Bacon Service Corp. v. Huss

The plaintiff and respondent is a California corporation having its principal place of business in the county of Fresno. It has been and is engaged in the business of transporting property for hire as a private carrier and persons and property for hire as a common carrier over the public highways of the state by means of motor vehicles operated between fixed termini and over regular routes. The defendant and appellant is a law enforcement officer of the state whose duties relate chiefly to the enforcement of laws governing the use of the public highways by motor vehicles in Fresno County. In July, 1924, he was threatening criminal prosecutions against the respondent for alleged violations of the provisions of an act entitled “An act to impose a license fee for the transportation of persons or property for hire or compensation upon public streets, roads and highways in the State of California by motor vehicle; to provide for certain exemptions; to provide for the enforcement of the provisions hereof and for the disposition of the amounts collected on account of such licenses; . . . ,” approved June 13, 1923 (Stats. 1923, p. 706). This action was brought to enjoin him from enforcing or attempting to enforce the provisions of that act. The complaint set forth the foregoing facts and charged that said act contravened certain provisions of the state and federal constitutions and was therefore void.

The appellant answered admitting generally the allegations of the complaint but denying specifically the alleged unconstitutionality of the act. By stipulation, the cause was submitted to the trial court on the facts alleged in the complaint and on the issues of law raised by the answer. The court found the allegations of the complaint to be true, concluded that the act was void in its entirety as in violation of both state and federal constitutions and rendered judgment enjoining the defendant from enforcing the same. The defendant appeals. The sole question for determination is the alleged unconstitutionality of the statute.

As indicated by its title, the act was designed to impose a license tax upon those engaged in the business of operating motor vehicles upon the public highways for the transportation of persons or property for compensation. Section 1 defines certain words and phrases employed in the act. The

Section 2 of the act provides: “Each operator of a motor vehicle within this state who transports or desires to transport for compensation or hire persons or property upon or over any public highway within this state shall apply to and secure from the board of equalization of the State of California a license to operate each and all of the motor vehicles which such operator desires to operate or which such operator from time to time may operate.”

Under section 4 of the act, the renewal of said license is made conditional on the payment by the applicant of four per cent of the “gross receipts from operation” ascertained as provided in the act. Said section further provides “that there shall be deducted from said four per cent of the gross receipts the amount of any county or municipal licenses, and any city, or county or city and county taxes paid by such operators to any city, or county, or city and county in this state upon any of the property actually used and necessary in the operation of such motor vehicles for the transportation of persons or property and upon such payment said state controller shall issue a receipt, in duplicate, to such applicant. ’ ’

It is provided in section 7 that any operator using the public highways of the state for the transportation of persons or property for hire, either as a public or private carrier without first obtaining the license and making the return of gross receipts provided for, is guilty of a misdemeanor and is punishable by a fine or imprisonment or both. Section 8 provides that after the funds are paid to the state

The respondent concedes the right of the state to impose a license for revenue on all persons operating motor vehicles for hire on the public highways. It makes no objection to fixing the amount of such license tax at a percentage of the gross receipts, but it has refused to comply with the requirements of the law because of its alleged invalidity resulting from certain exemptions included in sections 1, 9, and 10 of the act. Section 1 excludes from the definition of the term “operator” everyone “who solely transports by motor vehicle persons to and from or to or from attendance upon any public school,” and also everyone “who solely transports his or its own property, or employees, or both, and who transports no persons or property for hire or compensation.” Section 9 reads as follows: “This act shall not apply to taxicabs, drays, transfer vehicles and other like city motor .vehicles which do not run over regular routes nor shall it apply to hotel busses meeting trains, cars or boats or to sight seeing motor vehicles,” and section 10 provides: “Nothing in this act shall be construed to apply to nor to levy a license upon the operation of any motor vehicle or motor vehicles of any operator, or the gross receipts therefrom, when as much as fifteen per cent of the gross receipts of such operator in the aggregate from such motor vehicle or motor vehicles shall have been earned by the transportation of United States mails, parcels post or other government matter under contract with the federal government.”

The respondent contends that the statute applies only to some of those who operate motor vehicles for hire over the public highways and in terms exempts others who stand in the same relation to the burdens imposed as does the respondent ; that no reasonable distinction can be found to justify their preference and that the act is therefore in violation of section 21 of article I of the state constitution prohibiting the granting of privileges or immunities to citizens or any class of citizens which, upon the same terms, are not granted to all citizens; also in violation of section 11 of article I requiring laws of a general nature to have a uniform operation; also in violation of section 12 of article XI, which

i On the former hearing the subject was treated particularly with reference to the applicability of section 11 of article I of the constitution. A rehearing was granted in order that more attention might be given in the first instance to the effect of section 21 of article I, in the light of the provision of section 11 of the act in question.

