Phoenix Carpet Co. v. State

• Decision Date: 28 June 1897
• Citation: 22 So. 627,118 Ala. 143
• Parties: PHOENIX CARPET CO. v. STATE.
• Court: Alabama Supreme Court

22 So. 627

118 Ala. 143

PHOENIX CARPET CO. v. STATE.

Supreme Court of Alabama

June 28, 1897

Appeal from criminal court, Jefferson county; S.E. Greene, Judge.

The Ph nix Carpet Company was convicted of doing business without a license, and appeals. Affirmed.

Walker Percy, Tillman & Campbell, and James E. Webb, for appellant.

Wm. C Fitts, Atty. Gen., and Chas. G. Brown, for the State.

BRICKELL C.J.

At the last session of the general assembly an act was passed and approved February 18, 1897, entitled "An act to amend the revenue laws of the state of Alabama." The fifteenth subdivision of the thirty-fifth section requires all corporations, foreign or domestic, doing business in this state, except banks and banking institutions regularly organized, not otherwise specifically required to pay a license tax, to pay an annual privilege tax, graduated by the paid-up capital stock of the corporation. The appellant, a corporation organized and existing under the laws of this state, doing business in the city of Birmingham, having a paid-up capital stock of $5,000, on information filed in the criminal court of Jefferson county, was convicted of a violation of the subdivision, and from the judgment of conviction this appeal is taken.

The argument of the counsel for appellant proceeds on the hypothesis, which we are inclined to adopt, that three questions are presented by the record for consideration and decision, which they state in the following order: (1) Is not the subdivision violative of the first and sixth sections taken in connection, of the eleventh article of the constitution? (2) If not violative of the constitution, did the subdivision take effect from the day of approval of the act, or is it postponed in operation until the 1st day of January next? (3) By force of the general revenue laws, is a county tax added to the state tax?

1. The two sections of the constitution supposed to be violated read as follows: "(1) All taxes levied on property in this state shall be assessed in exact proportion to the value of such property; provided, however, the general assembly may levy a poll tax, not to exceed one dollar and fifty cents on each poll, which shall be applied exclusively in aid of the public school fund in the county so paying the same." "(6) The property of private corporations, associations, and individuals of this state shall forever be taxed at the same rate; provided, this section shall not apply to institutions or corporations devoted exclusively to religious, educational, or charitable purposes." These sections, by their terms, relate only to direct taxes on property. It is only such taxes which are levied and assessed, and as to such taxes they place corporations on an equality with natural persons. There can be no discrimination between them. But "property," in the sense in which it is employed, is far from comprehending all the objects or subjects of taxation. Corresponding provisions are found in the constitutions of many, if not all, of the states, and there is a general, if not a universal, concurrence of judicial decision that they do not limit legislative power in the imposition of specific taxes. In Burroughs on Taxation (section 454), referring to these provisions, it is said: "These provisions, as a general rule, are held to apply to property, and not to include taxation on privileges or occupations." And in Sedgwick on Statutory and Constitutional Law (2d Ed.) 504-507, it is said: "In construing these provisions, it has been held, in many of the states, that the words 'equal and uniform' apply only to a direct tax on property, and that the clause in regard to uniformity of taxation does not limit the power of the legislature as to the objects of taxation, but is only intended to prevent an arbitrary taxation of property according to kind or quality without regard to value. Specific taxes have, therefore, been sustained as a valid exercise of the legislative power." And in 1 Desty on Taxation (section 36) it is said: "The provisions of the constitution as to equality and uniformity apply to property alone, and not to taxation on privileges or occupations. The legislature must decide when and for what purpose a tax shall be levied, and must select the subjects of taxation." The authorities in support of this general doctrine are too numerous for citation. Many of them are collected and referred to in Denver City Ry. Co. v Denver (Colo. Sup.) 52 Am. St. Rep. 243 (s. c. 41 P. 826); City of Newton v. Atchison (Kan. Sup.) 47 Am. Rep. 486 (s. c. 1 P. 288). The tax imposed by the subdivision has the properties and quality of a franchise tax. It is measured or graduated by the amount of the paid-up capital stock of the corporation, and this distinguishes it from a tax on property. Speaking in reference to this inquiry, it was said by Clopton, J., in State v. Stonewall Ins. Co., 89 Ala. 338, 7 So. 754: "The usual and most certain test is whether the tax is upon the capital stock, eo nomine, without regard to its value, or at its assessed valuation in whatever it may be invested. If the former, it is a franchise tax; if the latter, a tax upon the property." Reference was made to Bank of Commerce v. New York City, 2 Black, 620, in which it was said by Nelson, J., speaking of a franchise tax: "The tax was like one annexed to the franchise as a royalty for the grant." The tax may be imposed on the creation of the corporation, but, if the charter or grant of incorporation does not expressly exempt it from taxation, a tax on the franchise may be subsequently imposed at the will of the legislature. Burroughs, Tax'n, § 85; Bank v. Billings, 4 Pet. 514. Taxation is a legislative power, comprehended in the general grant to the general assembly, except as it is specially restrained or limited by the constitution, or by the relation of the state to the general government; and in its exercise the general assembly is not under the superintendence and control of the judiciary. "It is enough for the courts," said Brewer, J., in City of Newton v. Atchison (Kan. Sup.) 47 Am. Rep. 488, 1 P. 288, "that both occupations and property are legitimate objects of taxation; that they are essentially dissimilar;...