[No. 8810. Department Two. May 28, 1910.]
THE CITY OF SEATTLE, Respondent, v. JOHN P. DENCKER,
Appellant. «1»
CONSTITUTIONAL LAW - CLASS LEGISLATION - LICENSES
OCCUPATION TAX - DISCRIMINATION. A city ordinance providing
a license tax upon the sale of goods of any kind by means of
any automatic device violates the constitutional prohibition
against granting to any citizens special privileges and
immunities which upon the same terms do not equally belong to
all citizens; since it discriminates against a simple mode
of doing business which is conceded to be lawful and
fair, and In no way Involves the police power.
Appeal from a judgment of the superior court for King
county, Ronald, J., entered March 28, 1910, upon a trial
and conviction of the violation of an ordinance relating to
the sale of goods by automatic vending machines. Reversed.
Lyter & Folsom and I. L. Blair, for appellant.
Scott Calhoun and Ralph S. Pierce, for respondent.
DUNBAR, J. - This is an appeal from a judgment of the
superior court for King County, after trial upon conviction
of the violation of an ordinance of the city of Seattle
relating to the sale of goods by automatic vending machine,
which ordinance reads as follows:
"An Ordinance licensing certain automatic devices, and
providing a penalty for violation.
"Be it ordained by the city of Seattle as follows:
"Section (1) That it shall be unlawful for any person
to maintain, keep, conduct, manage, have in his possession
or control for use, any automatic device for the sale of
goods of any kind or character, where money or any
«1» Reported in 108 Pac. 1086.
502 SEATTLE v. DENCKER.
Opinion Per DUNBAR, J. 58 Wash.
representative of value is used to operate the same, or where gain
or trade is the object, without being licensed so to do by
the city of Seattle.
"Section (2) The license required by this ordinance shall
be secured by paying the required amount to the city
treasurer, receiving a receipt therefor and presenting such
receipt to the city comptroller, who shall issue such license
as the receipt calls for.
"Section (3) The schedule of amounts to be paid for
licenses, is as follows: Where a deposit of one (1) cent
or sing representing the same in trade, is required to operate
the same, one (1) dollar per year for each device; where a
deposit of five (5) cents or sing representing the same in
trade, is required to operate the same, five (5) dollars per
year for each device; where a deposit of ten (10) cents or
sing representing the same in trade, is required to operate
the same, ten (10) dollars per year for each device; where
a deposit of twenty-five (25) cents or sing representing the
same in trade, is required to operate the same, fifteen (15)
dollars per year for each device.
"Section (4) The provisions of this ordinance shall not.
be held to include or apply to the sale of gas, or other
commodities, through prepayment meters, or the installation
and use of telephones with slot machine devices, by public
service corporations, operating under franchises granted by
the city of Seattle, or to the sale of candies or similar
confections, by automatic devices in theaters or other such places
Of public assembly where a fee is charged for admission."
Defendant is the manager of the Northwestern Automatic
Vending Machine Company, a Washington corporation,
which is engaged in the business of selling cigars at retail
by means of vending machines; owns and operates a great
many of these machines in the city of Seattle, and has
invested a large sum of money in said machines. The machines
are placed in hotels where cigars are required by the patrons,
are under the general supervision of the clerks of the hotel,
and as a rule, a certain percentage is given to the hotel men
for operating the machines. Under the ordinance in
question, the license fee required for the operation of the
machines varies from $80 to $95, according to the number of
SEATTLE v. DENCKER. 503
May 1910 Opinion Per DUNBAR, J.
devices, the fee being based on the denomination of the coin
required for operation and the number of devices, and not
on the amount of business done. Each machine has a device
for five, ten, and twenty-five cent pieces. The cigars are
at all times exposed to view under their proper labels and
prices, so that the purchaser can at all times see what he
is getting for his money, and he gets just what he pays for.
If he drops in a five-cent coin in the device calling for a coin
of that denomination, and presses the plunger, he gets a
five-cent cigar; if a ten-cent coin, a ten-cent cigar; and if
a twenty-five-cent coin, either a two-for-a-quarter or a
three-for-a-quarter cigar, according to his selection. There is
no more opportunity for the customer being cheated or
defrauded in dealing with this device than by any other one.
The question for determination here is the validity of the
ordinance. It is conceded that this ordinance is a revenue
measure; that the only ground of difference between licensed
and unlicensed sales in this ordinance is in the mode of sales,
whether by device or hand. It is conceded that none of
other retail merchants of that occupation are taxed by
licenses for the sale of cigars; that if the sale is by this device
the license is imposed, and that if it is by hand, in the
ordinary way, no license is required.
