Standard Dredging Corp. v. State

• Decision Date: 30 June 1960
• Docket Number: 3 Div. 765
• Court: Alabama Supreme Court
• Parties: STANDARD DREDGING CORPORATION v. STATE of Alabama.

Page 280

122 So.2d 280

271 Ala. 22

STANDARD DREDGING CORPORATION v. STATE of Alabama.

3 Div. 765.

Supreme Court of Alabama.

June 30, 1960.

Martin & Blakey, Birmingham, Frank H. Hawthorne, Montgomery, Deutsch, Kerrigan & Stiles, Robt. E. Leake, Jr., and Rene H. Himel, Jr., New Orleans, La., for appellant.

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

GOODWYN, Justice.

This is an appeal by the Standard Dredging Corporation (herein referred to as Standard) from a decree of the circuit court of Montgomery County, in equity, sustaining an assessment made against it by the State for a contractor's license tax prescribed by § 496, Tit. 51, Code 1940. Our problem is to determine whether such license tax may validly be levied against Standard as a consequence of its acceptance and performance of a contract with the United States for maintenance dredging of the navigation channel in Mobile Bay.

Except for certain exhibits, and the testimony of one witness for the State (H. S. Phifer, Chief of the License Tax Division of the Department of Revenue) taken orally before the trial court, the facts were stipulated as follows:

'1--Standard Dredging Corporation, which is engaged in business as a dredging contractor, is a corporation duly organized and existing under and by virtue of the laws of the State of New Jersey. Its principal office is maintained in New York City. In addition, the corporation maintains division offices in Los Angeles, California (West Coast Division), and New Orleans, Louisiana (Southern Division). A district office also is located in Galveston, Texas.

'2--The corporation's Southern Division, whose operations are supervised, directed and controlled from its division office at New Orleans, Louisiana, operates three hydraulic dredges (among which is the Dredge Diesel), with auxiliary vessels and attendant plant (among which are the Tugs Peter and Maryel), in the States of Tennessee, Arkansas, Texas, Louisiana, Mississippi, Alabama and Florida.

'3--During the entire period from October 1, 1952 through September 30, 1953 (the period for which the tax at issue herein was levied) said corporation was duly qualified to do business in the State of Alabama, paid its franchise taxes with respect to such period, and was duly licensed by the State Licensing Board of General Contractors to practice general contracting in Alabama.

'4--On or about April 29, 1953, Standard Dredging Corporation contracted with the United States of America for maintenance dredging of the navigation channel in Mobile Bay, Alabama. The corporation's bid for such contract was prepared at its Southern Division office at New Orleans, Louisiana, and was submitted to the United States Corps of Engineers at Mobile, Alabama. Acceptance of said bid was by telegraphic advice from the Corps of Engineers at Mobile to the corporation at New Orleans. The formal contract was executed by the Corps of Engineers at Mobile, and by the corporation at New York. Said contract was the only contract accepted for performance, or performed, in Alabama by Standard Dredging Corporation during the period in question.

'5--The work under said contract consisted of dredging silt from the bottom of the channel and was done between Beacons 24 and 38 in Mobile Bay, as is shown on the maps attached hereto as Exhibits, P 5 and P 6 which was necessary to maintain prescribed navigational depths, and called for the removal of an estimated 3,000,000 cubic yards of material at a unit price of 5.14cents per cubic yard, or an estimated total price of $154,000. The work began on May 8, 1953 and was completed on June 15, 1953. Only 2,828,312 cubic yards of material were actually dredged, and the total actual contract price was $145,375.34. Prior to, during, and following performance of said work, said navigation channel was used extensively in interstate and foreign commerce.

'6--Work under said contract was subject to the direction and supervision, on behalf of the United States, of the United States Corps of Engineers, which has the responsibility of maintaining, repairing and improving the navigable harbors and waterways of the United States including Mobile Bay.

'7--Performance of said contract was directed and supervised, on behalf of Standard Dredging Corporation, from its division office in New Orleans, Louisiana, where the planning, engineering and administrative work in connection with, and executive and accounting control of, said contract also was done. Standard Dredging Corporation maintained no office or place of business in the State of Alabama during the period in question.

