County Board of Ed. of Jefferson County v. State ex rel. Carmichael.

• Decision Date: 31 January 1939
• Docket Number: 6 Div. 408,409.
• Citation: 187 So. 414,237 Ala. 434
• Parties: COUNTY BOARD OF EDUCATION OF JEFFERSON COUNTY v. STATE EX REL. CARMICHAEL, ATTY. GEN. COUNTY BOARD OF EDUCATION OF JEFFERSON COUNTY v. STATE TAX COMMISSION.
• Court: Alabama Supreme Court

187 So. 414

237 Ala. 434

COUNTY BOARD OF EDUCATION OF JEFFERSON COUNTY v. STATE EX REL. CARMICHAEL, ATTY. GEN.

COUNTY BOARD OF EDUCATION OF JEFFERSON COUNTY v. STATE TAX COMMISSION.

6 Div. 408, 409.

Supreme Court of Alabama

January 31, 1939

Rehearing Denied March 23, 1939.

Appeal from Circuit Court, Jefferson County; J. F. Thompson, Judge.

Petition by County Board of Education of Jefferson County for declaratory judgment against the State Tax Commission, and suit to recover taxes by the State of Alabama, on the relation of A. A. Carmichael, Attorney General, against the County Board of Education of Jefferson County. From a declaratory judgment adverse to it, complainant appeals; and from a judgment for plaintiff in suit to recover taxes, the defendant appeals.

Affirmed as to both appeals.

Horace C. Wilkinson, of Birmingham, for appellant.

Matt H Murphy and Wm. H. Ellis, both of Birmingham, for appellees.

THOMAS Justice.

The two appeals, 6 Div. 408 and 6 Div. 409, are submitted, argued and assigned for decision as one case. They are so considered.

A statement of the case is made by counsel for appellant, which we reproduce, in part, as follows:

In a declaratory judgment proceeding between the Board of Education of Jefferson County, as originally entitled, and the State Tax Commission of Alabama, the Board of Education asked the court below to declare:

"First. That so much of Article 13, Chapter 4, of the 1935 Revenue Act (Acts 1935, pages 508-516) as purports to impose an excise tax of six cents per gallon on gasoline stored and withdrawn from storage by the Board of Education and used exclusively for the transportation of school children in Jefferson County, Alabama, is unconstitutional, null, and void, and of no effect as running counter to Article 14 Sections 256-261, inclusive, and Section 91 of the Constitution of the State of Alabama.

"Second. That school money in the custody of the Board of Education of Jefferson County could not be used to pay taxes on the withdrawal of gasoline used in transporting school children to and from school."

When the cause was first submitted, the trial court held that the Board of Education could not use school money to pay the gasoline tax. That holding was appealed to this court and in State Tax Commission v. County Board of Education, 235 Ala. 388, 179 So. 197, on the assumption that the revenue law purporting to impose the tax was a valid enactment, the cause was reversed and remanded.

After that remandment to the court below, the petition for a declaratory judgment was amended to have a decision, first, as to the constitutionality of the statute; second, as to the authority of the Board of Education to use money received by it in payment of appropriations made by the Legislature for the support and maintenance of the public schools, or from special taxes levied and loans made for that purpose, in payment of said gasoline tax; third, whether current school revenue could be used to pay obligations imposed or created in a prior fiscal year.

At that stage of the proceedings the State filed a suit on the law side of the docket for the taxes and interest thereon, and the Board of Education interposed the aforesaid defenses.

The trial court expressed the view that the Revenue Law of 1935 purporting to impose the tax on gasoline used by the Board of Education was a valid enactment, that any school revenue, including poll taxes, could be used to extinguish the claim for gas tax, that the claim for gas tax was subordinate only to: "(a) The liability of said Board to pay taxes pledged to the payment of principal and interest upon legally authorized and issued bonds and warrants; and (b) the payment of salaries to teachers."

It was further ruled in the declaratory judgment proceeding that any funds of the Board of Education which are not the allocated portion of city boards of education in Jefferson County, Alabama, and not pledged to the payment of principal and interest upon legally authorized bonds and warrants, and not used for the payment of salaries to teachers, must be used by the Board toward the extinguishment of said Board's liability for said gasoline taxes until paid in full. The Court also rendered a judgment against the Board of Education in the proceeding at law for $15,225.88.

