AGNEW v. CITY OF LOS ANGELES

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District Court of Appeal, Second District, Division 1, California.

R. W. AGNEW, Plaintiff and Appellant, v. CITY OF LOS ANGELES, a municipal corporation, and Grover Wintz, Chief of the Electrical Division of the Department of Building and Safety of the City of Los Angeles, Defendants and Respondents.*

Civ. 22713.

Decided: March 24, 1958

R. W. Agnew, in pro. per. Roger Arnebergh, City Atty., Ralph J. Eubank, Deputy City Atty., Los Angeles, for respondents.

Plaintiff is an electrical contractor duly licensed by the state pursuant to the provisions of the Business and Professions Code. As was said in Agnew v. City of Los Angeles, 110 Cal.App.2d 612, 616, 243 P.2d 73, 75:

‘The Business and Professions Code, div. 3, ch. 9, sometimes called the ‘Contractors' License Act,’ creates a ‘Contractors' State License Board,’ referred to as the board, Bus. & Prof.Code, § 7000; defines those coming within the jurisdiction of the board, including electrical contractors, § 7026; prohibits any person from engaging in the business or acting in the capacity of a contractor without first having obtained a state license, and makes it a misdemeanor to do so, §§ 7028, 7030; provides for investigation and examination of applicants for license, § 7072; requires the payment of an application fee, annual renewal fees, and penalties, § 7137; makes elaborate provision for investigation of the acts of contractors, accusations against them, causes for disciplinary action, hearings, review, discipline, prosecution of violations of any law, and renewal or reissuance of suspended or revoked licenses, §§ 155, 7090–7122; and vests broad powers in the board relative to the licensing and regulation of contractors. §§ 7000–7145.

‘Wilful or deliberate disregard and violation of the building laws of the state, or of any political subdivision thereof, constitutes a cause for disciplinary action. § 7110. Section 7071.5 provides that before reinstatement after disciplinary action the board may require the applicant to give a surety bond or make a cash deposit conditioned upon his compliance with the provisions of the Act. Every person injured by the unlawful acts or omissions of such contractor may maintain an action on the bond or a claim on the deposit.’

This action was instituted by plaintiff, challenging the constitutionality of and to obtain an injunction restraining defendants from enforcing against him the provisions of Sections 93.0201, 93.0204, 93.0205(2), 93.0501, 93.0504 and 93.0505 of the Electrical Code of the City of Los Angeles, and Sections 11.00, 21.03, 21.06, 21.08, 21.09, 21.12(a), 21.12(b), 21.188 and 21.190 of the Municipal Code of defendant city.

Section 93.0201 provides that no person shall install, alter, reconstruct or repair any electric wiring regulated by defendant city's Electric Code without a permit from the Department of Building and Safety (hereinafter referred to as the Department).

Section 93.0204 requires that an application for such permit shall be made to the department on a form furnished by the latter. The required information consists of a description of the proposed electric wiring, plans, and specifications and a suitable diagram, and ‘such additional information as may be considered necessary by the department for the proper enforcement of the provisions of this Code’.

Section 93.0205 enumerates those to whom permits may be issued, including (Section (a)–2) Electrical contractors ‘registered’ with the department.

Section 93.0501 is entitled ‘Contractor Registration’ and provides in Subdivision (a) that ‘Before any contractor licensed by the State of California shall be issued any permits, he shall be registered with the Department. The applicant shall provide sufficient information to enable the Department to determine if there is compliance with all applicable City and State Laws.

‘(b) To register as a contractor, the responsible managing officer or responsible managing employee shall personally appear at an office of the Department and provide the following information:

‘1. The business name and address as listed by the Contractors State License Board; and

‘2. The names of the owners of officers of a corporation; and

‘3. The Contractors State License with the number and classification; and

‘4. The signature of the responsible managing officer or the responsible managing employee as listed by the Contractors State License Board; and

‘5. License Tax Registration Certificate number.

‘(c) The registrant shall notify the Department within 10 days of any change in the facts required by Subsection (b).

‘(d) No registration shall authorize any person to do work which is not within the specific classification of the registration.

‘(e) Every such registration shall expire on June 30 of each year.’

Section 93.0504 defines the regulations to which the foregoing certificate of registration shall be subject:

‘1. Certificates of Registration shall not be transferable.

‘2. Certificates of Registration shall become void 30 days after the holder who qualified by examination or experience ceases to have effective control over the work performed.

