Town of Hackleburg v. Northwest Alabama Gas District , 277 Ala. 355 ( 1964 )

HARWOOD, Justice.

This is an appeal by the Town of Hackle-burg from a decree entered in a declaratory judgment action adjudging that a privilege license tax of 1J4 percent of the gross receipts of business done the preceding year imposed pursuant to an ordinance enacted by the Town of Hackleburg was invalid under the laws and constitution of the State of Alabama.

The Northwest Alabama Gas District, a Corporation, was organized under the provisions of Article 9, Title 37 (Secs. 402(47), 402(66a), Code of Alabama 1940. Sec. 402 (47) provides that any two or more municipalities may cause to be organized and incorporated a gas district as a public corporation for the purpose of local distribution and sale of gas in any one or more of such municipalities.

Unless otherwise provided in the certificate of incorporation, the board of directors of such corporation shall consist of at least one member for each member municipality to be elected by the governing body of such member municipality. Sec. 402(52).

The board of directors constitute the governing body of the gas district. Sec. 402 (52).

The record shows that in addition to the Town of Hackleburg, the towns of Hamilton, Guin, and Sulligent, and the cities of Haleyville and Winfield are all members of the Northwest Alabama Gas District.

Because of this diversity of membership and control, the Northwest Alabama Gas District must be considered as though a separate proprietory corporation and not merely as an arm, branch or agent of any single municipal member of the gas system. In this aspect the status of the appellee differs from that of a Water Works Board, or Gas Board, organized within a single municipality under the provisions of Article 5 (Water Works Board) and Article 6 (Gas Plants and Systems), of Title 37, Code of Alabama 1940. Water boards and gas boards organized pursuant to the above Articles are, under certain conditions and factual situations, treated as the municipality itself. See State ex rel. Richardson v. Morrow, 276 Ala. 385, 162 So.2d 480.

Municipalities nave no inherent power of taxation, but the State, having the power to tax may confer and delegate this power on and to a municipality. Stein v. Mayor, etc., of Mobile, 24 Ala. 591; Estes v. City of Gadsden, 266 Ala. 166, 94 So.2d 744. If the taxing power delegated is not limited, it includes all the taxing power possessed by the State. See McQuillin, Municipal Corporations, 3rd Ed., Vol. 16, Sec. 44.07.

By the provisions of Sec. 735, Title 37, Code of Alabama 1940, the legislature has empowered all municipalities to license businesses, occupations and professions, which may be carried on in the municipality, to fix the amount of licenses, the time for which they are to run not exceeding one year, etc.

Section 745, Title 37, Code of Alabama 1940, specifically authorizes municipalities to levy a privilege license tax on public utilities, such tax not to exceed three percent of the gross receipts of the business done by the utility within the municipality the preceding year.

Thus, by Sections 735 and 745, supra, the State has delegated to municipalities the full power to levy the privilege license tax imposed by the Town of Hackleburg, if not otherwise inhibited by the Constitution, or if the Gas District be not exempted from such tax by other codal provisions.

The lower court found that the respondent (Town of Hackleburg) “has no authority under the laws and Constitution of the State of Alabama to impose such tax upon complainant.”

It is argued here, and we assume was argued below, that the tax was invalid because of the tax exemption granted to gas systems under the provisions of Sec. 402 (62), Title 37, Code of Alabama 1940, and also that Section 91 of the Constitution inhibited such tax.

Sec. 402(62), in parts pertinent to this review, provides:

“All property and all income of any district incorporated under this article shall be exempt from all state, county, municipal and other taxation in the state of Alabama.”

The exemption thus granted is on the property and income of a gas district. The tax levied by the appellant is an excise tax on the privilege of operating a gas distribution business within the Town of Hackleburg, and is not a property or income tax. Estes v. City of Gadsden, 266 Ala. 166, 94 So.2d 744. The tax is therefore not exempt under the provisions of Sec. 402 (62).

Section 91 of the Constitution does not inhibit the levying of this tax. This section exempts from all taxes the property of State, county, and municipal corporations. The Gas District is not the property of the Town of Hackleburg, but of the Northwest Alabama Gas District, and, as before stated, the tax is not a property tax but an excise privilege license tax, which is not within the provisions of Section 91, supra.

There being no constitutional grounds preventing the levying of the tax in question, and no statutory provisions evidencing a denial of the power of the Town of Hack-leburg to impose the tax, it is our conclusion that the lower court erred in decreeing the appellee not subject to the privilege license tax duly imposed by the Town of Hackleburg. This judgment must therefore be reversed and remanded with directions to enter a judgment consonant with this opinion.

Reversed and remanded with directions.

LIVINGSTON, C. J., and SIMPSON and MERRILL, JJ., concur.