Union Bank & Trust Co. v. Blan, 3 Div. 99.

• Decision Date: 26 April 1934
• Docket Number: 3 Div. 99.
• Citation: 155 So. 612,229 Ala. 180
• Court: Alabama Supreme Court
• Parties: UNION BANK & TRUST CO. v. BLAN, State Treasurer.

155 So. 612

229 Ala. 180

UNION BANK & TRUST CO. v. BLAN, State Treasurer.

3 Div. 99.

Supreme Court of Alabama

April 26, 1934

Rehearing Denied June 28, 1934.

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Action by Union Bank & Trust Company against S. H. Blan individually and as State Treasurer, to recover excise tax paid under protest. From a judgment for defendant, plaintiff appeals.

Affirmed.

BOULDIN and FOSTER, JJ., dissenting.

John S Coleman and Bradley, Baldwin, All & White, all of Birmingham for appellant.

Thos. E. Knight, Jr., Atty. Gen., and Frontis H. Moore, Asst. Atty. Gen., for appellee.

KNIGHT Justice.

The appellant, having paid under protest the excise tax levied and assessed against it on its net income for the tax year 1932, running from October 1, 1931, to September 30, 1932, for the privilege of engaging in the business of banking, and of conducting a financial business employing moneyed capital coming into competition with the business of national banks, in the state of Alabama, sued the appellee to recover back the money so paid.

This excise tax was levied and assessed against appellant upon its net income for the tax year 1932 by the state tax commission pursuant to the provisions of an act of the Legislature of Alabama approved October 22, 1932, and which carried a provision making the act effective upon its approval by the Governor. General Acts, Extra Session 1932, p. 112 (section 9).

Section 6 of the act in question reads: "Ad valorem exemptions and credits. All moneyed capital employed in the business the privilege of engaging in which is hereby taxed, and the shares of all financial institutions, as in this Act defined, shall be exempted from assessment and payment of ad valorem taxes, including those for the current tax year 1931-1932, except the moneyed capital and shares of any business hereby taxed which fails to make and file the returns required by this Act and to pay the tax levied by this Act as and when in this Act provided. The real estate owned by every such financial institution shall not be exempted. If any other tax whether on property (other than ad valorem taxes on real estate), income, business or any element thereof, except license taxes not in excess of those heretofore legally levied and in effect, be levied by this State or by any political subdivision of this State on any financial institution as in this Act defined, the amount of such other tax due by such institution shall be credited on account of the tax payable pursuant to the provisions of this Act."

It is insisted by appellant that, if the act providing for the levy and assessment of the excise tax was ineffectual in exempting it from the payment of the ad valorem tax on its shares of capital stock for the tax year 1931-1932, then, and in that event, it was not liable for the payment of the excise tax for the tax year 1932, as it was not the legislative mind or purpose to impose both taxes during said year upon appellant.

This court in the case of Phelps v. Union Bank & Trust Co., 225 Ala. 238, 142 So. 552, 553, held that the state could levy and assess an ad valorem tax against the shares of the capital stock of state banks, notwithstanding the fact that national banks were allowed to escape the payment of such tax. This court, in that case, recognized the fact that there was "no semblance of justice in taxing the shares of State banks and excluding those of National banks." The remedy for the injustice, it was pointed out, lay with the lawmaking power of the state and federal governments. The decision in the Phelps Case, supra, was announced by this court on May 19, 1932, and during the Extra Session of the Legislature of 1932 a bill, which afterwards became the act now under consideration, was introduced.

It may be conceded that the purpose of the act under consideration was to remedy the situation presented in the Phelps Case, supra, and to impose a tax alike upon national and state banking institutions, to the end that each class should be required to bear its just burden in supplying revenue to defray the expenses of operating the state government. It was recognized that national banks, while enjoying the equal protection of the laws of the state, should bear their fair and just burden in meeting and defraying the cost of maintaining the state government.

The idea of equality of burden upon both classes was the dominant thought of the Legislature in the adoption of the Excise Tax Law of 1932.

We say this because a cardinal rule of statutory construction is to arrive at the legislative intent, and, to do so, we may look to the object of the enactment against which it was intended to provide, the defect to be supplied, and the mischief sought to be prevented, averted, or ameliorated. Richardson Lumber Co. v. Howell, 219 Ala. 328, 122 So. 343; Cocciola v. Wood-Dickerson Supply Co., 136 Ala. 532, 33 So. 856; Thompson v. State, 20 Ala. 54; Huffman v. State, 29 Ala. 40-43.

The act now to be construed, in its original form, was introduced in the lower house of the Legislature in August, 1932. Before this original bill was ordered to its third reading in the House, a substitute therefor was offered and adopted, and the bill, as so amended, was passed by the House on October 6, 1932, and thereafter passed by the Senate on October 18, 1932, with amendment, and this Senate amendment was concurred in by the House on the same day, and was approved by the Governor on October 22, 1932.

The act, in section 8, provides: "If any clause, sentence, section, division or portion of this Act shall be held invalid or unconstitutional by any court of competent jurisdiction, such holding shall not affect any other section, clause, division or portion of this Act which is not itself unconstitutional."

Section 9 of the act provides: "This Act shall become effective immediately upon its approval by the Governor."

As heretofore pointed out, the major purpose of the act was to levy an excise tax for the privilege of engaging in the business of banking in the state of Alabama, and of conducting a financial business employing moneyed capital coming into competition with the business of national banks, so that national banks as well as state banks would be amenable to the law. The attempted exemption of state banks from the payment of an ad valorem tax on the shares of their capital stock for the tax year 1931-1932 was but an incident, and not the inducing or controlling purpose of the act.

We have held in the case of Union Bank & Trust Co. v. Phelps, 153 So. 644, on submission at the same time with this case, that the attempt to make the exemption in favor of state banks for the tax year 1931-1932 of ad valorem taxes was abortive, for the reason that the tax had been levied, and assessed, and was due and payable to the state before the approval of the act in question; and that the Legislature was inhibited by section 100 of the Constitution from remitting this tax.

The sole question, as we see it, to be now determined is, Was the inclusion of the exemption from ad valorem taxes for the tax year 1931-1932 the inducement which actuated the Legislature in adopting the act in question? If it was, then, of course, the entire act would fall, as we have held that the Legislature was without power to relieve the state banks from the payment of 1931-1932 ad valorem taxes, inasmuch as these taxes, at the time the act was adopted, had become liabilities to the state.

We do not think that the act must fail in the accomplishment of its major purpose, because of the abortive effort on the part of the Legislature to grant an exemption, which, at best, was but an incident, a subsidiary matter, and was separable from the main provisions of the act.

In the case of State v. Duluth Gas & Water Co., 76 Minn 96, 78 N.W. 1032, 1034, 57 L. R. A. 63, the Supreme Court of Minnesota, in considering a statute providing for the listing and assessing for taxation of franchises and other intangible property of certain corporations, held that the provisions of the section deducting the total amount of indebtedness of a corporation from the value of its stock was unconstitutional and void, but that the same did not invalidate the remaining part of the act. The court said in part: "Again, while it cannot be denied that the legislature intended the provision for deducting the indebtedness from the value of the capital stock to be a part of the system of listing and assessing the property of these corporations, * * * yet this provision is easily separable from the other...