49 So. 404 | Ala. | 1909
Lead Opinion
This suit was brought by the appellant against the appellee, as probate judge of Jefferson county, to recover $22,458.36, which had been paid to said probate judge under protest on account of the franchise tax required by Acts 1907, p. 418 (sections 2391-2399 of the Code of 1907). The complaint alleges that the plaintiff is a corporation organized under the laws of Virginia, specially authorized by said laws to acquire railroad properties in other states by either purchase or consolidation, and to use the same in the business of transporting passengers and freight as a common carrier; that it commenced business July 1, 1894, and has continued in business ever since, having acquired various lines of railway in Virginia, North Carolina, Tennessee, Georgia, and other states; that it is and has been
The case of State v, Stonewall Ins, Co., 89 Ala. 335, 338, 7 South. 753, 754, held merely that a tax on the “capital stock” of a corporation was a tax on property, and the court said: “Owing to the difficulty of distin
It was said in argument that the tax on a corporate franchise is a tax on the right to be a corporation; hut that is not correct, for the right to be a corporation is a right or franchise that belongs to the individuals who compose the corporation, and not to the corporation itself. The franchises of the corporation are the rights to engage in and carry on the business for which it was chartered. — Fietsam, Assignee v. Hay, 122 Ill. 293, 13 N. E. 501, 502, 3 Am. St. Rep. 492; Cedar Rapids Water Co. v. City of Cedar Rapids, 118 Iowa, 234, 91 N. W. 1081, 1083; Memphis & L. R. Co. v. Commissioners, 112 U. S. 609, 619, 5 Sup. Ct. 299, 28 L. Ed. 837. There are so many conflicting authorities that it is a matter of considerable difficulty to know just where to draw the line between a franchise as an asset of the corporation and a franchise tax as synonymous with a license or privilege tax. In a case in New York," where a tax was imposed on “the corporate franchise or business” of all corporations, and it was sought to be imposed upon a
It will be observed that the question at issue in these cases was, not whether the corporate franchise is property, but whether it is identical with the tangible property which it represents. So really these decisions do not throw much light on the question as to whether the franchise of a corporation is, in and of itself, property. In a late case, in which the Supreme Court of the United States held that certain provisions of the charter of a corporation did not prevent the state from levying a francll.se tax, the court says: “The tax in question is a property tax, and the effect of the decision is to uphoLd a valuation of the whole property as a going concern.” —Honolulu T. Co. v. Wilder, 211 U. S. 137, 142, 29 Sup. Ct. 44, 45, 53 L. Ed. Joyce, in his recent work on Franchises, draws the distinction between a franchise to be and a franchise to do, but holds that both go with it, wherever it goes, as a corporation. He also speaks of them as “intangible properties.” — Joyce on -Franchises, § 39. He also speaks of the various names given in different states to charges imposed upon the franchise right of corporations to carry on their business within the state, and notes the conflicts, but states that, by whatever name called, the state has the power to- imposé conditions on foreign corporations, within certain limits, for doing business in the state. Joyce on Franchises, § 356. Mr. Gray, in his work on Limitations of Taxing Power, states that the franchise to be and the franchise to do may be taxed either as property, or “by way of
The complaint shows that the appellant corporation paid the license fee required by law, when it complied with the other conditions necessary to do business as a corporation in this state, and also the annual license tax
The next inquiry, therefore, is whether there is anything in the nature, position, and standing of a foreign corporation which makes such a discrimination valid. It is familiar law that a state may allow a foreign corporation to transact business within its limits on such terms as it may please, or may exclude it entirely. The license, in the absence of special terms, is a mere revocable one, which may be recalled or burdened with additional restrictions, provided the Constitution of the United States is not violated. — Doyle v. Continental Ins. Co., 94 U. S. 535, 541, 24 L. Ed. 148, and cases cited; Mutual Life Ins. Co. v. Spratley, 172 U. S. 602, 620, 19 Sup. Ct. 308, 43 L. Ed. 569; Security Mutual Life Ins.