‘3. Every Certificate of Registration shall expire on December 31 of each year unless sooner revoked or suspended by the Board. A Certificate of Registration may be renewed within 30 days after expiration without examination upon the payment of the annual registration fee as prescribed in this Code.

‘4. The Board may revoke or suspend any Certificate of Registration for failure, refusal, or neglect of the holder to comply with the provisions of this Code or any provision of this Code or any provision of Section 98.00 of the Municipal Code as set forth therein.

‘5. No Certificate of Registration shall authorize any person to do work which is not within the specific classification of the Certificate of Registration.’

Section 93.0505 has no application to the issue presented on this appeal.

Before proceeding to a discussion of appellant's attack on the provisions of the Municipal Code, we shall give consideration to his contention that the foregoing sections of the Electrical Code of defendant city are in conflict with the general laws relating to state licensed contractors.

Appellant contends that the licensing of contractors throughout the state is a matter of general and statewide concern and is not a municipal affair that concerns only the inhabitants of a chartered city and which is subject to local regulations. That the general law has fully occupied the field; that his license from the state grants him permission to conduct his business at any place within the state and that this permission cannot be circumscribed by local authorities.

Appellant relies heavily upon the cases of Horwith v. City of Fresno, 74 Cal.App.2d 443, 168 P.2d 767; City and County of San Francisco v. Boss, 83 Cal.App.2d 445, 189 P.2d 32; Collins v. Priest, 95 Cal.App.2d 179, 212 P.2d 269; Lynch v. City of Los Angeles, 114 Cal.App.2d 115, 249 P.2d 856; Agnew v. City of Los Angeles, 110 Cal.App.2d 612, 243 P.2d 73; and Agnew v. City of Culver City, 147 Cal.App.2d 144, 304 P.2d 788.

It is undeniably true, as urged by appellant, that these cases support his claim that while Article XI, section 11 of our State Constitution authorizes a city to ‘make and enforce within its limits all such local, police, sanitary and other regulations', the constitutional provision restricts such power to regulations ‘not in conflict with general laws'. And the cited cases sustain appellant in his position that a local ordinance is in conflict with general law if it attempts to impose additional requirements in a field which is fully occupied by the general law.

However, the foregoing cases point out that while it was clearly the intention of the legislature to declare that the licensing and regulation of contractors by the state shall be the only licensing and regulation in the state, nevertheless, as was stated in Horwith v. City of Fresno, supra, 74 Cal.App.2d at page 449, 168 P.2d at page 770, ‘This does not limit the right of local governmental agencies to protect property and life through the enforcement of local regulations as to the quality and character of the installations. The right to enforce local ordinances is still in the hands of municipalities through the power of inspections and permits'.

Conceding that the general laws were intended to be the only licensing and regulation of contractors in the state nevertheless, as declared in Agnew v. City of Los Angeles, supra, 110 Cal.App.2d at page 616, 243 P.2d at page 75, ‘This does not limit the right of a city or county to protect life and property by the enforcement of local regulations as to the character and quality of electrical installations. (Bus. & Prof.Code, sec. 7110.)’.

The question then arises, do the challenged provisions of the Electrical Code of defendant city attempt to provide the means by which an electrical contractor with a state license may be denied the right to contract or work in the City of Los Angeles or do they come within the category of valid enactments by a municipality designed to protect property and life through the medium of local regulations as to the quality and character of electrical installations? We are inclined to the latter view.

Appellant concedes that, ‘the city has the power to prescribe the quality of electrical materials and the methods to be used for the installation of that material, and of inspection concerning the electrical installation (save in the exceptions announced in Hall v. City of Taft, 47 Cal.2d 177 [302 P.2d 574]), and the right to collect reasonable and proper fees for inspection, and for the purpose of receipting for such inspection fees * * *’

While appellant objects to the fact that the ordinance denominates the requirements of the Electrical Code as ‘Permits', it is at once manifest that if the ‘permit’ provisions of the ordinance (Sections 93.0201, 93.0204, and 93.0205(2)) relate to the quality and character of electrical installations, then such provisions are valid irrespective of the particular name by which they are designated.

