State v. Birmingham Southern R. Co.

• Decision Date: 14 February 1913
• Citation: 62 So. 77,182 Ala. 475
• Parties: STATE v. BIRMINGHAM SOUTHERN R. CO.
• Court: Alabama Supreme Court

62 So. 77

182 Ala. 475

STATE v. BIRMINGHAM SOUTHERN R. CO.

Supreme Court of Alabama

February 14, 1913

On Rehearing, March 24, 1913

Appeal from City Court of Birmingham; C.C. Nesmith, Judge.

In the matter of the Birmingham Southern Railroad Company. The Railway Company returned its property to the Board of Assessment, whereupon the board raised the assessment, and the Railway Company appealed to the Birmingham City Court. From a judgment sustaining demurrers to counts filed by the State, the State appeals. Affirmed.

Mayfield and Sayre, JJ., dissenting on rehearing.

R.C Brickell, Atty. Gen., W.L. Martin, Asst. Atty. Gen., R.B Evins, of Greensboro, and Stallings & Drennen, of Birmingham for the State.

Percy, Benners & Burr, of Birmingham, for appellee.

SOMERVILLE J.

To quote from the brief of counsel for appellant: "The question at issue is whether the Legislature has the right, under the provisions of the Constitution of this state, to fix by enactment the taxes on taxable property at 60 per cent. of the real value, as was attempted to be done by section 36A, p. 185, of the acts of the Legislature of 1911." The language of that section is: "The taxable property within this state shall be assessed, for the purpose of taxation, at sixty per cent. of its fair and reasonable cash value." The constitutionality of this provision must be considered in the light of the following well-established principles:

(1) The power of taxation is an incident of sovereignty and is possessed by the government without being expressly conferred by the people.

(2) The power is purely legislative.

(3) So long as no constitutional limitations are exceeded, the Legislature is of supreme authority, and the courts, as well as all others, must obey. Schultes v. Eberly, 82 Ala. 242, 243, 2 So. 345; Hare v. Kennerly, 83 Ala. 608, 3 So. 683; Phoenix Carpet Co. v. State, 118 Ala. 143, 151, 22 So. 627, 72 Am.St.Rep. 143; 1 Cooley on Constitutional Limitations, pp. 7, 9, 49.

If the legislative provision in question is unconstitutional, it must be because it is repugnant to one or more of the following sections of the state Constitution:

Section 211: "All taxes levied on property in this state shall be assessed in exact proportion to the value of such property, but no tax shall be assessed upon any debt for rent or hire of real or personal property, while owned by the landlord or hirer during the current year of such rental or hire, if such real or personal property be assessed at its full value."

Section 214: "The Legislature shall not have the power to levy in any one year a greater rate of taxation than sixty-five one-hundredths of one per centum on the value of the taxable property within this state."

Section 260: "The income arising from the sixteenth section trust fund, etc., etc., together with a special annual tax of thirty cents on each one hundred dollars of taxable property, *** which the Legislature shall levy, shall be applied to the support and maintenance of the public schools: *** Provided, that nothing herein contained shall be so construed as to authorize the Legislature to levy in any one year a greater rate of state taxation for all purposes, including schools, than sixty-five cents on each one hundred dollars' worth of taxable property. ***"

Section 181 (prescribing who shall be qualified to register as electors, and including): "The owner in good faith in his own right, or the husband of any woman who is the owner in good faith, in her own right, *** of real estate situate in this state, assessed for taxation at the value of three hundred dollars or more, or ***" (repeating the same conditions as to personal property).

