Daughdrill v. Alabama Life Insurance & Trust Co. , 31 Ala. 91 ( 1857 )

"WALKER,, J.

— The 16th subdivision of section 391 of the Code subjects corporations, created by the laws of this State, and not exempt under section 390, to a tax of 25 cents on each hundred dollars of the capital stock actually paid in. Section 776 of the Code authorizes the levy of a tax for county purposes, not exceeding one hundred per cent, upon the State assessment. The tax levied upon the corporation, which is the appellee here, did not exceed one hundred per cent, on what would have been the State tax, had it been assessed ; and that corporation is not one of the institutions exempted from taxation by section 890. The appellee is, therefore, liable to taxation, unless an exemption is provided by the charter.

The Alabama Life Insurance & Trust Company was chartered on the 9th January, 1836. The 22d section of the charter provides as follows: “As a full commutation for all taxes, impositions, or assessments on the capital stock of said company, or on any of its property or effects, the said company, during the continuance of its charter, shall pay annually, on the first Monday in December in each year, to the treasurer of the State, for the use of the people thereof, the sum of two thousand dollars.” Section 25 of the same charter contains the following words: “This act shall continue and be in force, unalterable by the general assembly without the consent of the trustees of the said company, for and during the term of twenty years, and no longer.” The capital stock of the company was originally one million of dollars, but was subsequently reduced; and a corresponding reduction was made in the bonus to the State.

The questions which have been argued in this case, are as follows: 1st, whether an act discriminating in the imposition of taxes, in favor of a corporation, is constitutional ; 2d, whether the legislature has passed any law for the repeal of the provision of the charter in reference to the commutation of taxes; 3d, if such an act has been passed, whether it is constitutional.

It is argued for the appellant, that a law which confers upon a corporation the privilege of paying a specific sum, as a commutation of, or, in other words, in exchairge or barter for all taxes, contravenes that clause of the first article of the State constitution, which says that “no man or set of men are entitled to exclusive, separate, public emoluments or privileges, but in consideration of public services.” "We shall not controvert the proposition, that the discrimination in favor of any single natural or artificial person in the imposition of taxes would be tantamount to conferring an exclusive separate public privilege. During a portion of the corporate existence of the appellee, the State exacted no taxes from its citizens ; during another portion of its existence, the State has exacted taxation from the people of the State generally, in a heavier proportion than is exacted from this corporation under the commutation feature of the charter. If we look at the commutation as extending through the entire corporate existence, it would seem that such an exchange of the annual tax, accommodated in its amount to the varying necessities of the State by the judgment of successive legislatures, for a fixed annual sum, would be a privilege or burden, according as the aggregate amount paid the State might be less or greater than the aggregate of the tax during the same period. If we contrast the commutation with the tax for the particular year 1853, it would seem that the commutation is a privilege, because the tax would have exceeded for that year the amount paid as a commutation. We do not determine in which light it is proper to regard the question ; because, conceding that the commutation is a privilege, within the intendment of the constitution, we decide the question of the constitutionality of a commutation of taxes in favor of this corporation, adversely to the appellant.

Every corporation is invested with privileges which distinguish it from natural persons, and do not pertain to the people generally. The perpetuity, right of succession, and of suing and being sued in a corporate name, and of exemption from liability on the part of the corporators to its debts beyond their stock, are privileges characterizing almost all corporations. A still higher privilege is that, conferred upon all companies organized to build roads, of subjecting private property to their use, upon making compensation. The conferring of none of these or the like privileges has ever been supposed to involve an infringement of the constitutional provision as'to exclu-give privileges. If it did, every act of incorporation ever granted in tlie 'State would be void.

The theory of corporations is, that the privileges are conferred upon them in consideration of public benefit which will result from their operations. The production of such benefit constitutes the “public service” for which the constitution permits the grant of peculiar privileges. It is said in Blackstone’s Commentaries, 467 : “It has been found necessary, when it is for the advantage of the public to have any peculiar rights kept on foot and continued, to constitute artificial persons, who may maintain a perpetual succession, and enjoy a kind of legal immortality.” “The public benefit is deemed a sufficient consideration of a grant of corporate privileges.” — Angell & Arnes on Corporations, §' 18.

