Terry v. CITY OF PORTLAND

LATOUBETTE, C. J.,

specially concurring.

The sole question to be determined in this case is whether or not the city of Portland has authority under the police power to prohibit ownership, use, play, etc., of coin-in-the-slot amusement devices in view of the legislative enactment known as ch 220, Oregon Laws 1943, relating to privilege taxes on such devices.

It is agreed that under the Portland City Charter the city has such a right in the exercise of its police power in the absence of state legislation preventing it. It is also agreed that if ch 220, Oregon Laws 1943, is police power legislation, then there would be a conflict between the state law and the ordinance, and the ordinance would be invalid. Counsel for plaintiff, in a colloquy between the court and him, makes the following concession:

“Q (By the Court) Do you agree that if the 1943 act is a revenue measure and not one under the police power, the city would then have the right, under the police power, to pass the ordinance in question?

“A I concede the point that if the 1943 measure, ch 220, is strictly a tax measure, then I have no standing in court.”

The issue narrows down then to whether the 1943 act is a revenue raising or police power measure.

It is sometimes difficult to determine what is or is not police power legislation. Concerning this matter, a broad definition is quoted from Professor Tucker in Stettler v. O’Hara, 69 Or 519, 531, 139 P 743, LRA 1917C 944, as follows:

“ ‘Police power is the name given to that inherent sovereignty which it is the right and duty of the government or agents to exercise whenever public policy, in a broad sense, demands, for the benefit of society at large, regulations to guard its morals, safety, health, order or to insure in any respect such economic conditions as an advancing civilization of a highly complex character requires.’ ”

The basic distinction between revenue and police power legislation is well pointed out by Mr. Justice Brand in Starker v. Scott, 183 Or 10, 15, 190 P2d 532, wherein he said:

“If the challenged portion of O. C. L. A., § 107-243 was enacted as an exercise of the taxing power, it would be invalid for, as such, it would be violative of the constitutional requirement of uniformity. It is therefore apparent that the ultimate question for decision is whether the so-called ten per cent penalty is imposed pursuant to the police power or as a tax. While the name given by the legislature is of significance in determining whether an act is passed pursuant to the police power or to the power of taxation, it is nevertheless true, as urged by plaintiffs, that the primary purpose of a statute determines whether it is enacted pursuant to the one or the other power.”

The opinion quotes with approval 1 Cooley, Taxation, 4 ed, § 27, as follows:

“ ‘The distinction between a demand of money under the police power and one made under the power to tax is not so much one of form as of substance. The proceedings may be the same in the two cases, although the purpose is essentially different. The one is made for regulation and the other for revenue. If for regulation, it is an exercise of the police power while if for revenue it is an exercise of the taxing power. If, therefore, the purpose is evident in any particular instance, there can be no difficulty in classifying the case and referring it to the proper power. * * *

“ ‘* * * If revenue is the primary purpose, the imposition is a tax. Only those cases where regulation is the primary purpose can be specially referred to the police power. If the primary purpose of the legislative body in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the public. * * * ’ ” See also City of Coos Bay v. Eagles Lodge, 179 Or 83, 97, 170 P2d 389; State v. Franklin, 163 Or 500, 98 P2d 724; 33 Am Jur 339, Licenses, § 19 et seq.; 53 CJS 455, Licenses, § 3.

It is my opinion that ch 220, Oregon Laws 1943, is a revenue raising measure rather than one under the police power for regulation, in that the primary purpose of the act is to raise revenue for old age assistance, the act directing that 60 per cent of the moneys raised shall he credited to the public assistance fund of the state and 40 per cent to the counties. I can find nothing in the act of a regulatory nature other than that which is incidental to the main purpose of raising revenue.

Plaintiff places much stress on Fox v. Galloway, 174 Or 339, 148 P2d 922, wherein we said:

“Chapter 220, supra, imposes not a property tax, hut a privilege tax upon the right to operate or display for operation a coin-in-the-slot mechanical device such as therein designated; and payment of the tax is made a condition to the exercise of such right: 33 Am Jur., Licenses, p. 326, §3; 26 R.C.L., Taxation, p. 35, % 19.”

And from this he deduces that plaintiff has the unlimited right to operate or display his devices.

Counsel’s analysis of the Fox v. Galloway case is clearly erroneous. The question there was whether or not ch 220, Oregon Laws 1943, taxed the amusement devices as property (an ad valorem tax) in which connection we said to thus hold would give “rise to a serious question as to the constitutionality of the act.” We there held that the tax was not a property but a privilege tax, and so it is. It is well settled that such a tax may he imposed for raising revenue. Lyons v. City of Portland, 115 Or 533, 536, 235 P 691; Elsner Bros. v. Hawkins, 113 Va 47, 73 SE 479; Billig v. State, 157 Md 185, 145 A 492; Commonwealth v. Ellis, 158 Mass 555, 33 NE 651; 51 Am Jur 46, Taxation, § 13.

In the absence of legislation on the part of the city in the exercise of its police power, owners of such devices under the Fox case would obviously have a right to operate or display them. The question of the police power of the city was not before us in that case.

It cannot be doubted that the state may preempt the field by expressly prohibiting a municipality from legislating on the matter, even though the measure were a revenue measure. However, the state, in the law under consideration, has not expressly reserved to itself such power.

The city of Portland, under its charter, has broad powers with reference to the matter in controversy: It may ignore the subject entirely; it may impose an additional privilege or occupation tax for revenue purposes; it may license and regulate, or prohibit entirely under the police power, which it did.