City of Birmingham v. Sales Promotions, Inc.

HARWOOD, Presiding Judge. The issue.on this appeal is whether the appellee is liable for a license tax imposed by appellant’s ordinance Number 1414-F, Section One, Subsection 241, which is: “241 — Trading Stamps, Coupons, Etc. — Each person, firm or corporation engaged in the business of selling, issuing, or otherwise distributing any trading stamps, coupons, certificates or other similar devices redeemable or purporting to be redeemable in partial or full payment of goods, wares, merchandise, services or' other things of value shall pay an annual license equal to three per centum of the gross receipts of such business for the next preceding year with a minimum license in any case of $600.00.” Appellee paid under protest the $600 imposed by the ordinance as a minimum license fee, filed a timely demand upon appellant for a refund, and upon the refusal of the appellant to refund, filed suit to recover the amount paid. Appellee alleged that the license tax was illegal and void as being arbitrary, excessive, discriminatory, and a substantial burden on interstate commerce. A jury trial was waived and the trial court entered judgment for the plaintiff below. From this judgment defendant below perfected this appeal. Hereinafter appellant will be referred to as the City and appellee as the Stamp Company. There was no material conflict in the evidence. The evidence showed that the Stamp Company had its offices in Macon, Georgia. All of the Stamp Company’s business was conducted in or out of the Macon office with no office, warehouse, redemption center, or establishment of any kind in Alabama. Solicitors or “service men” of the Stamp Company .operated out of Macon, Georgia. These solicitors came from Macon, Georgia into Birmingham, Alabama, took orders from merchants for stamps subject to approval by the Macon office, returned the orders to Macon, where, upon approval, the solicitor would pick up in Macon the appropriate number of stamps and déliver them to the merchant on his next round. New and renewal orders for stamps were handled in the same manner. Redemption of the stamps for the various items of merchandise was done similarly, i. e., the solicitor picked up the filled stamp books which had the merchandise selected [73] shown therein, took the filled books to Macon, picked up the merchandise and brought it to the local merchant on his next trip. The “service men” or solicitors spent approximately one and one-half days each week in Birmingham soliciting new orders and servicing old accounts. No stamps were delivered at the time of the order, but were delivered only after approval by the Macon office. It should be noted at this point that the ordinance in question imposes a license tax based on a per centum of gross receipts with a minimum fixed sum of $600. Article I, Section 8 of the Constitution of the United States, commonly called the “commerce clause” gives to Congress the power to regulate commerce among the several states. The sole question involved in this appeal is whether or not the exaction of the minimum fixed sum license tax extracted from this appellant, who clearly was engaged in interstate commerce, constituted a burden upon interstate commerce and was therefore prohibited by the commerce clause of the Federal Constitution. The welter of decisions pertaining to the question now before us, both in the Federal courts and the State courts,, are, by their numbers and delicate distinctions, more productive of confusion than clarity. There is yet much underbrush to be cleared away. See North Western States Portland Cement Co. v. State of Minn., 358 U.S. 450, 79 S.Ct. 357, 3 L.Ed.2d 421. It does seem clear, however, that insofar as fixed sum license taxes upon solicitors in interstate commercial transactions are concerned, the original pronouncement in Robbins v. Shelby County Taxing District, 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694, refusing to allow such taxes, remains intact.- See Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760; West Point Wholesale Grocery Company v. City of Opelika, Alabama, 354 U.S. 390, 77 S.Ct. 1096, 1 L.Ed.2d 1420. To like effect are our cases of Crum v. Prattville, 155 Ala. 154, 46 So. 750; Ineichen v. City of Anniston, 10 Ala.App. 605, 65 So. 710; McCarter v. City of Florence, 213 Ala. 367, 104 So. 806; Leibold v. Brown, 260 Ala. 354, 71 So.2d 7. The foregoing cases are decisive of the present appeal. Fixed sum license taxes are not rendered valid merely because they are nondiscriminatory, Leibold v. Brown, supra, and cases therein cited, but are deemed a burden upon interstate commerce for the reason that they must be paid as condition precedent to engaging in such interstate commerce, and are subject to being duplicated by every community worked by the solicitors, and they apply to a single transaction with the same force as they do to transactions carried on continuously throughout the year. Armstrong v. City of Tampa, Fla.Sup., 118 So.2d 195; Nippert v. Richmond, supra. The tax sought to be imposed by the ordinance in question, of course, goes further than imposing a mere fixed sum license tax, in that it provides for an annual license tax “equal to 3 per centum of the gross receipts of such business for the next preceding year with a minimum license in any case of $600.00.” We pretermit consideration as to whether or not the provisions seeking to levy an annual tax of 3 per centum of the gross receipts of a business for the next preceding year is a valid exercise of the taxing power of the City of Birmingham, in that in the record before us the evidence relates solely to the imposition of the minimum fixed sum license tax of $600, and there is no evidence pertaining to the volume of business done by the appellee. See Nippert v. City of Richmond, supra. Affirmed.