
    D. H. Hirshfield v. The City of Dallas.
    
      No. 3611.
    
    
      Decided December 6.
    
    1. Occupation Tax—Constitutional Law—Ordinances of the City of Dallas.—Section 100 of the charter of the city of Dallas confers upon the city the power to “license, tax, and regulate * * * and all other trades, professions, occupations, and callings, the taxing of which is not prohibited by the Constitution of the State of Texas, which tax shall not be construed as a tax on property.” Under this charter power an ordinance of the city of Dallas levied a license fee of $500 per annum upon all persons pursuing the occupation of railway ticket broker, “scalper,” or dealer. The appellant, being prosecuted for pursuing such occupation without having paid the necessary license, etc., assailed the constitutionality of the said ordinance upon the ground that it taxes an occupation not taxed by the State of Texas; and this position is sought to be maintained under the proviso to section 1 of article 8 of the State Constitution, which declares that ‘ ‘ the occupation tax levied by any county, city, or town for any year, on persons or corporations pursuing any profession or business, shall not exceed one-half of the tax levied by the State for the same period on such profession or business.” But 
      held: The said proviso is not intended to limit and restrict municipal corporations in the exercise of their taxing powers to just such occupations as may have been taxed by the State; but on the other hand, it is intended only to restrict and limit the amount of tax to be assessed by them upon those occupations which have theretofore been taxed by the State. Thus the Constitution neither limits, restricts, nor prohibits the power granted by the charter of the city of Dallas to tax the said occupation, notwithstanding it is not one of the occupations taxed by the State; and therefore the ordinance enacted under the said charter can not be impugned upon constitutional grounds.
    
      2. Same—Prohibitory Taxation.—In this case the grant of power to the municipality of Dallas by its charter is the twofold power to license and to tax. The rule which obtains in such case sustains the constitutionality of such provisions, unless— which is not the fact in this case—there is some specific limitation on the authority of the Legislature in this respect. A tax thus laid for the double purpose of regulation and revenue must be grounded in both the police and taxing power; but the grant of a power to tax will not authorize the imposition of a burden in its nature and purpose prohibitory. Under these rules and under the evidence adduced on the trial (for the substance of which see the opinion) the tax levied upon the occupation of railway ticket broker or "scalper” by the municipality of Dallas is prohibitory in amount, and therefore renders void the ordinance whereby it was imposed. See the opinion upon the whole question.
    Appeal from the City Court of the City of Dallas. Tried below before Hon. T. J. A. Brown, City Judge.
    The opinion discloses the nature of the case. The penalty assessed against the appellant was a fine of $100.10.
    
      V. H. Hexter, for appellant.
    
      A. P. Wozencraft and M. Trice, for City of Dallas.
   WHITE, Presiding Judge.

This appeal attacks the validity of ordinances of the city of Dallas under which the appellant was convicted in the City Court for pursuing the occupation of ticket broker and “scalper” without first procuring a license therefor. The ordinances regulating this matter provide:

1. That no person shall pursue the occupation without a license. Art. 365, Ordinances of the City of Dallas.

2. Article 364 of said ordinances defines the occupation of a railway ticket broker, “scalper,” and dealer.

3. Article 365 provides that no person shall engage in such business in the city without paying an annual license fee of $500, said license not to be issued for a less term than one year, and the business to be carried on at one office only.

4. Article 366 requires, as a prerequisite to the issuance of the license, the execution of a bond with security by the licensee in the sum of $1000, conditioned against losses to purchasers on account of tickets sold, and giving said purchaser the right to sue on said bond to recover damages in the premises; and,

5. Article 367 declares a violation of said ordinances to be a misdemeanor, punishable by fine in the City Court of not less than $25 and not-more than $200; and that each day on which the business is carried on. without compliance with said ordinances constitutes a separate offense.

Appellant insists that by said ordinance the city of Dallas taxes an occupation which is not taxed by the State of Texas, and that consequently-said ordinance is unconstitutional and void.

Section 100 of the Dallas city charter confers upon the city the power to “license, tax, and regulate” certain enumerated occupations “and all other trades, professions, occupations, and callings, the taxing of which-is not prohibited by the Constitution of the State of Texas, which tax shall not be construed as a tax on property. ” The constitutional provision invoked by appellant is the latter clause or proviso of section 1 of article 8-of the State Constitution, which declares that “ the occupation tax levied by any county, city, or town for any year, on persons or corporations pursuing any profession or business, shall not exceed one-half of the tax levied, by the State for the same period on such profession or business.”

The occupation of railway ticket broker or “ scalper ” is one which has. not been taxed by the State. But though this be so, it is not, as we interpret the constitutional provision, intended t'a prohibit municipal corporations from taxing, or rather, it is not intended to limit and restrict, them in the exercise of their taxing powers to just such occupations as. may have been taxed by the State; but on the other hand it is intended to-restrict and limit the amount of tax to be assessed by them upon those-occupations which have theretofore been taxed by the State. If the State-has taxed the occupation, then, and only in that event, is the municipal corporation limited in its exercise of the same power as to the same subject matter to one-half of the tax levied by the State. “The general rule that the powers of a municipal corporation are to be construed with strictness is peculiarly applicable to the cases of taxes on occupations;, * * * but where a discretionary power is conferred its exercise will not-be interfered with unless it clearly appears to have been abused.” Cool, on Tax., p. 387. As above quoted, the charter power to tax conferred by section 100 upon the city of Dallas embraced “all other trades, professions, occupations, and callings the taxing of which is not prohibited by the Constitution of the State of Texas.”