[1] An examination of the entire statute discloses that the obvious and only purpose of the act was to provide a revenue with which to maintain and repair the public highways of the state outside of incorporated cities and that such revenue was to be obtained by the imposition of a license or privilege tax on the business of operating motor vehicles for hire over such public highways. [2] The act is not a police measure in any sense. It provides for a license tax for revenue purposes only. As 'stated, the respondent concedes that this is a proper purpose to justify a license tax. It contends, however, that if operators of motor vehicles for hire constitute a proper classification to satisfy constitutional requirements, there is no natural, intrinsic, or constitutional distinction between the use to which its motor vehicles are put and the use exercised by certain of the exempted vehicles. |

[3] Taking up the exemptions in the order in which they appear in the statute, it is first noted that section 1 exempts operators of motor vehicles used solely for the transportation of persons to and from the public schools. In providing for, this exemption, the legislature doubtless had in mind the motor vehicles operated by or under contract with public school authorities for the conveyance of school children to and from school. The expense of such operation is a charge on the public treasury and the exaction of the license tax thereon would naturally increase the general tax burden. The state has a special interest in the development of the public school system and in as full and regular school attendance as possible. To that end such conveyances have been provided at public expense. It is easily conceivable

[4] The next exemption applies to those who use said public highways for the transportation of their own property or employees or both and to those who transport no persons or property for hire or compensation. It is obvious that those who operate motor vehicles for the transportation of persons or property for hire enjoy a different and more extensive use of the public highways. They are thereby enabled to engage in business on the public highways and to provide for themselves a livelihood, particularly because of the existence of the public highways and the facilities thereby afforded. Such extraordinary use constitutes a natural distinction and a full justification for their separate classification and for relieving from the burden of the license tax those who merely employ the public highways for the transportation of their own property or employees.

[5] The respondent next contends that the exemption ''of “taxicabs, drays, transfer vehicles, and other like city vehicles which do not run over regular routes” is such an exemption as disturbs the required uniformity of the act. It is apparent that this exemption and the further exemption of hotel busses meeting trains, cars, or boats were intended to apply to those who are engaged in the business of operating such motor vehicles for hire within the limits of incorporated cities. As such, they may be properly so separately classified for the reason that highways within municipalities are usually not maintainable directly at the expense of the state but from municipal revenues derived from the exercise of municipal powers of license and taxation, and it must be assumed that the legislature had this distinction in mind in limiting the license to the use of highways maintainable by

In providing for the exemptions heretofore considered, we are of the opinion that the legislature has not acted arbitrarily nor.without reason in making such classifications. We do not intend to hold, however, that the exemptions provided for in section 9 of the act would apply to operators therein mentioned who are engaged also in the business of transporting passengers or property for hire outside of incorporated cities as the fact in each case may appear.

[6] A different situation is presented as to the exemptions next to be considered. It is insisted by respondent and it is not denied by the appellant that sight-seeing motor vehicles carrying passengers for hire are quite generally operated in county territory outside of incorporated cities. That being the fact, it is clear that the operators of such vehicles come within the definition of those who are required to obtain licenses and to pay four per cent of their gross receipts to the state under the general provisions of the act. There appears to be no natural or intrinsic and certainly no constitutional distinction between the use of the public highways by the vehicles of the respondent and the same use by sight-seeing busses regularly using the highways of the state outside of municipalities in the business of transporting persons or property for hire.

Likewise it is insisted by the respondent that the exemption of operators who derive as much as fifteen per cent of their gross receipts from United States mail contracts constitutes a classificaton having no basis of distinction except the arbitrary declaration of the statute itself. It is difficult to perceive how this exemption may be justified when it relieves from the burden of the license tax those operators who conduct a motor-bus business outside of municipalities and- who perchance may have acquired a government contract for the carriage of mail from which they derive at least fifteen per cent of their gross receipts. Under this exemption the entire revenues of such operators derived from business exclusive of mail contracts—and which may be as much as eighty-five per cent of their gross receipts—are relieved from the deduction of four per cent license tax while a like percentage of the gross receipts of those operators of the same class having no mail contracts are subjected to the tax.

