CITY OF PHOENIX, a municipal corporation, Horen Foster, Mayor, Frank G. Murphy, Margaret B. Kober, J. R. Williams, C. N. Walters, John F. Sullivan and Allen L. Rosenberg, Members of and Constituting the Council of the City of Phoenix, and B. W. Bear, Tax Collector of the City of Phoenix, Appellants,
ARIZONA SASH, DOOR & GLASS COMPANY, a corporation, Appellee.
[80 Ariz. 101] William C. Eliot, City Atty., George T. Fike, Fred F. Bockmon, James F. Haythornewhite, Asst. City Attys., Phoenix, for appellants.
Ryley, Carlock & Ralston, Lewis, Roca, Scoville & Beauchamp, Phoenix, for appellee.
Jennings, Strouss, Salmon & Trask, Cunningham, Carson, Messinger & Carson, McKesson & Renaud, James E. Flynn, Samuel C. Jefferies, Phoenix, of counsel.
This is an appeal from an order granting a motion for summary judgment in favor of plaintiffs below in an action brought to recover taxes paid under protest. On March 31, 1949, the City of Phoenix enacted ordinance No. 5121 assessing a privilege tax upon all persons doing business in the City of Phoenix. This tax was imposed upon the gross business done or the gross proceeds of the business and was graduated from 1/16 to [80 Ariz. 102] one-half of one per cent, dependent upon the type of business that the taxpayer conducted. On December 30, 1952, this ordinance, as amended, was chapter 17, article 2, Code of the City of Phoenix, 1951. Upon this date the Arizona Sash, Door and Glass Company which had paid a tax levied and assessed under this chapter, under protest, filed a suit against the City of Phoenix to recover the sum of $991.77. It is stated in the brief of appellant that only the question of the power of the City to assess, levy and collect a privilege license tax is presented in this appeal.
It is first claimed that the trial court erred in holding that the City of Phoenix did not have the power to assess, levy and collect a privilege license tax for the reason that the charter specifically gives it such power.
It is a settled principle of law in this jurisdiction that municipalities, regardless of how organized, have only such legislative powers as have been expressly, or by necessary implication, delegated to them by constitution or by the legislature. City of Tucson v. Arizona Alpha of Sigma Alpha Epsilon, 67 Ariz. 330, 195 P.2d 562; Gardenhire v. State, 26 Ariz. 14, 221 P. 228. These powers will be strictly construed. City of Flagstaff v. Associated Dairy Products Co., 75 Ariz. 254, 255 P.2d 191.
The City of Phoenix was organized and operates under what is called a 'home rule charter' which was framed and approved by the inhabitants under the provisions of section 2, article 13, of the constitution. Home Owners' Loan Corporation v. City of Phoenix, 51 Ariz. 455, 77 P.2d 818. A home rule charter adopted in this manner may not contravene any provisions of the constitution or general laws but must be consistent with and subject thereto. City of Phoenix v. Elias, 64 Ariz. 95, 166 P.2d 589; City of Tucson v. Tucson Sunshine Climate Club, 64 Ariz. 1, 164 P.2d 598; Trigg v. City of Yuma, 59 Ariz. 480, 130 P.2d 59. Such a charter grants its possessor certain rights and privileges free from interference by the legislature. These rights have been variously designated in legislation, decisions and constitutions as matters of local concern or as municipal affairs. Luhrs v. City of Phoenix, 52 Ariz. 438, 83 P.2d 283. The securing of revenue for a city has been held to be 'peculiarly and emphatically a matter of local concern'. Barrett v. State, 44 Ariz. 270, 36 P.2d 260, 261. But the power of taxation under the constitution inheres in the sovereignty of the state and may be exercised only by the legislature except where expressly delegated to political subdivisions of the state or to municipal corporations. The authority of municipalities to levy a tax must be made clearly to appear and doubts, if any, as to the power sought to be exercised must be resolved against the municipality; the power to tax is a separate, independent power and exists in municipal corporations only to the extent to which it [80 Ariz. 103] is clearly conferred by the charter or state statutes and its existence cannot be inferred or deduced from other powers conferred. Maricopa County v. Southern Pac. Co., 63 Ariz. 342, 162 P.2d 619; Wise v. First Nat. Bank of Nogales, 49 Ariz. 146, 65 P.2d 1154; Home Owners' Loan Corporation v. City of Phoenix, supra.
It will be necessary, therefore, to examine both the constitutional grant authorizing the adoption of the home rule charter by the City of Phoenix and the provisions of the charter itself to determine whether the city council had the power to enact legislation exacting the tax questioned in this litigation.
Section 2, article 13 of the state constitution provides insofar as here material that
if the proposed charter is ratified by a majority of the qualified electors voting thereon it shall be submitted to the Governor for his approval and that the Governor shall approve it, if it be not in conflict with the constitution or the laws of the state, and it further provides that:
'* * * Upon such approval said charter shall become the organic law of such city and supersede any charter then existing (and all amendments thereto), and all ordinances inconsistent with said new charter. * * *'
Chapter IV, section 2, paragraph 28 of the charter of the City of Phoenix states that it shall have the power:
'To license, for the purpose of regulation and revenue, all and every kind of business, profession, calling, trade or occupation not prohibited by law to be transacted or carried on in the city; to fix the rates fo licenses upon the same and provide for the collection thereof by suit or otherwise; to provide penalties for transacting such business, professions, callings, trades, or occupations, without license when the same is fixed and prescribed.'
It specifically grants to the City the power to license for the purpose of regulation and revenue all and every kind of business, etc., in the City of Phoenix and to fix the rates of licenses upon the same and to provide for the collection thereof.
It is our view that this charter provision empowers the city council to exact by ordinance a license tax for the privilege of doing business in the City. Revenue is defined by ...