Republic Iron & Steel Co. v. State

Citation86 So. 65,204 Ala. 469
Decision Date05 June 1920
Docket Number3 Div. 456
CourtSupreme Court of Alabama
PartiesREPUBLIC IRON & STEEL CO. v. STATE.

Appeal from Circuit Court, Montgomery County; Wm. L. Martin, Judge.

Action by the State of Alabama against the Republic Iron & Steel Company to recover the tonnage tax on coal and iron. Judgment for the State and defendant appeals. Affirmed.

Tillman Bradley & Morrow, of Birmingham, John H. Bankhead, Jr., of Jasper, and Percy, Benners & Burr, of Birmingham, for appellant.

Until they are mined, coal and iron ore are property only in a theoretical sense. Being incapable of use until they are mined, they do not become property in any real sense until they are mined, whether they be mined now or in a thousand years. The tax, being not only measured by, but predicated on, the act of converting the minerals as they lay in the ground into usable property, is inevitably on property. The tax is on nothing but the act of conversion, making personalty of realty.

The right to own things, without the right to use them, is a conception unknown to, and therefore without name in, the law. The word "property" includes, not only the thing, but the right to use and enjoy the thing. Dorman v. State, 34 Ala. 216, 221; Fruth v. Board of Affairs, 75 W.Va. 456, 84 S.E. 105, L.R.A.1915C, 981 subd. 1, opinion; City of St. Louis v. Hill, 116 Mo 527, 22 S.W. 861, 21 L.R.A. 226, 228; Western Union Co v. State Board, 80 Ala. 273, 60 Am.Rep. 99: Ex parte Marshall (C.C.) 102 F. 324, 325; Ex parte Koser, 60 Cal. 210; Braceville Coal Co. v. People, 147 Ill. 71, 35 N.E. 62, 63, 22 L.R.A. 340, 37 Am.St.Rep. 206; Buchanan v. Warley, 245 U.S. 60, 38 Sup.Ct. 16, 62 L.Ed. 149, L.R.A.1918C, 210, Ann.Cas.1918A, 1201.

Coal and ore in place, whether owned separately from the fee or as a part of it, have been the subject of property taxes in this state since 1852, or earlier. To tax minerals through years as they lay in the ground, and then to tax the act of taking them out, is to tax them twice. Code of 1852, § 391, subd. 4; Code of 1867, § 434, subd. 2; Code of 1886, § 453, subd. 1; Revenue Act of 1919, p. 284, § 5, subd. (a).

The taxes levied by schedules 66 and 67 are taxes on property. There is no distinction in law, there being none in fact, between taxing a thing and taxing the enjoyment of that thing. Thompson v. McLeod, 112 Miss. 383, 73 So. 193, L.R.A.1918C, 893, Ann.Cas.1918A, 674; Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 580, 582, 15 Sup.Ct. 675, 39 L.Ed. 759, 819; Id., 158 U.S. 601, 637, 15 Sup.Ct. 912, 39 L.Ed. 1108; Sims v. Parish of Jackson, 22 La.Ann. 440; Covell v. Young, 11 Neb. 510, 9 N.W. 694; Pittsburgh, etc., R.R. v. Ohio, 49 Ohio St. 189, 30 N.E. 435, 16 L.R.A. 380; Brown v. Maryland, 12 Wheat. 419, 6 L.Ed. 678; State of Maryland v. Cumberland, etc., R.R. Co., 40 Md. 22, 51; Pittsburgh Ry. Co. v. City of Pittsburgh, 211 Pa. 479, 60 A. 1077, 1080: Scully v. People, 104 Ill. 349; State v. Lakeside Land Co., 71 Minn. 283, 73 N.W. 970; Fatjo v. Pfister, 117 Cal. 83, 48 P. 1012; Wheeler v. Weightman, 96 Kan. 50, 149 P. 977, L.R.A.1916A, 846; State v. Moore, 12 Cal. 56; State v. Bengsch, 170 Mo. 81, 70 S.W. 710; In re Page, 60 Kan. 842, 58 P. 478, 47 L.R.A. 68.