The two cases were tried on one agreed statement of facts, set out in the record. In such statement it is indicated that the Board of Education of Jefferson County started the fiscal year, beginning October 1, 1935 (the day the 1935 Revenue Act became effective), with a deficit of $11,558.86; and from that date to June 30, 1938, the Board of Education received $7,153,883.60. This income is itemized in the transcript in the declaratory judgment proceeding; and is shown to come from appropriations made by the legislature "for the support and maintenance of the public schools," from taxes levied and collected "for the support and maintenance of the public schools," and from some short term loans made by the Board of Education.

The Jefferson County schools closed on May 14, 1937, twenty days short of a normal term, and on April 29, 1938, twenty days short of a normal term. The disbursements of the Board of Education from October 1, 1935, to June 30, 1938, were $7,147,469.94; and they are likewise itemized in the declaratory judgment proceeding. This left an apparent balance on hand June 30, 1938, of $6,413.67; and of this $3,681.58 was due the cities of Birmingham, Bessemer, Fairfield, and Tarrant, Alabama, as their allocated and undistributed share of funds received by the Jefferson County Board of Education, which left an apparent net balance on hand June 30, 1938, of $2,732.08. There was, however, an outstandig deficit of $11,558.86, so that on June 30, 1938, the Board of Education of Jefferson County, Alabama, had an actual deficit of $8,826.78.

The budget for the fiscal year 1938-39 was introduced in evidence. This budget is for a seven months school, forty days short of a normal term. It shows estimated revenue receipts $2,377,171; estimated expenditures of $2,370,901.66, which would leave a balance on hand at the end of the year of $6,269.34, which would further reduce the deficit to $1,557.44, at the close of the school year in 1939. By reducing the school term for the year 1938-1939 to seven months and operating with economy, if the Board of Education of Jefferson County receives one hundred per cent of all expected revenue, it will still have a deficit of $1,557.44 at the close of the current school year.

The appellee's counsel states as additional and fundamental facts that "appellant operated on an annual grand total amount of revenue of $2,397,630.84 for 1935-1936, and $2,571,051.40 for 1936-1937, and its budget for 1938-1939 is based on a smaller estimated amount of total receipts than either year, being $2,377,171.00." It is insisted that there is reason shown why the board will receive approximately $200,000 less revenue for the current year than it actually received "during the fiscal year 1936-1937."

It is stated that "appellee's claim in the law case for gasoline tax on motor fuel used in school busses is for $13,649.76 which covers the period from December 1, 1935, to May 31, 1937, being eighteen calendar months, or $758.32 monthly, or on an annual basis of only $9,099.84." And it is further insisted by appellee that these totals show that the contention is not well founded that the payment of this tax will cause the premature closing of the schools of Jefferson County, Alabama.

From the adverse rulings of the trial court the Board of Education of Jefferson County appeals.

It is insisted by the appeal and argument of distinguished counsel that so much of the Revenue Act of 1935 as attempts to impose a tax on the gasoline it uses for the transportation of school children is unconstitutional; that the funds received by it from appropriations made for the support and maintenance of the public school or from taxes levied for that purpose cannot be used to pay the gas tax in question; and that the appellants cannot use current revenue that is needed for current school operation to pay obligations imposed or incurred in a prior fiscal year. It is further insisted that the tax imposed on gasoline used by Boards of Education for the transportation of school children is a property tax and not an excise tax, and therefore an unconstitutional levy on the educational trust funds.

It is insisted by appellee that this is in the nature of a rehearing of the case of State Tax Commission v. Board of Education of Jefferson County, 235 Ala. 388, 179 So. 197. In that decision there was the declaration that the legislature may impose an excise tax on counties, municipalities and other governmental agencies, which are engaged in enterprises for which such tax is imposed on persons or companies so engaged; and the tax in question was an excise and not a property tax, and not within the provisions of Section 91 of the Constitution. Said provision of the Constitution is that the "legislature shall not tax the property, real or personal, of the state, counties, or other municipal corporations, or cemeteries * * *."

The case of State v. City of Montgomery, 228 Ala. 93 151 So. 856, cited and approved in State Tax Commission v. Board of Education of Jefferson County, supra, contains the declaration that the privilege of storing in bulk an inflammable article, such as gasoline, within a city is the just basis for an excise tax, and as levied in the Revenue law is not a property tax; that it is immaterial to what use the gasoline so stored is subjected, when it is withdrawn from such storage in the state, it was subject to the excise tax in question. The Court said, in ...