City of Birmingham v. Home Ins. Co.

• Decision Date: 29 June 1940
• Docket Number: 6 Div. 688.
• Parties: CITY OF BIRMINGHAM v. HOME INS. CO.
• Court: Alabama Supreme Court

198 So. 716

240 Ala. 195

CITY OF BIRMINGHAM v. HOME INS. CO.

6 Div. 688.

Supreme Court of Alabama

June 29, 1940

Rehearing Granted Oct. 17, 1940.

Certiorari to Court of Appeals.

Petition of the City of Birmingham for certiorari to the Court of Appeals to review and revise the judgment and decision of that Court in the case of City of Birmingham v. Home Ins Co., 198 So. 713.

Writ awarded, judgment reversed, and cause remanded.

BROWN J., dissenting in part.

John S Foster, of Birmingham, for petitioner.

Coleman, Spain, Stewart & Davies, of Birmingham, opposed.

Thos. S. Lawson, Atty. Gen., and John W. Lapsley, Asst. Atty. Gen., amici curiæ on behalf of the State.

THOMAS Justice.

The decision on first appeal did not decide the constitutionality of the proviso to Schedule 160.17, § 348, p. 555 of the General Revenue Act of 1935 (Gen.Acts 1935). Home Insurance Co. v. City of Birmingham, 28 Ala.App. 143, 180 So. 781; Id., 236 Ala. 41, 180 So. 783. That question is now presented. That proviso is: "Provided that no license or privilege tax, or other charge for the privilege of doing business shall be imposed by any municipal corporation on any fire insurance company writing industrial insurance."

Of the said proviso the Court of Appeals observed: "Of this last quoted sentence appellant's counsel say, here: 'It is agreed that if the above quoted sentence is unconstitutional or void for any of the three reasons raised by defendant (appellant) the plaintiff (appellee) shall not recover.' "

The provision of the Constitution of 1901 that is invoked, Article XII, Section 221, reads as follows: "The legislature shall not enact any law which will permit any person, firm, corporation, or association to pay a privilege, license, or other tax to the State of Alabama, and relieve him or it from the payment of all other privilege and license taxes in the state."

Of this constitutional provision, it has been observed by this Court that: "The Legislature had not been unaccustomed to pass acts which required of those who desired to carry on a particular character of business in the state for which a license tax might be lawfully required to pay a license tax for the State only and in which the State only participated. Cities and towns were thus frequently left without power to derive any revenue in the shape of license taxes from those to whom they were constantly furnishing municipal protection." Ex parte Bozeman, 183 Ala. 91, 63 So. 201, 202.

And again Mr. Justice Sayre speaking for this court said: "In the constitutional convention of 1901 there was differences of opinion as to the meaning of section 221. But the historical background of the section is plain enough. It is correctly stated by Judge Mayfield in Birmingham v. Southern Express Co., 164 Ala. 529, 51 So. 159, and again in his dissenting opinion in Ex parte Bozeman, 183 Ala. [91], 114, 115, 63 So. 201, and need not to be repeated." Exchange Drug Co. v. State Tax Commission et al., 218 Ala. 115, 117 So. 673, 676.

The rule of statutory construction touching the constitutionality of an act has been stated and the authorities cited in Jefferson County v. Busby, 226 Ala. 293, 148 So. 411, and it is not necessary to repeat the same here.

Under our system of jurisprudence constitutional rights stand above all other rules of law that may be adopted. Rochell v. City of Florence, 237 Ala. 635, 188 So. 247. It has been observed that courts will not inquire into the motives which may have induced legislative action (Birmingham Electric Co. v. Allen, 217 Ala. 607, 117 So. 199), other than to ascertain the legislative intent in the enactment for construction.

The further observation is contained in City of Montgomery et al. v. Orpheum Taxi Co., 203 Ala. 103, 82 So. 117, 121, that: "Where there is an express legislative grant to a municipality of power to ordain to a particular effect or to do a particular thing, the municipal ordinance expressive of that power cannot be inquired into with respect to its policy or reasonableness. * * *"

It is further declared that it is the legislative prerogative to define and confer upon its municipalities the power of self-government within constitutional limitations. Standard Oil Co. of Kentucky v. Limestone County, 220 Ala. 231, 124 So. 523.

