Nachman v. State Tax Commission, 3 Div. 199

• Decision Date: 18 February 1937
• Docket Number: 3 Div. 199
• Citation: Nachman v. State Tax Commission, 233 Ala. 628, 173 So. 25 (Ala. 1937)
• Parties: NACHMAN et al. v. STATE TAX COMMISSION et al.
• Court: Alabama Supreme Court

173 So. 25

233 Ala. 628

NACHMAN et al. v. STATE TAX COMMISSION et al.

3 Div. 199

Supreme Court of Alabama

February 18, 1937

Rehearing Denied March 18, 1937

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Suit in equity by M. Roland Nachman and Mamie M. Nachman, partners under the firm name of Nachman & Meertief, against the State Tax Commission, the individual members of said Commission and the Attorney General, in which there was intervention by W.P. Pickard, and a cross-bill by the respondents.From a decree denying relief, complainants appeal.

Affirmed.

BROWN J., dissenting.

Rushton, Crenshaw & Rushton, of Montgomery, for appellants.

A.A. Carmichael, Atty. Gen., Charles L. Rowe, Asst. Atty. Gen., and Hill, Hill, Whiting & Rives, of Montgomery, for appellees.

KNIGHT Justice.

This case comes to this court on appeal by the complainants in the court below from a decree of the circuit court of Montgomery county sustaining the constitutionality of an act of the Legislature of Alabama, passed during its present special session, convened by the Governor, under the provisions of section 122 of the Constitution, on November 23, 1936.

The title of the act in question is: "An Act to amend an Act entitled 'An Act to provide for the general revenue of the State of Alabama, approved July 10, 1935,' by adding schedule 155.4A and schedule 155.4B to section 348 of said Act."

The act now before the court consists of eight sections.However, section 7 only fixes the time during which the act shall be in effect, while section 8 provides for the repeal of all laws in conflict with the act.

Section 1 of the act provides that: "Every person, firm, corporation, association or copartnership opening, establishing, operating or maintaining one or more retail stores or retail mercantile establishments within the State, whether under one general management or not, shall, in addition to all other licenses or taxes of whatever kind now levied by law, pay to the State of Alabama, as a license or privilege tax for the privilege of doing such business, an amount equal to one and one-half per cent. (1 1/2 %) on the gross sales of said business."This section constitutes schedule 155.4A.

Section 2 of the act makes provision for the monthly payment of the license tax levied under section 1, and for the ascertainment of the amount of the tax to be paid, and other matters relating to the ascertainment and payment of said license tax.

Section 3 of the act imposes a license tax similar in amount, and "payable to the State of Alabama, on every person, firm, corporation, association, or copartnership engaged or continuing within this State in the business of conducting places of amusement or entertainment, billiard and pool rooms, bowling alleys, theaters, opera houses, moving picture shows, vaudevilles, amusement parks, athletic contests, including wrestling and prize fights, boxing exhibitions, football and baseball games, skating rinks, race tracks, or any other place at which amusement or entertainment is offered the public," etc.

Section 4, like section 2, provides for the ascertainment and payment monthly of the license tax levied under the provisions of section 3 of the act.

By section 5 of the act it is provided that the license levied by schedules 155.4A and 155.4B shall not apply to the sale of gasoline and lubricating oils, cigars, cigarettes, and tobacco products otherwise taxed.This section also exempts certain other persons, firms, corporations, associations, or copartnerships engaged in certain businesses otherwise taxed.

Section 6 of the act appears in the report of the case, and will not here be set out either in whole or in substance.

The complainants in their bill attack the validity of the act in question upon a number of constitutional grounds, but it would appear from briefs before us that the major contention is that the act is offensive to section 45 of the Constitution, though insistence is also made that the act is violative of sections 1,6,22,23,35, and71 of the Constitution, as well as the "equal privilege provisions of both the State and Federal Constitutions."It is also insisted that the act is violative of that clause of the Fourteenth Amendment to the Constitution of the United States which provides: "Nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

The bill, as originally filed, prayed for an injunction restraining and enjoining the respondents from collecting or attempting to collect the license tax imposed by said act against retail merchants.