If defendant city is to protect itself against electrical installations inimical to life and property then surely it has a right to know who contemplates such installations. To us it clearly appears that is all Section 93.0501 requires. It provides that the state licensed contractor or his representative shall furnish the department with five simple and purely informational facts within the applicant's knowledge, and which are hereinbefore narrated. Except for the requirement that the contractor shall furnish his ‘License Tax Registration Certificate number’, (a business license tax, the validity of which will hereafter be considered), Section 93.0501 and its related sections here under attack, merely provide a procedure whereby the contractor can reasonably secure a permit and defendant city and its department be assured that the applicant is a person lawfully authorized by the state to do the electrical work in a manner that will not endanger the life and property of residents of the municipality. No fee is required, no bond exacted, no examination of contractor is demanded, no investigation is conducted. To summarize, no regulatory measures previously condemned in the cases relied upon by appellant are present in the provisions of the electrical ordinance here under attack. We therefore conclude that the challenged Electrical Code provisions constitute a valid exercise of the power of defendant city to establish and enforce local regulations as to the quality and character of installations by an electrical contractor who is licensed by state law.

We come now to a consideration of appellant's contention that certain sections of the Municipal Code of defendant city (Article I, chapter 2) entitled ‘Licenses and Sales Taxes' are unconstitutional because they impinge upon the general laws that have preempted the field of licensing electrical contractors.

The following will serve as an epitome of the general scheme of the taxing legislation here under consideration. A Los Angeles city license tax must be paid in advance annually be every person who is engaged within the city in a great variety of business activities. (Section 21.03.) Contractors and independent contractors are among the businesses specified. (Sections 21.188, 21.190.) In the case of these businesses the tax is measured by annual gross receipts commencing with a license fee in the sum of $12 per calendar year for the first $12,000 or less of gross receipts. Upon the payment of the tax the City Clerk issues a ‘License Tax Registration Certificate’ which remains in force and effect thereafter until suspended or revoked for the licensee's failure to pay such tax as may validly accrue in each subsequent year. (Section 21.08(b).) Such revocation or suspension can be effected only after appropriate notice and hearing. (Section 21.12.)

It is now well established that while a particular matter may be a state affair and subject to state regulation it is not immune from local taxation for revenue purposes where the tax does not interfere with the field preempted by the state (In re Galusha, 184 Cal. 697, 699, 195 P. 406; City of San Mateo v. Mullin, 59 Cal.App.2d 652, 654, 139 P.2d 351). The power of the City of Los Angeles to collect a license tax for revenue purposes was conferred upon it by the charter framed for its government, pursuant to the provisions of Section 8 of Article XI of our State Constitution. Such power is a ‘municipal affair’ within the meaning of that phrase as used in Section 6 of Article XI of the Constitution, and therefore, cannot be withdrawn or abrogated by general laws enacted by the legislature (Ex Parte Braun, 141 Cal. 204, 213, 74 P. 780; Ainsworth v. Bryant, 34 Cal.2d 465, 469, 211 P.2d 564). Therefore, it cannot be said that the State Contractors Licensing Act (Bus. & Prof.Code, Sec. 7000 et seq.) was intended to have the effect of diminishing defendant city's power to tax for revenue purposes. The contractors license law was enacted for the basic purpose of protecting the general public against imposition respecting structural improvements to real property in cases where special skill, training and ability are required, and its licensing requirements were adopted for the same purpose (Bowline v. Gries, 97 Cal.App.2d 741, 743, 218 P.2d 806; Franklin v. Nat C. Goldstone Agency, 33 Cal.2d 628, 632, 204 P.2d 37).

Answering the same contention advanced by appellant herein, this court said in Franklin v. Peterson, 87 Cal.App.2d 727, 731, 197 P.2d 788, 790, ‘Conceding that a license requirement cannot be imposed upon a lawyer, nor his business be regulated by ordinance, the tax provided for in the ordinance here under consideration is levied upon the business of practicing law, rather than upon a person because he is an attorney at law. A license to practice law does not carry with it exemption from taxation.’ And, at page 732 of 87 Cal.App.2d, at page 790 of 197 P.2d we further stated, ‘The Los Angeles ordinance does not attempt to regulate the professions, business or occupations which are subject to the tax. It provides only for a license for revenue purposes, and is not a regulatory measure affecting the business or profession so taxed.’ The ordinance under consideration in the case just cited was the same Section 21.190 of the Los Angeles Municipal Code that is in issue here. And, the case was cited with approval by the Supreme Court in City of Los Angeles v. Rancho Homes, Inc., 40 Cal.2d 764, 771, 256 P.2d 305.

