Hospital Medical Collections, Inc. v. City of Los Angeles

This appeal concerns an action to recover taxes paid under protest. Plaintiff taxpayers are three corporate collec tion agencies, Hospital Medical Collections, Inc., Petroleum Collections, Inc., and Mutual Collection Bureau. Named as defendants were the City of Los Angeles and Rex E. Layton, City Clerk. The case was tried below pursuant to a written stipulation of facts. Judgment was rendered in favor of plaintiffs and against defendants in the sum of $75.16 together with costs of $53.20. Defendants have appealed from the judgment.

At issue in this case is the proper interpretation of certain provisions contained in the Los Angeles Municipal Code, article I, chapter 2, the “Business Tax Ordinance.” Defendant City of Los Angeles imposes a tax on business activity conducted within the city (§ 21.03), and defendant city clerk is empowered to make the assessments (§ 21.16). The tax is measured by the amount of “gross receipts” of the taxpayer in the preceding year (§ 21.14, subd. (a)), and is payable by collection agencies engaged in business in the city (§ 21.78).

The “gross receipts” which constitute the measure of the tax are defined in section 21.00, subdivision (a), as…