Monroe v. Harco, Inc.
Decision Date | 11 February 2000 |
Citation | 762 So.2d 828 |
Parties | H.E. MONROE, Jr., as Commissioner of the Department of Revenue; and James D. Martin, as Commissioner of the Department of Conservation v. HARCO, INC., et al. |
Court | Alabama Supreme Court |
J. Wade Hope, Alabama Department of Revenue, for petitioner H.E. Monroe, Jr.
William A. Gunter, Alabama Department of Conservation and Natural Resources, Montgomery, for petitioner James D. Martin.
Matthew C. McDonald and David F. Walker of Miller, Hamilton, Snider & Odom, L.L.C., Mobile, for respondent Harco, Inc., et al.
C. Lee Reeves of Sirote & Permutt, P.C., Birmingham, for respondents Bruno's, Inc., Sears & Roebuck Co., Wal-Mart Corp., Kmart Corp., Rite Aid Corp., and Delchamps, Inc.
Matthew H. Lembke of Bradley, Arant, Rose & White, Birmingham, for respondent CVS Pharmacy.
This case involves the administration of the sales-tax laws of this State. The specific legal issue presented is whether § 40-23-36(b), Ala.Code 1975 ("Subsection (b)"), which delegates to the executive branch the authority to limit the sales-tax discount that Alabama retailers can claim for collecting sales taxes and remitting them to the state, violates the separation-of-powers principle embedded in § 43, Alabama Constitution, 1901.1
This constitutional issue arose when Harco, Inc., and other large retailing chains, collectively referred to herein as "the retailers," sued H.E. Monroe, the commissioner of the Department of Revenue, and James D. Martin, the commissioner of the Department of Conservation, to permanently enjoin the enforcement of Administrative Regulation 810-6-4-.03, which set a $900 limit on the sales-tax discount that could be claimed by a retailer, regardless of the amount of sales taxes collected by the retailer.
The retailers claimed the Governor's issuance of an executive order, which led to the promulgation of a corresponding administrative regulation by the Department of Revenue, violated the separation-of-powers provisions of § 43 of the Constitution. The Circuit Court of Montgomery County agreed and entered a judgment holding that the executive order violated § 43. The commissioners of the Departments of Revenue and Conservation appealed. After carefully reviewing the briefs and thoughtfully considering the parties' oral arguments, we conclude that no constitutional violation occurred in regard to the Governor's issuance of that executive order; consequently, we reverse the judgment of the trial court and remand the cause for further proceedings consistent with this opinion.
Since 1939, when the Legislature originally enacted the sales-tax laws, those laws have allowed retailers, who collect and remit the sales taxes to the State, to claim a sales-tax discount. In fact, the Legislature, in 1939, gave the Governor the authority to issue an executive order directing the Department of Revenue to provide for a discount not to exceed 3% of the taxes levied by the Sales Tax Act.2 No discount was permitted, however, if the retailers did not remit the taxes to the State before they became delinquent.3
Shortly after the sales-tax laws became effective, questions arose relating to the procedures for claiming the sales-tax discount. In 1943, the Attorney General issued an opinion to the commissioner of the Department of Revenue, advising him that the Department was not authorized to allow a discount for the remittance of collected sales taxes unless the beneficiary of the discount strictly complied with the statute. In 1951, the Legislature amended the statute by adjusting the amount of the discount, but nevertheless retained the language providing that no discount would be authorized or allowed regarding taxes not paid before they became delinquent. In 1959, the Legislature rewrote the salestax statutes, but retained the sales-tax discount. See Acts 1959, 2d Ex.Sess., Act No. 100, p. 298, § 34, which is now codified as § 40-23-36(a), Ala.Code 1975 ("Subsection (a)").
After the Legislature adopted the 1959 Act, Governor John Patterson, on January 8, 1960, issued Executive Order No. 2, which authorized the Department of Revenue to provide for a sales-tax discount. Pursuant to that order, the Department issued Regulation 810-6-4-.03, which allowed the sales-tax discount on taxes collected on sales made on or after October 1, 1959. This regulation was subsequently ratified pursuant to the Administrative Procedure Act (§§ 41-22-1 to 41-22-27, Ala. Code 1975), effective October 1, 1982. The administrative regulation closely mirrored the sales-tax discount allowed by the statute.
