144 So. 93 | Ala. | 1932
Lead Opinion
This bill is filed by the appellee, American National Bank, against the respondents, John A. Camp, as tax collector of Etowah county, and as ex officio tax collector of the city of Gadsden, and the city of Gadsden, a municipal corporation, to use the language of appellee's *491 brief, "for the purpose of enjoining said John A. Camp, as Tax Collector of Etowah County, Alabama, and as Tax Collector of the City of Gadsden, from levying on any of the property of the appellee or of its shareholders, and from selling the same for the payment of any taxes assessed against the corporate shares of appellee; and also to restrain such Tax Collector from collecting such taxes and from threatening, harassing or vexing the complainant or its stockholders in an effort to collect the same or any part thereof."
The ground upon which the bill rests the right to relief is: "That a large amount of moneyed capital in the hands of individual citizens, corporations and other organizations which is exempt from taxation or which was not taxed at as great a rate as assessed against the corporate shares or capital stock of appellee, was used in competition with appellee in the territory in which it did business. The contention of the appellee in said bill is that section 5219 of the Revised Statutes of the United States, as amended, being section 548, title 12, of the United States Code Annotated, prohibited the State of Alabama, and its political subdivisions from taxing complainant's corporate shares or capital stock at a greater rate than is assessed upon other moneyed capital coming into competition with the business of appellee, and that, therefore, the tax which the said John A. Camp was attempting to collect on the shares or capital stock of the American National Bank was illegal," etc.
"It must be regarded as settled, that taxpayers can not resort to a court of equity, to enjoin the collection of a tax claimed to be illegal, unless with the illegality of the tax there is connected some recognized ground of equitable jurisdiction." City Council of Montgomery v. Sayre et al.,
In the case first above cited, a bill filed to enjoin a municipal corporation from collecting an illegal tax, it was observed: "If bills of this kind could be entertained, municipal corporations would be placed at the mercy of reluctant and litigious tax-payers, embarrassed in all their operations, and incapable of preserving the peace, order, and proper government of the localities to which their powers extend." City Council of Montgomery v. Sayre et al.,
And in Mayor, etc., of Mobile v. Baldwin,
Nor does the bill bring the case within the influence of Shanks et al. v. Winkler et al.,
That is not so here. The levy is for a single tax year, and the tax may be paid under protest, and, if illegal, may be recovered in a single action at law, at the suit of appellee. Ward, Tax Collector, v. First Nat. Bank of Hartford (Ala. Sup.)
We are therefore of opinion that the bill is without equity, and the circuit court in equity erred in overruling the demurrer to the bill and in granting the injunction, and the decree of the circuit court is reversed and one here rendered sustaining the demurrer and dissolving the injunction, and the cause will be remanded.
Reversed, rendered, and remanded.
All the Justices concur, except THOMAS, J., who dissents.
Dissenting Opinion
The suit was for injunction to prevent the collection of city taxes alleged to be illegally assessed (under authority of section 3095 of the Code), and the fact of illegality is set up by extraneous facts that are averred.
The trial court overruled demurrers to the bill and granted the temporary injunction conditioned upon the giving of the bond prescribed by the decree. The ruling on demurrer presents the appeal of the city of Gadsden.
