State v. Burchfield Bros.

• Citation: 99 So. 198,211 Ala. 30
• Decision Date: 07 February 1924
• Docket Number: 6 Div. 929.
• Parties: STATE ET AL. v. BURCHFIELD BROS.
• Court: Supreme Court of Alabama

99 So. 198

211 Ala. 30

STATE ET AL. v. BURCHFIELD BROS.

6 Div. 929.

Supreme Court of Alabama

February 7, 1924

Appeal from Circuit Court, Tuscaloosa County; Henry B. Foster Judge.

Appeal to the circuit court by the State of Alabama and Tuscaloosa county from the assessment for taxation by the board of revenue of the property of Burchfield Bros., a partnership. From the judgment, the state and county appeal. Affirmed.

Harwell G. Davis, Atty. Gen., and O. B. Cornelius, Asst. Atty. Gen for appellants.

Brown &amp Ward, of Tuscaloosa, and Rushton, Crenshaw & Rushton, of Montgomery, for appellee.

THOMAS J.

The appeal is by the state.

The question pertains to the collection of the state's revenues. The trial was before the court, without a jury. The facts on which the case was tried were agreed upon by counsel.

In Ex parte State, 206 Ala. 575, 90 So. 896, the respective taxable interests in personal property in which the vendor retains a conditional title were declared. Acts 1919, p. 283, § 2.

In State v. Seals Piano Co., 209 Ala. 93, 95 So. 451, it is declared that-

"When the title to some substantial interest in property is vested in one person, and the general title in another, the interests are taxable separately. Ashe-Carson Co. v. State, 138 Ala. 108, 35 So. 38. The act is entirely clear to the effect that no stock of goods, wares, and merchandise is to be assessed for taxation at less than the capital actually employed in the business. *** We do not understand that the amount of capital assessed to appellee included anticipated profits."

And capital actually employed in that business-the business of such conditional sales contracts-is there defined to be "that part of the assets of the company, including profits already earned (if reinvested), which, at the period of assessment, is used by it in the conduct of its business for the purpose of deriving profit therefrom," and it was held that "the company's interest in outstanding lease-sale contracts at the time of the assessment under review was capital within the purview of section 5, supra." This element of taxable property not exempt was differentiated from solvent credits as such that were exempt by the statute as follows:

"Being at once solvent credit and capital actually employed in business, it appears from the plain language of the revenue act that, while not in general taxable as solvent credit, in the particular circumstances indicated by subsection (d) of section 5 the value of such outstanding interest must be assessed for taxation, in effect, to the extent necessary to supply the difference, if any, between the value of the average stock of goods, wares, and merchandise on hand during the preceding year and the capital actually employed in the business."

The pertinent provisions of the statute, subsection (d) section 5, General Acts 1919 page 285, are as follows:

" All stocks of goods, wares and merchandise, the assessment to be on the average amount on hand during the preceding year, but the amount so assessed shall in no case be less than the capital actually employed in the business, and this shall include all goods, wares and merchandise kept on plantations or elsewhere, or by railroad companies or manufacturing companies, or other associations, companies or persons, for sale or to be dealt out to laborers or employees for profit, or on account of their wages, and shall include all goods, wares and merchandise offered for sale by any person commencing business subsequently to the first day of October of a current year, but in such case the tax shall be apportioned according to the date at which the business was commenced, so that if commenced after the first day of January, the tax shall be three-fourths of the tax for the whole year; if commenced after the first day of April the tax shall be one-half of the tax for the whole year; provided that the assessment herein provided for shall not include products raised on the farms in the hands of the original producers. If the person, association or corporation carrying on such business shall fail to make return of the amount of stock as provided by law, or if the county tax assessor is not satisfied with the return made, in order to make proper assessment, he shall have the right to demand a copy of the last inventory made of such stock of goods, and may also by inquiry of persons believed to have knowledge of the subjects, obtain information as to the probable average amount of such stock, and from such information may assess the same upon his best judgment." (Italics supplied.)

Section 2. of the act supra, among other things, exempts:

"All bonds of the United States and of this state, *** all mortgages, together with the notes, debts and credits secured thereby on real and personal property situated in this State which mortgages have been filed for record and the privilege tax paid thereon; all money on deposit in any bank or banking institution in this State and all solvent credits." (Italics supplied.)

The quæere may be made, under this tax statute (that is, strictly construed against the taxing power, State v. Roden Coal Co., 197 Ala. 407; 73 South, 5.): Are the words "capital actually employed in the business" the equivalent of the words "net worth of the business," if effect be given to the plain intent of the statute when considered as a whole? State v. Seals Piano Co., 209 Ala. 93, 95 So. 451; Sunflower Lbr. Co. v. Turner Supply Co., 158 Ala. 191, 48 So. 510, 132 Am. St. Rep. 20; Mutual Life Ins. Co. v. Allen, 166 Ala. 159, 51 So. 877. They are not.

These words ("capital actually employed") were used in subsection (d), section 5, of the statute, supra, in their natural and ordinary signification and in the generally accepted sense. They have application to all of the properties and moneys set apart from other uses and invested or employed in the operation of the business with a view to income or profit therefrom. Bailey v. Clark, 21 Wall. (88 U. S.) 284, 22 L.Ed. 651; Terre Haute & I. R. Co. v. State, 159 Ind. 438, 65 N.E. 401, 404, 408. It follows that the respective withdrawals from the business by the two Burchfields, aggregating the sum of $101,000, are held not to be capital actually employed in said business within the statute construed.

In one of the briefs of appellees' counsel is the admission that under the Seals Piano Co. Case, supra, solvent credits (though generally exempt from taxation) "can be taxed to some extent, provided the cash actually employed in the business of a concern is in excess of the average amount of stock on hand in such business." They, however, ask a reconsideration of the decision rendered in the Seals Piano Co. Case, to the end, as they say, that "full force and effect" be given to "all of the provisions and subsections of the revenue act of 1919," under the maxim ut res magis valeat quam pereat-that the thing may rather have effect than be destroyed. Simonds v. Walker, 100 Mass. 113; National P. Bank v. Lougee, 108 Mass. 373, 11 Am. Rep. 367. It is a rule of statutory construction that if two provisions of a statute are in conflict-inconsistent and irreconcilable-the legislative intent must be found, if possible, from the whole act, considering its history, nature, purpose, etc., and having in mind that such statutes are construed in favor of the taxpayer. Southerland's Stat. Const. §§ 364, 441. If the conflict is irreconcilable and not to be determined by other rules that obtain, the statutory rule-as to the last legislative expression-may be resorted to. 6 Ann. Cas. 860; 19 Ann. Cas.

149; 25 R. C. L. 1011. Though, this rule is not often resorted to since...