides at Salt Lake City, Utah. The four suits were consolidated in the court below. They are all brought here for review upon one appeal. The trial court granted the relief prayed by the various plaintiffs upon the sole ground that chapter 91, Laws Utah 1929, is unconstitutional. The defendants appeal.

The act, so far as material to a determination of the questions here presented for review, reads as follows:

"It shall be unlawful for any person, firm or corporation to barter, sell or offer for sale, oleomargarine as defined in Section 1 of this Act, in the State of Utah, without first having obtained a permit therefor, which said permit may be granted and issued by the board of city commissioners of any city of the first or second class, the city council of any city of the third class, the board of trustees of any town, or the board of county commissioners in any territory outside of any city or town. Said permit shall be in force and effect for one year from and after the date of issuance, unless sooner revoked, and shall be granted only to a person, firm or corporation owning or operating the place from which such sales are to be made, which place shall be within the territorial limits of the body granting such permit. Each permit shall be numbered and shall show the residence and place of business of the permit holder, and shall not be transferable. The body issuing such permit shall, on reasonable notice and hearing, revoke the permit of any person, firm or corporation violating any provision of this Act, and no permit can be issued to such person, firm or corporation within a period of two years thereafter. The body issuing such permits, and upon revocation of any permit shall immediately certify the same to the State treasurer.

"No permit shall be issued until the applicant shall have paid to the treasurer of the city, town or county, as the case may be, an annual license fee of five ($ 5.00) dollars per year or fraction thereof. All such license fees shall be credited to the general fund of the city, town or county collecting the same.

"From and after the taking effect of this Act there is hereby imposed, and there shall be collected by and paid to the State treasurer, upon the sale of all oleomargarine sold in the State of Utah to consumers, the following taxes, to be paid at the time of sale and delivery to the consumer:

"Class (a). On oleomargarine not artificially colored, five cents per pound.

"Class (b). On oleomargarine artificially colored, ten cents per pound.

"Whenever a box, carton, or other container of oleomargarine is broken open and the contents offered or placed on sale, there must be attached to each pound, or other sized package, a suitable stamp denoting the tax thereon, said stamp to be cancelled under such regulations as the State treasurer shall prescribe. * * *

"The State auditor shall prepare and have suitable stamps for use on each kind of package described herein. Upon requisition from the State treasurer, the State auditor shall deliver to his order the stamps designated in such requisition and shall charge the State treasurer with the stamps thus delivered, and shall keep an accurate record of all stamps coming into and leaving his hands. The State treasurer shall sell the stamps herein provided for, only to dealers holding permits issued as provided in this Act and the moneys received from the sale of such stamps shall be turned into the general fund of the State. * * *"

Article 13, § 5, of the Constitution of Utah, reads thus:

"The Legislature shall not impose taxes for the purpose of any county, city, town or other municipal corporation, but may, by law, vest in the corporate authorities thereof, respectively, the power to assess and collect taxes for all purposes of such corporation."

The defendants contend that the annual license fee of $ 5 which the act requires be paid into the general fund of a county, city, or town for a permit to sell oleomargarine is not a tax within the meaning of article 13, § 5, of our state Constitution. In support of such contention the following cases are cited: Bailey v. Van Dyke, 66 Utah 184, 240 P. 454; State v. Camp Sing, 18 Mont. 128, 44 P. 516, 32 L.R.A. 635, 56 Am. St. Rep. 551; State v. Union Central Life Ins. Co., 8 Idaho 240, 67 P. 647; State v. Nelson, 36 Idaho 713, 213 P. 358; Trustees', Executors' & Securities Ins. Corp. v. Hooton, 53 Okla. 530, 157 P. 293, L.R.A. 1916E, 602.