In a case where there is the right of injunction to preserve the statu quo, or protect from irremedial injury, etc., injunction pendente lite may issue on sufficient bond of indemnity, with or without notice, as warranted by the facts, and prior to the filing of answer. Section 8304, Code; Lynne v. Ralph,
It is the general rule that, unless some recognized ground of equitable interference is shown, "other than mere illegality, hardship, or irregularity in respect of the levy or assessment of the tax, a bill to enjoin its collection will not be entertained." Shanks et al. v. Winkler et al.,
Speaking generally, where the municipal tax is illegal, because levied (1) under an unconstitutional statute, or (2) for an unlawful purpose, or (3) assessed on persons or property not subject to taxation, it has been held sufficient grounds to justify a court of equity to enjoin the proceedings, provided the circumstances bring the case under the recognized head of equity jurisdiction, or there is no adequate remedy at law for redress of the injury. 37 Cyc. 1258, 1259; City Council of Montgomery v. Sayre,
In the federal courts the following earlier decisions support the foregoing rule where equity assumed jurisdiction: Clearwater Timber Co. v. Nez Perce County (C. C.) 155 F. 633; McKnight v. Dudley, 148 F. 204, 78 C.C.A. 162; Louisville, etc., R. Co. v. Wright (C. C.) 116 F. 669 [affirmed in 117 F. 1007, 54 C.C.A. 672 (reversed on other grounds in
In People of State of New York v. Barker,
"To raise the question which the plaintiff in error seeks, it was therefore obviously necessary to allege and prove as a fact that there was habitual violation of law by undervaluation; that, in the language of Mr. Justice Miller, in Albany County Supers. v. Stanley,
"Both these cases related to the taxation of national bank shares, and the question was whether the tax levied violated the provisions of the national banking act on that subject."
In Coulter v. L. N. R. Co.,
In 3 A.L.R. pp. 1372, 1373, and 1374, under "Assessment of Property at Full Value," it is declared:
"In State ex rel. Gottlieb v. Western U. Teleg. Co. (1901)
"In Railroad and Teleph. Cos. v. Board of Equalizers ([C. C.] 1897) 85 F. 302, supra, the holding that equity will interfere on the ground that the assessment violates both the uniform tax clause of the state Constitution and the equal protection clause of the United States Constitution is based upon the finding that there is no provision that property must be assessed at its full value; nevertheless, Judge Clark, in arguing the point, says: 'Conceding, for the purpose of testing the soundness of this proposition, that the constitutional term, "according to its value," means the same thing as "at its full value," the contention of the state then, stated with reference to its effect, is this: That it may assess the property of A at its full value, in obedience to the Constitution, and the property of D at one half of its value, in violation of the Constitution, and, when A complains that the result has been to violate the Constitution in respect to the equality provision, the answer is that the objection is not open to A, because he is taxed on no more than the full value of his own property, and that he must pay 50 per cent more on the same actual value than D. Now, it will certainly be admitted that the simple statement of such a proposition suggests its utter untenableness. If decisions may be found which apparently uphold a result such as this, they promulgate a doctrine which cannot be accepted as good law.' Another decision by the same judge (Nashville, C. St. L. R. Co. v. Taylor ([C. C.] 1898) 86 F. 168, appeal dismissed in (1899) 44 L.Ed. (U.S.) 1219.
"In Southern R. Co. v. North Carolina Corp. Commission ([C. C.] 1900) 104 F. 700, supra, the court, in giving instruction to the standing master, adopted this same view of the matter, when it said: 'The Constitution of the state of North Carolina, and the acts of assembly passed under the authority thereof, require all real and personal property in the state to be assessed for taxation at its actual value in money. The Corporation Commission, which is intrusted with the assessment of railroad property for taxation, assessed the property of the several complainants at a certain sum each. The complainants thereupon come into this court, alleging that the method adopted with regard to them differs materially from the method adopted with regard to all other real and personal property in the state, so that they are exposed to unjust discrimination. On that allegation they ask an injunction. On the truth of that allegation depends the action of this court. It cannot assess the value of property, nor perform any of the functions of the assessor. It cannot pass upon the assessment, and say whether or not it be excessive, whether it be illegal, irregularly imposed, or unjust. State R. Tax Cases (1876)
"And in Michigan R. Tax Cases (1905) 138 F. 223, affirmed in (1906)
"And in First Nat. Bank v. Christensen (1911)
In Fargo v. Hart,
And in Cummings, Treas., etc., v. Merchants' National Bank of Toledo,
And in First National Bank v. City of Covington (C. C.) 103 F. 523, it was held the national bank was an agency of the United States and may protect its shareholders by bill to enjoin the collection of an invalid tax on stock; that is, a tax not assessed as Congress had consented. Des Moines Nat. Bank v. Thomas Fairweather,
So much for the later general authorities seeking injunctive relief in courts of equity. Adverting to the recent cases in this jurisdiction, the case of Ward, Tax Collector, v. First Nat. Bank of Hartford (Ala. Sup.)
