BUENEMAN v. CITY OF SANTA BARBARA (1936)

This is an appeal by plaintiffs from a judgment of dismissal rendered following an order sustaining a demurrer to their complaint without leave to amend. The two objections to the complaint which are stressed by the respondents, and which we must consider in order to determine whether the demurrer was erroneously sustained, are that equity will not entertain an action to enjoin the enforcement of the ordinance which is the subject of plaintiffs' complaint and, second, that the ordinance is not unconstitutional and void but within the legislative power of the respondent city. The complaint alleges that the plaintiffs were at all times mentioned therein and for a long time prior to August 2, 1933, and subsequent thereto, engaged in the general laundry, towel, and linen supply business, and conducting a part of their business in the city of Santa Barbara, although they do not and have not maintained their plant or establishment for the actual work of laundering within the city; that the respondent city adopted an ordinance effective August 2, 1933, section 7 of which purported to levy a license fee upon laundries or linen supply or dry-cleaning concerns, maintaining a regular delivery or distribution system in the city in those cases where the establishment used for the actual work ‘is not maintained within said city of Santa Barbara at a fixed and regular place of business within said city,’ which fee the section recites ‘is required and imposed solely and only for revenue and not for any other purpose.’ The complaint also alleges that the ordinance imposes no tax upon any individual or firm conducting a like business where the plant or establishment is maintained within the city; that by another section of the ordinance the carrying on of business by one whose plant is outside the city limits without payment of the license fee is made a misdemeanor, and that every day or part thereof on which he carries on the business he is guilty of a separate offense, punishable by not exceeding $300 fine or 90 days in jail or by both the fine and imprisonment. It is then alleged that plaintiffs have refused to pay the tax for the reason that they believe it to be unconstitutional and void and that defendants fendants have arrested and threaten to continue to arrest plaintiffs' employees; and that such arrests and threats have interfered with their business and wil continue to hamper and hinder their business. It is also set forth that the ordinance violates various provisions of the federal and state Constitutions, and plaintiffs seek to enjoin the defendants from enforcing it against them and other firms similarly situated.

The respondents base the first contention to which we have already referred, upon the premise that equity will not interfere to prevent the collection of a personal tax, even conceding it to be illegal and the ordinance unconstitutional. A reference to the authority upon which respondents rely in which the expression ‘personal tax’ is used (Youngblood v. Sexton, 32 Mich. 406, 20 Am.Rep. 654) shows that it is employed to indicate an ordinary tax levied upon persons with respect to their business and not upon real estate, and not the exaction of a license fee the payment of which is a prerequisite to the carrying on of a lawful business. Other authorities, such as Ritter v. Patch, 12 Cal. 298; Berri v. Patch, 12 Cal. 299, had to do with the collection of taxes assessed against property which it was alleged were improper because of a number of irregularities in the assessment. Obviously, cases of this tenor are neither in point nor similar to the situation here. On the other hand, the books are replete with cases where the equity courts have entertained jurisdiction to prevent the enforcement of municipal ordinances which, by making illegal the conduct of a business, which in and of itself is perfectly lawful, seriously hampers or prevents the carrying on of the business. Hoffman Candy Co. v. Newport Beach, 120 Cal.App. 525, 8 P.(2d) 235; Bramman v. City of Alameda, 162 Cal. 648, 124 P. 243; Abbey Land & Imp. Co. v. County of San Mateo, 167 Cal. 434, 139 P. 1068, 52 L.R.A.(N.S.) 408, Ann. Cas.1915C, 804, and cases cited; Hair v. City of Humboldt, 133 Kan. 67, 299 P. 268; Hewin v. City of Atlanta, 121 Ga. 723, 49 S.E. 765, 67 L.R.A. 795, 2 Ann.Cas. 296; City of Danville v. Quaker Maid, Inc., 211 Ky. 677, 278 S.W. 98, 43 A.L.R. 590; Chaires v. City of Atlanta, 164 Ga. 755, 139 S.E. 559, 55 A.L.R. 230; Thompson v. Smith, 155 Va. 367, 154 S.E. 579, 71 A.L.R. 604. The cases of Hoffman Candy Co. v. Newport Beach, Hair v. City of Humboldt, Bramman v. City of Alameda, Hewin v. City of Atlanta and City of Danville v. Quaker Maid, Inc., supra, all involved ordinances purporting to levy a tax similar to the one attempted here. There are also authorities which hold that while ordinarily equity will not enjoin a criminal prosecution, yet where repeated prosecutions are threatened under a void municipal ordinance the effect of which would be to seriously impair the enjoyment of his property, it will entertain a suit to inquire into the validity of the enactment. Carey v. Atlanta, 143 Ga. 192, 84 S.E. 456, L.R.A. 1915D, 684, Ann.Cas.1916E, 1151. The complaint in this action, by the allegations to which we have referred, makes it clear that the business of plaintiffs which, in and of itself, is perfectly lawful, is being seriously hampered and that unless they submit there will follow continued prosecutions. Under such circumstances we think the court of equity may well entertain the suit. We have not overlooked the rule that equity will not and cannot enjoin the execution of a public statute (section 3423, Civ.Code), but actions such as the present one must proceed, under appropriate allegations, upon the theory that the enactment being void, is in fact and in law, nonexistent. Wheeler v. Herbert, 152 Cal. 224, 92 P. 353; Jones v. City of Los Angeles, 211 Cal. 304, 295 P. 14.

