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CITY OF MILWAUKEE, Respondent, v.



FACTS: The city undertook to repave and widen streets to accommodate the trackless trolleys and bear
the expense of the obligation, formerly that of the company (ST Corp.), to repave and maintain the track
zones by adopting conversion ordinances.

At $10 per passenger seat the annual fees charged under these ordinances amount to over $100,000. This
is in addition to all charges for repaving.

The City claims that the fees exacted under the ordinances are made in the exercise of their
police/regulatory power because by adopting the conversion ordinances it assumed expenses and
inconveniences not previously borne by it.

The city also claims that the ordinances in question are binding contracts entered into between the city
and the company, effective only upon acceptance of their terms by the company, and that the legislature
has no power to impair the obligation of such contracts.

ISSUE: Whether or not the "license fees" exacted under these ordinances constitute a tax for revenue or a
charge for regulation or a contract.

RULING: The license fees are taxes.

The nature of the fees is not determined by the method of payment but by the test of whether or not they
bear any relation to the city's cost of regulation—a relationship which the city has failed to show.

The only power the city has over the use of the streets, aside from its regulatory or police power, must be
delegated to it by the state. Without such delegation of authority the city has no power to prevent the
company's use of the streets in a reasonable manner consistent with public use. The court finds nowhere
any authority to exact from the company a price for the privilege of operating its lines, except that the
state had delegated to the city the right to tax the company for revenue. This is the only authority it had to
levy on the company. The city has no right to call such a levy a consideration for a "valuable right" which
it has and which the company wants, and exact a price for it. If the $10 per seat fee is a legal assessment,
it necessarily must be as a tax authorized by the state for revenue.

If the purpose is regulation the imposition ordinarily is an exercise of the police power, while if the
purpose is revenue the imposition is an exercise of the taxing power and is a tax.

TAX DEFINITION: Taxation is defined as the power by which the sovereign raises revenue to
defray the necessary expenses of government. Taxation is merely a way of apportioning the cost of
government among those who in some measure are privileged to enjoy its benefits and must bear its

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