Dixie Finance Co. v. City of Demopolis
| Decision Date | 15 November 1956 |
| Docket Number | 2 Div. 303 |
| Citation | 90 So.2d 732,265 Ala. 267 |
| Parties | DIXIE FINANCE COMPANY v. CITY OF DEMOPOLIS. DEMOPOLIS FINANCE COMPANY v. CITY OF DEMOPOLIS. , 305. |
| Court | Alabama Supreme Court |
Pitts & Pitts, Selma, and Henry McDaniel, Demopolis, for appellant Dixie Finance Co.
Henry H. Mize and Jonas Spiro, Jr., Mize & Spiro, Tuscaloosa, and Henry McDaniel, Demopolis, for appellant Demopolis Finance Co.
W. W. Dinning and H. A. Lloyd, Lloyd & Dinning, Demopolis, and Douglas Arant and John J. Coleman, Jr., White, Bradley, Arant, All & Rose, Birmingham, for appellee.
Pursuant to authority given by Code 1940, Tit. 37, § 735, the City of Demopolis adopted a general license ordinance for the year 1951 providing, in pertinent part, as follows:
* * *
* * *
'The term 'Loan Office' shall be defined as follows: Any person, co-partnership or corporation engaging in the business of making loans of money or things in action in the amount of Three Hundred Dollars ($300.00) or less; but not including loans made to the tenants of such person, firm or corporation engaged in agriculture, nor to loans to persons whose principal business is farming, nor the business of financing the purchase of motor vehicles, refrigerators or other personal property which is purchased from the lender, nor shall it apply to credit unions as defined by law, nor to savings and loan associations as defined by law, nor to any bank organized and existing under the laws of the State of Alabama or under the laws of the United States, nor to loans insured or guaranteed by the United States or any of its agencies.'
We here note that the exclusion provision of schedule 169 is the same as that contained in the Harris Act, Act No. 159, appvd. June 23, 1945, Gen.Acts 1945, § 12, pp. 200, 203, regulating the business 'of making loans of money or things in action in the amount of three hundred dollars ($300.00) or less', and in Act No. 787, appvd. Sept. 11, 1951, Acts 1950-51, § 14, pp. 1385, 1392, amending the Harris Act.
The Dixie Finance Company, Southern Finance Company, and Demopolis Finance Company engaged in such loan business in Demopolis and became subject to said license. Each of these companies paid the prescribed $2500 under protest and then filed a claim with the City Clerk for its repayment. The claims being denied by the city, these companies brought suits in the circuit court of Marengo County to recover the amounts so paid. Each of the complaints consists of three counts, the first two being common counts. The third count in each case, relied on by the plaintiffs, contains the following allegations:
'* * * that said Section 169 of said license code was arbitrary, unreasonable and confiscatory; that said Section 169 was unconstitutional and would result in the deprivation of the property of the plaintiff in violation of the Constitution of the United States and in violation of the Constitution of the State of Alabama; that said Section 169 was not passed in good faith for the purposes of raising revenue for the City of Demopolis, but was passed for the purpose of prohibiting and preventing the plaintiff from carrying on a lawful and useful business within the City of Demopolis; * * * that said license is so unreasonable and excessive as to amount to the prohibition of the carrying on of a legitimate and useful trade or occupation within the City of Demopolis; that said license or tax is void in that it is imposed upon such terms and conditions as to operate as the virtual prohibition of a useful or lawful business or trade. * * *'
By agreement, the three cases were tried together. The evidence was taken orally before the trial court without a jury. Judgment in each case was rendered in favor of the city. All three plaintiffs took an appeal. Thereafter, prior to submission here, the Southern Finance Company dismissed its appeal. By agreement, the appeals in the other two cases were submitted together on one transcript.
