State Ex Rel. Smith v. Elba Bank & Trust Co.

In response to the foregoing question propounded to this court for determination, we advise as follows:

1. Section 229 of the Constitution is mandatory in its requirement that the Legislature "shall, by general law, provide for the payment to the state of Alabama of a franchise tax by corporations organized under the laws of this state"; and the mandate applies to all domestic corporations save only the classes of corporations expressly excepted from the tax, viz. those which are strictly benevolent, educational, or religious.

2. The proviso found in each of the revenue acts referred to (1911 and 1915), in so far as it exempts banks and banking institutions from the payment of the franchise tax imposed in general terms upon "all corporations organized under the laws of this state," is in violation of the mandate of section 229 of the Constitution. The proviso is therefore, as to banks and banking institutions, unconstitutional and void, and must be denied any operation or effect.

3. The clause imposing the franchise tax on domestic corporations in general must be given effect, notwithstanding the nullification of the proviso, for the reason that it is the legislative execution of a constitutional mandate, and it must be presumed that the Legislature intended that it should operate nevertheless according to the force of that mandate. They could not have intended to relieve all corporations of the tax, and so to violate their plain duty in the premises, in order to protect state banks from the burden of its payment.

This presumption is fully confirmed, so far as the revenue act of 1915 is concerned, by the explicit legislative declaration found in sections 289 of the act, that —

"If any section, clause or provision of this act shall be held void, or ineffective for any cause, it shall not affect any other section, clause or provision of this act." State ex rel. Crumpton v. Montgomery et al., 177 Ala. 212, 241,59 So. 294.

These considerations of course render in applicable the general rule that the nullification of a material proviso or exemption carries with it the nullification of the entire section or act, as illustrated by the cases of Vines v. State,67 Ala. 73; McLendon v. State, 179 Ala. 61, 60 So. 392, Ann. Cas. 1915C, 691; and Wilkinson v. Stiles, 200 Ala. 279,76 So. 45.

The foregoing conclusions are soundly stated and supported by BRICKEN, P.J., speaking for the Court of Appeals, in the *Page 257 opinion submitted to us, and which we fully approve.

ANDERSON, C.J., and McCLELLAN, THOMAS, and MILLER, JJ., concur.

SAYRE and GARDENER, JJ., dissent.

Opinion on Response from the Supreme Court.