State Tax Commission v. Tennessee Coal, Iron & R. Co.

• Decision Date: 16 June 1921
• Docket Number: 6 Div. 393
• Citation: 89 So. 179,206 Ala. 355
• Parties: STATE TAX COMMISSION v. TENNESSEE COAL, IRON & R. CO. et al.
• Court: Alabama Supreme Court

89 So. 179

206 Ala. 355

STATE TAX COMMISSION v. TENNESSEE COAL, IRON & R. CO. et al.

6 Div. 393

Supreme Court of Alabama

June 16, 1921

Rehearing Denied July 8, 1921

Appeal from Circuit Court, Jefferson County; Richard Evans, Judge.

Application by the State Tax Commission for mandamus, directed to the Tennessee Coal, Iron & Railroad Company and its governing officers, to compel them to submit certain books, papers, and other documents to the State Tax Commission or its duly authorized agents. From a decree sustaining demurrers to the petition, petitioners appeal. Reversed, rendered, and remanded.

Gardner and Sayre, JJ., dissenting.

The fact that duces tecum was broader than it should have been does not relieve the parties from responding thereto or from the contempt for failure to do so.

The petition was filed by the members of the State Tax Commission in their official capacity and by the State Tax Commission asserting that the Commission or the officials thereof required information which would be disclosed by the books records and documents in the possession and control of the corporation and the individual respondent as officers thereof, which information was necessary and material for the petitions to have in order to the proper performance of their duties as commissioners under the act approved September 15 1919 (Laws 1919, p. 282). The petitioners based their right upon certain specific provisions of the act, and assert that mandamus is necessary in order to obtain the information and for the procurement of and inspection of said books documents and records, or that if they are mistaken in this they are entitled to proceed under certain provisions of the act itself against the individual respondents as officers of the corporation as provided by section 148 of the act. Petition avers in substance that the respondent corporation is engaged in the business of mining coal and iron ore and manufacturing and selling the same and the products thereof; manufacturing steel and the products thereof; owning lands and interest in lands for that purpose amounting to 170,000 acres containing coal, iron ore, and other minerals, and that the corporation is actively operating its mines on a very large scale, and that its manufacturing establishment consists of furnaces rolling mills, mines, quarries, and other manufacturing establishments of various kinds, together with the machinery and ordinary appliances used in such business, all of great value, to wit, from $30,000,000 to $50,000,000, on which the corporation is liable to taxation by the state, not only on the value of such physical properties, but for a franchise tax, based on the actual amount of capital employed by it in the state and on all goods, wares, stocks, and merchandise and also for tonnage tax on coal and iron per ton mined by it for each preceding month.

The petition sets up two main grounds as bases for its authority and right to obtain the information sought: First, under the general and continuous duties required of it by said act, to see that proper values are obtained as a basis for taxation, that the burden of taxation be justly equalized, without discrimination throughout the state and each taxing community thereof; second, that as to the respondent corporation upon its listed return of items of property for taxation, made to the tax assessor of Jefferson county, the local board of tax adjusters of said county made a preliminary or provisional assessment on values estimated by them, without sufficient or accurate knowledge of such values having been first obtained, and that, acting under the authority of the statute, the State Tax Commission has set aside and annulled such provisional assessment as authorized by said act, having previously thereto made request of respondent corporation for permission to inspect and examine its books, which request was denied, and that thereafter such Tax Commission proceeded to take the necessary lawful steps to procure said information by the issuance of a subpoena duces tecum, regularly issued and served upon said corporation and its said officers, to produce before it, at its office in the city of Montgomery, on November 16, 1921, certain books, documents, and records, specifically set forth in each separate paragraph of each said subpoena duces tecum (copy of which is attached later) as authority for requiring the production and inspection of these books, papers, and records, petitioners refer to sections 138, 148, 21, and 417 of said act particularly, and also refer to the act as a whole. The petition also sets up by a statement of facts that access to the books and records kept and used by respondent in the conduct of its manifold business is necessary to the ascertainment of the facts and elements of value which enter in to the assessment of taxes on the respondent in Jefferson county. All of which is verified by the oath of petitioner.

