City of Montgomery v. Montgomery City Lines, 3 Div. 506

• Court: Supreme Court of Alabama
• Citation: 254 Ala. 652,49 So.2d 199
• Docket Number: 3 Div. 506
• Parties: CITY OF MONTGOMERY v. MONTGOMERY CITY LINES, Inc.
• Decision Date: 08 December 1949

Page 199

49 So.2d 199

254 Ala. 652

CITY OF MONTGOMERY v. MONTGOMERY CITY LINES, Inc.

3 Div. 506.

Supreme Court of Alabama.

Dec. 8, 1949.

Rehearing Granted June 30, 1950.

Rehearing Denied Dec. 14, 1950.

R. S. Hill, Jr., and Walter J. Knabe, of Montgomery, for appellant.

Jack Crenshaw and Wm. S. Duke, of Montgomery, for appellee.

LIVINGSTON, Justice.

This is a bill for a declaratory judgment submitted to the Circuit Court, in Equity, of Montgomery County upon an agreed stipulation of facts. The facts are as follows:

'The Montgomery City Lines is a corporation organized and existing under the laws of the State of Alabama; the City of Montgomery is a municipal corporation under the laws of the State of Alabama.

'On the 5th day of December, 1935, the City of Montgomery duly and legally passed an ordinance granting to Montgomery City Lines, Inc., a franchise to operate a bus transportation system within the City of Montgomery, and its police jurisdiction for a period of twenty (20) years. Section 13 of said ordinance was in words and figures, as follows:

"Section 13. License or privilege tax. The company will pay to the city such reasonable license tax as the city may impose upon it for operating said buses within the corporate limits and police jurisdiction of said City of Montgomery; provided, however, that the amount of such license tax for the first five years of the life of this grant shall not exceed one per cent of the gross revenue derived from the preceding year's operation, or the sum of two thousand dollars ($2,000.00), whichever is the greater; and for the balance of the term of this grant shall not exceed a sum equal to two per cent of the gross revenue derived from the preceding year's business; provided, that if said two per cent of the gross revenue for any of the said years shall not equal the sum of five thousand dollars ($5,000.00), then the company shall pay to the city the said sum of five thousand dollars ($5,000.00), for such years. The license or privilege tax for the first year of the grant of this franchise shall be the sum of two thousand dollars ($2,000.00), which shall be subject to adjustment at the end of said year in accordance with the actual amount of the gross revenues of the company for said year; provided, further, that in the event said company begins operations before the beginning of the license year under the license schedule of the city of Montgomery, the company shall pay for such license tax only the proportion of the amount herein provided to be paid which the period of operation prior to the beginning of said license year bears to twelve months.

"The license or privilege tax herein provided to be paid shall be the sole and exclusive tax which said company shall pay for the privilege of conducting its said business within the corporate limits of Montgomery, except that nothing herein contained shall relieve said company from paying ad valorem taxes upon its physical properties and such tax as may be levied upon the sale or consumption of gasoline, oil and other motor vehicle fuel.'

'For the past several years the Montgomery City Lines has been operating its bus transportation system within the City of Montgomery and also outside of the corporate limits of the City of Montgomery, Alabama, but within the police jurisdiction of the city; some passengers of the Montgomery City Lines pay for transportation outside of the corporate limits of the city, but within the police jurisdiction.

'At all times material herein, there were in force and effect in the City of Montgomery and applicable to the City of Montgomery, as well as other municipal Corporations, certain statutes, the pertinent ones being Sections 733 and 745 of Title 37 of the Code of Alabama of 1940, which reads as follows:

"733. Licenses, general. Any city or town within the State of Alabama may fix and collect licenses for any business, trade or profession done within the police jurisdiction of such city or town but outside the corporate limits thereof; provided, however, that the amount of such licenses shall not be more than one-half the amount charged and collected as a license for like business, trade or profession done within the corporate limits of such city or town, fees and penalties excluded. Provided, further, that when the place at which any such business, trade or profession is done or carried on within the police jurisdiction of two or more municipalities which levy the licenses thereon authorized by this section, such licenses paid to and collected by that municipality only whose boundary measured to the nearest point thereof, is closest to such business, trade or profession. Provided that this section shall not have the effect to repeal or modify the limitations in this article relating to railroad, express companies, sleeping car companies, telegraph companies, telephone companies and public utilities, and insurance companies and their agents.

