Haden v. Watson
| Decision Date | 21 January 1960 |
| Docket Number | 3 Div. 863 |
| Citation | 117 So.2d 694,270 Ala. 277 |
| Parties | Harry HADEN, as Commissioner of Revenue, v. L. W. WATSON, d/b/a Dr. Pepper Bottling Company. |
| Court | Alabama Supreme Court |
MacDonald Gallion, Atty. Gen., Guy Sparks, Sp. Asst. Atty. Gen., and Wm. H. Burton, Asst. Atty. Gen., for appellant.
Hill, Hill, Stovall & Carter, Montgomery, Albert Boutwell and Wm. H. Ellis, Birmingham, for appellee.
This is a suit for a declaratory judgment brought by L. W. Watson, doing business as Dr. Pepper Bottling Company, Troy, Alabama (appellee), against Harry Haden, as Commissioner of Revenue of the State of Alabama (appellant).
In his bill of complaint, in equity, the complainant attacked the constitutional validity of § 481, Title 51, Code of 1940, as amended in 1943, 1955 Cumulative Pocket Part, Title 51, which in pertinent part reads as follows:
'Each person using or consuming carbonic acid gas (carbon dioxide) in manufacturing, compounding producing or bottling in bottles or other closed containers any soda water, soft drink, near beer, malt beverage, cereal beverage, including any drink or beverage by whatever name known or called, in addition to all other licenses or taxes imposed by this title, shall pay a license or privilege tax equal to two cents on each pound of carbonic acid gas so used or consumed by him. * * *.'
The act is attacked on the grounds that the class or subclass which is designated in the statute as the subject of the tax is an arbitrary, capricious one and one based on any real distinction or difference from other persons using carbonic acid gas. The bill prayed that the aforesaid license tax statute be declared unconstitutional and the complainant not liable for the tax but to be entitled to a refund under the provisions of § 810, Title 51, Code of 1940, in the sum of $140, which the complainant had paid to the state under protest on October 6, 1958, as such license tax.
The respondent filed an answer to the bill denying the allegations of the bill of complaint, asserting that the tax as levied was a valid levy against the complainant as a member of a properly designated class or subclass which is specifically covered by the taxing statute and that the taxing statute itself is a valid levy and exercise of the taxing power of the legislature and against the class or subclass of persons designated in the statute and the tax as so levied and applied against the complainant is valid and lawfully due to be paid by the complainant to the State of Alabama.
The case was heard orally before the court and was submitted on the pleadings and proof. Thereafter the court entered its decree holding in effect that the tax provided in the foregoing statute as amended is violative of the provisions of the Constitution of Alabama and of the 14th amendment to the Federal Constitution in that it constitutes a substantial burden on the privilege of doing business and imposes a tax upon complainant's method of doing business and further that the statute purports to impose a tax upon carbonic acid gas (carbon dioxide) at the rate of two cents per pound when such carbonic acid gas (carbon dioxide) is used in manufacturing, compounding, producing or bottling in bottles or other closed containers any soft drink, etc., and is not imposed upon the use or consumption of carbonic acid gas (carbon dioxide) in manufacturing, compounding or producing soft drinks, etc., when such beverages are not produced or bottled in bottles or other closed containers and that there is no real or substantial basis for the alleged classification and the statute is arbitrary, discriminatory and capricious and therefore unconstitutional and void.
The court also decreed a refund of $140 previously paid by the complainant under protest.
This appeal followed the foregoing decree.
The original bill of complaint was filed against Arthur Joe Grant in his capacity as Commissioner of Revenue and amendment was twice allowed changing the name of the commissioner until the present appellant was finally named commissioner, having succeeded to the office by the time the case was tried.
The salient facts as shown by the evidence are as follows. The complainant is a resident of Pike County, Alabama. He is engaged in the manufacture of a soft drink at Troy, Alabama, called Dr. Pepper, one of the ingredients of which is carbon dioxide gas. He bottled his drinks in bottles or closed containers and, therefore, paid the license tax.
There is another method of manufacturing or mixing these drinks which is in use at soda founts where they have the carbonated water and have a carbonator just like that used in bottling plants. They put in the syrup and pull the handle and get the carbonated water, except that it goes into a cup or other open container of some kind. No license is charged on this method of manufacturing or mixing drinks.
The testimony also tends to show that there is a vending machine called a Post-Mix which is operated on the same principle. This machine has a small cylinder of CO sub2 gas and a water line and syrup. A coin is dropped into a box. The customer receives the syrup out of one line and the carbonated water out of another line. The drinks are mixed in a cup when it falls out of the machine into an open container. No tax is imposed on such drinks mixed by the Post-Mix machine. Persons using this method provide substantial competition to the bottling industry.
There is also a machine called a Pre-Mix machine. Its product is mixed in a closed cylinder prior to being released into an open cup. This product, since it is mixed in a closed container, is taxed.
There is evidence tending to show that the major part of the bottling business is wholesale but some of it is retail. The evidence tends to show that there are other users of CO sub2 gas none of whom are taxed under the Alabama statute. These include ice cream people, meat packers, etc. There is also evidence tending to show that the bottling business is being undersold by untaxed machines by eight-tenths of a cent per drink.
I. The predecessor of the license in question was first passed in the Regular Session of the Legislature 1935 (1935 Acts, p. 450) and there applied to 'each person selling, distributing or using carbonic acid gas or any substitute therefor, for any purpose * * *.' In 1943 (1943 Acts, p. 319), this statute was amended to eliminate the license as to all users of CO sub2 gas except to apply it to drinks or beverages and then only if the drink or beverage was put in a 'closed container.'
As we analyze this case the question for decision is whether Section 481, Title 51, Code of 1940, as amended in 1943 (§ 481, Title 51, p. 283, 1955 Cumulative Pocket Part, Code of 1940), is invalid and unconstitutional as administered and applied by the State...
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