National Association; Citibank (South Dakota), N.A.; Maryland Bank, N.A.; Bank of America National Trust and Savings Association; Colonial National Bank USA; and First Interstate Bancard Company, N.A., seeking a judgment declaring that the financial institution excise tax levied pursuant to Ala.Code 1975, § 40-16-1 et seq. ("the excise tax"), applies to out-of-state national banks that solicit applications from residents of Alabama for Visa and MasterCard credit cards issued by these banks. By agreement, the banks are acting through Chase Manhattan Bank (USA), National Association ("Chase")
"1. The Chase Manhattan Bank (USA), National Association ('Chase') is a National Banking Association.
"2. Chase is located in Wilmington, Delaware and has no offices, branches or other places of business in Alabama....
"3. To facilitate the making of loans as authorized by the National Bank Act, Chase maintains credit card accounts.
"4. Chase issues credit cards--both Visa and MasterCard.
"5. Chase has been issuing Visa credit cards since February, 1982 and MasterCard credit cards since March, 1985.
"6. Chase has issued Visa and Mastercard credit card accounts to persons residing in Alabama as well as to persons residing in other states.
"7. Since 1982 Chase has opened approximately 50,000 Visa and MasterCard credit card accounts with persons having billing addresses in Alabama out of a total of more than 4,000,000 credit card accounts opened by Chase during such period.
"8. From outside Alabama by direct mail Chase solicits credit card applications from persons residing throughout the United States, including from time to time persons residing in Alabama.
"9. Since 1982, Chase has from outside Alabama by direct mail solicited applications for credit card accounts from persons residing throughout the United States including, from time to time, persons residing in Alabama, and continues to solicit applications by direct mail from time to time from persons with Alabama addresses along with persons having addresses elsewhere.
"10. The Visa and MasterCard credit cards that are issued to persons residing in Alabama are valid for a term certain, up to 2 years, and the credit card may be used by the cardholder as long as he or she complies with the terms of the credit card agreement. The credit cards remain the property of Chase, and may be recalled by Chase or returned by the cardholder for any reason, or for no reason and have no value as a tangible item in and of themselves.
"11. An annual fee of $20.00 is charged on most Visa and MasterCard credit card accounts maintained with Chase by persons residing in Alabama; interest and fees are charged by Chase pursuant to the credit agreement ... in connection with said accounts.
"12. Chase has on occasion used the courts of Alabama to collect accounts of persons residing in Alabama which are delinquent.
"13. Persons residing in Alabama may use Visa and Mastercards throughout the United States and the world to purchase merchandise and services or to obtain cash advances.
"14. When Chase opens a credit card account in Delaware with a person residing in Alabama, that person is given a line of credit.
"15. Chase has never filed an excise tax return with the State of Alabama Department of Revenue.
"16. Chase has never paid any excise taxes to the State of Alabama Department of Revenue.
"17. Chase pays state franchise tax based on net income to the State of Delaware based upon 100% of its net income, and Chase does not pay income tax, Financial Institution Excise Tax, or any other income-based tax to any state except the State of Delaware.
"18. Chase's principal business consists of making loans in connection with its credit card accounts.
"19. A person residing in Alabama may obtain a Visa or MasterCard credit card account with Chase and obtain an extension of credit with respect to such account as follows:
"(1) He or she--Alabama resident--receives a solicitation through the mail ... which was sent from outside Alabama to Martha H. Cluck residing in Montgomery, Alabama. That solicitation states that a 'new Chase Premier Visa card with a $5,000 credit line has been reserved in your name'....
"(2) If the person residing in Alabama who is solicited wants the credit card account offered, he or she fills out the application, and signs it. He or she then mails the application from Alabama or elsewhere to Chase in Wilmington, Delaware in an envelope furnished by Chase. Postage is paid by Chase in Delaware.
"(3) Chase reviews the application in Delaware. Approval of the application is made, if at all, in Delaware; an account is opened in Delaware; and Chase mails the credit card (and also credit card account checks if requested) from outside Alabama to the person residing in Alabama along with an agreement.
"(4) The cardholder may use his or her Visa or MasterCard to purchase goods or services from a retailer in Alabama or elsewhere.
"(5) In making a purchase with a credit card the cardholder generally signs a credit card sales slip and receives a copy of it. In other circumstances purchases may be made by phone without the credit card by the card holder identifying himself or herself by supplying his or her account number to the merchant.
"(6) The merchant takes the sales slip to a merchant bank ('merchant bank') (which may be located inside or outside Alabama) with which it has a contract and receives his money less a discount.
"(7) The merchant bank or a transaction processor acting on its behalf records the information from the sales slip and transmits the information to a Visa (USA) Inc. or MasterCard International, Inc. interchange center located outside of Alabama for the purpose of obtaining payment of the face amount of the slip, less an interchange fee, from the bank which issues the credit card.
"(8) The Visa (USA) Inc. or MasterCard International, Inc. interchange center settles transactions. On a regular basis Visa and MasterCard inform Chase of the amount owed by it with respect to sales slips which have been tendered for Chase's account from all acquiring merchant banks in aggregate and from Delaware Chase wire transfers funds to accounts maintained by Visa (USA) Inc. and MasterCard International, Inc. in New York to pay such amounts.
"(9) The Visa (USA) Inc. or MasterCard International, Inc. interchange center also transmits the data relating to particular transactions to the computer center utilized by Chase which is located outside of Alabama at which individual transactions are posted to cardholders' accounts and from which statements are generated and mailed to cardholders.
"(10) The cardholder pays part or all of the statement balance by sending the payment by mail to Delaware from Alabama or elsewhere. Payment is effective only when received by Chase in Delaware.
"20. Chase Visa and MasterCard accounts may also be accessed through the use of credit card checks which when used are negotiated like any other check and clear through the Federal Reserve System in the same manner as checks drawn on checking accounts and are honored or dishonored by Chase in Delaware. A credit card may be used to obtain a cash advance from certain banks. Drafts for cash advances are settled through Visa (USA) Inc. or MasterCard International, Inc. interchange centers located outside Alabama along with sales slips amounts as described in paragraph 19(8).
"21. The relationship between the cardholder and Chase is governed by the Agreement....
"22. Chase does not act as a merchant bank for any merchant located in the State of Alabama.
"23. Chase has no directors, officers, agents or employees in Alabama, and it does not regularly send its directors, officers, agents or employees into Alabama in connection with performance of their duties for the bank.
"24. Chase does not receive payments in Alabama.
"25. Chase has no material contacts with Alabama other than those relating to credit card accounts described above.
"26. No national bank located outside the State of Alabama currently or in the past has paid the Financial Institution Excise Tax to the State of Alabama.
"27. No state or national bank, which does not have an office or branch in Alabama, pays or has paid the Financial Institution Excise Tax nor has such tax ever been assessed against any such entity by the State of Alabama. A number of such state and national banks without offices or branches in Alabama issue credit cards or provide other...