A statute of' Colorado (section 499, Mills’ Ann. St.) prescribing certain conditions necessary for a foreign corporation to enter the state, concluded with these words: “And such corporations shall be subjected to all the liabilities, restrictions and duties which are, or may be, imposed upon corporations of like character, organized .under the general laws of this state, and shall have no other or greater powers.” After the corporation in question had complied with the provisions of the then law, and had invested a considerable amount in its business in said state, the Legislature passed an act placing upon domestic corporations a tax of 2 cents upon each $1,000 of capital stock and upon foreign corporations a tax of 4 cents on each $1,000 of capital stock. The Supreme Court of the United States held this act to be violative of the constitutional clause prohibiting any law impairing the obligation of a contract; the court saying: “These provisions of law, existing when the corporation applied for leave to enter the state, made the payment required, and received its permit, amounting to a contract that the foreign corporation so permitted to come
It will be noticed that in the Smelting Company Case the provision defining the status of the corporation was
The only effect of the act complained of is to recall or revoke so much of the privilege granted as authorized the.foreign corporation to do an intrastate business. The corporation remains the same, and the railroad the ■ same, and the pleadings in this case do not raise any issue as to the result of'the tax working “oppression and wrong.” The fact that section 242 of the Constitution of 1901 places certain duties on railroad companies has no bearing on this question; for, if the state itself prohibits the corporation from doing intrastate business, it could not be subjected to liability for not doing it. The act does not interfere with the interstate business of the
The next insistence of the appellant is that the act complained of is violative of that provision of the fourteenth amendment to the Constitution of the United States which provides that “no state shall * * * deny to any person, within its jurisdiction, the equal protection of the laws.” It is settled by the decisions of the Supreme Court of the United States that, while a corporation is not a “citizen” within the meaning of that instrument, yet it is a “person” within its terms. There cannot be any controversy as to the point that a corporation of another state, which has complied with the laws of this state, so that process can be served upon it, and paid the fees required for the privilege of doing business in this state, and also purchased property in the state and entered upon the transaction of the business authorized, is “within” the “jurisdiction” of the state. — Blake v. McClung, 172 U. S. 289, 19 Sup. Ct. 165, 43 L. Ed. 432. In fact, the claim of the state to impose a tax on the corporation carries with it an admission that it is within the jurisdiction of the state.
In a case where a state board of equalization assessed the franchises and other property of a corporation at a different rate and by different methods, so as to result in “an enormous disparity and discrimination between the various assessments on corporations,” it was held to be a violation of the fourteenth amendment. —Raymond v. Chicago Traction Co., 207 U. S. 20, 37-38, 28 Sup. Ct, 7, 13, 52 L. Ed. 78. An act regulating the charges in stockyards of certain size was held to be violative of the fourteenth amendment, because there was only one stock
The Supreme Court of Kentucky, while holding that a corporation is not a “citizen,” and may have imposed upon it such conditions as the state may choose to require, yet said: “If any state * * * should allow a corporation of another state to transact business as a corporation within its limits and to acquire property there, the rights and property thus legally acquired, being held by the corporators, may be entitled to the same protection, under this clause of the Constitution, as if held by the corporators themselves.” — Commonwealth v. Milton, 12 B. Mon. 212, 54 Am. Dec. 522, 529, 530. On the other hand, the Supreme Court of Iowa sustains the right of a state to impose a higher tax on foreign corpora tions than is imposed on domestic corporations, basing its conclusions partly on the general principle that the state has absolute power over foreign corporations, and partly on a misunderstanding to the effect that in the Pembina Case, 125 U. S. 181, 189, 8 Sup. Ct. 737, 741, 31 L. Ed. 650, the Supreme Court of the United States had hekl that a corporation is not a “person,” when in fact the decision in that case is that, although a corporation is not a “citizen,” it is a “person.” — Scottish, etc., Ins. Co. v. Herriott, 109 Iowa, 606, 80 N. W. 665, 77 Am. St. Rep. 548, 555.