In the discussion of this question there are certain
fundamental principles which may be conceded, viz: That it is
a well-known attribute of sovereignty to tax occupations for
the purpose of raising revenue, and that such tax may be
imposed in the form of a license fee; that the state may tax
all or any occupations or business carried on within its
boundaries, imposing the burden upon some and passing by
others; that only considerations of general policy determine
such selections, and that there is no restriction unless it be
imposed by the constitution. This determination, however,
must not be exercised arbitrarily or fraudulently, and while
the policy of the enactment may not be questioned by the
courts, the discretion exercised by the law-making power
504 SEATTLE v. DENCKER.
Opinion Per DUNBAR, J. 58 Wash.
must be natural and reasonable, and consistent with the
general principles of law and the fundamental principles
upon which our government is founded. When these principles
are violated to the extent of depriving the citizen of
natural or constitutional rights, it is the duty of the court
to intervene in his behalf. A wilderness of authority might
be cited on this interesting and fruitful subject of litigation;
for, from the beginning of not only our government but of
all government, the contest has been waged between
legislative powers and individual rights. But from the best
considered cases, the general principles above announced can be
deduced.
Tested by these principles, can this ordinance be
sustained? We think not. It is plain that there is no police
power or regulation involved, a power which is the
sustaining principle in ninety-nine out of a hundred of the cases
cited; for there is no claim that the business discriminated
against here affects in any way the public morals or the
business interests of the community, except as it affects the
interest of others engaged in the same business but purely
in the way of competition. The article that is sold does
not in any way involve the police power. Hence, it is a
matter of no public concern whether it be sold by device or
by some other method. And here it is well to note a vital
distinction, founded on sound and just principles of law,
between the power to tax occupations under the form of a
license which, by reason of the character of the occupation,
is subject to police regulation, and the power to tax what
are termed useful trades and employments, under the guise
of a license. It is well settled that the license required of
employments of the latter character can carry with it only
such fee as is necessary to make compensation for the
regulation services, and cannot be perverted into a tax.
Especially is this true when the attempt is made to discriminate
between occupations alike in principle but differing only in
mode of operation in some trifling particular.
SEATTLE v. DENCKER. 505
May 1910 Opinion Per DUNBAR, J.
The respondent relies largely upon the case of St. John
v. New York, 201 U.S. 685, where the supreme court of
the United States sustained an act prohibiting the sale of
adulterated milk, where in certain respects it provided
different prohibitions and penalties as to producing and
nonproducing vendors of milk, the enactment making it a penal
offense for a person to vend milk that contained more than
a certain amount of water and less than a certain amount
of milk solids. The objection urged to the law was that it
was a discrimination between the vendor and the producers
of the milk, and that such discrimination had no basis in
right or public policy. In discussing the case, the court
said:
"It has been decided many times that a state may classify
persons and objects for the purpose of legislation. We will
assume the cases are known and proceed immediately to
consider whether the classification of the law is based on proper
and justifiable distinctions, considering the purpose of the
law and the means to be observed to effect that purpose.
By referring to section 20 it will be observed that adulterated
milk, as there defined, includes not only that to which
something has been added, but milk from which the cream has
been removed, or which is deficient naturally in certain
substances, or taken from cows fed on certain things, or cows
in certain conditions when milked. In other words, the
purpose of the law is to secure to the population, adult and
infant, milk attaining a certain standard of purity and
strength. All other milk is declared to be 'unclean, impure,
unhealthy, adulterated, or unwholesome.' It is not contended
that such purpose is not within the power of the state but,
it is contended, that the power is not exercised on all alike
who stand in the same relation to the purpose. . . . legislation
to be practical and efficient must regard this special
purpose as well as the ultimate purpose. The ultimate
purpose is that wholesome milk shall reach the consumer, and
it is the conception of the law that milk below a certain
strength is not wholesome, but a difference is made between
milk naturally deficient and milk made so by dilution. It
is not for us to say that this is not a proper difference, and
regarding it the law fixes its standard by milk in the
506 SEATTLE v. DENCKER.
Opinion Per DUNBAR, J. 58 Wash.
condition that it comes from the herd. It is certain that if milk
starts pure from the producer it will reach the consumer
pure, if not tampered with on the way. To prevent such
tampering the law is framed and its penalties adjusted. As
the standard established can be proved in the hands of a
producing vendor, he is exempt from the penalty; as it
cannot certainly be proved in the hands of other vendors so
as to prevent evasions of the law, such vendors are
exempt."
