Volusia County Kennel Club v. Haggard

• Decision Date: 01 June 1954
• Parties: VOLUSIA COUNTY KENNEL CLUB, Inc., et al. v. HAGGARD et al.
• Court: Florida Supreme Court

Page 884

73 So.2d 884

VOLUSIA COUNTY KENNEL CLUB, Inc., et al. v. HAGGARD et al.

Supreme Court of Florida, En Banc.

June 1, 1954.

Rehearing Denied July 6, 1954.

Loftin, Anderson, Scott, McCarthy & Preston, Robert H. Anderson and D. P. S. Paul, Miami, for appellants.

Richard E. Ervin, Atty. Gen., Fred M. Burns and George E. Owen, Asst. Attys. Gen., John D. Moriarty, Sp. Asst. Atty. Gan., and Walter E. Dence, Miami, for appellees.

MATHEWS, Justice.

This case involves the legality of an additional tax upon the operator's permissible 'take' from legalized gambling at dog racing tracks based upon a new or additional classification.

Chapter 28058, Laws of 1953, F.S.A. § 550.16, appears to provide an additional classification within a classification of another classification for the sole purpose of imposing an additional tax, based upon the amount of daily gross receipts for each of the new classifications.

Prior to 1931 all gambling was illegal. In 1931, F.S.A. § 550.01 et seq., the Legislature classified gambling into two classes; first, gambling at enclosed race tracks was purified and washed clean of its sin by legislative enactment, and second, gambling on races outside of an enclosure, and all other gambling still remained sinful and clothed with a noxious odor. Then the Legislature further classified race track gambling into two classes, dog tracks and horse tracks, and based upon this classification, different taxes were imposed. In 1953 the Legislature made a further classification of dog tracks for taxation or revenue purposes, and it is upon this classification an additional graduated tax is now imposed.

The new classification for dog tracks is based upon the amount of the daily gross receipts or daily pool and a different rate of taxation is imposed upon each pool according to size or amount.

The appellants contend that they are now engaged in lawful businesses and are entitled to the protection of the Constitution to the same extent as any other lawful business and that the additional tax based upon the new classification between dog tracks denies to them the equal protection of the laws guaranteed by the Fourteenth Amendment of the United States Constitution and the Declaration of Rights of the Constitution of the State of Florida.

Sixty percent of the new tax is to be divided equally between the sixty-seven counties and forty percent is to be used for Old Age Assistance. It is urged that the tax should be upheld because it serves a useful purpose. In oral argument, particular emphasis was placed upon the fact that forty percent of the tax would be used where it was so badly needed for Old Age Assistance. No one questions the fact that the proceeds of the tax would be used for a needful purpose and that assistance to the aged has a particular appeal. Money could hardly be put to a more useful purpose than Old Age Assistance.

Only a few months ago we were urged to ignore sound principles of taxation and plain language of the Legislature in order that race tracks might run additional days because the money would be used for a useful purpose in providing college football scholarships.

Recently it was proposed to the Legislature that certain types of gambling should be legalized if the gambling was conducted by some church and such church received a part of the proceeds of the gambling. Public officials are constantly asked to look the other way at gambling at fairs and expositions. Recently there was a proposal that gambling at jai alai frontons be ignored on Sundays because a part of the proceeds would go to a cancer society. Such proposals are made from time to time because it is said a part of the proceeds of the operation will be used for a good purpose. Even a good purpose must be accomplished in a lawful manner and it would be a dangerous doctrine to say that the government may or should ignore fundamental principles of the Constitution and the laws in order to accomplish a good purpose.

It is also urged that the tax should be sustained because it is a tax in the exercise of the police power to further regulate a business with a noxious odor, although legal.

This Court has held that race track gambling establishments are now legal and that those in a like situation should be treated fairly and impartially. State ex rel. West Flagler Amusement Co. v. Rose, 122 Fla. 227, 165 So. 60; Hialeah Race Course Inc., v. Gulfstream Park Racing Association, Fla., 37 So.2d 692; and Simmons v. Hanton, Fla., 65 So.2d 42. All doubt with reference to the legality of these enterprises was removed by the adoption of Section 15, Article IX of the State Constitution, F.S.A., whereby the fundamental law recognized the operation of pari-mutuel pools as being legal. As further evidence of the legislative intent to eliminate the odor theretofore surrounding the operation of race track gambling and to recognize the importance of such businesses it declared that the same 'is a substantial business compatible to the best interests of the state and the taxes derived therefrom constitute an integral part of the tax structures of the state and counties. * * * and development of this business and influences and affects the financial stability of the state and counties.' F.S. § 550.081, F.S.A.

