State v. Alabama Fuel & Iron Co.

Decision Date25 July 1914
Docket Number900
Citation66 So. 169,188 Ala. 487
PartiesSTATE v. ALABAMA FUEL & IRON CO.
CourtAlabama Supreme Court

Appeal from City Court of Birmingham; John H. Miller, Chas. W Ferguson, H.A. Sharpe, and Jno. C. Pugh, Judges.

Action by the State of Alabama against the Alabama Fuel & Iron Company. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Anderson C.J., dissenting.

This is an appeal by the state of Alabama from a judgment of the city court of Birmingham dismissing an assessment levied against the defendant for escaped taxes for the tax year beginning October 1, 1913. The proceedings were instituted by the tax commissioner of Jefferson county, Ala., who reported an assessment of escaped taxes to the board of revenue of Jefferson county, Ala., against the Alabama Fuel & Iron Company, upon the latter's solvent credits owned on October 1, 1913, and valued at $45,000.

The proceedings were instituted under section 2260 and section 2151 of the Code of 1907. The case was heard, by consent, by the board of revenue, and the assessment confirmed. The defendant appealed to the city court of Birmingham, and in that court the state filed a statement or declaration setting up the proceedings before the tax commissioner and board of revenue, and asserting that the assessment was correct. The defendant demurred to the declaration or statement filed by the state, on the ground that solvent credits are not subject to assessment under the present laws of the state, upon the theory that paragraph "I" of subdivision 7 of section 2082 of the Code of 1907 is unconstitutional and void, upon the authority of Barnes v. Moragne, 145 Ala. 313, 41 So. 947.

Paragraph "I" of subdivision 7 of section 2082 of the Code of 1907, and above referred to, is as follows: "All money lent, solvent credits, or credits of value, except such as are secured by mortgage, deed of trust, or written contract of conditional sale, upon which a tax imposed by law has been paid."

No other point or question of procedure, jurisdiction, or description, was presented by the demurrer, which was sustained by the city court. The state of Alabama declined to amend, and judgment was rendered for the defendant. From that judgment the state appeals, and assigns as error the judgment of the court below, sustaining the demurrer to the declaration.

The amount of the tax involved, based upon an assessment of $45,000, and estimated on the basis of $2.35, that being the combined state, county, and municipal rate, exceeds $1,000. The appeal is, accordingly, returnable to the Supreme Court.

Forney Johnston, of Birmingham, for the State.

The power of the Legislature over all matters is plenary and unlimited, except as expressly restricted by the state and federal Constitutions. This applies to every method of taxation, whether upon an ad valorem or other revenue basis or upon privileges or occupations. Hare v. Kennerly, 83 Ala. 608, 3 So. 683; State v. Street, 117 Ala 203, 23 So. 807; W.U. Telegraph Co. v. State Board, 80 Ala. 273, 60 Am.Rep. 99; M. & S.H.R.R. Co. v Kennerly, 74 Ala. 566; Moog v. Randolph, 77 Ala. 597; State v. Skeggs, 154 Ala. 249, 46 So. 268; Swann & Billups v. Kidd, 79 Ala. 431; Auditor v. Jackson County, 65 Ala. 142; State v. Birmingham Southern R.R. Co., 62 So. 77; Capital City Water Co. v. Board of Revenue, 117 Ala. 303, 23 So. 970; Mefford v. Sheffield, 148 Ala. 543, 41 So. 970; Alabama Gold Life Ins. Co. v. Lott, 54 Ala. 499; People v. Ronner, 185 N.Y. 285, 77 N.E. 1061; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 Sup.Ct. 431, 46 L.Ed. 679; W.W. Cargill v. Minnesota, 180 U.S. 452, 21 Sup.Ct. 423, 45 L.Ed. 619; Cook v. Marshall Co., 196 U.S. 268, 25 Sup.Ct.

233, 49 L.Ed. 473; Armour Pkg. Co. v. Lacy, 200 U.S. 226, 26 Sup.Ct. 232, 50 L.Ed. 451; Southwestern Oil Co. v. Texas, 217 U.S. 114, 30 Sup.Ct. 496, 54 L.Ed. 688.

