The Birmingham age-herald., 1921-07-01
SWEEPING DECISION N FRANCHISE CASE s WON BY STATE
Exemption Allowed by LeglS- Iature Does not Hold Good,
 as It Conflicts With Constitution
By FRED H. GoRMLTY

< Mortromerv Bureau, The AEe- Herald
 e2I-2 First National Bank Building
 Montgomery, June 30.-(SpecIal) slabama's state treasury will be en- lched by an amount variously esti- lated at from S5O0,000 to S1.000,- lO0, and scores of corporations .shich have claimed exemptions com taxation will be required to Fay franchise tax to the state Snder decision of the court of ap-
 calls Thursday afternoon in the case f the state ex rel J. q. Smith, orfter attorney general, vs. the 5slba Bank and Trust company, from
 lontgomery ciecuit court.
 Not only did the court of ap-
 peaIs hold that the sections of the revenue laws of 1911 and
 1915 exempting certain corpora ! tions from franchise and other { taaes to be void insofar Rs it de-
 prived the state of the franchise 4 taxes, but 1t attached to it's opin-
 ion an additional opinion of the
 supreme court rendered at the re- N quest of the court of appeals.
 This must end the case except through the right or the defendant lo ask for a rehearing. There will lie no appeal to the supreme court aecause the court passed upon the issue and rendered its opinion to he court of appeals.
 ! Far-Reaching' Effect
 \ The far-reaching effect of this de- .dsion will be understood when 1t is stated that the Alabama Power company and other large corporations which are supposed to be exempted from all taxes for ten years will be fequired to pay the franchise tax Ind that every bank organized under The state laws will be required to pay franchise tax in addition to The special tax they now pay for the yupport of the banking depa rtment. | The decision resulted from an in lerpretation of section 229 of the constitution, which says that the leg ,slature shall levy a franchise tax against all corporations except strict y educational, benevolent and re- ,Hgious corporations, the tax to be in proportion to the amount of capi- aal stock. But the legislatures or #911, 1915 and 1919 exempted banks from the payment of this franchise fax because of the fact that they were required to pay the additional lax for the support of the banking ifepartment The legislatures of 1911 Ind l9f3 carried into the revenue iaws section exempting certain arge corporations from all taxes for period of ten years
 Under the latest decision these
 corporations will not only be re- ., quired to pay the franchfes tax \ in the future, but the state may \ proceed toward the collection of ! the franchise taxes for years gone \ by.
 < No one can estimate how much money will be obtained by the state 5reasury as a result of the decision. put t is not probab ble that it will Pc less than S500.000 and those who iluggested this amount expressed the opinion it would be far greater.
 X Associate Justice Somervil1e pre- pared the opinion for the suprems tourt in holding that franchise tax must be collected even though the a w carry the exemption. while Pre- aiding Judge Bricken prepared the ppinion for the court of appeals The appellate court prepared it's opinion tnd submitted it to the supreme ifourt and was sustained in all points.