Fox Bakersfield Theatre Corp. v. City of Bakersfield

In an action for declaratory relief, injunction and recovery of taxes paid under protest by plaintiffs, operators of motion picture theatres, the trial court determined that a business license tax levied by defendant city and affecting them was valid. The attack on defendant’s tax ordinance includes the charges of discrimination, double taxation, and defective enactment.

The city has had for many years a basic business license tax ordinance, No. 681, which levies a tax for the purpose of revenue rather than regulation. It reaches practically every kind of business conducted in the city. Detailed classifications are made of various kinds of business. In some the license fee is a flat sum and in others is graduated according to the income from the business, or on some .other basis. Among those businesses are theatres taxed by section 56 (the same section also includes other .things, such as amusement games). The tax on theatres is $104 per annum for 300 seats or less, and $8.00 for each 100 seats or fraction thereof over 300. Plaintiffs do not question the validity of that tax.

In 1946, an ordinance was adopted which imposed one cent per admission tax on theatres. That ordinance was repealed, and in 1947, an initiative ordinance was adopted, as No. 754, the one here questioned. It is a license tax ordinance for revenue requiring that a license shall be obtained “by all persons maintaining places of or furnishing amusement or entertainment in the City. Places of amusement or entertainment shall include theatres, shows, games, carnivals, spectacles, exhibitions, dances, and other performances; furnished or provided at any place or by any person as to which a charge, admission fee, or other sum is required to be paid, whether wholly or partially, for the privilege of seeing, witnessing, being present at, engaging or participating in singly or with another person, or for otherwise being diverted, amused, or entertained.” The tax imposed is 1 cent “for each 10 cents or fraction of 10 cents over and above the first 15 cents of the amounts charged and paid for admission to any place, including admission by season ticket or subscription; and 1 cent for each ten cents or fraction of 10 cents

“(b) 1 cent for each 10 cents or fraction of 10 cents over and above the first 15 cents of amounts charged and received by the operator of any place of amusement, where no admission fee is charged, for the use or operation of property, equipment and/or facilities, and/or the privilege of being in or upon such place of amusement. ...” The tax is on the privilege of conducting such places of business but shall be collected from the customer. The tax imposed is expressly made in addition to, rather than in lieu of, any other taxes. Hence it is in addition to the general business tax license ordinance No. 681 above mentioned. Where refreshments, food or services are dispensed at any roof garden, cabaret, cafe, restaurant or hotel, or the like, and there is furnished public performance, floor show, dance floor, or other amusement, then it is deemed that 20 per cent of the amount paid by the customer is for entertainment and a tax of 1 cent on each 15 cents of such 20 per cent is levied (§ 8(c)). Billiard tables, pool tables and arcades where no admission fees are charged, are exempted from the tax. (§8(b).) Also exempted are admission fees for entertainment charged by charitable, religious and educational organizations, and those producing nonprofit symphony concert programs (§ 9(a)) ; the furnishing of music alone by musicians or mechanically without an admission charge (§9(c)); and, in the sale of alcoholic beverages and such beverages as are not included in the refreshments covered by section 8(e) unless the charge therefor is included without segregation in the customer’s bill.

Invoking the United States Constitution equal protection mandate (U. S. Const., 14th Amend.) and similar guarantees under the state Constitution, such as uniformity and equality of operation of laws (see Cal. Const., art. I, §§11, 21; art. IV, §25(19) (20) (33)), plaintiffs assert that the tax levied by ordinance No. 754 is discriminatory and not based upon any proper classification.

Preliminarily, it should be observed, in connection with plaintiffs’ assertion that as a result of ordinance No. 754, they bear and pay a large proportion of the business license taxes levied and collected by thé city and a major share of the amuse

Correctly interpreted, cases such as Hansen v. Town of Antioch, 18 Cal.2d 110 [ 114 P.2d 329 ], and the eases there cited, involving a different license tax for itinerant peddlers than that for persons with a fixed place of business, are not to the contrary. In the Hansen case, the court stated that a distinction may be drawn between such merchants, and that

Plaintiffs’ contention that a double tax has been laid upon them should be first disposed of. As seen from the ordinance, they pay the tax that is levied on all businesses and, in addition, that levied by ordinance No. 754. It is conceded that both taxes are excise rather than property taxes. Taxation, other than of property, upon the same activity or incident for the same purpose by the same taxing agency, more than once in the same period, sometimes called double taxation, standing alone, is not forbidden by the Constitutions, state or federal. (Ingels v. Riley, 5 Cal.2d 154 [ 53 P.2d 939 , 103 A.L.R. 1 ]; see Dougles Aircraft Co. v. Johnson, 13 Cal.2d 545 [ 90 P.2d 572 ]; Flynn v. City and County of San Francisco, 18 Cal.2d 210 [ 115 P.2d 3 ]; Illinois C. R. Co. v. Minnesota, 309 U.S. 157 [ 60 S.Ct. 419 , 84 L.Ed. 670 ]; Baker v. Druesedow, 263 U.S. 137 [ 44 S.Ct. 40 , 68 L.Ed. 212 ].) It is a factor in determining whether the tax is invalidly discriminatory when it is levied upon some activities but not others, or it may pose a question of substantive due process if its imposition assumes confiscatory or prohibitory characteristics.