The provisions of the Alabama Constitution do not require equality or uniformity, nor that taxes should be levied either in proportion to value or at the same rate; the exception being that property declared to be the subject for annual ad valorem taxes must be assessed in proportion to value. Hooper v. State, 141 Ala. 111, 37 So. 662; W.U. Telegraph Co. v. Board, 80 Ala. 273, 60 Am.Rep. 99; Phoenix, etc., Co. v. Montgomery, 117 Ala. 646, 23 So. 843, 42 L.R.A. 468; Kidd v. Alabama, 188 U.S. 730, 23 Sup.Ct. 401, 47 L.Ed. 669; Sturges v. Carter, 114 U.S. 511, 5 Sup.Ct. 1014, 29 L.Ed. 240; Moog v. Randolph, 77 Ala. 597; Common Council of Detroit v. Rentz, 91 Mich. 78, 51 N.W. 787, 16 L.R.A. 59; Southwestern Oil Co. v. Texas, 217 U.S. 114, 30 Sup.Ct. 496, 54 L.Ed. 688; New York ex rel. Hatch v. Reardon, 204 U.S. 152, 27 Sup.Ct. 188, 51 L.Ed. 415, 9 Ann.Cas. 736; Ala. Gold Life Ins. Co. v. Lott, 54 Ala. 499, 507; 37 Cyc. 728; State v. Trav. Ins. Co., 73 Conn. 255, 47 A. 299, 57 L.R.A. 481; State v. Birmingham So. R.R. Co., 62 So. 77.

Neither section 211, Constitution of Alabama, nor the provisions of the fourteenth amendment, or the "pursuit of happiness" clause of the state Constitution, requires equality of taxation. On the contrary, the courts declare that exact equality is unattainable and undesirable, and, further, that horizontal levies would be oppressive. Mich. Cent. R.R. Co. v. Powers, 201 U.S. 245, 26 Sup.Ct. 459, 50 L.Ed. 744; State of N.Y. ex rel. Hatch v. Reardon, 204 U.S. 152, 27 Sup.Ct. 188, 51 L.Ed. 415, 9 Ann.Cas. 736; People v. Ronner, 185 N.Y. 285, 77 N.E. 1061; Hooper v. State, 141 Ala. 111, 37 So. 662; State Bank v. Board of Revenue, 91 Ala. 217, 8 So. 852; Common Council of Detroit v. Rentz, 91 Mich. 78, 51 N.W. 787, 16 L.R.A. 59; Moog v. Randolph, 77 Ala. 597.

The Legislature has the power to exempt any class or item of property from taxation, and to declare what property shall be the subject of ad valorem or annual property taxes, and, as distinguished from ad valorem taxes, to provide that any class of property or thing of value shall be subjected to a revenue tax levied upon a flat basis, or upon any rate which may be determined by the Legislature; section 211 applying only to ad valorem or property taxes, and not to special or registration or license taxes, even when levied for revenue. 37 Cyc. 735, 736; Bidwell v. Coleman, 11 Minn. 78 (Gil. 45); Daughdrill v. Ala. Life Ins. Co., 31 Ala. 91; State v. Birmingham Southern R.R. Co., 62 So. 77; W.U. Telegraph Co. v. Board, 80 Ala. 273, 60 Am.Rep. 99; Phoenix, etc., Co. v. Montgomery, 117 Ala. 631, 23 So. 843, 42 L.R.A. 468; Clark v. Port of Mobile, 67 Ala. 217; City Council of Montgomery, Ex parte, 64 Ala. 464; Hooper v. State, 141 Ala. 111, 37 So. 662; State Bank v. Board of Revenue, 91 Ala. 223, 8 So. 852; N.Y. ex rel. Hatch v. Reardon, 204 U.S. 152, 27 Sup.Ct. 188, 51 L.Ed. 415, 9 Ann.Cas. 736; Mich. Cent. R.R. Co. v. Powers, 201 U.S. 245, 26 Sup.Ct. 459, 50 L.Ed. 744; Nicol v. Ames, 173 U.S. 509, 19 Sup.Ct. 522, 43 L.Ed. 786; Otis v. Parker, 187 U.S. 606, 23 Sup.Ct. 168, 47 L.Ed. 323; W.W. Cargill v. Minnesota, 180 U.S. 452, 21 Sup.Ct. 423, 45 L.Ed. 619; Cook v. Marshall Co., 196 U.S. 268, 25 Sup.Ct. 233, 49 L.Ed. 473; Armour Pkg. Co. v. Lacy, 200 U.S. 226, 26 Sup.Ct. 232, 50 L.Ed. 451; Southwestern Oil Co. v. Texas, 217 U.S. 114, 30 Sup.Ct. 496, 54 L.Ed. 688; Home Life Ins. Co. v. N.Y., 134 U.S. 594, 10 Sup.Ct. 593, 33 L.Ed. 1025; Wisconsin Cent. Ry. Co. v. Taylor County, 52 Wis. 37, 8 N.W. 833; Chicago & N.W. v. State, 128 Wis. 553, 108 N.W. 561; Clement Nat. Bank v. Vermont, 231 U.S. 120, 34 Sup.Ct. 31, 58 L.Ed. 147; Kidd v. State, 188 U.S. 730, 23 Sup.Ct. 401, 47 L.Ed. 669; Moog v. Randolph, 77 Ala. 597; Mobile v. Stonewall Ins. Co., 53 Ala. 570.

