1. A city ordinance imposing a license tax on a telephone
company measured on the gross income from its business in the city,
and providing penalties for delay in payment, cannot be held
violative of due process upon the ground of being too vague and
indefinite to enable the taxpayer to compute the amount of its tax
where the ordinance does not purport to give the final definition
of the taxpayer's obligation, but leaves that to be done by an
administrative official through regulations and forms for tax
returns, which are not shown to have been prepared, and where the
duty to make return and pay any part of the tax cannot arise under
the ordinance until such forms are available. P.
291 U. S.
303.
2. The Fourteenth Amendment does not require that legal duties
shall be defined by any particular agency of the state government.
P.
291 U. S.
303.
3. The demands of due process are satisfied if reasonably clear
definition is afforded in time to give the taxpayer an opportunity
to comply. P.
291 U. S. 304.
172 Wash. 649, 21 P.2d 721, affirmed.
Appeal from a judgment affirming the dismissal of a suit to
restrain the collection of a tax.
Page 291 U. S. 301
MR. JUSTICE STONE delivered the opinion of the Court.
This is an appeal under § 237 of the Judicial Code from a
judgment of the Supreme Court of the state of Washington, 172 Wash.
649, 21 P.2d 721, sustaining a state license or excise tax assailed
by appellant upon numerous state and federal grounds. The only one
urged here is that the statutory measure of the tax, as applied to
appellant, is so vague and indefinite as to infringe the due
process clause of the Fourteenth Amendment.
An ordinance of the Seattle City Council, of May 23, 1932,
imposes annual license taxes on the privilege of carrying on
various classes of business. One such is the telephone business
upon which the tax is 4% of the "gross income" of the business "in
the city" during the preceding fiscal year. The definition of gross
income by § 2 is printed in the margin.
* By § 10, the
taxpayer is required annually to make application to the city
comptroller for an "occupation license" for the ensuing year
"upon blanks or forms to be prepared by him requiring such
information as may be necessary to enable him to arrive at the
lawful amount of the fee or tax."
By § 20, the comptroller is required to make rules and
regulations having the force of law for carrying the ordinance into
effect. Payment of the full tax or a monthly or quarterly
installment of it is required on filing the return.
Page 291 U. S. 302
The cause was heard and decided on demurrer to appellant's bill
of complaint asking an injunction to restrain the collection of the
tax. The bill was filed shortly after the enactment of the
ordinance. It alleges that the appellant, a California corporation,
derives its receipts and earnings from the conduct of a telephone
business, both interstate and intrastate, carried on within and
without the City of Seattle, by the use of its telephone exchanges,
wires, poles, conduits, and other property located in Seattle, and
also outside of Seattle, both within and without the state. It
charges that the ordinance is vague and indefinite in that it fixes
no method of computation whereby appellant, with reasonable
certainty, can segregate its interstate business or so much of its
intrastate business as is conducted within the City of Seattle, and
that the definition of gross income set out in § 2 is so vague and
uncertain as to make it impossible for appellant to compute with
reasonable certainty the amount of the tax.
The bill of complaint does not show whether appellant had
applied for its occupation license or had received from the
comptroller the prescribed form of return specifying the
information which would be required by him for the computation of
the tax, or whether the comptroller had prepared such a form at the
time when the bill was filed. It fails to show whether the
comptroller had promulgated rules or regulations for carrying the
ordinance into effect, or whether appellant had requested of him
any ruling, interpreting the ordinance, which would aid in
preparing the return required for the computation of the tax. On
the argument before us, appellant admitted that the present suit
was brought without waiting for the preparation of forms and
regulations, and that it had made no effort to secure an
administrative interpretation of the ordinance.
Page 291 U. S. 303
The state court, in disposing of the attack upon the uncertainty
of the statute, contented itself with saying that "gross income" is
a proper basis for determining the amount of a tax; that the
objections raised by the appellant are "more fancied than real;"
and that,
"in practical application, under present-day systems of
accounting, appellant will have no serious difficulty in
ascertaining the amount of tax it is required to pay."
Despite this conclusion of the state court that the taxing act
can be given a practical construction, we are asked to say that the
statute is unconstitutional because of its vagueness. It may be
conceded that the definition by the ordinance of taxable "gross
income" is not free from ambiguities or difficulties of
construction. But, in the present posture of the case, we are
called upon neither to resolve them nor to say whether they can be
resolved.
The ordinance allows wide latitude for administrative
construction, both by the provision which requires the comptroller
to make interpretative rules and regulations and that which
commands him to prepare the form for the return on the basis of
which the tax is to be computed. Until the form is prepared, the
most that can be required of taxpayer is that they apply for the
license and for the form on which to make their tax returns.
Without the return, there can be no tax, and no penalty can be
imposed for its nonpayment. Thus, the ordinance does not purport
finally to define the duty of taxpayers. Instead, it directs that
an administrative officer shall mark the scope of the obligation,
and only then does the state compel obedience to its mandate.
In this we see no invasion of constitutional immunity.
Compare In re Kollock, 165 U. S. 526;
St. Louis, I.M. & S. Ry. v. Taylor, 210 U.
S. 281;
Interstate Commerce Comm'n v. Goodrich
Transit Co., 224 U. S. 194. The
Fourteenth Amendment does not require that legal duties
Page 291 U. S. 304
shall be defined by any particular agency of the state
government.
Dreyer v. Illinois, 187 U. S.
71,
187 U. S. 83;
Soliah v. Heskin, 222 U. S. 522,
222 U. S. 524;
Keller v. Potomac Electric Power Co., 261 U.
S. 428,
261 U. S. 443;
O'Donoghue v. United States, 289 U.
S. 516,
289 U. S. 545;
cf. Pacific States Telephone & Telegraph Co. v.
Oregon, 223 U. S. 118. The
demands of due process are satisfied if reasonably clear definition
is afforded in time to give the taxpayer an opportunity to comply.
Connally v. General Construction Co., 269 U.
S. 385,
269 U. S. 391.
Before the duties of the administrative officer are performed, we
cannot say that the ordinance falls short of that requirement. At
this stage, appellant can show no more than apprehension that the
definition which the administrative officer will lay down may be
deficient. The Constitution cannot allay that fear.
Compare
Edelman v. Boeing Air Transport, Inc., 289 U.
S. 249,
289 U. S. 253.
The decision of the state court must be affirmed not because the
appellant has failed to exhaust its administrative remedies, which
would concern us only if the suit had been brought in a federal
court of equity, but because, without administrative action, which
has not occurred, there can be no infringement of the immunity
invoked.
Affirmed.
*
"Section 2. Definitions:"
"Gross Income: the value proceeding or accruing from the sale of
tangible property or service, and receipts (including all sums
earned or charged, whether received or not) by reason of the
investment of capital in the business engaged in, including
rentals, royalties, fees or other emoluments, however designated
(excluding receipts or proceeds from the use or sale of real
property or any interest therein, and proceeds from the sale of
notes, bonds, mortgages, or other evidences of indebtedness or
stocks and the like) and without any deduction on account of the
cost of the property sold, the cost of materials used, labor,
costs, interest or discount paid, or any expense whatsoever, and
without any deduction on account of losses."