Tsutras Automatic Phonograph Co. v. City of Williamson

Fox, Judge: The plaintiff, Tsutras Automatic Phonograph Company, Inc., is engaged in the business of owning and operating automatic phonographs and pin ball machines in and around the City of Williamson in this State. Under Code, 11-12-10 the yearly required license fee for a State license for keeping and maintaining the character of machines *23 operated by the plaintiff is $5.00 for each machine. Code, 8-4-13 provides: “Wherever anything, for which a State license is required, is to be done within such town the council may, unless prohibited by law, require a municipal license therefor, and may impose a tax thereon for the use of the town.” This provision is contained in the general law governing municipal corporations. The City of Williamson is a municipal corporation, operating under a special charter, enacted by the Legislature at its regular session, 1933, Section 24 of which reads as follows: “The council in its discretion shall be vested with authority to impose license or privilege taxes payable to the city, upon such businesses, professions, occupations, or enterprises as the council may deem proper, and to make and enforce all reasonable ordinances and regulations respecting the same: Provided, however, that nothing therein contained shall be in conflict with the constitution or laws of this State or of the United States of America.” Acting under this authority, the council of the city, on February 22, 1935, adopted an ordinance which provided that each and every non-gambling marble or dice amusement device be registered with the clerk of the city, and that on each such device which operates by the insertion of a penny, a license or tax of $12.00 per year should be imposed; that on any such device which operates on the insertion of a nickel or coin of larger denomination, a fee or license of $24.00 per year be imposed; and that for each and every phonograph used in the city there should be imposed a license or tax of $12.00 per year where not more than five were operated; at the rate of $9.00 per year where *24 not less than six nor more than ten were so operated; and at the rate of $6.00 per year where more than ten were operated. Plaintiff is the owner of thirty-seven phonograph machines which it operates in the City of Williamson, and which it admits are subject to a license tax in said city, to the extent that the State of West Virginia may impose a license tax therefor, to-wit, $5.00 for each machine. On this theory it offered to pay to the City of Williamson the sum of $201.84 as the license for the fiscal year beginning July 1, 1946, and on September 26, 1946, made such offer by check tendered on that date. The manner and form of such tender is not questioned. On October 16, 1946, the said check so offered was returned to the drawer, and attention called to the ordinance noted above. Plaintiff’s bill was filed in the office of the Clerk of the Circuit Court of Mingo County on February 15, 1947, and sets out the dispute in which the plaintiff and the City of Williamson were then involved, concerning the license fees aforesaid. It alleged that the officials of the City of Williamson had threatened to seize', disconnect and appropriate the machines operated by it in the city, by reason of the non-payment of the license fees demanded; alleged the tender of the proper license fees; asserted that the amount tendered, covering its machines, was the same as those imposed by the State therefor; and prayed that the city be enj oined and inhibited from seizing the machines, aforesaid, molesting in any manner the operations of said machines, or in any way interfering with plaintiff’s business, and that the city be required to accept the legal license fees or taxes for said machines, and to issue to the plaintiff license to operate the same. Also, that the ordinance of February 22, 1935, be declared null and void, insofar as it conflicted with the laws of the State of West Virginia, and for general relief. The City of Williamson filed its demurrer to said bill and assigned four specific grounds therefor, (1) that an injunction would not lie to restrain the collection of a tax merely because of its il- *25 legallity or unconstitutionality, a court of equity lacking jurisdiction to interfere in such a case because a law action would afford a plain and adequate remedy; (2) that a court of equity lacked jurisdiction to interfere by way of an injunction in the collection of a tax which is merely irregular or erroneous, the proper remedy being at law; (3) that a court of equity lacked jurisdiction to enjoin the collection of a tax merely upon the ground that it is excessive; and (4) that a court of equity lacked jurisdiction to enjoin a prosecution of a crime, the remedy being adequate by way of defending the prosecution. On February 15, 1947, and prior to the filing of this demurrer, a temporary injunction had been granted, restraining and inhibiting the defendants from disconnecting, seizing or taking possession the said machines and from interfering and molesting the plaintiff in the transaction of its business, until further order of the court. On June 19, 1947, the cause was heard upon the plaintiff’s bill and the demurrer thereto, and the injunction theretofore granted was dissolved, and the bill dismissed. From that decree, plaintiff was granted this appeal. The cause has been argued in this court upon the controlling question, namely, the right of the City of Williamson to impose a license tax upon the machines operated by the plaintiff therein, in excess of that imposed by the State therefor. The jurisdictional questions raised by the demurrer