The subject of due classification in legislative acts dealing with individuals, corporations, business, or articles handled therein contained in taxing statutes and ordinances has been of frequent consideration by this court. This is illustrated by leading cases as follows: Exchange Drug Co. v. State Tax Commission, 218 Ala. 115, 117 So. 673; Exchange Drug Co. v. McNeel, 278 U.S. 577, 49 S.Ct. 176, 73 L.Ed. 515; 62 A.L.R. 106; Town of Guntersville v. Wright, 223 Ala. 349, 135 So. 634; Lee v. State Tax Commission, 219 Ala. 513, 123 So. 6; Phoenix Carpet Co. v. State, 118 Ala. 143, 22 So. 627, 72 Am.St.Rep. 143; Wages v. State, 225 Ala. 2, 141 So. 707; Rochell v. City of Florence, 237 Ala. 635, 188 So. 247.

The rule of classification of such statutes requires a definite statement of exemptions and impositions of taxes, property and excise, under the taxing and police power of government. The subject of exemption from taxation under the rule of equality and uniformity was declared in Lee v. State Tax Commission, supra, and need not be repeated here.

The insistences of the City of Birmingham in a word are (1) an exemption from municipal license taxation accorded fire insurance companies writing industrial insurance, by the last sentence of Schedule 160.17 of Section 348 of the General Revenue Act of Alabama of 1935, violates Section 221 of the Constitution of Alabama of 1901; and (2) a provision in a tax statute which is not in accord to and within the terms of such rule is void. Standard Oil Co. v. State, 178 Ala. 400, 59 So. 667; State v. Goldstein, 18 Ala.App. 587, 93 So. 308; State ex rel. Highsmith v. Brown Service Funeral Co., 236 Ala. 249, 182 So. 18; 31 Corpus Juris, 966.

The schedule challenged by the appeal is as follows: "Schedule 160.17. No fire insurance company doing business in any municipality in this State having a population of less than 100,000, according to the last preceding Federal Census, shall be required to pay to such municipality for any license or license tax, a sum greater than four per centum of its gross premiums, less return premiums, received by such company on risks in such municipality, including any sum, or sums, required to be paid or contributed by such insurance company to any Firemen's Compensation, or Relief Fund in such municipality. Provided that no license or privilege tax, or other charge for the privilege of doing business shall be imposed by any municipal corporation on any fire insurance company writing industrial insurance." [Italics supplied.]

It will be observed as to this that appellant's counsel says: "The license tax of one and one-half per cent levied upon fire insurance companies doing business in the City of Birmingham by Section 11 of the Firemen's Pension and Relief Fund Act, approved September 9, 1935 (p. 852), applies to fire insurance companies writing industrial insurance. General Acts of Alabama of 1935, p. 852 (855); Cobbs v. Home Ins. Co., 18 Ala.App. 206, 91 So. 627; General Acts of Alabama of 1919, p. 415 (Schedule 59); General Acts of 1927, p. 226 (Section 9)." [Parenthesis supplied.]

The provision thus adverted to by counsel is: "Section 11. * * * C. That each fire insurance company, whether a mutual company or otherwise, qualified to do business under the laws of Alabama, and doing business in such city, shall annually and on or before the first day of March of each year hereafter, pay into said Firemen's Pension and Relief Fund, a sum equal to one and one-half per centum of the gross premiums, less returned premiums, received by such fire insurance company for and on account of business, including all renewals of fire insurance, done by it in such city during the preceding year; and it shall not be lawful for such fire insurance company or its agent, to take or receive any premium for insurance against fire within such city, unless such fire insurance company shall pay, at the time aforesaid, to the said Firemen's Pension and Relief Fund, the amount herein provided to be paid by such fire insurance company * * *. D. * * * All sums, except the penalties payable to the State of Alabama, as hereinabove provided, collected under the provisions of this Subsection shall be payable to the Treasurer of the Firemen's Pension and Relief Fund of the City in which said property is situated, and shall be disbursed and used for the same purposes and under the same conditions as is provided by this Act. E. The Board of City Commissioners or other governing body of such City, is hereby authorized, and empowered to set apart for, and pay into, the said Firemen's Pension and Relief Fund, not exceeding one per centum of all revenues collected and received by such city from licenses issued by such city. Provided, however, that the said sum equal to one and one-half per centum of gross premiums, less return premiums, required by paragraph (c) of this Section 11 to be paid by Fire Insurance Companies into said Firemen's Pension and Relief Fund shall be treated and held to be a part of the maximum of four per cent. (4%) on each One Hundred Dollars, or major fraction thereof, of gross premiums, less return premiums, which any municipal corporation may by law impose upon any Fire Insurance Company in any one year as a license or privilege tax for the privilege of doing business in such municipality during such year under Schedule 160.10 of Section 348, Chapter 8 Article 13 of the General Revenue Act of 1935 approved July 10th, 1935." [[[...