The subpoena of duces tecum is as follows:

"The following described books, documents, records, and papers which are in his custody and control as Treasurer of Tennessee Coal, Iron & Railroad Company:

"(1) All ledgers, general and subsidiary, all journals, voucher books and cashbooks, and all subsidiary books and vouchers necessary to explain entries in such ledgers, journals, voucher books and cashbooks.

"(2) All trial balance and balance sheet books, or all trial balance and balance sheets, showing the assets and liabilities of the company at the end of the year 1918 and 1919, or at the end of each fiscal year ended in 1918 and 1919.

"(3) Stock ledgers and stubs of stock certificate book, and minute books containing reports and statements made to stockholders and directors, and copies of all such reports and statements made during years 1919 and 1920, if not recorded in minute book.

"(4) Copies of income and excess profits statements rendered the federal government in so far as such statements relate to invested capital and valuation of property for allowance of depreciation and depletion.

"(5) Copies of all inventories of merchandise and material at the close of the year 1919, or the fiscal year ended in 1919.

"(6) All insurance policies in force on October 1, 1919.

"(7) Copies of all statements of condition as reported to the commercial agencies, such as R.G. Dun, Bradstreet's Commercial Agency, etc., and all such statements as rendered to any bank or banker, or to any other person or firm as a basis for credit.

"(8) All books showing land values, including evidence of such values as engineers' reports, and other reports of like character, and also reports or statements made by the company on which capitalization was based or issues of bonds were made.

"(9) Any other books, papers or records to be found in the possession of the company which it might develop from examining the above-mentioned records would afford information touching the capital employed by the company in Alabama, or touching the valuation of any of the tangible property of the company."

The demurrers interposed were as follows:

"(1) It does not appear with sufficient certainty from the petition or the rule granted pursuant thereto, in connection with what proceeding or controversy before the plaintiffs it is sought to require them by mandamus to produce the books and documents of defendant company before plaintiffs or before this court or to permit officers or agents of plaintiff to have access to defendant company's books and documents, nor in connection with which it is sought to attach the individual defendants for failing to obey the mandate of the subpoena set forth in the petition.

"(2) It does not appear with sufficient certainty what books or documents it was sought to require these defendants to produce before the State Tax Commission in Montgomery.

"(3) It does not appear with sufficient certainty what books and records it is which plaintiffs ask the court to direct the production of, or to permit plaintiffs' officers or agents to have access to.

"(4) It does not appear with sufficient certainty what it is that it is sought by the petition to compel these defendants to do.

"(5) It does not sufficiently appear that the individual defendants are in any sort of default for declining to obey the mandate of the subpoena set forth in the petition.

"(6) It appears that the plaintiffs set aside the assessment of the defendant company's property, and it does not appear that there was any legal ground for so doing.

"(7) The plaintiffs have no right or power to compel the production by these defendants before this court of defendant company's books and records, or to compel these defendants to submit such books and records to an examination at the instance of plaintiffs in connection with a revaluation or reassessment of defendant company's property by them, in that the power attempted to be given the State Tax Commission to make such revaluation and reassessment by the Revenue Act of 1919 is unconstitutional, in that it is an attempt to confer on plaintiffs the right to deprive persons whose property is subject to taxation of that property without due process of law, contrary to the inhibitions of the Fourteenth Amendment to the federal Constitution.

"(8) No right to any relief against these defendants is shown.

"(9) It does not appear that there is any controversy between the plaintiffs and the defendant company with reference to the amount of the franchise tax of the defendant company, and in the absence of such controversy the production sought of the defendant company's books and documents under the power of the plaintiffs to fix such franchise tax would constitute an unreasonable search and seizure of defendant company's books and documents.

"(10) In so far as the production of defendant

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