have not been here discussed, and appear to have been waived or abandoned. They will not be considered by us because, in our opinion, our decision should rest upon the single question raised on the bill and in the argument. However, we do not mean by our action to indicate any opinion on the merits of the points raised on demurrer. Under our constitution, power of taxation is vested in the Legislature, and by Section 1 of Article 10 it is provided that: “The Legislature shall have authority to tax privileges, franchises, and incomes of persons and corporations * * The Legislature may delegate to municipalities the power to tax, including the power to tax privileges, and *26 it has done so by Code, 8-4-13, quoted above, a provision appearing- in the statute law applying to municipalities heretofore organized under the provisions of what is now Chapter 8 of the Code. In addition to this general power, the Legislature granted such power to the City of Williamson by Section 24 of Chapter 138, of the Acts of the Legislature, Regular Session, 1933, which is quoted above. That charter provision remains in full force and effect, and is not in any wise affected by what is known as the municipal home rules statute, Chapter 56, Acts of the Legislature, Regular Session, 1937, and Section 9 of Article I thereof so provides. Therefore, Section 12 of Article 4 of said act, referred to in plaintiff’s brief, containing a reference to police power, need not be considered. In none of the statutory provisions above referred to is there any limitation on the amount of the license fee or tax which municipalities may impose on an activity for which the State imposes a license tax. Clearly, what is now the section covered by Code, 8-4-13, has never contained any such limitations. What is now Code, 8-4-13, was, in substance, Section 26 of Chapter 54, in the 1860 Code of Virginia; Section 33, Chapter 47, of our Code of 1868; and Section 33 of Chapter 47, of Barnes Code of 1923. Prior to the enactment of our Code of 1931, what is now Section 8-4-13, covered also the matter of the issuance of licenses to sell intoxicating liquors; but when our present code was adopted, there being no legal authority for the sale of intoxicating liquors, that part of the section was eliminated as obsolete. Therefore, so far as Code, 8-4-13 and precedent statutes authorizing a license tax by municipalities, under the general authority first mentioned above, it does not appear that there was ever any specific limitation on the power of the town or city as to the amount of tax it might impose, subject, of course, to the obviously implied limitation that such a tax, or other restriction, could not be imposed to the extent that it interfered with the operation of the activities licensed by the State. See Brackman’s v. City of Huntington, 126 W.Va. 21, 27 S. E. 2d. 71. *27 By Chapter 102, Acts of the Legislature, 1919, the Legislature made radical changes in our license law, and deprived county courts and municipalities of their former discretionary power to veto the issuance of license in a county or municipality, and made it the mandatory duty of the clerk of the County Court in each of the counties, to issue state licenses, but still permitting municipalities to impose a tax upon activities licensed by the State, and to issue licenses therefor. Subsequent to the enactment of this 1919 statute, in the case of State ex rel Kelley v. City of Grafton, 87 W. Va. 191, 104 S. E. 487, this Court held that a municipal corporation possessed no inherent police power, and could exercise only such regulatory authority as had been delegated to it by the Legislature; that where a municipal charter confers upon the governing body municipal authority to license acts or businesses, with the provision that the exercise of such authority should conform to the laws of the State, its power to grant or refuse such a license was governed by the requirement of the law then in force; that by the enactment of the 1919 statute, the Legislature had constituted the clerk of the County Court the chief licensing authority of the county; and that said act destroyed the theretofore existing power vested in municipal corporations in respect to the issuing of license, but that the municipality might still require a license, and impose a tax therefor. This was the general effect of this decision, but in the body of the opinion it is stated: “The municipality, in the exercise of its discretion, may decline to require a license for such purpose, but if it does, it has no authority to refuse to grant it upon tender of the proper license fee and presentation of the state license granted by the clerk of the county court. The only restriction placed upon the municipality in requiring such a license and tax is that the fee shall not be greater in amount than the State tax imposed for the same act, unless its charter reserves to *28 the council the right to fix the rate of such licenses.” This quotation is relied upon as supporting the contention of the plaintiff that the City of Williamson can not impose a greater license tax on plaintiff than that imposed by the State for the same act. The Kelley case was decided in October, 1920. At that time there was eff ective Section 18, Chapter 32 of the Code of 1913, which reads as follows: “Where the council of a city, town or village is authorized by its charter or any law of the State to impose a penalty for doing any act, or engaging in any business or occupation within the limits of such municipality, without first having obtained a license therefor pursuant to the ordinances of said town, no state license shall exonerate the person holding the