The case of Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 357, which is frequently referred to in the decisions, came up on an application for a license, and was based on the principle that a corporation is not a citizen. The Supreme Court of Illinois held that the state may rightfully discriminate against a foreign insurance company in levying taxes (Ducat v. City of Chicago, 48 Ill. 172, 95 Am. Dec. 529), and that dceision was affirmed by the Supreme Court of the United States. — Ducat v. Chicago,
The second section of the act (Acts 1907, p. 421) is not violative of section 45 of the Constitution of 1901. The title of the act is sufficient to cover the levy for county purposes; the same being referable and cognate to the general subject of providing revenue for the state. If there were no mention of the counties, the commissioners’ court of each county could levy a tax for such county. — Code 1907, § 2155.
The judgment of the court is affirmed.
Dissenting Opinion
(dissenting.)- — I agree with my brethren upon the proposition that all doubts should be resolved in favor of the validity of the act assailed, when the assailant has the right of appeal to the Supreme Court of the United States, and that the state’s right to do so is questionable. I do not think, however, that the infirmity of the act in question is open to serious doubt; and, notwithstanding the high regard I have for the opinion of my Associates, the infirmity of the act is to me so glaring that I deem it my imperative duty to construe the law as I understand it, regardless of consequences, or whether the state has, or has not, the right of appeal.
Pretermitting the other questions insisted upon by appellants against the validity of the act in question,-1 am of the opinion that it is violative of the fourteenth amendment of the federal Constitution, in that the classification attempted is so unreasonable and 'unjust as to amount to a discrimination .against one and in favor of other members of the same class. The classification has no reference to- the subject or business, but is based solely on thé residence of the corporation. There can be no doubt that the states have the right to require certain things of foreign corporations as a condition precedent to doing business therein; but when they enter the state upon its invitation, and after complying with its requirements, they are entitled to the equal protection of the law, which includes a guaranteed uniformity in taxation. To my mind equal protection is not accorded when one railroad is taxed thousands of dollars more than others of equal value and similarly situated, the only distinction being that one is a foreign and the other a domestic corporation, notwithstanding the tax may be designated as a franchise tax in order to avoid the influence of the state Constitution against unequal taxa
The question before us is: Was the tax lawfully levied? If it was, the plaintiff'cannot recover; if not legal, it can recover it back. What the state can and will do-for a refusal to submit we are not called upon to decide. “Sufficient unto the day is the evil thereof,” as we are dealing with the right to levy and collect, -and not the penalty for a refusal to submit. Should' the state attempt to deprive many of her citizens dependent solely
I regret my inability to concur in the conclusion of my Brothers, and am constrained to voice my protest .against this statute, as it involves not only a year’s taxation, but a principle so far-reaching and important as to not only affect the integrity of the state, but threatens the sacred rights secured by our federal Constitution. Citation of authority is not required to demonstrate the inequality of this law and that the classification therein attempted is unreasonable and unjust. Nor ■do I feel it necessary to comment on many of those mentioned in the opinion, but will content myself with a short discussion of what seems to be the three leading ■cases relied upon as supporting the conclusion of the majority.
The case of Ducat v. Chicago, 10 Wall. 410, 19 L. Ed. 972, does not apply to the present question. There the fourteenth amendment was not considered, and, while the case may have been decided subsequent to the adoption of same, the statute considered was enacted prior to the amendment, and the alleged violation of same was anterior to said amendment.
The case of New York v. Roberts, 171 U. S. 658, 19 Sup. Ct. 58, 43 L. Ed, 323, and Horn Silver Mining Co. v. New York, 143 U. S. 305, 12 Sup. Ct. 403, 36 L. Ed.
I dissent from the conclusion of the majority, and think this tax was illegal, and the plaintiff should recover it back.
(Since this case was reported the Supreme Court of the United States has reversed it, holding the act violative of the 14th Amendment of the Federal Constitution. — Reporter.)