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dently the city understood that, if the entire gross revenue from the business was pledged, it might be for that reason unable to pay out any part of the revenue for another purpose. It also is easy to perceive that the appellant, by reason of its interest in the street railroad revenue bonds, may have regarded the present suit as a suitable vehicle for getting its contention respecting such a pledge before a court and possibly establishing indirectly what it had been unable to establish through its earlier and direct efforts. Certainly the appellant could not reasonably have expected to enhance its chances of success in the present suit by introducing such a contention respecting the pledge given in support of the electric light and power revenue bonds.
Of the circumstances in which the ordinance was adopted and of the provision in § 6 declaring the tax applicable to the city's business, the state court said in the present suit:
“ The city, in its proprietary capacity, is in competition with appellant in the power and light business. The sible consequences to appellant, if it is subjected to an excise of three per cent on its gross revenues, while its competitor escapes the burden, are too obvious for discussion. Evidently having such consequences in mind, the city council, by virtue of $ 6 of the ordinance, has undertaken to subject the city's power and light business to the tax imposed upon persons and corporations engaging in that business. This is merely a more or less friendly gesture. The city has not allocated, and probably cannot allocate, any of the revenues of its power and light business to the payment of such a tax. Bonds have been issued in excess of $30,000,000 against the revenues from that business; and those bonds are a prior lien on the entire income from it-taking precedence even over operating charges.” (p. 671.]
VAN DEVANTER, J., concurring.
Counsel differ widely respecting so much of this excerpt as speaks of the existing pledge as an obstacle to applying the tax to the city's business. Counsel for the city say this statement rests only on an allegation in the appellant's complaint and was made in the absence of a full presentation of the matter and without intention to render a decision thereon; and they present arguments and citations giving color to their assertion. On the other hand, counsel for the appellant insist the statement is decisive and point to its letter as justifying them in so insisting. It is obvious that the statement, when separately considered, makes strongly for the latter view; but when it is read in connection with prior decisions, which it does not mention, and with charter and statutory provisions, which are not noticed, there arises a real doubt whether it was made as a decisive utterance or as a recital of what was alleged and only assumed to be true. This is a matter on which only the state court can speak with ultimate authority; and as its solution, as will appear later on, is not essential for present purposes, it properly may be put to one side. When this is done, the appellant's charge of unreasonable discrimination amounting to a denial of equal protection needs to be examined with three suggested views of the existing pledge in mind—one treating it as including only the net revenues from the city's business, as the city asserts; another treating it as including the entire gross revenues, but subject to payment therefrom of any tax lawfully imposed on the city's business; and still another treating it as including the entire gross revenues and preventing, by reason of the contract clause of the Constitution, payment therefrom of the tax named in the ordinance, as the appellant insists.
* Inaccurate statements of counsel sometimes lead to erroneous assumptions by courts. Langford v. Monteith, 102 U.S. 145, 147.
VAN DEVANTER, J., concurring.
The ordinance, in § 6, provides that the tax “shall, as far as permitted by law, be applicable" to the city's proprietary business. Unless the pledge be in the way it is plain that there is no legal obstacle to carrying this provision into effect. The state court does not suggest the presence of any other obstacle; and counsel for the appellant do not show that there is any. On the other hand, counsel for the city concede that the ordinance imposes the tax on the city's business and assert the city's willingness to pay the tax out of the gross revenues from that business.
True, the appellant alleges in its complaint that the city budget for 1932 did not allocate any of the revenues from the city's business for such payment. But this allegation is of no significance. As counsel for the city point out, the budget was adopted late in 1931, while the taxing ordinance was not adopted until May 25, 1932, and did not become effective until July 1 of that year. Appellant's complaint was filed shortly after the ordinance became effective and before the time fixed for making up and settling another budget.