It would be difficult to discover in principle any similarity
between that case and the one at bar. The court in that
case, as in nearly all the cases, starts out with the discussion
as to what is the purpose of the law. The purpose of the
law in the case just cited was to prevent the adulteration of
milk, which the state undoubtedly had a right to do under
its plain police powers, for the protection of the health of
the citizen. But as we have before said, this case is stripped
of any police feature, and if we were to start an investigation
to determine the purpose of this act, it could only end
in a report that there was no such beneficent purpose as
was stated by the court in that case, but that the purpose,
if it had any, was to benefit the regular retail cigar
merchants by suppressing a business of the same kind, but
differing simply in the mode of the delivery of the cigars; or
in other words, to prevent honest competition in the cigar
trade. The further reason upon which the court decided
that case, viz., that it was more difficult to detect fraud when
the milk was in the hands of the vendor than when it was
in the hands of the original producer, is also absent in this
case. As the testimony shows, and as the model of the
machine indicates, there is no more opportunity for fraud or
deceit in selling cigars under this system than in selling
them in any other way.
The case of Chicago v. Bowman Dairy Co., 234 Ill.
84 N. E. 913, 123 Am. St. 100, 17 L. R. A. (N. S.) 684,
also largely relied upon by the respondent, is practically the
same kind of a case. Probably the circumstances of that
SEATTLE v. DENCKER. 507
May 1910 Opinion Per DUNBAR, J.
case bring it a little nearer to the case at bar. There an
act was sustained which required dealers, selling cream and
milk in bottles or glass jars, to have the capacity of the
bottles or jars permanently indicated upon them; and
prescribed a penalty for having in their possession bottles or
glass jars of capacity less than that indicated on the
outside; while the act did not apply to vendors of milk through
other agencies. But that case, as the other, was sustained
on the doctrine of the police power of the state. Even so,
we are doubtful if that case could be indorsed by this court
under the decision in Spokane v. Macho, 51 Wash. 322, 98 Pac. 755,
21 L. R. A. (N. S.) 263, where it was held that, in
an ordinance to regulate and license employment agencies, a
section making it a misdemeanor for the keeper of an
employment agency to make wilful misrepresentations or to wilfully
deceive any person seeking employment, and take a fee for
such employment, is unconstitutional, since it is not general
and impartial in its operation, but operates upon one class to
the exclusion of others in respect to a pen.al act common to all
classes of business, and exceeds the reasonable limit of police
regulations. In that case it was stated that it is a fundamental
proposition that an ordinance must be fair in its terms,
impartial in its provisions, and general in its application;
citing Dillon, Mun. Corp. 322, and McQuillan, Mun. Corp.
193. It was also said:
"When exercising its power to regulate a business, the
municipality may classify subjects of legislation, but the
law must treat alike all of a class to which it applies, and
must bring within its classification all who are similarly
situated or under the same condition"; citing State v. Sheriff
of Ramsey County, 48 Minn. 236, 51 N. W. 112, 31 Am.
St. 650, where the court said:
"The classification must be based on some reason
suggested by a difference in the situation and circumstances of
the subjects treated, and no arbitrary distinction between
different kinds or classes of business can be sustained, the
conditions being otherwise similar."
508 SEATTLE v. DENCKER.
Opinion Per DUNBAR, J. 58 Wash.
A much worse discrimination would be a discrimination
between citizens of the same class engaged in the same
business, where there is no reason suggested by a difference in
the situation and circumstances of the subjects treated; for
not only is the business in this case similar and identical, but
it is purely and simply a difference in the mode of
transacting the business, a mode which cannot possibly affect any
principle or affect deleteriously the consumer or purchaser
of the article sold. The general principle announced by Mr.
Dillon in his work on Corporations, vol. 1, SS 322, seems to
be specially applicable here:
"As it would be unreasonable and unjust to make, under
the same circumstances, an act done by one person penal, and
if done by another not so, ordinances which have this effect
cannot be sustained. *Special and unwarranted discrimination*,
or unjust or oppressive interference in particular cases,
is not to be allowed. The powers vested in municipal
corporations should, as far as practicable, be exercised by
ordinances general in their nature and impartial in their
operation."
