Hay v. Leonard

• Decision Date: 26 February 1948
• Docket Number: 16047.
• Parties: HAY et al. v. LEONARD, County Treasurer, et al.
• Court: South Carolina Supreme Court

46 S.E.2d 653

212 S.C. 81

HAY et al. v. LEONARD, County Treasurer, et al.

No. 16047.

Supreme Court of South Carolina

February 26, 1948

Appeal from Common Pleas Circuit Court of Charleston County; J. Frank Eatmon Judge.

Action by Frank S Hay, C. Norwood Hastie, P. L. Bootle, Coastal Terminals Inc., a corporation, Josie Stewart, W. R. Patrick, Charles E Gibson, Charles E. Gibson, Inc., a corporation, and certain interveners too numerous to be named, against William J Leonard, as County Treasurer of Charleston County, and Gedney M. Howe, Jr., as Solicitor of the Ninth Judicial Circuit, to restrain the enforcement of a statute levying an annual license tax for privilege of engaging in business in county of Charleston except in city of Charleston. From an adverse judgment, plaintiffs appeal.

Equitable jurisdiction to restrain enforcement of statute levying an annual license tax based on gross receipts for privilege of engaging in business in county of Charleston except in city of Charleston would not be exercised on ground that taxpayers had no adequate remedy at law merely because Legislature did not provide for recovery of interest on taxes paid under protest. Code 1942, § 2807.

Order of Judge Eatmon follows:

The above entitled action was instituted to challenge the validity and restrain the enforcement of an Act of the General Assembly of South Carolina passed at the 1947 Session, 45 St. at Large, p. 589. The defendants in the cause are the County Treasurer of Charleston County, to whom the tax is payable by the terms thereof, and the Circuit Solicitor of the Ninth Judicial Circuit, as the prosecuting officer in Charleston County. The Act in question was approved May 19, 1947, and under the same there was levied an annual license tax for the privilege of engaging in each and every business and occupation in the County of Charleston, except in the City of Charleston, which comprises School District No. 20 of said County. This tax is graduated as follows:

'On not exceeding the first Five Thousand ($5,000.00) Dollars of annual gross receipts therefrom, the sum of Twenty ($20.00) Dollars;

'On the excess over Five Thousand ($5,000.00) Dollars to Thirty Thousand ($30,000.00) Dollars of annual gross receipts therefrom, an amount of money equal to one-fourth (1/4) of one (1%) per cent thereof;

'On the excess over Thirty Thousand ($30,000.00) Dollars to One Hundred Thousand ($100,000.00) Dollars of annual gross receipts therefrom, an amount of money equal to one-sixth (1/6) of one (1%) per cent thereof;

'On the excess over One Hundred Thousand ($100,000.00) Dollars to Two Hundred Thousand ($200,000.00) Dollars of annual gross receipts therefrom, an amount of money equal to one-eighth (1/8) of one (1%) per cent thereof;

'On the excess over Two Hundred Thousand ($200,000.00) Dollars of annual gross receipts therefrom, an amount of money equal to one-twenty-fifth (1/25) of one (1%) per cent thereof.'

The Act requires each taxpayer to file with the County Treasurer of Charleston County on or before each July 15th, commencing with July 15, 1947, a statement under oath showing his gross receipts for the preceding fiscal year, and to pay a tentative tax calculated on the basis of such statement. A like statement must be filed on or before the following July 15th on the basis of which the tentative tax is reconciled with the actual tax due, by rebate or additional payment, and the tentative tax for the ensuing fiscal year is paid, with reconciliation in similar manner at the end of such fiscal year. A taxpayer commencing any business or occupation in a fiscal year must estimate his gross receipts for such year, and pay a tentative tax on the basis thereof, subject to like reconciliation at the end of the fiscal year.

Section 6 of the Act provides:

'The County Treasurer shall place to the credit of the Trustees of each school district the amount of the license fees collected by him under this Act in such district, and the same shall be expended by such Trustees for educational purposes within the District. Where a license fee covers the engaging in a business or occupation in more than one such school district the said license fee shall be prorated among such school districts on the basis of annual gross receipts.'