'8--Standard Dredging Corporation executed the work under said contract through the use of its hydraulic suction dredge Diesel, her auxiliary vessels, the Tugs Peter and Maryel, and attendant plant. These vessels were brought to Mobile Bay from Texas, via the Gulf Intracoastal Waterway, on May 7, 1953. At all times while performing said work these vessels were afloat in Mobile Bay, navigating under their own power (the dredge sometimes also being assisted by her auxiliary tugs for facility of movement). On June 17, 1953, after completing the work, said vessels and plant, departed Mobile Bay for the Port of New Orleans, Louisiana via the Gulf Intracoastal Waterway.

'9--The Dredge Diesel and her auxiliary vessels, the Tugs Peter and Maryel, each is of more than twenty tons burden, and each is, and at all times herein mentioned was, enrolled as a vessel of the United States, and licensed by the Bureau of Marine Inspection and Navigation of the Department of Commerce of the United States to engage in the maritime coasting trade. Photostatic copies of the coasting licenses of said vessels, marked exhibits P 1, P 2, and P 3, respectively, are annexed hereto and made part hereof as fully as though set forth in extenso herein. During the taxable period in question, said vessels operated on the navigable waters of the United States within the States of Texas, Louisiana, Mississippi, Alabama and Florida.

'10--During the period in question, the only property of Standard Dredging Corporation within the State of Alabama was the Dredge Diesel, her auxiliary vessels and attendant plant necessary for the execution of the subject contract. The vessels' crews lived aboard the dredge, in quarters provided for that purpose.'

There is no dispute that Mobile Bay, where the dredging work was done, is a part of the territorial waters of the State of Alabama.

The position taken by Standard is (I) that the license tax imposed by § 496, Tit. 51, Code 1940, supra, is on the privilege of accepting or making contracts and, as such, may not be exacted 'for the privilege of accepting or making a contract with the United States of America under the circumstances' of this case.

Alternatively, it is insisted that, if it should be held that the license tax is directed against the privilege of performing work under contract and not for centracting therefor, the tax as imposed against Standard's activities here involved is invalid (II) 'as a direct burden on interstate commerce', and (III) 'as an impairment of the exclusive admiralty and maritime jurisdiction of the Congress of the United States, and of the Federal maritime coasting licenses of appellant's vessels.'

(I)

We are unable to agree with Standard's insistence that § 496 'purports to levy the tax on the privilege of 'accepting' contracts,' and only on such privilege. Accordingly, there is no occasion to discuss the further insistence that the tax 'may not be imposed on the privilege of contracting with the United States of America.'

Section 496, to the extent here pertinent, provides as follows:

' § 496. Construction companies or contractors.--Any person, firm or corporation * * * who shall accept an order for or contract to excavate earth, rock or other material for foundations or any other purpose, * * * shall be deemed a contractor. Every contractor shall procure from the probate judge of the county in which he has his principal office a license to carry on the business of a contractor, provided that if such contractor has no such office in this state, then he shall procure such license from the probate judge of the county where the contract is to be performed. Every such contractor shall pay a license to be ascertained in the following manner: If the gross amount of all orders or contracts accepted aggregate five thousand dollars and not exceeding ten thousand dollars, he shall pay the sum of ten dollars; * * * if the amount of such orders or contracts exceeds two hundred thousand dollars, two hundred and fifty dollars; and when such contractor shall have obtained a license for any year for which he has paid a license tax of less than the maximum above prescribed he shall not accept any contract or contracts during such year, the aggregate amount of which exceeds the maximum amount for which his license was obtained, unless and until he shall have paid such additional sum as will make the total license tax paid by him for that year sufficient to cover the aggregate amount of such contract or contracts as prescribed above; and unless he pays such additional sum he shall be deemed to be acting without a license. The payment of the license in one county in the state, as evidenced by the license or official certificate of the probate judge, shall be sufficient.' [Emphasis supplied.]- It is to be noted that § 496 was amended on September 17, 1953 (Act No. 749, Acts 1953, Vol. II, p. 1012), after the license here involved became due and payable. The amendment added the following phrase after the word 'ascertained' in the third sentence, viz.: 'on the basis of the gross amount of all orders or contracts accepted, exclusive of orders or contracts pertaining to state or county road and bridge projects.' The amendment is not applicable here.

We think a fair and reasonable interpretation of § 496, when...