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'...