Appellants, the city and its officers (collectively the city), challenged judgments of the Superior Court of Monterey County (California) and orders granting a preliminary injunction and denying their motion to set aside a default in an action by respondent corporation to have an ordinance declared unconstitutional and its enforcement enjoined.
The corporation, which occasionally delivered fish within the city, brought an action against the city to have an ordinance imposing a business license tax deemed unconstitutional and to have its enforcement enjoined. The lower court granted the order and the city appealed. It also appealed from the order denying its motion to set aside a default judgment against it. The court was of the opinion that the trial court's refusal to set aside the city's default was to be affirmed. The court rejected the city's honest mistake of law argument and noted that the trial Mileage rate 2021 California was justified in believing that the city's failure to look up the law indicated at least indifference. With respect to the constitutionality of the ordinance, the court also affirmed. The court noted that the ordinance made no exception for occasional or incidental deliveries, and such deliveries could not be taxed. The court also noted that although the city's power to tax was clear, the method provided for in the measurement of the tax was invalid because it measured the tax by factors not entirely based on the taxable event occurring in the city. The tax was therefore discriminatory and void. The judgments in favor of the corporation and against the city in the corporation's action to have the ordinance declared unconstitutional and its enforcement enjoined was affirmed. Additionally, the order denying the city's motion to set aside a default was affirmed. Appellant corporation challenged a judgment of the Superior Court of Los Angeles County (California), which sustained a demurrer filed by respondent State in the corporation filed suit to recover money paid for franchise taxes for the year 1935. The corporation maintained that the additional franchise taxes were improperly assessed and levied against it and were void due to the retroactive nature of the legislation on which they were based. The corporation contended that the application of the amendment of § 14 to the Bank and Corporation Franchise Tax Act of California, 1929 Cal. Stat. p. 19 (amend. 1937), Cal. Gen. Laws p. 3851(1937), deprived it of vested rights which it acquired by previously paying its taxes for the year in question according to the provisions of the Act as it had existed before the amendment became effective. Under the amended statute, the corporation could not offset the losses of affiliated corporations. In affirming the trial court's judgment, the court found that the tax under consideration was in the nature of a license or franchise tax and concluded that the mere fact that the amendment was deemed retrospective with respect to its application to that portion of the year 1935 which had already elapsed when the amendment was passed did not necessarily render it void. The court determined that the legislature "left no doubt" that it intended the amendment to operate retrospectively and to apply to the levying of franchise taxes for the calendar year beginning January 1, 1935. A legislative department of government had the right to change an excise tax during the term for which it was imposed. The trial court's judgment was affirmed.
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