In the case of Currie’s Adm’rs v. Mutual Ins. Society, 4 H. & M. 315, Judge Roane, of Virginia, used the following language: “With respect to acts of incorporation, they ought never to be passed, but in consideration of services to be rendered the public. This is the principle on which such charters are granted, even in England; and itjpiolds a fortiori in this country, as our bill of rights interdicts all ‘exclusive and separate emoluments or privileges from the community, but in consideration of public services.’ It may be -often convenient for a set of associated individuals to have the privileges of a corporation bestowed upon them; but, if their object is merely private or selfish, if it is detrimental to, or not promotive of - the public good, they have no adequate claim on the legislature for the privilege.”

This court expressed the same idea in the old case of Aldridge v. Tuscumbia Rail-road Company, 2 Stew. & Por. 211: “Whenever the State grants a charter of incorporation, it is always presumed that she receives for it some equivalent; that the grant is not without a quid pro quo.” See, also, Dartmouth College v. Woodward, 4 Wheat. 637; Toledo Bank v. Bond, 1 Ohio State R. 622, 642 ; Dale v. Governor, 3 St. 387; 1 Domat on Civil Law, 566.

The principle upon which the bestowment of those privileges is harmonized with the constitution, is, that they arc the result of contract between the corporation and the State. The public service to be done by the enterprise, in which the corporation is engaged, is the consideration upon which the State enters into the contract. The constitutional power of the legislature, to grant the privilege under consideration, cannot be distinguished from those other privileges which are so frequently conferred upon corporations without a question of their validity.

In the hurry of legislative proceedings, it cannot be doubted that mistakes are committed, and that peculiar privileges are sometimes conferred upon corporations which yield no fruit of public utility commensurate in value with the bestowment upon them. But where, as in the case of this insurance company, the powers conferred are, prima facie, such as will in their exercise operate a wholesome and beneficial influence upon the commerce, trade, and mercantile interests of the country, it is not the province of the judicial tribunals to revise the judgment of the legislature, as to the measure of public utility likely to result from the corporation. It is a matter determinable by the judgment, and involves the exercise of calculation and intelligence. The correct decision of the question as to the adequacy of the consideration which the usefulness of a corporation will afford for the privileges conferred, depends upon an intimate knowledge of all the groat interests of the State, moral, social, educational, agricultural, commercial, mining, and mechanical, and an enlightened perception of the effect upon them of specific enterprises. It is improper, and impossible in the nature of things, that errors of the legislature in such a matter should be the subject of judicial cognizance. — President & Directors of the Bank of Newbern v. James Taylor, 2 Murph. (N. C.) 266 ; Patterson v. Trabue, 3 J. J. Marsh. 598 ; Yadkin Navigation Company v. Benton, 2 Hawks, 13; Hazen v. Union Bank, 1 Sneed, 115.

For the reasons which we have given, we do not regard a law unconstitutional which provides for the payment of a specific sum in lieu of all other taxes by a corporation, tbe purposes of which are, prima facie, such as. will beuefit the public.

The provision in the charter of the appellant for the commutation of taxes, being a constitutional law, must remain the law until it is repealed. If the commutation feature of the charter be repealed, it is done by the Code. Section 391 of the Code, if construed without reference to the rest of that book, would undoubtedly repeal, by virtue of its repugnancy, the section of the charter which prescribes the bonus to be paid to the State. But section 10 of the Code expressly continues in force all special acts, or joint resolutions of the general assembly, in force at the adoption of the Code, incorporating companies for banking or manufacturing purposes, for the purpose of making roads, canals, or bridges, and for marine and fire insurance, or for any other purpose. The act of incorporation in this case is clearly within this list of laws preserved from repeal, and is, therefore, unrepealed, if it was in force at the adoption of the Code. Where the legislature, by the 10th section of the Code, preserved from repeal the act of incorporation under a comprehensive term, it must be understood that all parts of the act then unrepealed were continued in force. The part of the charter fixing the annual sum to be paid by the corporation, being continued in force by the Code, must be regarded as an exception to the general law embodied in section 391. It is only by so regarding it, that full effect can be given to section 10; and we must construe the law so that all parts of it may stand.

The general acts before the- adoption of the Code, on the subject of taxation, are not such as will repeal the previous special law contained in the charter.

Until the legislature shall pass an act for the repeal of the commutation feature of the charter, the question of legislative power to make that feature irrepealable does not arise. Until the question shall, by such a repealing act, be raised and presented to us, we decline to pass on it.

The judgment of the court below is affirmed.