Plaintiff in error was convicted in the hustings court of Richmond for the violation of an ordinance forbidding the carrying on of the business of a 'private banker' without a license. This judgment was affirmed by the supreme court of the state.
Numerous objections to the ordinance and to the tax, arising under the law and Constitution of the state, were decided adversely to the plaintiff in error. With these we have no concern. The case comes here upon the claim made in the state court, and denied, that the ordinance denies both the equal protection of the law and due process as guaranteed by the 14th Amendment.
The ordinance in question requires all persons desiring to pursue certain businesses and occupations to pay a special license tax for the privilege of prosecuting such business. Many pursuits are named, among them real estate agents, commission merchants, brokers, auctioneers, private bankers, etc. The persons required to pay such special license tax are to be divided by the finance committee of the city council into thirteen classes. The amount required to be paid by each class is as follows: First class, $800; second class, $600; third class, $400; fourth class, $300; fifth class, $250; and so on in decreasing amounts to the thirteenth class, which is required to pay only $10. This classification by the finance committee is to be made with the advice and assistance of 'the commissioner of revenue, the city tax collector, or any city officer.'
The tax imposed is not merely an exercise of the police power regulating a business, but is a tax assessed as a condition upon which the license issues. Though it fulfils the double function of both regulating the business and producing revenue, it was fully authorized by the law of the state, as adjudged by the very judgment under review. Gundling v. Chicago, 177 U.S. 183, 189, 44 L. ed. 725, 759, 20 Sup. Ct. Rep. 633. Since the purpose of the statute is double, it is plain that the exact the same amount from each person or firm subject to the tax might result in inequality of burden under like circumstances and conditions. Therefore it was that the ordinance provided for a division into classes, those in each class paying the same tax.
The objection to the ordinance does not grow out of any contention that there may not exist just and reasonable distinctions justifying a greater tax upon some of these persons or firms engaged in doing what is called a 'private banking' business than upon others engaged in the same general business; but arises from the fact that the law provides no rule by which some are to be placed in one class and some in another. An ordinance which commits to a board, committee, or single official the power to make an arbitrary classification for purposes of taxation would meet neither the requirement of due process, nor that of the equal protection of the law.
But this ordinance does not authorize any arbitrary classification, nor could the state or the council legally confer or exercise arbitrary power in classifying for the purpose of either regulating or licensing or taxing. The guaranty of the 14th Amendment would forbid.
But whether the power of classifying be exercised by the state directly or by a city council authorized to require the payment of such a tax as a condition to the issuance of a license, it is at last the exercise of legislative discretion, and is subject, in either case, to the guaranty referred to.