The power to classify is necessary to avoid oppressive results, and is subject only to the limitations imposed by the state and federal Constitutions. These limitations prohibit only those classifications which can be supported on no rational hypothesis. W.W. Cargill v. Minnesota, 180 U.S. 452, 21 Sup.Ct. 423, 45 L.Ed. 619; Cook v. Marshall County, 196 U.S. 268, 25 Sup.Ct. 233, 49 L.Ed. 473; Armour Pkg. Co. v. Lacy, 200 U.S. 226, 26 Sup.Ct. 232, 50 L.Ed. 451; Am. Sugar Ref. Co. v. Louisiana, 179 U.S. 89, 21 Sup.Ct. 43, 45 L.Ed. 102; Southwestern Oil Co. v. Texas, 217 U.S. 114, 30 Sup.Ct. 496, 54 L.Ed. 688; People v. Ronner, 185 N.Y. 285, 77 N.E. 1061; Mutual Benefit, etc., v. Martin County, 104 Minn. 179, 116 N.W. 572; Hooper v. State, 141 Ala. 111, 37 So. 662; State Bank v. Board of Revenue, 91 Ala. 217, 8 So. 852; Clement Nat. Bank v. Vermont, 231 U.S. 120, 34 Sup.Ct. 31, 58 L.Ed. 147; Kennamer v. State, 150 Ala. 74, 43 So. 482; Griffith v. Connecticut, 218 U.S. 563, 31 Sup.Ct. 132, 54 L.Ed. 1151; Mutual Loan Co. v. Martell, 222 U.S. 225, 32 Sup.Ct. 74, 56 L.Ed. 175, Ann.Cas.1913B, 529; Moog v. Randolph, 77 Ala. 597; Pocahontas Consol. Collieries Co. v. Commonwealth, 113 Va. 108, 73 S.E. 446; W.U. Telegraph Co. v. Board, 80 Ala. 273, 60 Am.Rep. 99; Mefford v. Sheffield, 148 Ala. 539, 41 So. 970; Ala. Consol. v. Herzberg, 177 Ala. 248, 59 So. 305; 37 Cyc. 746; Mark v. D.C., 37 App.D.C.

563, 37 L.R.A. (N.S.) 440; Farmers' & Mechanics' Savings Bank v. Minnesota, 232 U.S. 516, 34 Sup.Ct. 354, 58 L.Ed. 706; Mobile v. Dargan, 45 Ala. 310.

A classification will be sustained, not only when based on an inherent natural distinction, but where it is expedient for the state to make distinctions, based on considerations of public policy, or expediency, or adaptibility to the method or object involved. Mutual Benefit, etc., Co. v. Martin County, 104 Minn. 179, 116 N.W. 572; State ex rel. v. Fitzgerald, 117 Minn. 195, 134 N.W. 728; People v. Ronner, 185 N.Y. 285, 77 N.E. 1061; Mich. Cent. R. Co. v. Powers, 201 U.S. 245, 293, 26 Sup.Ct. 459, 50 L.Ed. 744, 761; Otis v. Parker, 187 U.S. 606, 23 Sup.Ct. 168, 47 L.Ed. 323...

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