State v. Alabama Power Co.

• Decision Date: 19 October 1950
• Docket Number: 3 Div. 569
• Citation: 48 So.2d 445,254 Ala. 327
• Parties: STATE v. ALABAMA POWER CO.
• Court: Alabama Supreme Court

Page 445

48 So.2d 445

254 Ala. 327

STATE v. ALABAMA POWER CO.

3 Div. 569.

Supreme Court of Alabama.

Oct. 19, 1950.

A. A. Carmichael, Atty. Gen., and Gardner F. Goodwyn, Jr., M. Roland Nachman, Jr., and Neil Metcalf, Asst. Attys. Gen., for appellant.

Steiner, Crum & Baker, of Montgomery, and Martin, Turner & McWhorter, of Birmingham, for appellee. STAKELY, Justice.

This is an appeal by the State of Alabama from a decree of the equity court of Montgomery County overruling its demurrer to the bill in the nature of a bill in equity filed by the Alabama Power Company. The bill seeks relief against alleged discriminatory practices in the assessment for ad valorem taxes of the properties of the complainant. The allegations of the bill may be stated in substance as follows:

The Alabama Power Company is a corporation organized and existing under the laws of the State of Alabama, with its principal place of business at Attalla, Etowah County, Alabama. It owns property and operates a public utility in all except ten counties of the state and it owns property in one other county but does not operate a utility in that county.

As required by law the Alabama Power Company filed its return with the State Department of Revenue for the tax year of 1949. The State Department of Revenue ascertained and fixed the total value of its property in Alabama for tax purposes for such year to be $154,000,000. It then assessed the property at sixty percent of that value, thereby fixing the company's ad valorem assessment at $92,400,000. Pursuant to statutory provision the Alabama Power Company then filed its protest against the assessment with the State Department of Revenue. This protest was overruled and the State Department of Revenue then made the assessment final. From such final assessment the Alabama Power Company appealed to the Circuit Court of Montgomery County and executed an appropriate supersedeas bond.

The State Department of Revenue exercises general and complete supervision and control of the valuation, equalization and assessment of property, privilege and franchise taxes, of the collection of all taxes of every kind for the state and counties, of the enforcement of the tax laws of the state and supervision and control of all officials and boards charged with any duty in the enforcement of the tax laws, to the end that all taxable property in the State shall be assessed and taxes shall be imposed and collected thereon in compliance with the law, and that all assessments on property, privileges and franchises in the State, shall be made in exact proportion to the fair and reasonable market value thereof in substantial compliance with the law. The duties of the Department are referred to in the bill in detail.

For the tax year 1949 and for many years prior thereto the taxing authorities in Alabama have intentionally and systematically assessed the property of other taxpayers generally upon the basis of less than 40 percent of the fair and reasonable market value of their property '(except that for the tax year 1949 the Department of Revenue has assessed the property of certain railroad, public utility and other like properties upon a basis of 60 percent of their value for tax purposes)' and the Department for the tax year 1949 assessed the property of the Alabama Power Company at 60 percent of its value for tax purposes.

The bill avers that the assessment imposed on Alabama Power Company property is illegal, excessive, void and discriminatory in that it is in violation of §§ 211, 217, 6, 13 and 35 of the Constitution of Alabama and of the due process and equal protection clauses of the 14th Amendment to the Constitution of the United States.

The bill avers that the assessment so fixed against the Alabama Power Company property was the result of a systematic and intentional discrimination against it in assessing its property at a greater and greatly disproportionate percentage of the value of its property from that intentionally and systematically assessed against the property of other private corporations, associations and individuals in the state, in violation of §§ 211, 217, 6, 13 and 35 of the Constitution of Alabama and applicable statutes and of the 14th Amendment to the Constitution of the United States.

Alabama Power Company prays that the court vacate and set aside the final assessment made by the Department against its properties and fix the assessment of its properties for the tax year 1949 as provided by Code of 1940, Title 51, § 140 and in accordance with §§ 211, 217, 6, 13 and 35 of the Constitution of Alabama and of the 14th Amendment at a figure not in excess of the percentage at which other property is generally and systematically assessed in Alabama and prays for general relief.