The plaintiffs contend (1) that there is a fundamental distinction between a license fee imposed under the police power and a license fee imposed for revenue; that a license fee imposed for revenue is a tax, regardless of the name by which it may be called; that the provision contained in Laws Utah 1929, c. 91, whereby a license fee of $ 5 shall be paid into the general fund of a county, city, or town for a permit to sell oleomargarine, is necessarily a provision to raise revenue for counties, cities, and towns, and hence imposes a tax for municipal purposes within the meaning of section 5, art. 13, of the Constitution of Utah, and therefore such provision is unconstitutional, and (2) that the provisions of the act levying a stamp tax of five and ten cents per pound on oleomargarine sold within the state is void because by the act stamps may be sold to permittees only; that, if there can be no legal permittees, there can be no lawful sale of stamps to place on the packages containing oleomargarine. In support of the first proposition urged by the plaintiffs, the following cases and authorities are cited: Kimball v. Grantsville City, 19 Utah 368, 57 P. 1, 45 L.R.A. 628 State v Standford, 24 Utah 148, 66 P. 1061; Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, 15 S.Ct. 912, 39 L.Ed. 1108; Patton v. Brady, 184 U.S. 608, 22 S.Ct. 493, 46 L.Ed. 713; Black v. State, 113 Wis. 205, 89 N.W. 522, 90 Am. St. Rep. 853; Hancock v. Singer Mfg. Co., 62 N.J.L. 289, 41 A. 846, 42 L.R.A. 852; Spokane & Eastern Trust Co. v. Spokane County, 70 Wash. 48, 126 P. 54, Ann. Cas. 1914B, 641; State of Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 35 L.Ed. 994; Bank of Commerce & Trust Co. v. Senter, 149 Tenn. 569, 260 S.W. 144; Amos v. Gunn, 84 Fla. 285, 94 So. 615; State v. Norval Hotel Co., 103 Ohio St. 361, 133 N.E. 75, 19 A.L.R. 637; In re Opinion of the Justices, 123 Me. 573, 121 A. 902; Albert Pick & Co. v. Jordan, 169 Cal. 1, 145 P. 506, Ann. Cas. 1916C, 1237; Des Moines Ry. Co. v. Chicago Great Western Ry. Co., 188 Iowa 1019, 177 N.W. 90, 9 A.L.R. 1557; Cincinnati Milford & Loveland Traction Co. v. State, 94 Ohio St. 24, 113 N.E. 654; Union Steam Pump Sales Co. v. Deland, Secretary of State, 216 Mich. 261, 185 N.W. 353; U.S. v. Philadelphia B. & W. R. Co. (D. C. Pa.) 262 F. 188; Foster & Creighton Co. v. Graham, 154 Tenn. 412, 285 S.W. 570, 47 A.L.R. 971; Cadwalader v. Lederer (D. C.) 273 F. 879; State v. Burr, 65 Wash. 524, 118 P. 639; Provo City v. Provo Meat & Packing Co., 49 Utah 528, 165 P. 477, Ann. Cas. 1918D, 530; Matthews v. Jensen, 21 Utah 207, 61 P. 303; 37 C. J. 170; 3 McQuillin on Municipal Corporations, § 991; Royall v. State of Virginia, 116 U.S. 572, 6 S.Ct. 510, 29 L.Ed. 735, page 737; Robinson v. Norfolk, 108 Va. 14, 60 S.E. 762, 15 L.R.A. (N.S.) 294, page 299, 128 Am. St. Rep. 934; Waters-Pierce Oil Company v. City of Hot Springs, 85 Ark. 509, 109 S.W. 293, 16 L.R.A. (N.S.) 1035, page 1036; Ex parte Richardson, 170 Cal. 68, 148 P. 213; City of Portland v. Portland Gas & Coke Co., 80 Ore. 194, 150 P. 273, page 274, 156 P. 1070; Ex parte Mayes, 64 Okla. 260, 167 P. 749, pages 750, 751; City of Muskogee v. Wilkins, 73 Okla. 192, 175 P. 497; Spokane & Eastern Trust Company v. Spokane County et al., 70 Wash. 48, 126 P. 54, Ann. Cas. 1914B, 641, page 642; State ex rel. Wyatt v. Ashbrook, 154 Mo. 375, 55 S.W. 627, 48 L.R.A. 265, page 268, 77 Am. St. Rep. 765; License Tax Cases, 72 U.S. 462, 5 Wall. 462, 18 L.Ed. 497; Yamhill County v. Foster, 53 Ore. 124, 99 P. 286; People v. Martin, 60 Cal. 153, 155; License Tax Cases, 46 U.S. 504, 5 HOW 504, 12 L.Ed. 256; Ex parte Pfirrmann, 134...