In the case of Shanks et al. v. Winkler et al.,
After all that may be said on the question presented by the bill, the assessment of taxes against the corporate shares of the national bank is averred to be illegal and invalid, by reason of the extrinsic facts set up in that pleading, which show discrimination by the municipality in favor of other persons in that business area and jurisdiction who are in direct competition therewith in the exercise of its purpose and conduct of that national *496
banking business, and not as Congress had assented. Ward, Tax Collector, v. First Nat. Bank of Hartford, ante, p. 10,
The decision of Shanks et al. v. Winkler et al., supra, was a relaxation of our old rule as indicated above.
In First National Bank of Hartford, Wis., v. City of Hartford, etc.,
See, also, State of Minnesota v. First National Bank of St. Paul,
The special equity here averred is:
"* * * That under Section 5219 of the Revised Statutes, as amended, of the United States, being Section 548 of Title 12 of the United States Code Annotated, and the laws of the United States in such cases made and provided the State of Alabama, its political subdivisions and the cities and municipalities therein, are prohibited from taxing complainant's corporate shares or capital stock at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of said State coming into competition with the business of complainant, complainant being, as aforesaid, a National Bank, organized and existing and operating under the National Banking Laws of the United States. * * *
"That the assessment of said taxes against the corporate stock of complainant in the hands of and owned by its stockholders is invalid and void because of illegal discrimination against complainant and its corporate stock and in favor of the moneyed capital of other persons, firms, corporations and associations coming in direct competition with complainant in the exercise of its legitimate purposes and business in lending money, discounting paper, and the like, in that such moneyed capital competing with complainant is not taxed or assessed for or liable for taxation under the laws of Alabama or of said County, or City, while the shares of capital stock of complainant are made liable to such assessments and taxes by the Statutes and Laws of said State, County and City. * * *
"That the said assessments, State, County, and City, for taxes for said tax year set out in the preceding section, and the proceedings leading up to and embracing said assessments, appear valid on their face, but for the reasons herein set out, are invalid and contravene the provisions of the Statute Laws of the United States above referred to; that said assessments are in the hands of said respondent, whose duty it is, unless restrained by this Court, to levy on the property of complainant for collection of said taxes, and complainant alleges that such assessments create a cloud on the title of complainant's real estate and other property of which it is now in possession of in said Etowah County, Alabama, and unless this Court enjoins or restrains the collection of said taxes, State, County and City, and removes the said cloud from complainant's title to its said property, then complainant will suffer damage and loss and cannot be relieved of the same except by the restraining order of this Court. * * *
"That until the legislature of Alabama amends the taxing laws herein complained of so as not to discriminate against the shares of stock in complainant's National Banking Association, and in the other National Banks located in Alabama, that any assessment against such share for taxes, State, County, and City, in said City of Gadsden, or said County of Etowah, will be illegal and void because of the discrimination outlined in this complaint, and if such assessments are made in said County for said State and County, and for said City, the same shall constitute a cloud on complainant's real and personal property located in said County. Such acts will continue as a source of harassment to complainant and the holders of its stock, and will result in a multiplicity of suits unless this Court enjoins and restrains said assessments being levied against complainant's corporate shares so long as such discriminatory laws of the State of Alabama remain in force."