In view of the terms of the ordinance, and of the city's attitude declared by its counsel, it is manifest that, if the pledge be only of the net revenues, the tax falls on
" Louisville v. Commonwealth, 62 Ky. 295; Commonwealth v. Makibben, 90 Ky. 384; 14 S.W. 372; Clark v. Louisville Water Co., 90 Ky. 515; 14 S.W. 502 (affirmed 143 U.S. 1); Newport v. Commonwealth, 106 Ky. 434; 50 S.W. 845, 51 id. 433; Covington v. Commonwealth, 107 Ky. 680; 39 S.W. 836 (affirmed 173 U.S. 231); Western Saving Fund Society v. Philadelphia, 31 Pa. St. 175, 183; Chadwick v. Maginnes, 94 Pa. St. 117; Erie County v. Commissioners, 113 Pa. St. 368; 6 Atl. 138; Vilas v. Manila, 220 U.S. 345, 356. And see Atlantic & N. C. R. Co. v. Commissioners, 75 N.C. 474; South Carolina v. United States, 199 U.S. 437; Los Angeles v. Los Angeles Gas & Electric Corp., 251 U.S. 32; Bank of United States v. Planters Bank, 9 Wheat. 904, 907; Curran v. Arkansas, 15 How. 304, 309.
the city's business just as on the other, and that the charge of unreasonable discrimination is without any basis.
If the pledge be of the gross revenues but subject to payment therefrom of any tax lawfully laid on the city's business, thereby leaving the city free to pay the tax imposed by the ordinance out of such revenues, it still is manifest that the ordinance treats both businesses alike, and therefore that there is no discrimination.
If the pledge be of the entire gross revenues and, by reason of the contract clause of the Constitution, prevents the application of part of the revenues to the payment of the tax, it is very plain that such discrimination as results is neither arbitrary on the part of the city nor within the condemnation of the equal protection clause. The contract clause and the equal protection clause are both parts of the Constitution; and of course action taken or omitted in obedience to the contract clause cannot be regarded as a violation of the equal protection clause. Nor does the latter clause require that a right or exemption which under the other clause must be accorded to a particular business be also accorded to a similar business not otherwise entitled to it.
It follows that in none of the suggested views of the pledge can the appellant's charge of unreasonable discrimination be sustained. And, this being so, there is no need for now considering which of the suggested views of the pledge is right.
MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND and MR. JUSTICE BUTLER concur in this opinion.
• Raley & Bros. v. Richardson, 264 U.S. 157; Packer Corporation v. Utah, 285 U.S. 105, 109; Des Moines National Bank v. Fairweather, 263 U.S. 103, 116–117; Union Bank & Trust Co. v. Phelps, 288 U.S. 181, 187.
Opinion of the Court.
SEATTLE GAS CO. v. SEATTLE.
APPEAL FROM THE SUPREME COURT OF WASHINGTON.
No. 359. Argued January 12, 15, 1934.-Decided March 19, 1934.
Decided upon the authority of Puget Sound Power & Light Co. v.
Seattle, ante, p. 619. 172 Wash. 701; 21 P. (2d) 732, affirmed.
APPEAL from the affirmance of a judgment sustaining a demurrer and dismissing the complaint in a suit by the Gas Company to recover money paid under protest as a tax, and to enjoin future assessments.
Mr. DeWolfe Emory, with whom Mr. C. K. Poe was on the brief, for appellant.
Messrs. Walter L. Baumgartner and A. C. Van Soelen for appellee.
MR. JUSTICE STONE delivered the opinion of the Court.
This case comes here on appeal under § 237 of the Judicial Code from a judgment of the Supreme Court of Washington, 172 Wash. 701; 21 P. (2d) 732, upholding a municipal license or excise tax, assailed by appellant as repugnant to the Fourteenth Amendment and the contract clause of the Federal Constitution. The ordinance, which imposes a tax of 3% of the gross income from appellant's business of furnishing gas to consumers in the City of Seattle, and the federal questions raised are the same as those in Puget Sound Power & Light Co. v. City of Seattle, decided this day, ante, p. 619. Appellant's bill of complaint, demurrer to which was sustained by the state court, alleges that the appellant is engaged in the distribution of gas, used for lighting in the City of Seattle, in competition with the city, the appellee, which conducts an electric light business, and that its constitutional rights are in