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Opinion of the Court.
contention is, in effect, that the city, by virtue of the Fourteenth Amendment, upon entering the business forfeited its power to tax any competitor.
In conducting the business by state authority the city is exercising a part of the sovereign power of the state which the Constitution has not curtailed. The decisions of this Court leave no doubt that a state may, in the public interest, constitutionally engage in a business commonly carried on by private enterprise, levy a tax to support it, Green v. Frazier, 253 U.S. 233; Jones v. Portland, 245 U.S. 217, and compete with private interests engaged in a like activity. Standard Oil Co. v. Lincoln, supra; Madera Water Works v. Madera, 228 U.S. 454; Helena Water Works Co. v. Helena, 195 U.S. 383.
We need not stop to inquire whether the equal protection clause was designed to protect the citizen from advantages retained by the sovereign, or to point out the extraordinary implications of appellant's argument when applied to expansions of government activities which have become commonplace. It is enough for present purposes that the equal protection clause does not forbid discrimination with respect to things that are different. The distinctions between the taxing sovereign and its taxpayers are many and obvious. The private corporation, whatever its public duties, carries on its business for private profit and is subject to the obligation, common to all, to contribute to the expense of government by paying taxes. The municipality, which is enabled to function only because it is a tax gatherer, may acquire property or conduct a business in the interest of the public welfare, and its gains if any must be used for public ends. Hence equal protection does not require a city to abstain from taxing the business of a corporation organized for profit merely because in the public interest the municipality has acquired like property or conducts a like business.
Opinion of the Court.
These differences are not lessened nor the constitutional exaction of uniformity increased because the city competes with a business which it taxes. Compare Springfield Gas Co. v. Springfield, 257 U.S. 66; Hollis v. Kutz, 255 U.S. 452; Emergency Fleet Corp. v. Western Union, 275 U.S. 415. The state may tax different types of taxpayers differently even though they compete. State Board of Tax Commissioners v. Jackson, 283 U.S. 527; Alaska Fish Salting & By-Products Co. v. Smith, 255 U.S. 44; Hammond Packing Co. v. Montana, 233 U.S. 331; Quong Wing v. Kirkendall, 223 U.S. 59. It could not plausibly be argued that a private nonprofit corporation distributing electric current to consumers at cost could not be exempted from taxes borne by others serving the same wants. Compare Louisville Gas Co. v. Coleman, 277 U.S. 32, 40; German Alliance Ins. Co. v. Kansas, 233 U.S. 389, 418; Citizens Telephone Co. v. Fuller, 229 U.S. 322. A business which in private hands might be exempted from taxation because not conducted for private profit is no less privileged because its capital is supplied by the government which controls it in the public interest. These considerations are in no way affected by calling the city's activity “proprietary" instead of “governmental.” Compare South Carolina v. United States, 199 U.S. 437, with Murray v. Wilson Distilling Co., 213 U.S. 151 and Metcalf & Eddy v. Mitchell, 269 U.S. 514.
The injury, which appellant fears may result, is the consequence of competition by the city, and not necessarily of the imposition of the tax. Even without the tax the possibility of injury would remain, for the city is not bound to conduct the business at a profit. The argument that some way must be found to interpret the due process clause so as to preclude the danger of such an injury fails to point the way. Legislation may protect from the consequences of competition, but the Con
Opinion of the Court.
stitution does not. Helena Water Works Co. v. Helena, supra; Vicksburg v. Henson, 231 U.S. 259. The Fourteenth Amendment does not purport to protect property from every injurious or oppressive action by a state, Memphis Gas Co. v. Shelby County, 109 U.S. 398, 400; St. Louis v. United Railways Co., 210 U.S. 266, 276, nor can it relieve property of congenital defects, Madera Water Works v. Madera, supra, 456. It does not preclude competition, however drastic, between private enterprises or prevent unequal taxation of competitors who are different. Those were risks which appellant took when it entered the field. No articulate principle is suggested calling for the conclusion that the appellant is not subject to the same risks because the competing business is carried on by the state in the exercise of a power which has been constitutionally reserved to it from the beginning.