The nature of the tax is to be determined by its effect. The name given by the Legislature is of no consequence. Crew Levick Co. v. Penn., 245 U.S. 292, 294, 38 Sup.Ct. 126, 62 L.Ed. 295; American Mfg. Co. v. St. Louis, 250 U.S. 463, 39 Sup.Ct. 522, 63 L.Ed. 1084; State v. Parker, 5 Ala.App. 240, 59 So. 741; Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 15 Sup.Ct. 673, 39 L.Ed. 759; Pittsburgh Ry. v. Pittsburgh, 211 Pa. 479, 60 A. 1077; Fatjo v. Pfister, 117 Cal. 83, 48 P. 1012; State v. Bengsch, 170 Mo. 81, 70 S.W. 710.

A discriminatory excise tax is offensive both to the state and federal Constitutions. Ala. Consolidated Co. v. Herzberg, 177 Ala. 248, 59 So. 305; Judson on Taxation (1st Ed.) pp. 258-264; Birmingham-Tuscaloosa Ry. v. Carpenter, 194 Ala. 141, 69 So. 626; Board of Commissioners of Mobile v. Orr, 181 Ala. 308, 61 So. 920, 45 L.R.A. (N.S.) 575.

In levying the tax on those who mine coal and load it into railroad cars, and not on those who mine coal and load it into wagons, schedule 66 is arbitrary and void. Harding v. People, 160 Ill. 459.

43 N.E. 624, 32 L.R.A. 445, 52 Am.St.Rep. 344; Cotting v. Godard, 183 U.S. 79, 102-108, 22 Sup.Ct. 30, 46 L.Ed. 92; Adams v. Miss. Lumber Co., 84 Miss. 23, 36 So. 68; In re Yot Sang (D.C.) 75 F. 983; Birmingham-Tuscaloosa Ry. v. Carpenter, 194 Ala. 141, 69 So. 626; Commonwealth of Pennsylvania v. Alden Coal Co.,

251 Pa. 134, 96 A. 246, L.R.A.1916F, 154, and note; City Council of Montgomery v. Kelly, 142 Ala. 552, 38 So. 67, 70 L.R.A. 209, 110 Am.St.Rep. 43; Ala. Consolidated Co. v. Herzberg, 177 Ala. 248, 59 So. 305; Minn. v. Wagener, 69 Minn. 206, 72 N.W. 67, 38 L.R.A. 677, 65 Am.St.Rep. 565; Commonwealth v. Clark, 195 Pa. 634, 46 A. 286, 57 L.R.A. 348, 86 Am.St.Rep. 694.

The right to own and enjoy property is not a privilege conferred by or derived from Constitutions or the statutes, but is a fundamental right, existing at common law as a part of our free institutions. Jones v. N., C. & St. L.R.R., 141 Ala. 393, 394, 37 So. 677; Cooley, Coast. Lim. (6th Ed.) p. 49; 6 R.C.L. top page 18; Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891; City of Lexington v. Thompson, 113 Ky. 540, 68 S.W. 477, 57 L.R.A. 775, 776, 201 Am.St.Rep. 361; State v. Denny, 118 Ind. 449, 21 N.E. 274, 4 L.R.A. 65, 77.

The applicable provisions of the Alabama Constitution are sections 35, 211, 214, and 217.

(a) A tax on property, or on taxable property, is a tax assessable and payable solely on account of the ownership, use, or disposition of property (the essential attributes of the right of property), which leaves no opportunity or election on the part of the owner or possessor of the property to avoid the tax, except upon the abandonment of the property as such, and which is not levied in the exercise of the police power.

"The stamp duty is contingent on the happening of the event of sale, and the element of absolute and unavoidable demand is lacking." Thomas v. United States, 192 U.S. 363, 24 Sup.Ct. 305, 48 L.Ed. 481.

(b) Section 211 of the Constitution permits no tax on property of any kind with reference to its yield, or by any standard or measure, except its value. Board for Assessment v. Ala. Central R.R., 59 Ala. 551; Western Union Tel. Co. v. State Board of Assessment, 80 Ala. 273, 60 Am.Rep. 99; Sims v. Parish of Jackson, 22 La.Ann. 440; 27 Amer. and Eng.Ency. of Law, 605; 37 Cyc. 760.