Section 102 of the Revenue and Taxation Code (formerly Pol. Code, § 3607) states that nothing in that “division” shall be construed to permit double taxation but that “division” deals solely with property taxes. Our Constitution provides that “all property” in the state except as otherwise provided “shall be taxed in proportion to its value.” (Cal. Const., art. XIII, § 1) And under that provision it has been held that there could be no double taxation of property. (See Germania Trust Co. v. San Francisco, 128 Cal. 589 [ 61 P. 178 ]; People v. Badlam, 57 Cal. 594 ; San Francisco v. Anderson, 103 Cal. 69 [ 36 P. 1034 , 42 Am.St.Rep. 98 ]; Estate of Fair, 128 Cal. 607 [ 61 P. 184 ]; Morgan Adams Inc. v. Los Angeles County, 209 Cal. 696 [ 289 P. 811 ]; Flynn v. San Francisco, 18 Cal.2d 210 [ 115 P.2d 3 ]; Redwood Theatres v. City of Modesto, 86 Cal.App. 2d 907 [ 196 P.2d 119 ]; Bank of California, Nat. Assn. v. Roberts, 173 Cal. 398 [ 160 P. 225 ]; Spring Valley Water Co. v. County of Alameda, 24 Cal.App. 278 [ 141 P. 38 ]; Napa Sav. Bank v. County of Napa, 17 Cal.App.

This brings us, therefore, to the question that, inasmuch as the tax imposed is not on all businesses in the city, has there been made a proper constitutional classification of the businesses taxed, or is there a violation of the uniformity and equal protection requirements of the Constitutions.

Plaintiffs assert that the classification is improper because it does not include all amusement businesses in the city and that they bear a major share of the taxes assessed against amusements. It will be remembered that exemptions are made of pool halls and arcades where admissions are not charged, certain religious, charitable, and educational affairs, where music alone is furnished without admission charge.

We do not think the city overstepped constitutional limitations in its classification. It must be remembered that, as aptly expressed in speaking of the state sales tax, by the court in Roth Drug, Inc. v. Johnson, 13 Cal.App.2d 720 , 733 [ 57 P.2d 1022 ]: “The power of the states to make classifications of persons or property for the purpose of taxation is very broad ... A statute is presumed to be constitutional until the contrary appears. It has been said that an act may not be held to be unconstitutional merely because it may contain provisions which seem to be unjust or oppressive, or be

It is well settled that occupations and businesses may be classified and subdivided for purposes of taxation, and it is within the discretion of the Legislature to exact different license taxes from different classes or subclasses of businesses, subject only to the limitations of the state and federal Constitutions in regard to equal protection of the laws. No constitutional rights are violated if the burden of the license tax falls equally upon all members of a class, though other classes have lighter burdens or are wholly exempt, provided that the classification is reasonable, based on substantial differences between the pursuits separately grouped, and is not arbitrary. (1 Cooley, Taxation, 4th ed., pp. 746-751; 53 C.J.S. pp. 532-538; 33 Am.Jur., pp. 353-363; Quong Wing v. Kirkendall, 223 U.S. 59 [ 32 S.Ct. 192 , 56 L.Ed. 350 ]; Northwestern Mut. Life Ins. Co. v. Wisconsin, 247 U.S. 132 [ 38 S.Ct. 444 , 62 L.Ed. 1025 ]; State Tax Commissioners v. Jackson, 283 U.S. 527 [ 51 S.Ct. 540 , 75 L.Ed. 1248 ]; Liggett Co. v. Lee, 288 U.S. 517 [ 53 S.Ct. 481 , 77 L.Ed. 929 , 85 A.L.R. 699 ]; Fox v. Standard Oil Co., 294 U.S. 87 [ 55 S.Ct. 333 , 79 L.Ed. 780 ]; Ex parte Haskell, 112 Cal. 412 , 417 [ 44 P. 725 , 32 L.R.A. 527 ]; Ex parte Lemon, 143 Cal. 558 , 562 [ 77 P. 455 , 65 L.R.A. 946 ]; Bramman v. City of Alameda, 162 Cal.

