Champion v. McLean

Decision Date25 April 1957
Docket Number3 Div. 786
CourtAlabama Supreme Court
PartiesLouise S. CHAMPION as Tax Assessor of Montgomery County, et al. v. James McLEAN et al.

John Patterson, Atty. Gen., Wm. F. Thetford, Circuit Solicitor, Montgomery, Willard W. Livingston and Arthur Joe Grant, Asst. Attys. Gen., for appellants.

Rushton, Stakely & Johnston and John B. Scott, Montgomery, and Preston C. Clayton, Eufaula, for appellees.

COLEMAN, Justice.

Appellees, taxpayers and owners of cattle in Montgomery County, filed a bill in equity for declaratory judgment and respondents filed demurrer. Demurrer of appellants was overruled and counsel for both parties stipulate that the facts alleged in the bill are true, and that the questions for decision are solely questions of law which may be determined from appellees' bill for declaratory judgment.

The circuit court rendered a decree construing the statutes involved in accordance with appellees' contentions. From that decree, this appeal is taken and the rulings of the circuit court are assigned as error.

The question regarding the existence of a justiciable controversy was raised by the demurrer. In overruling the demurrer, the trial court held that such a controversy did exist. The correctness of this ruling is one assignment of error, but we pretermit consideration thereof because appellants state in brief:

'Although this ruling is assigned as error, no argument will be made with respect thereto as the parties concerned are desirous of a declaration of the law by this Court on the legal questions involved.'

The appellants, as tax officials, contend that all cattle are subject to ad valorem tax by virtue of the provisions of Title 51, § 21(e), Code 1940, except as specifically exempt under Title 51, § 2(j), Code 1940.

Appellees contend that all cattle raised on the farm in the hands of the original producer are 'products raised on the farm in the hands of the original producers' within the meaning of Title 51, § 21(d), Code 1940, and that cattle remaining in the hands of the original producer thereof are 'agricultural products' within the meaning of Title 51, § 2(h), Code 1940. Appellees further contend that cattle which have been raised or grown in the State of Alabama and which remain in the hands of the producer thereof, or his landlord, or in the hands of a co-operative association for all time, and for a period of one year in the hands of the purchaser of said cattle, are exempt from ad valorem taxation under Title 51, § 2(h), Code 1940

The decree appealed from recites that it is:

'Ordered, Adjudged, Declared And Decreed by the Court as follows:

'1. That cattle raised on the farm in the hands of the original producer are products raised on the farm in the hands of the original producer within the meaning of subsection (d), Section 21, Title 51, Code of Alabama of 1940.

'2. That cattle remaining in the hands of the original producers thereof are agricultural products within the meaning of Subsection (h), Section 2, Title 51, Code of Alabama of 1940 as amended.

'3. That cattle which have been raised or grown in the State of Alabama and which remain in the hands of the producer thereof, or his landlord, or in the hands of a co-operative association for all time, and for a period of one year in the hands of the purchaser of said cattle, are exempt from ad valorem taxation.'

The above rulings of the circuit court are assigned as error and argued on this appeal. The sole question for decision by this court is the correctness of the above rulings of the circuit court.

Part One--Subsec. (d), § 21, Title 51

Paragraph 1. of the decree below declared that cattle raised on the farm in the hands of the original producer are products raised on the farm in the hands of the original producer and are therefore tax exempt, within the meaning of Subsection (d) § 21, Title 51 Code 1940.

The pertinent subsections of § 21, Title 51 Code 1940, recite as follows:

' § 21. Enumeration of subjects of taxation.--The subjects of taxation, except as exempted by law, shall be as follows: * * * (d) All stocks of goods, wares and merchandise, the assessment to be on the average amount on hand during the preceding year, except in cases where business is commenced on or after October 1 of a current year, and in such cases the assessment to be on the capital actually employed in the business and apportioned as hereinafter provided, but the amount so assessed for any whole year shall in no case be less than the capital actually employed in the business, and this shall include all goods, wares and merchandise kept on plantations or elsewhere, or by railroad companies or persons, for sale or to be dealt out to laborers or employees for profit, or on account of their wages, and shall include all goods, wares and merchandise offered for sale by any person commencing business subsequent to the first day of October of a current year, but in such case the tax shall be apportioned according to the date at which the business was commenced, so that if commenced after the first day of January the tax shall be three-fourths of the tax for the whole year; if commenced after the first day of April the tax shall be one-half of the tax for the whole year; provided that the assessment herein provided for shall not include products raised on the farms in the hands of the original producers. If the person, association or corporation, receiver or trustee carrying on such business shall fail to make return of the amount of stock of goods, wares and merchandise as provided by law, or if the county tax assessor is not satisfied with the return made, in order to make proper assessment, he shall have the right to demand a copy of the last inventory made of such stock of goods, wares or merchandise, and may also by inquiry of persons believed to have knowledge of the subject obtain information as to the probable average amount of such stock, and from such information may assess the same upon his best judgment. (e) All household and kitchen furniture, mechanical and electrical refrigerators, libraries, jewelry, precious stones, plate and silverware, ornaments and articles of taste, pianos and other musical instruments, paintings, clocks, gold, silver and other watches and gold and other safety chains, all wagons and other vehicles; all motor cars, automobiles, trucks, busses, tractors and motorcycles and other motor vehicles, and bicycles; all outboard motors; all airplanes, airships and other aircraft, and aircraft landing fields and equipment; all typewriters; all cash registers; all calculating machines; all bookkeeping machines, teletypes, dictaphones and other recording or sending apparatus or machines, all phonographs and all machines of like character; all radio sending and receiving sets and appliances; all iron safes and cabinets, all store fixtures, all office furniture and fixtures, all mechanical tools and farming implements; all tanks, all storage reservoirs or basins; all golf bags, golf sticks and all other sporting goods, all pistols and guns, all cattle and horses, mules, studs, jacks, and jennets; all hogs, sheep, and goats, except as specifically exempted; all x-ray machines, all lense grinding machines, all eye testing machines, all surgical instruments and all other instruments or appliances used in surgical, dental, medical, optometrical or other professional work. * * *.' (Emphasis supplied.)

The subsections quoted above from the 1940 Code are the same, without any material change, as Subsections (d) and (e) of § 10 of Act No. 194, Acts 1935, page 256, entitled 'An Act To Provide For The General Revenue Of The State of Alabama.'

Stripped of phrases and clauses not essential to this decision, the pertinent provisions of Subsections (d) and (e) of § 21, Title 51 Code 1940, read as follows:

'21. The subjects of taxation, except as exempted by law, shall be as follows: * * * (d) All stocks of goods, wares and merchandise, the assessment to be on the average amount on hand during the preceding year, * * * and this shall include all goods, wares and merchandise kept on plantations * * * for sale or to be dealt out to laborers * * * for profit, or on account of their wages * * * provided that the assessment herein provided for shall not include products raised on the farms in the hands of the original producers. If the person, * * * carrying on such business shall fail to make return of the amount of * * * goods, wares and merchandise * * * the county tax assessor * * * shall have the right to demand a copy of the last inventory made of such stock of goods, wares or merchandise, * * * and from such information may assess the same upon his best judgment. (e) All household and kitchen furniture, * * * all * * * farming implements; * * * all cattle and horses, mules, studs, jacks, and jennets; all hogs, sheep, and goats, except as specifically exempted; * * *.' (Emphasis supplied.)

Subsection (d) which is set out above, as it appears to us, is clearly intended to relate to the assessment of 'all stocks of goods, wares and merchandise,' kept for sale, etc. The proviso of said Subsection (d) relied on by appellees, appears at the end of a sentence which begins with the words 'All stocks of goods, wares and merchandise.'

The next and last sentence of the subsection provides that in the event the person 'carrying on such business shall fail to make return of the amount of stock of goods, wares and merchandise as provided by law, or if the county tax assessor is not satisfied with the return made, * * *,' he may proceed in the manner there indicated to obtain information so as to assess the 'amount of such stock of goods, wares or merchandise' upon his best judgment.

It appears to us that this subsection was intended by the legislature to deal with a mercantile business. The subjects of taxation mentioned therein are designated by words commonly used to designate the articles or assets...

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