On May 7, 1996, Governor Fob James issued Executive Order No. 19, which authorized the Department to set a maximum discount of $900 per month, but the Revenue Department never promulgated any regulations to implement the provisions of that executive order. On May 20, 1996, the Legislature adopted Act No. 96-785. That Act amended the sales-tax statutes in their entirety, but what is now Subsection (a) of the sales-tax-discount statute remained unchanged, while Subsection (b) was added.4 This new Subsection allowed the Governor to authorize the Department to set a maximum discount for any licensed retailer that collects and remits sales taxes to the State, and it authorized the Governor to limit the discount to a particular maximum, a ceiling that would apply to each retailer regardless of the number of the retailer's retail locations in the State. Section 1 of the Act earmarked the additional amounts remitted to the State as a result of applying the ceiling, for use by the Department of Conservation and National Resources for renovation of the State's park system and for use by the Department of Human Resources in administering its foster-care program.
On May 31, 1996, Governor James issued Executive Order No. 20, which rescinded Executive Order No. 19 and authorized the Department of Revenue to promulgate regulations making the discount-cap effective. The Department issued the regulations, and this lawsuit by the retailers followed. The trial court held that the executive order and the Department's regulations were unconstitutional. The commissioners of the Departments of Revenue and Conservation appealed.
"In reviewing [a question regarding] the constitutionality of a statute, we `approach the question with every presumption and intendment in favor of its validity, and seek to sustain rather than strike down the enactment of a coordinate branch of the government.'" Moore v. Mobile Infirmary Ass'n, 592 So.2d 156, 159 (Ala.1991) (quoting Alabama State Fed'n of Labor v. McAdory, 246 Ala. 1, 9, 18 So.2d 810, 815 (1944)). Moreover, "[w]here the validity of a statute is assailed and there are two possible interpretations, by one of which the statute would be unconstitutional and by the other would be valid, the courts should adopt the construction [that] would uphold it." McAdory, 246 Ala. at 10, 18 So.2d at 815. In McAdory, this Court further stated:
246 Ala. at 9, 18 So.2d at 815 (citation omitted). We must afford the Legislature the highest degree of deference, and construe its acts as constitutional if their language so permits. Id.
Applying the standard of review set out in Part II, we must answer this question: Is § 40-23-36(b) an unconstitutional delegation of legislative power to the executive branch? We think not. Article III of the Alabama Constitution of 1901 creates the framework for the division of powers between the State's legislative, executive, and judicial branches. Each branch within our tripartite governmental structure has distinct powers and responsibilities, and our Constitution demands that these powers and responsibilities never be shared. But "the doctrine of separation of powers does not prohibit the Legislature's delegating the power to execute and administer the laws, so long as the delegation carries reasonably clear standards governing the execution and administration." Folsom v. Wynn, 631 So.2d 890, 894 (Ala. 1993); see also Porter Coal Co. v. Davis, 231 Ala. 359, 362, 165 So. 93, 96 (1935) ( )(quoting United States v. Grimaud, 220 U.S. 506, 520, 31 S.Ct. 480, 55 L.Ed. 563 (1911), in turn quoting Field v. Clark, 143 U.S. 649, 694, 12 S.Ct. 495, 36 L.Ed. 294 (1892)). To deny the Legislature the power to make a law delegating a power to determine some fact or thing "`would be to stop the wheels of government.'" Porter Coal Co., 231 Ala. at 362, 165 So. at 96 (quoting Grimaud, 220 U.S. at 520, 31 S.Ct. 480). This Court has explained:
""
Heck v. Hall, 238 Ala. 274, 282, 190 So. 280, 286 (1939) (quoting State ex rel. Adams v. Burdge, 95 Wis. 390, 402, 70 N.W. 347, 350 (1897)).
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