Following these principles, it has been generally held or stated that legislation separately classifying places of amusement for the purpose of imposing license taxes on the owners or operators of them as a group, is valid. (See Hale v. State, 217 Ala. 403 [ 116 So. 369 , 58 A.L.R. 1333 ]; Nachman v. State Tax Commission, 233 Ala. 628 [ 173 So. 25 ]; City of Bessemer v. Bessemer Theatres, 252 Ala. 117 [ 39 So.2d 658 ]; Pellicer v. Sweat, 131 Fla. 60 [ 179 So. 423 ]; City of Miami v. Kayfetz, 158 Fla. 758 [ 30 So.2d 521 ]; Veterans’ Foreign Wars v. Hull, 51 N.M. 478 [ 188 P.2d 334 ]; Curdts v. South Carolina Tax Commission, 131 S.C. 362 [ 127 S.E. 438 ] (affirmed in memo, opinion, 273 U.S. 669 [ 47 S.Ct. 471 , 71 L.Ed. 831 ]); Knoxtenn Theatres v. Dance, 186 Tenn. 114 [ 208 S.W.2d 536 ]; Ringling Bros.-Barnum & Bailey C. Shows v. Sheppard (C.C.A. 5, 1941), 123 F.2d 773 .)

Similarly, it has usually been held that the amusement industry might be further subdivided, so that moving picture theatres could be taxed as a separate subclass. (Metropolis Theater Co. v. Chicago, 228 U.S. 61 [ 33 S.Ct. 441 , 57 L.Ed. 730 ]; Brandenburg v. City of Covington, 153 Ca. 92 [ 111 S.E. 574 ]; City of Metropolis v. Gibbons, 334 Ill. 431 [ 166 N.E. 115 ]; State v. Greene, 104 Mont. 460 [ 67 P.2d 995 , 111 A.L.R. 770 ]; City of Drumright v. Strand Amusement Co., 139 Okla. 162 [ 282 P. 128 ]; Bijou Amusement Co. v. Toupin, 63 R.I. 503 [ 9 A.2d 852 ]; Wingfield v. South Carolina Tax Commission, 147 S.C. 116 [ 144 S.E. 846 ]; Davis v. White, (Tex.Civ.App., 1924), 260 S.W. 138 ; North Fort Worth Amusement Co. v. Card, (Tex.Civ.App., 1930), 23 S.W.2d 778 .) While the question does not appear to have been authoritatively decided in this state, it was said by way of dictum in Redwood Theatres v. City of Modesto, 86 Cal.App. 2d 907 , 918 [ 196 P.2d 119 ], that there was no doubt of the propriety of separately classifying places of amusement for the purpose of taxation. The case was actually disposed of on a point of pleading, but the statement appears to be sound and in accord with the weight of authority elsewhere.

Those principles compel the conclusion that the instant classification is proper. We cannot substitute our judgment for that of the city’s legislative power and conclude that there was no conceivable basis for the classification such as the nature and character of the amusement business and of those in that business taxed as distinguished from those exempted. Among other things, one of the main features of the tax is that it is imposed on those amusement businesses charging admission, and those taxed are the ones where larger groups of people are likely to gather, with the accompanying effects on the functioning and activities of the government.

Finally it is urged that the proposition stated on the ballot used in the election at which initiative ordinance No. 754 was adopted was “so misleading, as to invalidate” the ordinance; that the ordinance levied two taxes, one of 1 cent for each 10 cents admission over the first 15 cents admission charge and the other of 1 cent on each 15 cents of 20 per cent of amounts charged for food refreshment, etc., with entertainment, but only the first was mentioned in the ballot. The proposition on the ballot reads: “Proposition No. 1: Shall an ordinance entitled An Ordinance Licensing the Carrying On Of Certain Businesses, Occupations, and Callings and Conduction, Operating, Providing And Maintaining Places of Amusement and Entertainment in The City of Bakersfield for The Purpose of Baising Municipal Bevenue and Providing Penalties For the Violation Of The Provisions Hereof which imposes a license tax of one cent for each 10 cents or fraction of 10 cents over and above the first 15 cents of amounts paid by the patrons of places of amusement or entertainment, for the privilege of conducting such places of amusement or entertainment, and which provides that such tax shall be collected by the operators of such places from the persons patronizing such places, be adopted ? ’ ’ The city charter provides: “The ballots used when voting upon such [initiative petition] ordinances shall give the title in full and

Here the main and general purpose of the initiative was the imposition of a tax on amusement businesses. That is adequately covered in the title of the ordinance stated on the ballot. The mention of the method of computing the tax as to some businesses but not others was merely incidental or auxiliary and may be disregarded. As said in Brown v. Jordan, supra, 84: “If it be conceded that after disclosing the chief purpose and points of the proposal, the title contains references to some provisions of the proposal no more important than some to which reference was omitted, this does not render the title fatally defective. The title need not contain a summary or index of all of the measure’s provisions. Within certain limits what is and what is not an important provision is a question of opinion. Within those limits the opinion of the attorney-general should be accepted by this court.” There was substantial compliance here. People v. City of Los Angeles, 187 Cal. 56 [ 200 P. 947 ], is readily distinguishable. There the very important feature of whether by annexation the annexed property would assume the annexing city’s debts was omitted.

The judgment is affirmed.

Gibson, C. J., Shenk, J., Traynor, J., Schauer, J., and Spence, J., concurred.

Edmonds, J., concurred in the judgment.

Appellants’ petition for a rehearing was denied November 2.1950.