At the time of the new and additional classification upon which the new and additional tax is based, there was no suggestion nor thought of additional regulation of the dog race track business. In his meassage to the Legislature the Governor (Journal of the House of Representatives, April 7, 1953, page 11) discussed dog tracks and said:

'* * * These businesses are not now paying a fair share of the cost of government.

* * *

* * *

'I recommend that a Bill be passed for a graduated tax scale that will increase the state's 'take' * * *.'

The law making the new classification for the purpose of the additional tax does not contain any word or suggestion with reference to further regulation of the business of race track gambling, either in the title or body of the Act.

There may have been a time when all money from gambling was considered 'tainted' money, but now the only complaint about money from legalized race tracks appears to be 'taint enough of it'.

In deciding this case we must, therefore, eliminate from consideration any theory that the tax is imposed under the police power for the purpose of regulation and conclude that it is a tax question and its legality must be measured by the fundamental principles with reference to taxation for revenue and that the principles of law with reference to police power and regulation are not involved.

If it is an income tax, it violates Section 11, Article IX of the State Constitution. It is not an income tax. The lower Court held: 'The tax here under consideration is a tax upon a privilege.' It further held that the amount of the tax was based upon the amount of the gross income based upon the different classifications, that the tax was levied upon each "daily pool' and the tax as regards each single daily pool is assessed as a tax upon a single taxable transaction.' The Chancellor further found an indication that there is a reasonable basis for the Legislature to determine that there is a definite relationship between the size of the daily pools operated by the various tracks and the profits made by such tracks and then held: 'The making of such Legislative determination, when justified by the facts, will be presumed for the purpose of sustaining the constitutionality of a Legislative enactment.' We find no legislative determination of anything except the desire to get more money from the race tracks. There is no legislative determination that there is any difference in the various classifications except the size of the gross daily income.

A mere examination of the formula set forth in Chapter 28058, Laws of Florida 1953, as a basis of the tax shows that it is nothing more than an additional graduated tax against race tracks in the higher brackets and they are compelled to pay larger sums than the smaller tracks simply because of larger gross receipts. The transactions in the smaller and larger tracks are identical.

The appellants contend that the case of Stewart Dry Goods Company v. Lewis, 1935, 294 U.S. 550, 55 S.Ct. 525, 529, 79 L.Ed. 1054, and other similar cases are controlling in this case. The Stewart case appears to be the leading case on the subject. In that case Mr. Justice Roberts (U. S. Supreme (Court) said: 'We think the graduated rates imposed were not intended to bear any relation to net profits.'

In the present case, the Chancellor, in his final decree, stated:

'The contention that the equal protection clause is violated is based largely upon the decision of the Supreme Court of the United States in the case of Stewart Dry Goods Company v. Lewis, 294 U.S. 550, 55 S.Ct. 525, 79 L.Ed. 1054. That case involved a tax upon the gross sales of all retail stores based upon a fixed percentage of the amount of sales in each of several brackets specified in the law, the tax being a larger percentage of the gross sales in each higher bracket as the volume of sales increased. Emphasis is laid upon the summary of the holding of the court found in the dissenting opinion of Mr. Justice Cardozo, who said:

"The prevailing opinion commits the court to a holding that a tax upon gross sales, if laid upon a graduated basis, is always and inevitably a denial of the qual protection of the laws, no matter how slight the gradient or moderate the tax."

The Stewart case was followed by the case of Valentine v. Great Atlantic & Pacific Tea Co., 1936, 299 U.S. 32, 57 S.Ct. 56, 81 L.Ed. 22. That case involved tax on certain types of retail stores based upon an accumulated graduated scale. The Valentine case was first heard by a three-judge District Court, Great Atlantic & Pacific Tea Co. v. Valentine, 12 F.Supp. 760, 765, in which it was siad:

'In these particulars the cases are...