Section 211 of the present Constitution had its origin in a provision first found in the Constitution of 1819: "All lands liable to taxation in this state, shall be taxed in proportion to their value." This rule, preserved in all succeeding Constitutions, was extended to personal property and incorporated in the Constitution of 1868 in the following language: "All taxes, levied on property in this state, shall be assessed in exact proportion to the value of such property." And so it has been preserved unchanged in the two succeeding Constitutions of 1875 and 1901. The purpose and scope of this constitutional limitation upon the taxing power has been frequently considered by this court, and the substance of our decisions is that it was designed to secure uniformity and equality by the enforcement of an ad valorem system of taxation and to prohibit arbitrary or capricious modes of taxation without regard to value. Moog v. Randolph, 77 Ala. 597, 602; W.U. Tel. Co. v. State Board, etc., 80 Ala. 273, 275, 60 Am.Rep. 99; Assessment Board v. A.C.R.R. Co., 59 Ala. 551; Mayor of Mobile v. Stonewall Ins. Co., 53 Ala. 570. This does not mean that all property must be taxed. Moog v. Randolph, supra; State Bank v. Board of Revenue, 91 Ala. 217, 223, 8 So. 852. Nor does it prohibit exemptions from taxation or such classifications of property as are not purely arbitrary, capricious, or without the semblance of reason. Moog v. Randolph, supra. It does, however, prohibit the Legislature from prescribing or declaring an arbitrary or artificial value of the property of individuals or corporations, and assessing taxes on such valuation. Assessment Board v. A.C.R.R. Co., supra. It is perfectly clear that there is nothing expressed or implied in the language of this limitation which prohibits the Legislature from fixing as a basis for taxation any percentage of the actual value of property, whether greater or less than 100 per cent. thereof, provided only that such rule is applied without discrimination to all property of the same nature.

It is equally clear, however, that section 214, which limits the rate of taxation to .65 of 1 per centum on the value of taxable property, does, by necessary implication, forbid a legislative basis of assessment in excess of 100 per cent. of the value of the property, for otherwise the express limitation on the rate might be made wholly ineffectual by the simple legislative device of an excessive valuation of the property.

The Supreme Court of Illinois has given very thorough consideration to this subject. Under a constitutional provision that all persons should pay a tax in proportion to the value of their property, the Legislature enacted a statute requiring assessors to ascertain and set down the fair cash value of property and to apportion and compute all taxes upon one-fifth of such valuation. The statute was held not violative of the Constitution, and the court said: "But it is urged by counsel for appellants that the word 'value,' used in the Constitution, must mean actual value; that any attempt of the Legislature to direct assessing officers to take one-fifth of such value as the assessed value is void; and that, inasmuch as the statute provides for a determination of such actual value, it must be held to be a basis of the limitation. The central and dominant idea of the Constitution in the assessment of property for taxation and in the payment of taxes is uniformity and equality; but we find no provision which prevents the Legislature from fixing the assessed value at less than full value. Justice and uniformity between taxpayers may be as well secured by a proportionate basis, and, while the value cannot be fixed by the Legislature, it is within the legislative power to enforce the provision for uniformity by any proportional rule. Assessors had always assessed property at a part only of the full value, and we see no reason why the Legislature may not prevent the varying methods by which property was assessed unequally between different counties and municipalities of the state by enforcing a fixed and uniform rule. So long as the correct proportion between the different subjects of taxation is maintained, there is no language of the Constitution which limits the legislative power to prescribe a basis for the action of the assessors." City of Chicago v. Fishburn, 189 Ill. 367, 377, 59 N.E. 791, 793.

Similar legislation under similar provisions of the Constitutions of Tennessee, Nebraska, and West Virginia has been held to be valid. Railroad & Telephone Companies v. Board of Equalizers (C.C.) 85 F. 315; State ex rel. Young v. Osborn, Assessor, 60 Neb. 415, 83 N.W. 357; C. & S. Bridge Co. v. Kanawha County Ct., 41 W.Va. 658, 24 S.E. 1005. See, also, Lively v. M., K. & T. Ry. Co., 102 Tex. 545, 120 S.W. 852. We believe that no court has ever taken a contrary view.

Our conclusion is that, so far as sections 211 and 214 of the Constitution are concerned, the Legislature may prescribe as a basis for the levy of the general state tax of .65 of 1 per centum any percentage of the actual value of taxable property which it may deem expedient, not in excess of 100 per cent. thereof.

Section 260 of the present Constitution, as quoted above, is an imperative mandate to the Legislature to levy for the support of the public schools of the state "a special annual tax of 30 cents on each $100 of taxable property," and expressly reduces the total maximum rate of .65 of 1 per centum, as fixed by section 214, to .35 of 1 per centum for all other public purposes. This constitutional mandate has been executed by the enactment of subdivision "a" of section 2082, Code of 1907, which reads: "There is hereby levied for the purposes named, upon the property hereinafter named, in lieu of all taxes heretofore levied, annual taxes as follows, to wit: (a) For the maintenance of the public schools of the state, thirty cents on each hundred dollars of the assessed valuation of taxable property; (b) *** ; (c) ***."

We agree with counsel for the state that the phrase "taxable property," as...