State v. Bradley

• Decision Date: 30 June 1922
• Docket Number: 6 Div. 500.
• Citation: 93 So. 595,207 Ala. 677
• Parties: STATE v. BRADLEY.
• Court: Alabama Supreme Court

93 So. 595

207 Ala. 677

STATE v. BRADLEY.

6 Div. 500.

Supreme Court of Alabama

June 30, 1922

Appeal from Circuit Court, Jefferson County; C. B. Smith, Judge.

Action by the State of Alabama against Lee C. Bradley, as receiver of Birmingham Railway, Light & Power Company, to recover franchise taxes and penalties. From a judgment sustaining defendant's demurrers to the complaint, the plaintiff suffers nonsuit and appeals. Reversed and remanded.

Harwell G. Davis, Atty. Gen., and Henry P. White, of Alexander City for appellant.

Tillman Bradley & Baldwin, of Birmingham, for appellee.

McCLELLAN J.

The state of Alabama sued, in assumpsit, Lee C. Bradley, as receiver of the Birmingham Railway, Light & Power Company, a domestic corporation, to recover the amount of "franchise taxes" incepting and accruing pending the receivership for the calendar years 1920 and 1921, with statutory penalties for defaults in payment beyond 30 days after January 1st of the respective calendar years 1920 and 1921. The complaint avers that during those years the corporation was and continues to be an existing corporation with a paid-up capital stock of $7,400,000. Defendant's demurrer being sustained to the entire complaint, the state suffered nonsuit, and appeals.

The receivership was created by the District Court of the United States, sitting for the Northern district of Alabama.

The appointment of the receiver did not dissolve the corporation. Railroad Commission v. Alabama Great Southern R Co., 185 Ala. 354, 359, 64 So. 13, L. R. A. 1915D, 98.

A receiver appointed by a District Court of the United States may be sued without previous permission of the court making the appointment. His liability in the particular action is, of course, another matter.

"Actions against the receiver are in law actions against the receivership, or the funds in the hands of the receiver, and his *** liabilities are official and not personal, and judgments against him as receiver are payable only from the funds in his hands." McNulta v. Lockridge, 141 U.S. 327, 332, 12 S.Ct. 11, 13 (35 L.Ed. 796).

Since under this complaint the only judgment possible to enter must be against the estate of the corporation, the subject of the receivership, for a liability of the corporation, not against the receiver personally in any event, the grounds of demurrer taking the objection that the state's annual franchise tax is not imposed upon a receiver eo nomine of a corporation, or upon a corporation in the hands of a receiver, are without merit. To conclude otherwise would involve sanction of the proposition that, though imposed by Constitution and statute upon all domestic corporations (not excepted), a "franchise tax" might be avoided by the creation of a receivership.

It is the manifest duty of a receiver of an existing domestic corporation to satisfy out of the funds in the receiver's hands all valid taxes or governmental impositions in that nature imposed by the corporation's creator that would have been demandable of the corporation had the receivership not been created. In re U.S. Car Co., 60 N. J. Eq. 514, 516, 517, 43 A. 673.

By section 229 of the 1901 Constitution of Alabama it is provided:

"The Legislature shall, by general law, provide for the payment to the state of Alabama of a franchise tax by corporations organized under the laws of this state, which shall be in proportion to the amount of capital stock; but strictly benevolent, educational, or religious corporations shall not be required to pay such a tax."

This provision is mandatory; and the Legislature has conformed to the mandate thereby given. State ex rel. v. Elba Bank & Trust Co. (Ala. App.) 91 So. 917. The Legislature has fixed the tax-periods for which the "franchise tax" shall be paid. It has established the rate of the "franchise tax" upon the Constitution's basis of "capital stock." It has prescribed the occasion, and the official receiptor, of the payment of the "franchise tax," and determined the circumstances under which delinquency and default in payment occur. The Constitution of 1901 (section 229, quoted ante) and the laws of Alabama impose "franchise taxes" upon all existing domestic corporations, aside from exceptions of classes of which this corporation is not a member. Given the existence of a domestic corporation, the rate and tax period being prescribed by law as has been done, the only possible inquiry is the amount of the paid-up capital stock of the corporation. No assessment of the charge or imposition of this "franchise tax" is required or even possible under the laws, organic and statutory, of this state. Assessment, for purpose of taxation-a quasi judicial act-was defined in Perry County v. R. R. Co., 58 Ala. 552, as consisting of a listing and an appraisal of the value of the items of property listed. Neither of these acts is requisite to the imposition or exaction of a "franchise tax" on domestic corporations; the laws of the state themselves effecting to impose the charge and exact its payment in expressly stipulated circumstances. The ascertainment, in a concrete case, of the monetary measure of the "franchise tax" imposed and demandable, upon the basis of the domestic corporation's paid-up capital stock, is not a judicial, but a ministerial, act of the governmental authority charged with the duty of performing that service. Grider v. Tally, 77 Ala. 422, 424-426, 54 Am. Rep. 65.

A duty "is ministerial when the law exacting

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