The trial court wrote an opinion, the same in each case, making certain factual findings and giving the basis for its decision. It seems to us that that opinion adequately states the case. The opinion is as follows:
'The plaintiff sues to recover from the defendant the sum of $2,500, with interest thereon, paid by the plaintiff to the defendant as a license tax for the year 1951 pursuant to Section 169 of the License Code of the City of Demopolis for that calendar year, which license code was introduced in evidence in this cause as plaintiff's Exhibit 9. Counts one and two of the plaintiff's complaint are on the common counts. Count three of the plaintiff's complaint alleges among other things that said Section 169 of the License Code is arbitrary, unreasonable and confiscatory, and hence invalid under the Constitution of the United States and of the State of Alabama.
'By Section 169 of the License Code a license tax in the sum of $2,500 was imposed on the companies engaged in the small loan business in Demopolis. There is no question but that the plaintiff falls within the designation of a 'loan office' as that phrase is defined in the Demopolis Code. The plaintiff paid the tax imposed upon it by that license code, filed appropriate claims for refund, and upon the rejection of such claims filed the complaint in this action. Defendant plead the general issue.
'Findings of Fact
'(1) Prior to January 1, 1951, there were in operation in Demopolis, Alabama, three loan companies, the plaintiffs in this proceedings. Of those three, Dixie Finance Company had been in operation for not more than two months prior to January 1, 1951. Prior to that date Southern Finance Company had been in operation for approximately nineteen months; the Demopolis Finance Company was organized January 1, 1948, as successor to an individual proprietorship which had begun business in Demopolis during 1947.
'(2) The audit report of the City of Demopolis for its fiscal year 1951 was admitted in evidence. The total receipts by the City of license taxes for its fiscal year 1951, as disclosed by that audit report, aggregate $43,238.68, including receipts from the license tax imposed upon wholesale distributors of gasoline, License Code, Section 129-130. The same audit report discloses aggregate receipts by the City with respect to other taxes imposed by it, such as automobile license, ad valorem taxes and others.
'(3) The results of the plaintiff's operation since its organization in November, 1950, and the results obtained by Southern Finance Company since its organization in May, 1949, and by Demopolis Finance Company since January 1, 1949, are properly summarized as follows:
"Dixie Finance Company
Nov. 1, 1950 to Jan.-Sept
Dec. 31, 1950 1951
--------------- ----------
Principal amount of loans
made $8,495.60 --
Total interest charged (i. e
gross income) 2,730.60 $7,162.25
Total interest collected 685.45 7,675.85
Net loss per income tax
return (1,991.09) --
Estimated net profit or loss
for short period ended
September 30, 1951 -- (3,344.03)
"Southern Finance Company
May-Dec. Jan.-Oct
1949 Year 1950 1950
---------- ---------- ------------------
Principal amount of loans $20,090.10 $45,967.00 --
made
Total interest charged
(i. e. gross income) 8,733.55 19,380.85 14,663.50
Total interest collected 6,353.55 18,728.45 14,663.50 1
Net profits per income tax
return ( 246.90) 7,165.07 --
Estimated net profit or
loss for short period
ended 10-30-51 -- -- 13.50
(1) Mr. Schumard's estimate
"Demopolis Finance Company
Jan.-Oct
Year 1949 Year 1950 1951
---------- ---------- ----------
Principal amount of loans
made $51,337.50 $43.271.00 --
Total interest charged
(i. e. gross income) 22,472.30 18,900.40 $11,667.55
Total interest collected -- -- --
Net profit per income tax
return 14,781.14 8,096.25 --
Estimated net profit or
loss for short period
ended 10-30-51 -- -- 203.55
investment in Dixie Finance Company was borrowed by the partners from banks.
'(5) Typical rates of interest charged by the plaintiff was as follows:
Interest
Amount Interest Amount Rate Per
of Loan Charged Repaid Term of Loan Year
------- -------- ------ ------------ ---------
$25.00 $4.80 $29.80 11-16-50 to
12-16-50 230.4 %
5.00 2.00 7.00 11-4-50 to
11-11-50 2.085.6 %
5.00
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