It is then to be determined what effect the presence in the act of those unlawful exemptions had on the balance of the act. [7] It is well settled that if the objectionable portions of an act are so connected with the rest of the act as to be inseparable therefrom or to render the act inoperative as a complete legislative enactment in the event the objectionable portions be excluded, the entire act must fall. [8] It is also the rule that if the act, with the objectionable portions excluded, be completely operative as a legislative enactment and it is plain from the terms of the act that the objectionable portions were not the considerations or conditions which moved the legislature to enact the statute and that it was the intention of the legislature to pass the act though the objectionable portions were eliminated, then the balance of the statute may be permitted to stand as a complete expression of the legislative will. The rule in such cases is expressed in Hale v. McGettigan, 114 Cal. 112 [ 45 Pac. 1049 ], where it is said: “Whether a statute containing an unconstitutional provision, with others which

The purpose of that section was undoubtedly to meet such a situation as is here presented. [11] It was inserted in the act for the purpose of indicating to the court, when required to pass upon the constitutionality of the act or of any portion thereof, and to apply the rules of law applicable thereto, that the statute would have been enacted with the objectionable portions omitted in the event the court should conclude that said portions were separable and beyond the power of the legislature lawfully to incorporate in the statute. It is conceded by the respondent that “without such a declaration. in the statute it would be the duty of this court, if the act were in part constitutional and in part unconstitutional, to sustain the constitutional part if the good and the bad were not so blended that they could not be separated and the constitutional part could stand alone as a complete expression of the intention of the legislature.” But it is insisted that section 11 is ineffectual to accomplish the purpose contended for by the appellant. It is first pointed out that it is beyond the power of the legislature to bind the court by the assertion that if any portion of the act “is to be held unconstitutional, such decision shall not affect the remaining portions” of the act. To this contention we accede. [12] But we cannot view the language of the statute as an inexorable command, for it is a judicial question in each case whether the good may stand notwithstanding the bad. The use of such language may rightly be considered by the court as a declaration of intention on the part of the legislature that in so far as lay within its power a separable invalid portion of the act should not destroy the whole.

[13] It is next contended that the second sentence of section 11 to dhe effect that the legislature would have passed the act and each portion thereof “irrespective” of the fact

The case of Mordecai v. Board of Supervisors, 183 Cal. 434 [ 192 Pac. 40 ], is strongly relied upon by the respondent. A careful consideration of the decision in that case in the light of the terms of the statute then before the court discloses that the conclusions there reached are not controlling in the present case nor are they inconsistent with the rules applied in this controversy. The statute involved in that case provided generally for the creation of irrigation districts in counties throughout the state and conferred special powers upon the board of directors of such districts over irrigation and other districts theretofore organized and existing in all counties pursuant to general state laws. The act then provided that nothing therein contained should affect or apply to any irrigation, protection,

Other cases cited by respondent do not warrant a different conclusion. In Pasadena v. Stimson, 91 Cal. 238 [ 27 Pac. 604 ], the privileges were conferred by the general terms of the act and the disabilities or burdensome conditions were imposed upon the municipalities included in the exception and the entire act was therefore properly declared void. In the case of In re Raleigh, 177 Cal. 746 [ 171 Pac. 950 ], this court had under consideration the real estate brokers’ license law of 1917. The act contained an exemption of those who had received from the insurance commissioner or the bureau

It is contended by respondent that Hill v. Wallace, 259 U. S. 44 [ 66 L. Ed. 822 , 42 Sup. Ct. Rep. 453 , see, also, Rose’s U. S. Notes Supp.], is decisive of the present case. Its effect in that respect might be conceded if it were here determined that the valid and invalid portions of the act in question were inseparable. The Federal Trade Act of Congress, approved August 24, 1921, under consideration in that case, was found to contain regulations which were unenforceable. The act also contained a section which was the same in effect as section 11 of the present act. The court determined that the invalid portions were so interwoven with the other regulations contained in the act as to be impossible of separation and to render the saving clause ineffectual. A similar saving clause was considered in an Alabama case, concerning which it was held that “such an expression in an enactment serves only to render certain the legislative intent with respect to passage of the valid parts, notwithstanding the invalid, and does not avail to clothe the valid with immunity from the invalidating effect of the law because of the inseparable blending of the bad and good.” (State v. Montgomery, 177 Ala. 212 , 241 [ 59 South. 294 , 302].) In Dorchy v. State of Kansas, 264 U. S. 286 [ 68 L. Ed. 686 , 44 Sup. Ct. Rep. 323 ], it was said that such a saving clause was “not an inexorable command” to the court. So here it is recognized that such a clause cannot always save a statute. In Connolly v. Union Sewer Pipe Co., 184 U. S. 540 [ 46 L. Ed. 679 , 22 Sup. Ct. Rep. 431 , see, also, Rose’s U. S. Notes], the anti-trust law of Illinois was under consideration. It provided that its terms should “not apply to agricultural products or livestock while in the hands of the producer or raiser.” It was determined that those affected by the -general terms of the act were denied the equal -protection of the law and the whole statute must fall for the reason “that the legislature would not have entered

