Seattle Gas Co. v. Seattle
Headline: Seattle’s 3% municipal gross-income tax on a private gas company is upheld, blocking recovery of paid taxes and letting the city tax a gas supplier that competes with its electric service.
Holding:
- Allows Seattle to collect a 3% gross-income tax from the private gas supplier.
- Blocks recovery of a paid tax installment and denies an injunction against future taxes.
- Affirms that competing businesses may be taxed alongside municipal utilities.
Summary
Background
A private company that furnishes gas for lighting in the City of Seattle sued after the city imposed a 3% municipal tax on the company’s gross income. The company said it competes with the city’s electric light business and argued the tax violated the Fourteenth Amendment and the Constitution’s contract clause. It sought repayment of a tax installment it had already paid and a court order stopping future tax collections. The Washington Supreme Court sustained the city’s ordinance and sustained a demurrer to the company’s complaint, and the company appealed to the U.S. Supreme Court under section 237 of the Judicial Code.
Reasoning
The core question was whether the city ordinance unlawfully burdened the gas company’s constitutional rights. Justice Stone wrote the Court’s opinion and explained that the federal questions raised were the same as in a companion case decided the same day. For the reasons given in that companion opinion, the Supreme Court affirmed the Washington court’s judgment upholding the 3% tax. The practical result is that the company’s claims failed and its requested refund and injunction were denied.
Real world impact
The ruling lets Seattle collect the 3% gross-income tax from the private gas supplier that competes with the municipal electric service. The company cannot recover the paid installment under this judgment and cannot stop future installments by injunction. The decision follows the companion opinion’s reasoning and affirms the state-court outcome.
Dissents or concurrances
Four Justices (Van Devanter, McReynolds, Sutherland, and Butler) specifically stated they concurred in the result of the judgment.
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