The complainants, as partners, operate a single retail store in the city of Montgomery, and, if the act in question is valid, are liable to the license tax provided by the act.They have filed this bill in behalf of themselves, and all other persons, firms, and corporations similarly situated who might wish to intervene.Thereafter, W.P. Pickard was allowed to intervene as a complainant in said cause.

The complainants duly amended their bill, and by their amendmentthey charged that the respondents contend that the act in question was and is constitutional, valid, and enforceable; that there is subsisting an actual controversy on which substantial property rights are dependent in that said act of the Legislature, if valid, requires of the complainants and other persons, firms, and corporations similarly situated the expense of keeping records of their monthly sales, the making of elaborate reports thereof to the State Tax Commission, and the payment of an onerous and burdensome tax.And while the good faith of the respondents' contentions is not questioned, complainants contend that they are ill-advised.Nevertheless, the complainants charge that respondents, public officials as aforesaid, viz., the State Taxing Department and the Attorney General's Department, threaten to strictly enforce said statute and all penalties provided by law for any failure on the part of the complainants to comply strictly therewith.Then follows prayer for declaratory judgment as to whether said act is constitutional and valid, etc.

The respondents filed demurrers to the bill, and also an answer, and a cross-bill.By their cross-billcross-complainants pray also for a declaratory judgment as to the constitutionality and validity of the act in question.

It will thus be seen that the questions involved in this proceeding directly and vitally affect the revenues of the state, and a speedy and final determination of the same is of utmost importance, not only to the complainants, and others similarly affected by the legislation, but to the State, whose revenues are in part tied up by the litigation.

This court has tenaciously held to the rule that taxpayers cannot resort to a court of equity "to enjoin the collection of a tax claimed to be illegal, unless with the illegality of the tax there is connected some recognized ground of equitable jurisdiction.City Council of Montgomery v. Sayre et al.,65 Ala. 564;City of Ensley v. McWilliams,145 Ala. 159, 41 So. 296, 117 Am.St.Rep. 26;Adams, Tax Collector, et al. v. Southern Railway Co.,176 Ala. 320, 58 So. 397;Mayor, etc., of Mobile v. Baldwin,57 Ala. 61, 29 Am.Rep. 712.And this court in our recent cases of City of Gadsden et al. v. American National Bank,225 Ala. 490, 144 So. 93, and Ward, Tax Collector, v. First National Bank of Hartford,225 Ala. 10, 142 So. 93, reaffirmed the above stated rule.

Of course, if the taxpayer should pay the tax under protest, but has no adequate and complete remedy at law to recover the money paid, if its payment was illegally exacted, this would justify the interposition of a court of equity to restrain the collection until there could be a judicial determination of the legality of the tax.There may be, and doubtless are, other cases in which it would be permissible for the taxpayer to resort to a court of equity for relief by injunction.Shanks et al. v. Winkler,210 Ala. 101, 97 So. 142, 143.

Ordinarily, however, a taxpayer will not be allowed to tie up the revenues of the State--its very life blood, and without which it cannot function--unless, in addition to the illegality of the tax, there is connected with it some ground for equitable interposition.Under our theory of government there is no such thing as government by injunction.

We are not forced to determine the equity of the complainants' bill as first filed, for since its filing, and before the decree was rendered thereon, the complainants amended the bill by averring sufficient facts to invoke the jurisdiction of the court under our Uniform Declaratory Judgments Act of 1935.(Gen.Acts 1935, p. 777).Under the provisions of this act, the complainants state a case entitling them to a declaratory judgment of the court upon the constitutionality of the act now attacked.

The lower court assumed jurisdiction of the cause, but reached the conclusion that the act was not violative of any of the designated provisions of the Constitution, State or Federal, and decreed accordingly.This decree we are now called upon to review.

It is first insisted, and earnestly so, by appellants that the act in one or more particulars offends section 45 of the Constitution of the State.

The act purports to amend the General Revenue Law of the State, approved July 10, 1935, by adding two additional schedules--sources of income--to section 348 of said revenue law.Section 348, covering more than a hundred pages of the printed act, contains many separately numbered schedules of license tax, covering and including many different subjects of taxation and license.

It was...