Since defendant city's license tax registration certificate, as stated therein, ‘* * * signifies that the person named on the face hereof has fulfilled the requirements of section 21.03 L.A.M.C., by registering with the City Clerk for the purpose of paying license taxes for the classification of business for which the certificate is issued * * *’, it cannot be said that it purports either to authorize or prohibit anything in connection with the licensee's conduct of a lawful business in a lawful manner, nor does it seek to regulate the activities of a contractor in a field fully occupied by the state.

The requirement of the Electrical Code of defendant city (Section 93.0501, supra) that the contractor shall furnish defendant city with his ‘License Registration Certificate number’ does not therefore, impinge upon the provisions of the general laws licensing electrical contractors.

Appellant next contends that if defendant city is empowered to impose a business license tax, it cannot enforce the provisions thereof by ‘criminal sanctions', but is restricted to recovering the amounts thereof in a civil action. Section 11.00 of defendant city's Municipal Code provides, among other things, that a violation of its terms may be prosecuted and punished as a misdemeanor.

We are not in accord with appellant's contention that such prosecution and subsequent possible imprisonment for failure to pay the business license tax, is a violation of Section 15, Art. I of our State Constitution in that it constitutes imprisonment for debt.

As was said in In re Nowak, 184 Cal. 701, 708, 195 P. 402, 405, ‘Ordinance No. 39,600 (New Series) provides that this tax may be recovered in a civil action as a debt. It also provides that the act of doing business without the payment of the tax shall be a crime, and shall be punishable as such. For the commission of this crime petitioner has been imprisoned. This imprisonment does not violate his constitutional right not to be arrested for debt.’

And in In re Diehl, 8 Cal.App. 51, 55, 96 P. 98, 100, we find the following pertinent language: ‘The misdemeanor consists in a refusal to obey the provisions of the ordinance, and the fine authorized to be imposed upon conviction is not intended as a payment of the license tax, but as a punishment for defying the commands of the ordinance.’

To us there appears to be no inherent difference between carrying on the business of a state-licensed electrical contractor and carrying on any other business pursuit (In re Johnson, 47 Cal.App. 465, 469, 190 P. 852).

‘The levy and collection of taxes by a city having a charter under our Constitution is a municipal affair. The power is broad, being limited only by the charter and the Constitution.’ City of Glendale v. Trondsen, 48 Cal.2d 93, 98, 308 P.2d 1, 3. (Emphasis added.) It cannot therefore, be said that the State Contractors Licensing Act in any way limits or restricts the constitutional and charter right of defendant city to collect a business license tax for revenue purposes.

The case of Sivertsen v. City of Menlo Park, 17 Cal.2d 197, 109 P.2d 928, involved a state-licensed painting contractor who sought to enjoin a criminal prosecution against him for failure to pay a business license tax. A reading of pages 198 and 199 of 17 Cal.2d, at pages 929 and 930 of 109 P.2d of that case reveals a strikingly similar factual background in that case to the one now engaging our attention. Since the issue before the Supreme Court was the correctness of the trial court's order dismissing the action after a general demurrer was sustained, it is implicit in the decision of the Supreme Court that a proceeding to enjoin the criminal prosecution of a state licensed contractor for failure to pay a municipal business license tax, cannot be maintained on any theory, including the one advanced herein. Otherwise the order sustaining the general demurrer would have been erroneous.

We perceive no invasion upon the general law, which is the only ‘regulation’ authorized for state licensed contractors, by a prosecution for failure to pay a business license tax, as no such invasion would be present in a proseuction of a state licensed contractor for violation of a municipal ordinance prohibiting the blocking of streets with trucks, barriers or other paraphernalia used in the contracting business, without first obtaining a permit from the municipality so to do, or of a state licensed contractor who established and conducted his business in violation of a municipal ordinance, restricting the area to single family residences.

And finally, an unbroken line of decisions in this state has consistently sustained the power of municipalities to impose business license taxes for revenue purposes, and making the violation thereof a misdemeanor. Among such cases, see City of Los Angeles v. Belridge Oil Co., 42 Cal.2d 823, 271 P.2d 5; City of Los Angeles v. Rancho Homes, Inc., supra; In re Nowak, supra; In re Galusha, supra; Ex parte Braun, supra; City of Los Angeles v. Southern Pacific Railroad Co., 61 Cal. 59; Rexall Drug Co. v. Petersen, 113 Cal.App.2d 528, 248 P.2d 433; Franklin v. Peterson, supra.

For the foregoing reasons, the judgment is affirmed.

WHITE, Presiding Justice.

FOURT, J., and DRAPEAU, J., pro tem., concur.