same from any such penalty, whether such penalty be greater or less than herein provided; but no incorporated city, village or town shall impose or require the payment 'of a greater annual license tax for doing any act or engaging in any business within the limits of such city, village or town, than the state tax imposed by this chapter for doing the same act or engaging in the same business or occupation, except in such city, town or village having a special charter which reserves to the council the right to fix the rate of such license.” This section also appears as Section 18 of Chapter 32, Barnes Code of 1923, and was amended by the Code of 1931, and now appears therein as Section 9, Article 12, Chapter 11, and reads as follows: “Where the council of a city, town or village is authorized by its charter or any law of the State to impose a penalty for doing any act, or engag *29 ing in any business or occupation within the limits of such municipality, without first having obtained a license therefor pursuant to the ordinances of such town, no state license shall exonerate the person holding the same from any such penalty, whether such penalty be greater or less than herein provided.” To this section, as so amended, a statement is added by the revisers that: “That part of Section 18, Chapter 82, Code, 1923, limiting municipalities to the amount of the State license is omitted. It was designed primarily to apply to liquor licenses and is therefore obsolete.” It will appear, therefore, that the statement made in the opinion in Kelley v. City of Grafton, supra, was based upon a statute which no longer exists. The case of Brackman’s v. City of Huntington, supra, which by way of dicta, approves the Kelley case, should be construed to approve what that case held on the questions involved therein, and not to approve dicta which later statutory development makes obsolete. . We do not think it can be said that the action of the City of Williamson, in imposing a license tax greater in amount than that imposed by the State for the same act, conflicts with the law of the State. Such conflict could develop only where the Legislature had placed a limit on the taxing power of the municipality. Except in cases where a specific limitation is made by statute, as the law now stands, the power of taxation, with respect to license tax which a municipality may impose, is not, in express terms, limited as to amount. Apparently, the Legislature has not intended to place any limit thereon, because a former existing limitation has been removed by direct11 legislative action. Prior to the Code of 1931, there was a limitation which placed a restriction upon the power to tax licenses granted municipalities, by what was then Section 33 of Chapter 47 of the Code, and which became Code, 8-4-13. But when that limitation was removed by the Code of 1931, when the Legislature thereafter sought to impose a limitation on the power of municipalities to tax licenses, it did *30 so by direct action, as illustrated by Chapter 12, Section 17, Acts of 1987, relating’ to non-intoxicating beer, and by Section 13b, Article 4, Chapter 3, Acts of the Legislature, Extraordinary Session of 1947, relating to business or occupation taxes by municipalities. In our opinion, these acts strongly argue that the Legislature had not theretofore intended to put any limitation as to amount on the power of municipalities to impose license taxes. That it had no such intent is further evidenced by Section 43, of Chapter 119, Acts of the Legislature, 1939 now appearing in Michie’s Code, 1943, as Section 43, Article 12, Chapter 11, and which reads: “When any municipality is authorized by its charter or by any law of this state to impose a penalty for engaging in or prosecuting any business, activity, trade or employment within the limits of such municipality without first having obtained a license therefor pursuant to the ordinances of such town, no state license issued under this article shall exonerate the licensee from any such penalty, unless otherwise expressly provided, whether such penalty be greater or less than that imposed for the violation of the provisions of this article.” This perpetuates the policy adopted by the Legislature when it enacted the Code of 1931. There has been no later enactment on the subject. We are of the opinion, therefore, that, as the statute now stands, the City of Williamson has the power to impose the license tax authorized by the ordinance adopted by its council, on February 22,1935, even though that ordinance authorized the imposition of taxes greater in amount than that imposed by the State for the same activity. This is not to hold that a municipality has unlimited power in respect to the imposition of a license tax. Such tax must bear some fair relation to the value to the licensee of the *31 license so issued, and must always have regard to the paramount right of the State to control the issuance of licenses, and to insure the licensee of his right to operate thereunder. A license tax imposed by a municipality, the effect of which would be to make the license granted by the State of no value could not be sustained. On this point, each case must be governed by its circumstances, but until the Legislature acts there is no escape from the situation as it now exists. In the case at bar, however, there is no allegation that the tax imposed by the City of Williamson is unreasonable or confiscatory. The whole reliance of the plaintiff is that the City of Williamson does not possess the legal power to act under the ordinance of its council, dated February 22, 1935. The decree of the Circuit Court of Mingo County is affirmed. Affirmed.