"745. Public Utilities. The maximum amount of privilege or license tax which the several municipalities within the state may annually assess and collect of persons, operating (electric, hydro-electric) street railroad, electric light and power companies, gas companies, water works companies, pipe line companies for transporting or carrying gas, oil, gasoline, water or other commodities, gas distributing companies whether by means of pipe lines or by tanks, drums, tubes, cylinders, or otherwise, heating companies or other public utility, incorporated under the laws of this state or any other state, or whether incorporated at all or not, except telephone and telegraph companies, railroad and sleeping car companies, and express companies which are otherwise licensed, shall not exceed three percent of the gross receipts of the business of such persons, in the municipality for the preceding year. Provided that this shall not affect any existing contract, between any municipality and any public utility operating therein'.

'The Montgomery City Lines paid an annual license or privilege tax under provisions of section 13 above set forth, for the first five years of said grant equal to 1% of the gross receipts of its operations in the City of Montgomery and its police jurisdiction. Upon the expiration of said five years and on, towit, December 5, 1940, the City of Montgomery did not pass any ordinance establishing what was a reasonable license tax to be paid after the expiration of the first five year period. During the fall of 1941 the question was raised as to whether the provisions of section 13 of the ordinance of December 5, 1935, required the city of Montgomery to levy an annual license tax, or whether the tax was automatically fixed at 2%. Declaratory judgment proceedings were had before the Circuit Court of Montgomery County, Alabama, by which proceedings the Circuit Court of Montgomery County rendered a decree declaring the rights of the parties, construing the provisions of said section 13 of the ordinance of December 5, 1935, and decreeing that the Montgomery City Lines, Inc., was not required by said franchise ordinance to pay a license tax equal to two per cent of gross proceeds, but only such reasonable license tax as the City of Montgomery might impose, not to exceed two per cent of gross receipts; a copy of which said decree is hereto attached as Exhibit 'A', and made a part hereof as fully as if set out herein.

'Pursuant to said decree of the Circuit Court of Montgomery County, Alabama, the Board of Commissioners of the City of Montgomery made a full and complete investigation to determine what would be a reasonable annual license or privilege tax to be levied by the City of Montgomery pursuant to the terms of the franchise ordinance of December 5, 1935. Said investigation included numerous conferences, at which time one or more of the commissioners would meet with representatives of the Montgomery City Lines, Inc., including the superintendent, general counsel, and local attorney. At said conferences members of the Board of Commissioners examined statements, records, and other papers of the Montgomery City Lines, pertaining to the income, gross receipts, gross profits, wages of bus drivers and mechanics, number of passengers carried, number and type of buses, number of routes, number of schedules, and routes without the corporate limits but within the police jurisdiction. During the discussions and on towit, the 23rd day of September, 1941, the commissioners expressed a desire that: (1) the rates charged by the company remain the same; (2) that business of operating a route, extending from the corporate limits to the Veterans' Administration facility be continued; (3) the business of operating a route, extending from the corporate limits to Gunter Field to be continued; (4) the wages of bus drivers and mechanics to be increased substantially; and (5) more, larger and better buses be installed. The representatives of the Montgomery City Lines informed the Board of Commissioners that such desires could and would be fulfilled in the event the license or privilege tax was fixed at a reasonable rate for the duration of the grant. Thereafter on September 23, 1941, the said Board of Commissioners of the City of Montgomery, Alabama, at a regular meeting, duly and legally adopted an ordinance, levying against the Montgomery City Lines, Inc., and imposing upon it, for the term of the grant, as provided by the ordinance of December 5, 1935, an annual license or privilege tax of a sum equal to one percent of the gross revenue derived by said company from the preceding year's operations within the city and police jurisdiction of the City of Montgomery. A copy of the minutes of the Board of Commissioners of September 23, 1941, is hereto attached as Exhibit 'B', and made a part hereof as fully as if set out herein.

'In reliance upon said ordinance of September 23, 1941, and contingent upon other business factors the Montgomery City Lines...