The exemption of wagon mines destroys the tax under schedule 66. Vines v. State, 67 Ala. 73.

The statute is highly penal, and as such will be strictly construed. See sections 417 to 421 of the Revenue Act.

In addition, as a tax measure it will be construed against the state. State v. Roden Coal Co., 197 Ala. 417, 73 So. 5; Ex parte Birmingham, 201 Ala. 641, 79 So. 113; Crocker v. Malley, 249 U.S. 223, 39 Sup.Ct. 270, 63 L.Ed. 573, 2 A.L.R. 1601; Gould v. Gould, 245 U.S. 151, 38 Sup.Ct. 53, 62 L.Ed. 211.

Mining coal or ore is an incident to the business of mining and disposing of coal and ore, and patently mining coal and ore is merely one feature of defendant's principal business of making pig iron. Defendant is taxed, without reference to its property taxes, on its franchises and by other excise taxes. Occupation taxes cannot be levied on a business as a whole and then on its incidents. Gambill v. Endrich, 143 Ala. 509, 510, 39 So. 297; Tuscaloosa v. Holczstein, 134 Ala. 636, 32 So. 1007; Mefford v. Sheffield, 148 Ala. 539, 41 So. 970; Southern Express Co. v. Rose, 124 Ga. 581, 53 S.E. 185, 5 L.R.A. (N.S.) 625. See note on page 619.

The mining of its own coal and ore by defendant, for use in its business of making and selling pig iron, is not an occupation or business; not more so than is defendant's transportation of these raw materials to the furnace, nor more so than any of its furnace operations. An occupation, within the meaning of statutes levying occupation taxes, involves the element of receipt of money as the result of which the activity is taxed. It must be levied on that which is in fact one's occupation. Texas Co. v. Amos (Fla.) 81 So. 471; Watts v. Com., 106 Va. 851, 56 S.E. 223, Ann.Cas.1914B, 738; Lane v. Rowan County, 139 N.C. 443, 52 S.E. 140; State v. Anniston Rolling Mill, 125 Ala. 121, 27 So. 921; Love v. State, 31 Tex.Cr.R. 469, 20 S.W. 978; Carter v. State, 44 Ala. 29; Perkins v. State, 50 Ala. 157.

J.Q. Smith, Atty. Gen., and Henry P. White and Lawrence E. Brown, Asst. Attys. Gen., for the State.

The state takes the position that the taxes in question are not property taxes, but special taxes, and concedes their unconstitutionality if they are property taxes. That they are not property taxes they cite 183 Ky. 84, 209 S.W. 19; 125 Ky. 402, 101 S.W. 321; 217 U.S. 563, 30 Sup.Ct. 578, 54 L.Ed. 883; 40 S.C. 221, 18 S.E. 853; (D.C.) 249 F. 172.

The tax is not discriminatory. 251 Pa. 134, 96 A. 246, L.R.A.1916F, 154; 183 Ky. 84, 209 S.W. 19; 240 U.S. 369, 36: Sup.Ct. 379, 60 L.Ed. 691; 247 U.S. 132, 38 Sup.Ct. 444, 62 L.Ed. 1025; 185 U.S. 364, 22 Sup.Ct. 673, 46 L.Ed. 949; 96 U.S. 97, 24 L.Ed. 616; 220 U.S. 61, 31 Sup.Ct. 337, 55 L.Ed. 369, Ann.Cas.1912C, 160; 229 U.S. 322, 33 Sup.Ct. 833, 57 L.Ed. 1206; 50 W.Va. 533, 40 S.E. 514; 64 Neb. 342, 89 N.W. 1053, 57 L.R.A. 922; 80 Ala. 273; 188 Ala. 487, 66 So. 169, L.R.A.1915A, 185, Ann.Cas.1916E, 752.

The exemption of wagon mines has not the effect to render the act void.

185 U.S. 203, 22 Sup.Ct. 616, 46 L.Ed. 872; 186 Ill. 134, 57 N.E 880, 56 L.R.A. 266. See, also, 121 Ala. 28, 25 So. 622; 155 Ala. 149, 46 So. 237; 147 Ala. 682, 39 So. 353; 148 Ala....

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