62 So. 734 | Ala. | 1913
The complaint shows that the plaintiff corporation is one organized under the laws of Alabama, and doing business herein. By the specific language of section 12 of the Revenue Act, an annual franchise tax básed upon the amount of paid-up capital stock is exacted of “all corporations organized under the laws of this state.” On the other hand, the franchise tax exacted of “all corporations organized under the laws of any other state, nation or territory, and doing business in this state,” is based upon the “actual amount of capital employed in this state.”
The tax thus exacted of domestic corporations is primarily a license tax for the continued exercise of their corporate franchises. — Southern Ry. Co. v. Greene, 160 Ala. 396, 49 South. 404. The payment of such a tax is one of the conditions imposed by the sovereign power upon its own creatures in consideration of the boon of corporate life and the enjoyment of corporate functions and powers. The case of Ashley v. Ryan, 153 U. S. 436, 14 Sup. Ct. 865, 38 L. Ed. 773, cannot be distinguished in principle from the case at bar. Five distinct railroad corporations, organized and operating, respectively, in Ohio, Michigan, Indiana, Illinois, and Missouri, were consolidated into one corporation under the laws of Ohio, Avhich required, among other things, the payment of a tax or fee of one-tenth of 1 per cent, upon the authorized capital stock of corporations for filing the articles of incorporation, and a like amount upon the increased capital stock of existing corporations for filing the certificate of increase. The consolidated corporation denied the right of the state of Ohio to collect such fees as in violation of the federal Constitution and laws, but the court, by Mr. Justice White (now Chief Justice), said: “The question here is not the power of the state of Ohio to lay a charge on interstate commerce, or to prevent a foreign corporation from engaging in interstate commerce within its confines, but simply the right of a state to determine upon what conditions its laws as to the consolidation of corporations may be availed of. Considering, as we do, that the payment of the charge was a condition imposed by the state of Ohio upon the
In Delaware Railroad Tax, 18 Wall. 206, 231 (21 L. Ed. 888), it was said that “the state may impose taxes upon the corporation as an entity existing under its laws, as well as upon the capital stock of the corporation or its separate corporate property. And the manner in which its value shall be assessed and the rate of taxation, however arbitrary or capricious, are mere matters of legislative discretion.”
In the much cited case of Horn Silver Mining Co. v. New York, 143 U. S. 303, 313, 12 Sup. Ct. 403, 404 (36 L. Ed. 164), the court, by Mr. Justice Field, said: “The granting of the rights and privileges which constitute the franchises of a corporation being a matter resting entirely within the control of the Legislature, to be exercised in its good pleasure, it may be accompanied with any such conditions as the Legislature may deem most suitable to the public interests and policy. It may impose as a condition of the grant, as Avell as, also, of its continued exercise, the payment of a specific sum each year, or a portion of the profits or gross receipts of the corporation, and may prescribe such mode in Avhich the sum shall be ascertained as may be deemed convenient and just. There is no constitutional inhibition against the Legislature adopting any mode to arrive at the sum which it Avill exact as a condition of the creation of the
These authorities are, as we are constrained to think, conclusive of the federal questions presented by this appeal, and support the validity of the tax here complained of. Plantiff, however, relies for support upon the cases of Southern Ry. Co. v. Greene, 216 U. S. 412, 30 Sup. Ct. 287, 54 L. Ed. 536, 17 Ann. Cas. 1247, reversing s. c. 160 Ala. 396, 9 South. 404; W. U. Telegraph Co. v. Kansas, 216 U. S. 1, 30 Sup. Ct. 190, 54 L. Ed. 355; Galveston, etc., R. R. Co. v. Texas, 210 U. S. 217, 28 Sup. Ct. 638, 52 L. Ed. 1031. In Southern Ry. Co. v. Greene it was held that an additional franchise tax imposed upon foreign corporations, and not upon domestic ones engaged in the same business, was a denial of the equal protection of the laws, and therefore offensive to the fourteenth amendment to the federal Constitution. Said the court by Mr. Justice Day: “We have here a foreign corporation within a state, in compliance with the laws of the state, which has lawfully acquired a large amount of permanent and valuable property therein, and which is taxed by a discriminating method not employed as to domestic corporations of the same kind, carrying on a
In W. U. Telegraph Co. v. Kansas, it was held that a state tax of one-tenth of 1 per cent, on the foreign telegraph company’s total capital stock of $100,000,000, nearly all of which was invested in other states, and devoted in large part to interstate commerce, though called a license fee for doing intrastate business, was in fact a tax on property beyond the state, and was an unlawful burden on interstate commerce, and hence violated the federal Constitution in both particulars. From the conclusion stated in this case, also, the Chief Justice and Justices McKenna and Holmes dissented, with whom was in agreement Justice Peckham, who however died prior to the decision. Whatever may be the scope of these decisions with respect to the right of foreign corporations, they do not, we think, involve the principles determinative of the present case.
The case of Galveston, etc., R. R. Co. v. Texas is clearly not conclusive, for there it was held merely that a state tax upon railroad companies “equal to 1 per cent of their gross receipts” is, as to companies doing an interstate business, a burden on interstate commerce, and hence unconstitutional. In this case, again, there was weighty dissent by the Chief Justice and Justices Harlan, White, and McKenna; the dissenting theory being that the tax, though measured by gross receipts, was in fact an occupation tax, and only incidentally affected interstate commerce. On the whole, our survey of the decisions of the Supreme Court of the United States expository of the principles that restrict state taxation of corporate franchises leads to the conclusion that the Alabama Kevenue Act is free from constitutional ob
Affirmed.