Appeal from Superior Court, Maricopa County; Harold R. Scoville, Judge.
Jack Choisser, City Atty., and William C. Fields, Asst. City Atty., both of Phoenix, for appellant.
John L. Sullivan, Atty. Gen., and R. G. Langmade, Asst. Atty. Gen., for appellees.
Udall, Justice. Stanford, C. J., and LaPrade, J., concurring.
[65 Ariz. 316] The question for determination on this appeal is whether the City of Phoenix, a municipal corporation, is liable under section 66-256(b), A.C.A.1939, for the payment of unladen weight fees upon vehicles owned by it or the United States and used
by the city in transporting persons for hire.
To test the question involved, the Superintendent of the Motor Vehicle division of the Arizona Highway department caused the highway patrol to seize two of the several busses in question. One bus thus seized was owned by the city, the other being leased to the city by the United States Navy. To release these busses the city paid the unladen weight fees under protest and then brought separate suits to recover these amounts. By stipulation, the two cases (numbered 54985 and 55238) were consolidated for the purpose of trial. At the trial, under an agreed statement of facts, the city attorney admitted that the busses were being operated by the city in its proprietary capacity, carrying passengers for hire both within and without its corporate limits. The lower court denied the city's claim for tax exemption and the consolidated cases are now before us for review.
The city seeks to avoid the payment of the "unladen weight fee" exaction upon three grounds: (1) Such an imposition upon municipally owned property is an ad valorem or property tax from which municipal corporations are exempt by the provisions of Art. 9, sec. 2 of the Constitution of Arizona, and sec. 73-201. (2) As the above constitutional provision has been held to exempt the city from the payment of certain "lieu taxes" which are in the nature of excise impositions, this constitutional provision should equally exempt the city from payment of unladen weight fees [65 Ariz. 317] even if they are excise and not ad valorem taxes. (3) Finally, sec. 66-235, which exempts the city from the payment of registration fees for its vehicles, also exempts it from the payment of unladen weight fees as both fees are established by the same section of the statute and both are therefore intended to fall under the registration fee exemption.
Art. 9, sec. 2 of the Constitution of Arizona provides in part that "there shall be exempt from taxation all federal, state, county and municipal property" and sec. 73-201 provides in part that "All property shall be subject to taxation, except: (1) Federal, state, county and municipal property * * *."
The tax referred to in the above provisions, however, is a property or ad valorem tax and not an excise imposition. City of Phoenix v. State ex rel. Conway, 53 Ariz. 28, 85 P.2d 56. Nor are excise taxes contemplated by the above constitutional prohibition. Stults Eagle Drug Co. v. Luke, 48 Ariz. 467, 62 P.2d 1126. Where as here, the city enters the field of private competitive business for profit, it divests itself of its sovereignty pro tanto, takes on the character of a private corporation and thereby forfeits its immunity from taxation. Zangerle v. City of Cleveland, 145 Ohio St. 347, 61 N.E.2d 720. While functioning in a proprietary capacity it must pay any proper excise tax levied upon such business. City of Phoenix v. State ex rel. Conway, supra; City of Phoenix v. Moore, 57 Ariz. 350, 113 P.2d 935.
The crucial question here then is whether the unladen weight fees sought to be imposed upon the city are excise taxes or whether they are ...