The effect of the decisions is: (1) That the state law requires national banks to pay the stockholder's taxes assessed against the shareholder or his said shares, held by them *497
in national banks. See National Commercial Bank of Mobile v. Mayor, Aldermen Common Council of Mobile,
However, we will note that it is observed by Mr. High that: "It will be found upon examination that courts of equity have been inclined in cases of assessments by municipal corporations to relax somewhat the stringency of the rule of non-interference as applied to the collection of state taxes, and relief by injunction has been more freely granted against the collection of municipal taxes than in cases affecting the collection of revenues by the state. And while it is difficult to perceive any sufficient reason for such distinction, the distinction itself remains." High on Injunctions (4th Ed.) p. 509, § 536. This distinction as to injunction, as affecting the collection of state and county taxes on the one hand, and municipal taxes on the other, has been recognized by this court (Adams, Tax Collector, v. Southern Railway Co.,
We are of the opinion that the bill was within the recognized grounds for equitable interference to protect such assets of the national bank, as recognized in the federal authorities, and was within the influence of our latest authority. Shanks et al. v. Winkler et al., supra.
It is hardly necessary to observe that the decree for temporary injunction was not a final conclusion of the matter upon the facts, and was not intended and had not the effect of cutting off the city of Gadsden, or those acting in its behalf. There is no insistence, nor anything in the decree that would prevent the city from answering the bill and introducing proof in support thereof. If the decree had been intended to be final as to injunctive relief, and on the merits, no bond would have been required, as was done in the instant decree. Jesse French Piano Organ Co. v. Porter et al.,
I am therefore of opinion there was no reversible error in overruling the demurrer and in granting the temporary injunction. The court are not in accord with this result, believing the city's pleading merely presents a case of hardship, irregularity, or illegality in the threatened collection of municipal taxes on personal property, and that no recognized ground of equitable interference is shown under the earlier cases and the decision in Shanks et al. v. Winkler et al., supra; they are further of the opinion that the demurrer of the city of Gadsden should have been sustained.
I respectfully dissent.
Addendum
While under our law, Acts 1923, page 161, shares are assessed against the shareholders, it is also provided that "the bank shall pay *498
for the shareholders respectively the tax so assessed, against their shares," and that "it shall be no ground of objection to such assessment of shares that it is entered upon the assessment book in the corporate name." Section 6. This court has carefully considered such theory of taxing national bank shares, and it of course follows in line with the United States courts that it is the distinct independent interest of the shareholder which is taxable by a state, together with its real property, and on shares held by it in other national banks, but not its capital. National Commercial Bank of Mobile v. Mayor, etc., of Mobile,
We have shown that in Alabama there is provided not only an adequate remedy to test the legality of the assessment, but also to prevent a multiplicity of suits. Ward v. First National Bank (Ala. Sup.)
In National Commercial Bank of Mobile v. Mayor, etc., of Mobile, supra, equity relief was denied, though the theory of a multiplicity of suits was argued in brief.
In the Cummings' Case, supra, it also recognized the fact that there was a remedy by paying the tax under protest, and suing at law to recover it. But held that the bank was not in condition thus to protect itself, because of the matter which we have quoted from that case. Whereas, under our law the bank in this respect is not a mere stakeholder, but is required by law to pay the tax, and is debtor to the state for it. First National Bank v. Commonwealth of Kentucky, 9 Wall. 353,
Now if the tax is lawful, no one can complain on account of its payment by the bank; if it is not lawful, the bank may in one suit, in its own name, sue and recover it. Why would the bank which by our law is liable for the tax be thereby subjected to greater hardship, cost, or trouble than it would in a suit by it in equity to enjoin collection of the tax?
The other cases relied on by appellee are not authoritative respecting statutes such as ours. In Public Nat. Bank v. Keating (C.C.A.)
In the case of First National Bank v. Anderson,
The Supreme Court of Florida, without stating the effect of its statutes taxing bank shares, has recently sustained the equity of such a bill filed by a bank "on behalf of its stockholders" upon the authority of Hills v. National Albany Exchange Bank,
But we have shown that there is an adequate remedy at law in this state for a refund (Ward v. First National Bank, supra), and there does not appear any distinct ground for equity to assume jurisdiction, when the substantial effect of our statute is considered.
Application for rehearing overruled.
All the Justices concur, except THOMAS, J., who dissents.