That special powers conferred upon towns to charge license fees are valid, though the like licenses are not allowed by the general laws of the State, see Woodward v. Turnbull, 3 Scammon, 1; Ottawa v. La Salle, 12 Illinois, 339; Byers v. Olney, 16 Illinois, 35, cited in note to Cooley on Taxation, p. 387. See also Davis v. The State, 2 Texas Ct. App., 425; Ex Parte Slaren, 3 Texas Ct. App., 662; Ex Parte Gregory, 20 Texas Ct. App., 210.

Under the power granted by the charter we are of opinion that the city had the power to tax said occupation, notwithstanding it was not one of the occupations taxed by the State; the right to do so not being limited, restricted, nor prohibited by the Constitution.

In this view of the case we are further of opinion that the city was empowered not only to exact a reasonable license fee and license for the purpose of regulating the occupation under its police power, but to impose, if it desired to do so, a reasonable tax for purposes of revenue on the pursuit of the occupation.

In this case, as in Ex Parte Gregory, 20 Texas Court of Appeals, 210, “ the grant of power to the municipality by its charter is the twofold power to license and to tax. The rule which obtains in such case sustains the constitutionality of such provisions unless there is some specific limitation on the authority of the Legislature in this respect.”

We have seen there was no such limitation in this case. Then, having the power to lay a tax for the twofold purpose of regulation and revenue, the only question is, was the tax as imposed valid?

Mr. Cooley says: “A tax laid for the.double purpose of regulation and revenue must be grounded in both the police and taxing power; but the grant of a power to tax would not authorize the imposition of a burden in its nature and purpose prohibitory,” citing Ex Parte Burnett, 30 Alabama, 461. Cool. on Tax., p. 11.

Again, he says: “ If a revenue authority is conferred upon a municipality, the extent of the tax, when not limited by the grant itself, must be understood to be left to the judgment and discretion of the municipal government, to be determined in the usual mode in which its legislative authority is exercised; but the grant of authority to impose fees for the purposes of revenue would not warrant their being made so heavy as to be prohibitory, thereby defeating the purpose. * * * Moreover, in fixing upon the fee it is proper and reasonable to take into the account not the expense merely of direct regulation, but all the incidental consequences that may be likely to subject the public to costs in consequence of the business licensed. In some cases the incidental consequences are much the most important, and, indeed, are what are principally had in view when the fee is decided upon.” Cool, on Tax., pp. 408, 409.

Power to tax for revenue seems to be limited in amount of tax only by the nature and character of the occupation sought to be taxed, viz., the extent to which the occupation may be injurious to the public. Some-occupations are so injurious that a tax prohibitory entirely would be justifiable. Others may or may not be injurious, owing to the manner in which they are carried on or pursued and the abuses which may flow from them. Of this latter class is, we take it, the business of a railway ticket broker or “scalper.”

Mr. Tiedeman, in his invaluable work on Limitations of Police Power, says: “ Of late years statutes have been enacted in several States, notably Indiana and Pennsylvania, which prohibit the sale of railroad tickets except by the authorized agents of the railroads and bona fide purchasers of an unused ticket or portion of a ticket, the object of the statutes being to put an end to the business of the so-called scalpers, or brokers; and the Pennsylvania statute makes it compulsory upon the railroad company to redeem an unused ticket or portion of a ticket. It has been held in both States that the law was constitutional. In both cases the law was justified as a measure for the prevention of fraud upon the railroads, and upon purchasers. * * * It is not contended that the business of ticket brokerage is in itself of a fraudulent character. It is only claimed that in its prosecution the business presents manifold opportunities for the commission of fraud. As has already been stated the police regulation of an employment may extend to any length that may be necessary for the prevention and suppression of fraud in its pursuit; but an honest man cannot be denied the privilege of conducting the business in an honest and lawful manner because dishonest men are in the habit of practicing gross and successful frauds upon those with whom they have dealings. If that were a justifiable ground for abolishing a business many important, perhaps some of the most beneficial, employments and professions could be properly prohibited. * * * The business of ticket brokerage does afford many opportunities for fraud and deceit, and it may on that account be placed under strict police surveillance. But the business serves a useful end when honestly conducted, and the constitutional liberty of the ticket broker is violated when he is prohibited altogether from carrying on his business.” Tiedeman on Lim. of Police Power, pp. 292, 293. We have seen that section 100 of the Dallas city charter gives the city the right to “license, tax, and regulate” all such occupations. The cases of In Re Wan Yin, 22 Fed. Rep., 701; Ash v. The People, 11 Mich., 347; and Van Hook v. The City of Selma, 70 Ala., 361, do not apply.

In the case in hand the city had the right to tax the occupation. The only remaining question to be determined is, does the tax imposed (to-wit, $500) upon the occupation of a railway ticket broker or “scalper ” amount to a prohibition of the pursuit of such occupation on account of the excessive nature and exorbitancy of said fee or tax?

There was testimony adduced in the case to the effect that the fee “was more than enough to regulate the business; that the ticket broker business did not require near so much regulating as the saloon business.” Two ticket brokers testified “ that such a fee or tax would have the effect of prohibiting such business.” This latter evidence is not contradicted. If it be true, then the tax amounted to an absolute prohibition of a business the pursuit of which it was beyond the power of the corporation to prohibit, the occupation not being per se injurious to the public. We are constrained in the attitude in which the case is presented to us by the uncontradicted and unimpeached evidence adduced at the trial, to hold that the ordinance is void, because in excess of the power of the city Council, and prohibits the pursuit of an occupation which any citizen would have the right to pursue under reasonable tax restriction and regulation.

If the ordinance is invalid the conviction in this case is illegal. At all events it is against the evidence; wherefore the judgment is reversed and the cause remanded.

Reversed and remanded.

Hurt, J., absent.  