WILLINGHAM BUS LINES, INC., Petitioner and Appellant, v. The MUNICIPAL COURT OF SAN DIEGO JUDICIAL DISTRICT, etc., Respondent; The PEOPLE of the State of California, Real Party In Interest.
Appellant is engaged in the business of furnishing charter buses for hire in San Diego and other places. It is licensed by the State of California under Public Utilities, Code, section 5351 et seq., the Passenger Charter—Party Carriers' Act.
In June 1963 respondent City commenced in the superior court a civil action which is still pending against appellant, seeking declaratory relief and to collect allegedly delinquent taxes under section 31.0346.1 of the San Diego Municipal Code. This code contains the following provisions:
“ ‘Every person conducting, managing, or carrying on the business of running or operating a charter vehicle for the transportation of passengers for hire when driven by the owner or a representative of the owner at rates per mile, per trip, per hour, per day, per week, or per month, where such vehicle is routed under the direction of such passenger or passengers or of such person hiring the charter vehicle, shall pay a tax as follows:
“(a) Two per cent (2%) of the gross receipts received from such charter or charters.
“(b) Said tax shall be paid quarterly.
“(c) ‘Gross Receipts' shall mean, for the purposes of this section, all receipts from such charter or charters when the vehicle is chartered for use wholly within the City of San Diego. When any such vehicle is chartered for use partly within and partly without the City of San Diego, gross receipts shall be apportioned upon a mileage basis and in such case ‘Gross Receipts' shall mean, for the purposes of this section, the apportioned receipts attributable to the mileage operations within the City of San Diego.
“(d) Where mileage is both within and without the City of San Diego, it shall be the responsibility of the person conducting, managing, or carrying on the business to maintain detailed records of the origination, destination, route, total mileage, mileage outside the city, and gross receipts for each charter trip where the mileage is not wholly within the City of San Diego. In the event such records are not maintained, then it shall be presumed that all the mileage occurred within the City of San Diego.' ”
On October 20, 1964, a criminal complaint was filed by respondent City of the San Diego Judicial District Municipal Court charging that appellant violated its Municipal Code Section 31.0301, by unlawfully carrying on a charter bus service in San Diego without having first secured a license therefor. Section 31.0301 reads as follows:
“There is hereby imposed upon the businesses, trades, callings and occupations in this article enumerated a license tax fee in the amount hereinafter specified, and it shall be unlawful to conduct, manage or carry on any such business * * * without having first secured a license so to do as herein provided.”
After exhausting its remedy by demurrer in the municipal court appellant petitioned, without success, for a writ of prohibition in the superior court, seeking to restrain the municipal court from proceeding with the criminal action. The petition was considered by the superior court on an agreed statement of fact wherein it is conceded that payment of a license tax by charter bus companies is a condition precedent to doing business in San Diego.
Appellant complains that charter buses are the only form of conveyance using the city streets of San Diego which are taxed on the basis of gross receipts for operations within the city. It is pointed out that
“ * * * taxicabs, sightseeing busses, autos for hire, truck rentals, hauling or trucking and house moving, as categories, pay a flat fee based on the number of units, seating capacity, tunnage, [sic] etc. Taxicab,s for instance, pay a flat fee of $100 per cab. Sightseeing busses pay a fixed sum of $200 to do business and an additional amount for each vehicle, depending on seating capacity. House movers pay a flat fee of $50 per year. It is further pointed out that charter boats, sightseeing boats and charter airplanes are not specifically covered by the ordinance except as they come under the category of ‘other trades, calling, vocations, professions' and that all pay an annual fee of $10 per year plus $1per employee.”
Appellant offers the following three contentions:
“1. That Section 31.0356.1 of the Municipal Code discriminates arbitrarily against charter bus companies and is, therefore, in violation of the Equal Protection Clauses of the Fourteenth Amendment to the Constitution of the United States and Article I, Sections 11, 13 and 21 of the Constitution of the State of California.
“2. That Section 31.0346.1 is an attempted regulatory measure by a municipality in a field pre-empted by the State of California and thus violates Article XI, Section 11, of the Constitution of the State of California.
“3. That Section 31.0346.1 is indefinite and uncertain in its measure and for this reason it results in a deprivation of the rights, liberty or property of a person without due process of law, in violation of the Fourteenth Amendment to the United States Constitution and Article I, Section 13, of the California Constitution.”
POINTS I & III: The Equal Protection Clauses of the United States and California Constitutions require that government, in exercising its taxing power refrain from differentiations not based on real and substantial differences. (Barker Bros., Inc. v. City of Los Angeles, 10 Cal.2d 603, 76 P.2d 97.) While the subjects of taxation may be broadly classified this must be done on a rational basis so as not to result in discrimination. In reviewing the rationale in such cases as Bueneman v. City of Santa Barbara, 8 Cal.2d 405, 65 P.2d 884, 109 A.L.R. 895; Town of St. Helena v. Butterworth, 198 Cal. 230, 244 P. 357; City of Los Angeles v. Lankershim, 160 Cal. 800, 118 P. 215; Soares v. City of Santa Maria, 38 Cal.App.2d 215, 100 P.2d 1108; In re Hoskins, 16 Cal.App.2d 251, 60 P.2d 535, and Kelly v. City of San Diego, 63 Cal.App.2d 638, 147 P.2d 127, we are unable to draw a distinction with relevant difference between appellant and the other closely related passenger-carrying businesses enumerated in the Ordinance and taxed on a different basis. For example, respondent has not pointed out any controlling or persuasive reason why a sightseeing bus and a chartered bus should be treated differently for business taxation purposes. While comparisoins between a charter bus and the other vehicular entities enumerated in the Ordinance may provide more variations in similarity we are satisfied that there is insufficient difference to justify signing out the charter bus for taxation on such a widely divergent basis.