There are no penalties for late payment, but willful misstatement of gross receipts in an application for a license, as well as engaging in a business or occupation without first having obtained a license so to do, are subject to criminal prosecution and punishment.

One of the plaintiffs here is a distributor of petroleum products with a place of business in the County of Charleston outside of the City. He alleges that his gross receipts are derived partly from deliveries in that portion of Charleston County in which the Act is applicable, and partly from deliveries made in the City, in which the Act is not applicable, by its express terms. When credit is extended, collection is made for him in Columbia, S. C., by the Standard Oil Company of New Jersey.

Another plaintiff operates a floral nursery and an exhibition garden in the portion of Charleston County in which the Act is applicable. He alleges that he sells a large part of his output of plants and shrubs in interstate commerce, in the course of which they are shipped to places outside the State. He also alleges that the admissions charged by him to his exhibition garden are already subject to the State admissions tax, and that the tax levied by the Act in question constitutes a second license tax on the same gross receipts.

A third plaintiff conducts a road-side restaurant and a tourists' home in that portion of the County in which the Act is applicable. His contention is that he is subject to the tax while his competitors in the City are not.

A fourth plaintiff maintains deep water terminals in that portion of the County in which the Act is applicable, and offers its services in the handling of bulk petroleum products to various dealers in such products. Such products move through its terminals into other states, into other counties in this State, and into the City of Charleston, as well as into that portion of the County in which the Act is applicable.

A fifth plaintiff resides in that portion of the County in which the Act is applicable, but engages in her occupation entirely in the City, in which the Act is not applicable by its express terms. In the argument before me it was indicated that this plaintiff works for wages, and is not engaged in an occupation with gross receipts, overhead and expenses, and net receipts.

A sixth plaintiff is engaged in the wholesale distribution of confectioneries and tobaccos, with his place of business in the City of Charleston. He makes sales and deliveries in the portion of the County in which the Act is applicable, and some of the collections for such sales are made at his place of business in the City. He alleges that the merchandise sold by him is already subject to State and Federal excise taxes and that not only is the tax in question a third tax of such merchandise, but also that it constitutes a tax upon such taxes.

A seventh plaintiff is a truck farmer in that portion of the County of Charleston in which the Act is applicable. He markets his produce through the medium of the eighth plaintiff, which is a corporation engaged in the business of supplying farmers with merchandise and also of distributing and selling the products of their farming operations. Almost all of such sales are made by the corporation to purchasers in other states and in Canada. It is alleged that the tax in question will fall on the gross amount of the sales made by the corporation for the farmers and also on the amount paid over by the corporation to the farmers.

Several of the plaintiffs allege that the Act in question will cause them to make a complete change in their method of keeping their books and accounts, which will involve more than a nominal expenditure by them.

The specific points of attack upon the Act are briefly:

(1) That it violates Article I, section 5, of the State Constitution, and also Article 14 of the Amendments to the United States Constitution, and that it is a denial of equal protection of the laws.

(2) That it violates Article I, section 6, of the State Constitution in that the tax is imposed on gross income from property owned by one or more plaintiffs, and hence constitutes a tax on such property which is not in proportion to its value.

(3) That it violates Article III, section 34, of the State Constitution, in that it is a special law where a general law may be made applicable.

(4) That it violates Article X, Section 1, of the State Constitution, in that it does not provide for a uniform and equal rate of assessment and taxation, and is not within any of the exceptions in that section.

(5) That it violates Article X, Section 5, of the State Constitution, in that it vests the corporate authorities of the County of Charleston with power to assess and collect taxes for the corporate purposes of the said County without making such taxes uniform in respect to all persons and property within the jurisdiction of the County.

(6) That it violates Article I, section 8, of the United States Constitution, insofar as it undertakes to impose a tax on interstate commerce done in the portion of the County of Charleston in which the Act is applicable.

The Complaint also alleges that the plaintiffs have no adequate remedy at law under section 2807 et seq. of the Code of Laws of 1942, first, because the tax in question is not one within the scope of those sections, and secondly because those sections do not provide for the recovery of interest on taxes paid under protest, and hence ...