Although a number of propositions must be considered in this case the fundamental question is whether the State Department of Revenue has the power to assess the properties of Alabama Power Company at a ratio of 60% of their taxable value when at the same time the properties of other private corporations, associations and individuals in the state are systematically and intentionally assessed at a rate not in excess of 40% of their taxable value. The State points out in brief that there is no allegation in the bill 'that appellee is assessed at a higher rate than other public utilities or that there is discrimination among assessments of public utilities.' It is further pointed out that there is no allegation in the bill 'that the total value of appellee's property is less than $154,000,000 or that $92,400,000 is in excess of 60% of the value of appellee's property.'

At the outset it is well to note that a bill in the nature of a bill in equity was filed in the Circuit Court of Montgomery County, in Equity, in accordance with procedure approved by this court. State v. Louis Pizitz Dry Goods Co., 243 Ala. 629, 11 So.2d 342; Merriwether v. State, 252 Ala. 590, 42 So.2d 465. It is also well to note that on this appeal there is no issue of fact before the court but only the sufficiency vel non of the allegations of the bill. It is of course established that in this situation the court assumes as true all facts which are well pleaded in the bill of complaint.

In view of the important part which §§ 211 and 217 of the Constitution of 1901 play in this case, we set out the pertinent part of these sections.

'Section 211. All taxes levied on property in this state shall be assessed in exact proportion to the value of such property, * * *.'

'Section 217. The property of private corporations, associations, and individuals of this state shall forever be taxed at the same rate; * * *.'

In considering and construing the foregoing sections it will be helpful to make a chronological review of the several limitations upon the taxing power of the state as adopted in prior constitutions of the state. In this connection we quote from our decision in the case of Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 86 So. 56, 59, as follows: 'A chronological review of the several limitations upon the taxing power of the state, as adopted in successive constitutions, will be found in Western Union Tel. Co. v. State Board, 80 Ala. 273, 60 Am.Rep. 99, and in Capital City Water Co. v. Board of Revenue, 117 Ala. 303, 23 So. 970. The first limitation which included personal property is found in the Constitution of 1868, art. 14 , § 1, providing that 'all taxes, levied on property in this state, shall be assessed in exact proportion to the value of such property.' This identical clause was adopted in the Constitution of 1875, art. 11, § 1, along with the new provision (article 11, § 4) that 'the General Assembly shall not have the power to levy, in any one year, a greater rate of taxation than three-fourths of one per centum on the value of the taxable property within this state.' In that Constitution also was incorporated the provision (section 6, art. 11) that 'the property of private corporations, associations, and individuals of this state shall forever be taxed at the same rate.' This clause was a substantial repetition of section 4, art. 13, of the Constitution of 1868. These several limitations on the taxing power were carried into the Constitution of 1901 in totidem verbis. * * *'

The first important case construing the forerunners of §§ 211 and 217 in the present constitution is the case of Mayor of Mobile v. Stonewall Insurance Co., 1876, 53 Ala. 570. The court said:

'The constitutional provision [Const.1868, Art. XIII, Sec. 4] * * * was intended * * * to cure defects time had developed in former constitutions--to narrow and restrain legislative power in the instances experience had shown it most liable to abuse. Under former constitutions the taxing power was not defined, qualified, or restrained by any other provision than the simple declaration: 'all lands liable to taxation in this State shall be taxed in proportion to their value.' On personal property, taxes, either specific or ad valorem, could be imposed as the legislature deemed best. Slaves, formerly the chief subject of taxable personal property, were uniformly taxed, not according to value, but a specific tax was levied, graduated by the age of the slave. On other articles of personal property, such as watches, clocks, etc., a specific, not an ad valorem tax, was imposed. The inequalities of this mode of taxation were the cause of complaint, and we find in the constitution of 1868 the provision, which has been generally introduced into the later constitutions of our sister States: 'All taxes levied on property in this State shall be assessed in exact proportion to the value of such property.' * * * No governmental power is more easily abused, or more often perverted, than the taxing power. * * * There cannot be a just interpretation--an interpretation which will consummate the intent of the people in the adoption of these and other constitutional...