Quintard Terrace Apartments, Inc. v. State

• Decision Date: 12 March 1959
• Docket Number: 3 Div. 824
• Citation: 111 So.2d 602,269 Ala. 136
• Parties: QUINTARD TERRACE APARTMENTS, INC. v. STATE of Alabama.
• Court: Alabama Supreme Court

Page 602

111 So.2d 602

269 Ala. 136

QUINTARD TERRACE APARTMENTS, INC. v. STATE of Alabama.

3 Div. 824.

Supreme Court of Alabama.

March 12, 1959.

Rehearing Denied May 14, 1959.

Young, Aird & Young, Anniston, and Markstein & Cooper, Birmingham, for appellant.

John Patterson, Atty. Gen., Willard W. Livingston and Wm. H. Burton, Asst. Attys. Gen., for appellee.

STAKELY, Justice.

The State Department of Revenue made an assessment for franchise taxes under the provisions of § 348, Title 51, Code of 1940, for the year 1956, in the amount of $3,130.48 against Quintard Terrace Apartments, Inc., a corporation (appellant), hereinafter referred to as Quintard. Quintard paid the tax and appealed from the foregoing final assessment to the Circuit Court of Montgomery County, in Equity. Quintard then filed its bill of complaint in accordance with § 140, Title 51, Code of 1940.

The State filed a demurrer and answer to the bill of complaint and the cause was submitted for final decree upon the pleadings and evidence. In its decree the court overruled the demurrer of the State but affirmed the final assessment of the franchise tax made against Quintard. The appeal to this court followed.

The appellant, Quintard, is a corporation organized under the laws of the State of North Carolina. It entered into a contract with the Secretary of the Army whereby it leased approximately 25 acres of land, which is a part of that comprising the Fort McClellan military reservation in Calhoun County, Alabama. The land was leased for the purpose of erecting, maintaining and operating thereon a housing project consisting of approximately 140 units. The lease was made pursuant to authority of the Act of August 5, 1947, sometimes referred to as the Military Leasing Act of 1947.-61 Stat. 774-776, 10 U.S.C.A. § 1270 et seq.* and the Act of August 8, 1949, known as the Wherry Military Housing Act of 1949, which added Title VIII to the National Housing Act. 63 Stat. 570, 12 U.S.C.A § 1748.

The appellant qualified to do business in Alabama as a foreign corporation on June 8, 1954. Title 51, § 348, Code of 1940, as amended, 1955 Cumulative Pocket Part, reads as follows:

'Every corporation organized under the laws of any other state, nation or territory and doing business in this state, except strictly benevolent, educational or religious corporations, shall pay annually to the state an annual franchise tax of two and one-half ($2.50) dollars on each one thousand dollars ($1,000.00) of the actual amount of capital employed in this state. * * * Provided, that if a corporation has qualified to do business in this state it shall for the purpose of franchise tax prima facie be held to be doing business in the state of Alabama within the meaning of this title.'

The foregoing lease was for a period of 75 years. The evidence shows that practically all if not all of the employees of Quintard were residents of Alabama and were in Alabama during the time involved in this case and that the 140 units located on the military reservation were in Calhoun County, Alabama, some five miles north of Anniston on the Anniston-Jacksonville Highway. Quintard maintained an office in said apartment building where the books of the corporation were kept. The evidence further shows that the nerve center and business hub of the corporation was in Calhoun County, Alabama, and it was there that the only business or activities of the corporation were carried on. The rent for the housing units was collected at the local office from the tenants and the monthly rentals were deposited monthly to the credit of Quintard in a bank in Anniston, Alabama. The amounts ranged from $10,000 to $11,000 per month. In addition to depositing the rent money each month to the credit of Quintard in the bank in Anniston, the appellant Quintard also maintained in the name of Friendly Realty Company a deposit in an Anniston bank which averaged approximately $500 at all times to be used in connection with the operation of the apartments. The manager located on the reservation was authorized to write checks on this deposit to defray the current expenses of the apartments. The evidence further shows that the sole and only income of the corporation was derived from the rental of the foregoing apartment units within the State of Alabama.

It is insisted by Quintard that since it carries on its business on lands leased from the United States, the exclusive jurisdiction of such land having been ceded by the State of Alabama to the United States, that it is not doing business within the State of Alabama to such an extent as to be liable for a franchise tax.

There seems to be some conflict in the evidence as to whether the State of Alabama has ceded exclusive jurisdiction over Ft. McClellan to the Federal government. For the purposes of this case we will assume, without deciding, that such exclusive jurisdiction has been so ceded.

The Military Leasing Act hereinabove referred to reads in part as follows:

'Sec. 6. The lessee's interest, made or created pursuant to the provisions of sections 1270-1270b, 1270d shall be made subject to State or local taxation. Any lease of property authorized under the provisions of this Act shall contain a provision that if and to the extent that such property is made taxable by the State and local governments by Act of Congress, in such event the terms of such lease shall be renegotiated.'

The Wherry Military Housing Act heretofore referred to reads as follows:

' § 1748d. Lease of property; terms and conditions Whenever the Secretary of the Army, Navy, or Air Force determines that it is necessary to lease any land held by the United States on or near a...