POINT II: It is admitted that appellant is a certified charter bus operator licensed by the State under the Passenger Charter–Party Carriers' Act. Appellant maintains that San Diego Municipal Code, Section 31.0346.1, constitutes an attempted regulatory measure in a field pre-empted by the State. The reasoning on this point is that while a city can impose a reasonable tax for the privilege of engaging in business within its boundaries it cannot impose a tax for the use of its streets since such a charge constituted attempted local regulation in a state pre-empted field. Appellant cites Biber Elec. Co. v. City of San Carlos, 181 Cal.App.2d 342, 5 Cal.Rptr. 261. In the Biber case the City of San Carlos required by ordinance an emblem costing $1.00 to be displayed on the side of every commercial vehicle in excess of one, belonging to a business licensee and driven on any San Carlos street. The court held that this was not a business license but a license for use of city streets in a field pre-empted by the state through provisions of the Vehicle Code. That case was decided in 1960. In 1961 the Legislature passed the so-called Passenger Charter–Party Carriers' Act establishing a state licensing scheme for charter bus companies. In the absence of judicial interpretation as to the effect of that Act on municipal license fees, the California Attorney General rendered an opinion holding that under the Act the State intended to and did occupy the entire field of charter permits for inter-city charter bus service and consequently fees could not be charged by a city for the use of its streets by a carrier licensed under the Act. (44 Ops.Cal.Atty.Gen., 117, 121–122.)
In the instant case it is admitted by respondent City of San Diego that appellant is a certified charter bus operator licensed under the Passenger Charter–Party Carriers' Act and that its gross receipt tax applies only to such mileage as is traveled by appellant's buses within the city. Although this is not definitely stated we gather that in claiming appellant is doing business within the city respondent refers not only to the use of city streets as a segment of an entire charter trip, but also to the performance of other business activities within the city which would necessitate obtaining a business license. The result seems to be precisely that condemned in the Biber case, viz., a tax for use of city streets by a business licensee of the city. The fact that such tax is indirect, being levied on gross receipts measured by the percentage of total mileage traveled within the city limits would not alter the principle involved. Neither can the declaration of purpose set forth in Section 31.0101 of the Ordinance be determinative. That section reads as follows:
“The provisions of this article are enacted solely to raise revenue for municipal purposes and are not intended for the purpose of regulations.”
In determining the nature of a tax the courts are concerned with the practical operation thereof rather than descriptive label. (Martin Ship Service Co. v. City of Los Angeles, 34 Cal.2d 793, 215 P.2d 24.) As further evidence of the nature of the tax it is noted in appellant's brief that in respondent's action against appellant for collection of delinquent taxes, currently pending in the superior court,the gravamen allegation of its first cause of action is that appellant drove charter motor vehicles, “ ‘through, over, and upon the streets of the City of San Diego.’ ” The end result of respondent City's claim is that if there be no use of the city streets there is no tax. From all that appears, had appellant established an office in San Diego for the solicitation of business and the arranging of charters, with boarding or delivery of the transportation facilities to take place outside the City, it could legally have operated without any tax under the Ordinance. The tax is not activated by obtaining a license or by doing business within the City, but only by using its streets on a quantum basis for revenue producing purposes. We conclude that the tax required of appellant under the provisions of this Ordinance as a condition to obtaining a license is in violation of the Equal Protection Clauses of the Federal and State Constitutions and also is an attempted regulatory measure in a field pre-empted by the State under the Passenger Charter–Party Carriers' Act. (47 Ops.Cal.Atty.Gen., 207, 212, 213; Agnew v. City of Culver City, 51 Cal.2d 474, 334 P.2d 571; 42 Ops.Cal.Atty.Gen., 118, 120–125; Agnew v. City of Los Angeles, 51 Cal.2d 1, 330 P.2d 385.)
We are not to be understood as holding a business license may not be required of appellant in engaging in business within the City, or that a City tax might not be levied on the basis of quantum of business done within the City so long as the tax is not discriminatory when compared to levies on other businesses within the same general classification, and so long as its purpose or effect is not conflicting, prohibitory or regulatory within a field pre-empted by the State. (City of Los Angeles v. Drake, 195 Cal.App.2d 744, 16 Cal.Rptr. 103; City of Los Angeles v. Carson, 181 Cal.App.2d 540, 5 Cal.Rptr. 356; Agnew v. City of Culver City, supra, 51 Cal.2d 474, 334 P.2d 571; In re Groves, 54 Cal.2d 154, 4 Cal.Rptr. 844, 351 P.2d 1028.)
The judgment denying appellant's petition for peremptory writ of prohibition and dissolving the alternative writ is reversed with instructions to issue the peremptory writ.
FINLEY, Justice pro tem.* FN* Assigned by the Chairman of the Judicial Council.
BROWN, P.J., and COUGHLIN, J., concur.