The Birmingham age-herald., 1910-10-09
IA, M. CAREER REVIEWS
 FOREIGN COMP PAN|ES
Discusses Liability for Annual
 Franchise Tax
THEY ARE UNTAXEI
Bases Conclusions on Recent Opinions of the Supreme Court 8nd Advo-
 cates a Franchise Privilege Tax Be Imposed

| In answer to an inquiry directed at him by Auditor w. W. Brandon, Col. "A.
 M Garber, attorney general of Ala
 bama, has delivered an opinion in
 which he reviews the status of the
 various foreign corporations doing bus
 mess in Alabama in respect to their
 liability for the annual franchise. tax for the year 1911, as required by sec tions 2391 and 2392 of the code. The | opinion has to deal largely with re- cent opinions by the supreme court of | the United States and of Alabama on similar questions, and is to the effect that "the net result leaves both do- | nestle and foreign corporations un- taxed for the year 1911 until the legis- lature enacts another law providing franchise or privilege tax to be i'm posed upon both classes of corpora tions."
 The statement is as follows:
 Hon. William w. Brandon, State Audi tor, Capitol
 Dear Sir-I have your inquiry re- gardng the status of the various for eign corporations doing business in Alabama in respect to their liability for the annual franchise tax for the year 1911 as required by sections 2391 and 1892 of the code.
 The recent decision of the supreme court of the United States on this subject in the case of the Southern
 Railway company vs. Greene, 216 U. S. 400, and decision of more recent date by the supreme court of Ala bama in the case of Chinnabee Cotton mills vs the state, 52 So. Repr. 300, relating to the liability of a domestic corporation transacting business in Alabama for the tax imposed under subdivision 26 of section 2391 of the code, suggest that I briefly review the history of the statutes under which foreign and domestic corporations were required to pay the taxes in question, and also the changes adopted by the legislature in 1907 which appear in the present code.
 The revenue law in the code of 1896 in subdivision 55 of section 4122 pro- vided that "all corporations doing bus mess in this state, whether organized in this state or another state or coun- try, not specifically required to pay license tax, shall pay annually the fol- lowing privilege taxes, etc., the tax being graded in proportion to the a mount of capital stock. This section of the code of 1898 was amended by the act of March 5, 1901, but only with respect to the amount of the tax. The present statute contained In subdivi- sion 26 of section 2361 Is identical with that of the code of 1896 as amended in March, 1901, with the one excep- tion that it has application only to "corporations organized under the laws of this. state and doing business in this state" Foreign corporations were taken out of the operation or the statute of 1898 because the amount of the privilege or franchise tax here required was in proportion to the ito1 ct | the present statute, as above stated | operative only as to domestic corpor- ations. This was in obedience to the mandate of section 229 of the new con stitution approved November 2S, l9O1), which directed the legislature to pro vide for a tax on domestic corpora lions based on "the amount of capital stock" Section 232 of the new consti- tuition at the same time required the legislature to enact a general law pro- viding for the payment of franchise tax by foreign corporations based on the actual amount of capital employed in this state."
 Thus it was that under subdivision % of section 4122 of the code of 1896, origin ally applicable to both domestic ana TOT eign corporations as amended subsequent to the ratification of the new constitution
 came only to apply to domestic corpora tions on the capital stock basis, as 1t ap- hears now In subdivision 26 or section
 2631 of the code. Foreign corporations, on the other hand, were subjected, under sec
 tions 239l and 2392 of the code (codihed
 from the act of March ', 190D, to iran chise tax on the actual employed capital basis.
 There was A marked difference in the amount of the tax under these statutes as
 applied respectively to domestic railroad corporations and to foreign railroad cor
 porations Several of the class last men toned attacked in the court the validity | of the provisions of the act Of March,
 1907. codfied as section 2S91 to 24oO, 1n- c,usive in the code, upon several grounds
 among others that the provisions of said
 act violated the fourteenth amendment
 of the federal constitution in that It de- i nied to them the equal protection or the laws and deprived them of their property
 without due process of law. These suits,
 first instituted in the state courts, nnai- Inv reached thes upreme court or the
 United States, where the contention or
 the foreign railroad corporations was sus- tained and the provisions of the act of March. 1907, were held repugnant to such | corporations So Ky. Co. vs. Greene, supra (See also Western Union Tel. Co. vs' Kansas. PIG U. S. 1) The federal su- preme court took the position that these cases did not involve determining now Tar a state may arbitrarily exclude for- eign corporation, but to what extent a state. after allowing a foreign corpora tion to come in and acquire property, may tax such foreign corporation which has lawfully acquired large amount
 of permanent and valuable property there in by a discriminating method not em- ployed as to domestic corporations or the same kind, carrying on precisely similar
 business.
 The conclusion reached by this court was that these foreign corporations, which here assailed the above act, were, within the meaning of the fourteenth amendment, persons within the jurisdic- ton of the state of Alabama and, there- fore, entitled to be protected against any
 statute of the state which deprived them of the equal protection of the laws; and that being in a position to invoke the protection of said amendment the fran chise tax imposed upon them under the provisions of said act by different and more onerous rule than that used in taxing domestic corporations for the same privilege, both taxes being upon the same
 species of property or subjects of taxa tion, was a denial of the equal pro- lection of the laws and in conflict with
 the federal constitution.
 After a careful consideration of the opinion of the supreme court of the United States in these cases. 1t is my opinion that the principles declared there- in are applicable to all foreign corpora tions which had, prior to March T. 1907. been admitted into the state of Ala bama, in compliance with the laws of the state and had lawfully acquired val