We may therefore turn to a consideration of the vital question of whether the complaint sufficiently alleges that the ordinance violates the constitutional inhibitions against discrimination. As we have already observed, it is alleged that the ordinance levies no tax upon similar business maintaining establishments for the actual doing of the work within the limits of Santa Barbara. It alleges in considerable detail that the ordinance does not operate uniformly upon all persons and firms engaged in the same line of business, and for that reason violates designated provisions of the Federal and State Constitutions. In view of the recital in the enactment that it is adopted for the purpose of revenue only, we are not concerned with any regulatory power possessed by the respondent city and may pass directly to the question of whether it appears that there is any valid reason for the separate classification of those concerns which do not maintain establishments within the city. In the following cases: In re Hines, 33 Cal.App. 45, 164 P. 339, 340; In re Hart, 36 Cal.App. 627, 172 P. 610; In re Riley, 39 Cal.App. 58, 177 P. 854; and In re Robinson, 68 Cal.App. 744, 203 P. 175, 176, ordinances to all intents and purposes the same as the one before us were held to be void, because they attempted to distinguish between business located outside the city and within the city. In the first cited case we read: ‘We are of the opinion that the provisions of the ordinances under which petitioner has been convicted attempt to create and enforce a discrimination not based upon differences in the nature of the business being transacted or differences in the manner of conducting the same business, or any other difference other than the mere fact of difference in destination of the goods collected and delivered by wagons collecting for laundries located outside of the city and the destination of goods collected for delivery to laundries within the city. The license provisions in question are plainly devised as a protective tariff for the benefit of laundries located in the city of Venice or laundry wagons doing business with laundries located in the city of Venice, and apparently they have no other purpose.’ And in the Robinson Case we find the following: ‘It is simply the question whether the solicitor represents an inside or an outside business establishment. In the one case, he is subject to the provisions of the ordinance, in the other, he is exempt therefrom, although in both cases he may be doing exactly the same kind, character, and volume of business. * * * ‘It deprives the solicitor for an outside business house of the right to conduct his business on equal terms with the solicitor for the local business house. It deprives all business houses outside of the city of Sacramento of the right to secure trade in the city of Sacramento on terms that shall be the same as those on which local business houses solicit trade.’'

While these authorities seem to be directly in point the respondents assert that the present action is controlled by the case of Ex parte Haskell, 112 Cal. 412, 44 P.725, 32 L.R.A. 527, which held that an ordinance imposing a license tax upon peddlers different in amount from that imposed upon merchants which latter fee was made to depend upon the amount of their monthly sales was not unlawfully discriminatory. All that was determined in that case was that the legislative authority had the right to ‘make distinctions between different trades, and between essentially different methods of conducting the same general character of business of trade.’ The ordinance there applied to all residents and nonresidents who conducted the business of peddling, and the court was at pains to say as follows: ‘It may be conceded that if it could be said to discriminate in favor of residents of the city of Chico, by requiring such license only from nonresidents engaged in the line of business pursued by Haskell, it would be bad; or if it discriminated against residents of the state, or against merchandise from without, or not the product of the state, that it would be void, as being, in effect, a regulation of interstate commerce,—something entirely within the power of congress. * * * But it does neither of these. In the contention that it does so discriminate against nonresidents of the municipality, counsel has evidently confused this provision with another in the same ordinance, relating to hawkers and peddlers who carry their goods with them, which last may be, in its terms, open to such objection. But the latter provision is a wholly independent one, relating to a different class, and in no way affects the construction of the feature under consideration.’ The difference we have observed between the Haskell Case and the present one was also noted in Re Hart, supra, the court there denouncing an effort to erect a protective tariff for the benefit of the city of Venice. Likewise it was similarly distinguished in Re Robinson, supra. In support of the general proposition that an ordinance which attempts to discriminate between persons engaged in a trade or occupation can make such distinctions only upon a natural, fair, and reasonable basis, reference may be had to Bramman v. City of Alameda, Hewin v. City of Atlanta, City of Danville v. Quaker Maid, Inc., all supra, and Town of St. Helena v. Butterworth, 198 Cal. 230, 244 P. 357; Aaroe v. Crosby, 48 Cal.App. 422, 192 P. 97; Lassen County v. Cone, 72 Cal. 387, 14 P. 100; Ex parte Richardson, 170 Cal. 68, 148 P. 213, 214. In the last-cited case it is said: ‘It is this mode of making the sale and delivery that is the only attempted basis of the imposition of the tax, and there is no such difference between this mode, and the ordinary mode of sale and delivery of small articles of merchandise by means of a salesman as to furnish conceivable ground for supposing, in the absence of other regulatory provisions, that the charge was imposed either for the purpose of limiting the number of the machines in use, or for the purposes of reimbursing the city for the expense likely to be imposed on it in consequence of their use.’ The ordinance in that case being nonregulatory was declared void.

We are conscious of three cases from other jurisdictions in which similar ordinances have been sustained, but they are contrary to the weight of authority and to the adjudications of our own courts.

Our conclusion is (no other points requiring discussion) that the complaint sufficiently shows that the ordinance here in question is open to the objection that it violates the constitutional inhibition against unlawful discrimination. Article 1, § 21, Constitution of California.

The judgment is reversed.

I dissent. Ex parte Haskell, 112 Cal. 412, 44 P. 725, 32 L.R.A. 527.

I am of the opinion that the ordinance of the city of Santa Barbara under consideration herein does not unlawfully discriminate against classes and is a reasonable exercise of the municipal power. I therefore join in the dissent.

THOMPSON, Justice.

We concur: WASTE, C. J.; SHENK, J.; CURTIS, J.