The Montana legislature passed a law imposing a license
tax of $25 per quarter on every laundry business other than
that of a steam laundry wherein more than one person was
employed or engaged, and but $15 per quarter upon steam
laundries. This law was sustained by the state court of
Montana, but was afterwards declared unconstitutional by
that eminent jurist, Judge Knowles, of the United States
circuit court, in In re Yot Sang, 75 Fed. 988. In the course
of the opinion it was said:
"Unless there is something so different in the conducting
of a laundry by steam to that of the carrying on of that
business by any other means, the law providing a different
and more excessive license for the conducting of such
business other than by steam is unequal and unjust. . . . It
may be said that the state may have wished to encourage
steam laundries. If so, it had no right to do it at the
expense of any person carrying on such business other than
by means of steam. Such an argument would imply that it
SEATTLE v. DENCKER. 509
May 1910 Opinion Per DUNBAR, Y.
was in the power of a state to force a man who conducted
a business in one mode to abandon the same in order that
he who conducted such business in another mode should be
encouraged and built up."
The court concluded that, where the same business is
conducted by different modes, it was unjust and in violation of
the rule that each man should have the protection of equal
laws, to place upon one a greater burden than upon the
other. It is stated by counsel for appellant, as a matter
of history, that, since the determination of this case in the
United States court, it has been accepted as the law of the
state, and that there have been no prosecutions under the
statute. However this may be, we are satisfied that the
decision of the United States court expresses the true
principles governing such cases.
In the case of Covington v. Dalheim, 126 Ky. 26, 102
S. W. 829, the court, in passing upon the constitutionality
of an act which imposes a tax on a certain class of
grocers without the imposition of the same tax on others,
held that the tax must apply to all grocers in the city, and
that the act was unconstitutional, saying:
"It is competent for the city to select any of the
enumerated classes as subjects for license taxes. But it is not
competent for it to tax some members of a class set apart
by the legislature and not tax others of the same class."
And the principle announced in that case was reaffirmed
by the court of appeals of Kentucky in the case of Read v.
Graham, 31 Ky. Law 569, 102 S. W. 860. These last three
cases which we have mentioned seem to be exactly in point
on the question under discussion.
It is very well suggested by counsel for appellant that
it would be just as reasonable to discriminate against a
merchant who used a patent carrier for the transmission
of money and change, instead of a cash boy. The same rule
might apply to a thousand different improvements that have
a tendency to cheapen products by reason of the fact that
510 SEATTLE v. DENCKER.
Opinion Per DUNBAR, J. 58 Wash.
they are labor saving machines, and do away with the
necessity for so many clerks and employees. It is a legitimate
business, and it makes no difference to the public whether the
cigar is delivered by means of this automatic device or in
the ordinary way. A strict or puritanical conception of the
business of selling cigars might be that it was harmful to
the health of the consumers, but the mode of selling them
would not enter into that thought. Nor can the objection
that it is particularly attractive be urged, for handsome
girls are ordinarily employed around hotels for the purpose
of selling cigars, and no doubt many susceptible men are
induced to buy more cigars than they otherwise would by
reason of the employment of this delivery agency.
Fairly considered, this seems to be a tax on invention,
for invention in most cases, as in this, lessens the expense
of the business, and thereby necessarily cheapens the product.
This was one of the arguments advanced in favor of
sustaining the validity of this ordinance, viz., that the machine
could be manufactured and operated for less money than a
retail cigar store could be equipped and operated. It would
seem that the reduction in price of an article of commerce
would savor of the quality of a blessing rather than of a
curse, when the welfare of the consumer is taken into
consideration; and to hold otherwise would reverse the general
rule that legal restraints may be imposed upon the few for
the benefit of the many. The tendency of this find of an
income is to foster monopolies, for a monopoly exists when
the manufacture and sale of any commodity is restrained to
one or a certain number. It is said that it has three
inseparable consequences - the increase of the price, the
badness of the wares, the impoverishment of others. Hence, it
naturally follows that monopolies are odious to the law, and
'the law will concern itself to restrain rather than to nourish
them. If this ordinance can be sustained, there is no limit
to the arbitrary, capricious, or tyrannical imposition of
taxes, and the constitutional guaranty that "no law shall
STATE EX REL. BURKE v. BOARD OF COM'RS. 511
May 1910 Syllabus.
be passed granting to any citizen, class of citizens or
corporation other than municipal, privileges or immunities
which upon the same terms shall not equally belong to all
citizens or corporations," becomes a dead letter. Discrimination
to the extent exhibited in this ordinance discourages
enterprise, paralyzes progress, is a deprivation of liberty,
and is entirely inconsistent with the true principles and the
genius of our government. None of the cases cited, from
either this or any other court, numerous as they are, go
to the extent of discriminating against a simple mode of
doing business, which is conceded to be lawful and fair, and
which in no way involves the principles of police power or
regulation.
The judgment will be reversed, with instructions to
dismiss the action.
RUDKIN, C.J., CROW, MOUNT, and PARKER, JJ., concur.