Respondent relies on a statement in Lewis’ Sutherland on Statutory Construction (vol. 1, 2d ed,, sec. 306) where it is said: “If, by striking out a void exception, proviso or other, restrictive clause, the remainder, by reason of its generality,; will have a broader scope as to subject or -territory, its, operation is not in accord with the legislative intent, and the whole would be affected and made void by the invalidity of such part. ’ ’ The foregoing is unquestionably the rule except when a contrary legislative intent is ascertainable from the language of the statute or the general purposes or terms of the act. But when it appears in the statute that it was the intent that the separable void portion should not destroy the whole the invalidity of the entire statute will not necessarily result, especially when it is determined, as here, that such was the intent, and that the remainder is a full and complete legislative enactment of the subject to which it relates.

Numerous other cases cited and relied upon by respondent have been examined. In many of them we find a general recognition of the rules applied in the present case and we find none of them, when properly considered, compelling a conclusion contrary to that at which we have arrived. ,

Cases from other jurisdictions, cited by the appellant, declare the effectiveness of such a saving clause in proper cases. In N. R. Bagley Co. v. Cameron, 282 Pa. 84 [ 127 Atl. 311 ], it was held that a saving clause declaring statutory provisions separable is effective to raise a presumption of the

[17] In section 8 of the act it is provided that all moneys collected under and by virtue of the act, except such sums as are received for emblems, shall be paid into the state treasury and credited to the motor vehicle fuel fund. This section then appropriates one-half of said collections to the state to be devoted to the maintenance and repair of public highways. The other one-half is apportioned to the several counties of the state in accordance with the plan therein provided and to be devoted exclusively to the maintenance and repair of public highways within the counties. It is contended by the respondent that section 12 of article XI is thereby violated which provides, among other things, that the legislature shall have no power to impose taxes upon counties or upon the inhabitants of any county for county purposes, but may by general law vest in the authorities of the county the power to assess and collect taxes for such purposes. We find no merit in this contention. [18] The license taxes here imposed by the legislature are in furtherance of a state purpose for the maintenance of state highways and to extend aid in the maintenance of county highways. This action of the legislature would seem to' be fully authorized by section 26 of article IV of the constitution, which provides that “the legislature shall have the power to establish a system of state highways, or to declare any road a state highway, and to pass all laws necessary or proper to construct and maintain the same, and to extend aid for the construction and maintenance in whole or in part of any county highway.” (See Buckingham v. Commary-Peterson Co., 39 Cal. App. 154 , 167 [ 178 Pac. 318 ].) The cases of People v. Martin, 60 Cal. 153 , and San Francisco v.

[20] There is no merit in the contention of the respondent that the license tax here involved is a tax on its so-called franchise "or right to operate .its motor vehicles under a certificate of public convenience and necessity issued by the Railroad Commission, and therefore void under section 14 of article XIII of the constitution. That section provides that all franchises (such as the respondent claims to own) shall be assessed at their actual cash value and be taxed at the rate of one per cent each year exclusively for the purposes of the state. It is argued that inasmuch as section 8 of the act in question provides that one-half of the license tax collected shall be paid to the several counties the section of the constitution referred to has been violated. The answer is that the tax on the alleged franchise of the respondent as contemplated by the section of the constitution referred to is a property tax on an ad valorem basis and is not in any sense a license tax for the privilege of carrying on a business such as the act here involved intended to impose. !

We therefore conclude that when the separable and unlawful exemptions are excluded from the act as being obnoxious to section 21 of article I of our state constitution, the remainder of the act is a completely enforceable statute as to all operators engaged in the business of using the public highways of the state outside of municipalities for the transportation of persons or property for hire, including those unlawfully exempted, and that the remainder of said act violates no provision of the state or federal constitutions invoked by the respondent.

The judgment is reversed.

Seawell, J., Curtis, J., Richards, J., Waste, C. J., and Lawler, J., concurred.

Rehearing denied.