Such was the decision in Madera Water Works V. Madera, supra, where this Court pointed out that in the absence of any contract restriction the Fourteenth Amendment does not prevent a city from conducting a public water works in competition with private business or preclude taxation of the private business to help its rival to succeed. See also Springfield Gas Co. v. Springfield, supra. Such must be our decision now.
2. The definition of gross income by § 2 of the ordinance, which is assailed as vague and indefinite, is that considered in Pacific Telephone & Telegraph Co. v. Seattle, ante, p. 300. By $$ 10 and 20 the comptroller of the city is required to make rules and regulations, having the force of law, for carrying the ordinance into effect, and to provide blank forms of return upon which the taxpayer is to enter such information as the comptroller may require to enable him to compute the tax. As appellant alleges that it has received its license and paid the first installment of the tax, it appears that a practical construction has been
VAN DEVANTER, J., concurring.
given to the ordinance by an administrative officer competent to give it, which the state court has upheld. It is thus apparent that the ordinance, as construed, is sufficiently definite to enable the appellant to comply with it and as appellant's return for taxation and the method of computing the tax are not disclosed by the record no constitutional infirmity in the ordinance is revealed. See Edelman v. Boeing Air Transport, Inc., 289 U.S. 249; Pacific Telephone & Telegraph Co. v. Seattle, supra.
3. Appellant asserts a contract under its franchise to use the streets of the city for the purpose of carrying on its business for an unexpired term of years. It argues that the franchise is a contract license to carry on the business, and that the exaction of a tax as a condition precedent to the enjoyment of the license will operate to destroy the privilege granted by the franchise. This argument was made and answered in Memphis Gas Co. v. Shelby County, 109 U.S. 398, and in St. Louis v. United Railways Co., 210 U.S. 266. Surrender of the state's power to tax the privilege is not to be implied from the grant of it. Hence, appellant took its franchise subject to the power of the state to tax the granted privilege in common with all other privileges and property in the state. Without a clearly expressed obligation on the part of the city to surrender that power the contract clause does not limit it. See Wiggins Ferry Co. v. East St. Louis, 107 U.S. 365; New Orleans City & Lake R. Co. v. New Orleans, 143 U.S. 192; Postal Telegraph Cable Co. v. Charleston, 153 U.S. 692; cf. Knoxville Water Co. v. Knoxville, 200 U.S. 22.
MR. JUSTICE VAN DEVANTER, specially concurring.
I concur in the judgment of affirmance, but not in the principal part of the court's opinion.
The appellant, the power company, assails the ordinance imposing the tax on the following grounds:
VAN DEVANTER, J., concurring.
1. The ordinance contravenes the equal protection clause of the Fourteenth Amendment to the Constitution of the United States in that it lays the tax on the appellant's electric light and power business but not on the like and competing business of the city.
2. The ordinance offends the due process clause of that Amendment in that it prescribes severe penalties and liabilities for nonpayment of the tax and yet defines "gross income," on which the tax is to be computed, so vaguely that the amount of the tax cannot be ascertained with reasonable certainty.
3. The ordinance impairs the franchise contract entitling the appellant to conduct its business within the city for a term of fifty years, and thereby infringes the contract clause of the Constitution, in that it makes the continued enjoyment of the franchise depend on the payment of the tax.
The assault is confined to this taxing ordinance. Other ordinances, some provisions in the city's charter, and still other enactments, have a real bearing on the matter, but their validity under the Constitution of the United States is not called in question.
I agree that the second and third grounds of the assault must be held untenable for the reasons stated in the opinion; and I further agree that the first ground must failbut for reasons essentially different from those which the opinion announces.
The first ground proceeds on the theory that the city is free to accord equal treatment to the two competitive businesses, but by its ordinance unreasonably and arbitrarily discriminates against the business of the appellant and in favor of its own business by subjecting the former to the tax and omitting or refusing to subject the latter to a like burden. It therefore is of first importance to ascertain what the ordinance provides and what are the