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Law School Case Brief

Louis K. Liggett Co. v. Lee - 288 U.S. 517, 53 S. Ct. 481 (1933)


Gradation of a tax according to the number of units operated cannot be said to be so unreasonable as to transcend the constitutional powers of a legislature. The addition of a store to an existing chain is a privilege, and an increase of the tax on all the stores for the privilege of expanding the chain cannot be condemned as arbitrary; but an increase in the levy not only on a new store but on all the old stores, consequent upon the mere physical fact that the new one lies a few feet over a county line, finds no foundation in reason or in any fact of business experience.


Chapter 15624 of the laws of Florida, 1931 required the payment of a license fee, which was stepped up in amount as the number constituting the chain reached certain specified limits. The graduated scale applied to stores all of which were within a single county; but if the same number of stores was located in more than one county the license fee for each was materially increased. The act imposed the tax only on retail stores and excluded from the definition of a store filling gas stations engaged exclusively in the sale of gasoline and other petroleum products.

Three chain store owners filed in the Circuit Court of Leon County, Florida, a class bill, in which twelve others intervened and became co-plaintiffs, praying that the tax officials be enjoined from enforcing the act. They challenged the statute as violative of various provisions of the constitution of Florida, of the due process and equal protection clauses of the Fourteenth Amendment, and of the commerce clause of the Federal Constitution. The difference in the amount of tax laid upon the operator of a given number of stores in a single county and another conducting the same number in two or more counties was challenged as an unconstitutional discrimination. The exemption of filling stations was alleged to discriminate against the appellants in violation of the Fourteenth Amendment. The unequal effect of the act on these transactions was charged to be an unconstitutional burden upon interstate commerce. The defendants moved to dismiss, and this was granted by the district court and subsequently affirmed by the state’s supreme court.


Was any part of the Florida Act unconstitutional?


Yes, with regard to the imposition of different amount of tax if the stores were located in more than one county.


On further appeal of questions arising under the U.S. Constitution, the Court reversed the judgment and remanded the cause. The Court found that § 5, which increased the tax if the stores were located in more than one county, was unreasonable and arbitrary and violated the equal protection clause of U.S. Const. amend. XIV. However, U.S. Const. amend. XIV did not prevent the State from imposing differing taxes upon different trades and professions or varying the rates of excise upon various products. Accordingly, the fact that filling stations engaged exclusively in the sale of gasoline were exempted from the tax laid on appellants was not offensive to the guaranties of the amendment.

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