HORNSBY, Chief Justice.
This case presents the question of whether the financial institution excise tax, levied pursuant to Ala.Code 1975, § 40-16-1 et seq., applies to the credit card business conducted by national banks located outside Alabama with Alabama residents. The trial court, relying on this Court's decision in Ex parte Dixie Tool & Die Co., 537 So.2d 923 (Ala.1988), held that because Alabama's financial institution excise tax was enacted at a time when the State was prohibited by federal law from taxing out-ofstate national banks and the legislature was aware of this federal law when enacting the tax, the tax could not be levied on these banks. We affirm.
The attorney general of the State of Alabama sued Chase Manhattan Bank (USA),
The facts of the case are stipulated as follows:
"1. The Chase Manhattan Bank (USA), National Association (`Chase') is a National Banking Association.
"2. Chase is located in Wilmington, Delaware and has no offices, branches or other places of business in Alabama....
"3. To facilitate the making of loans as authorized by the National Bank Act, Chase maintains credit card accounts.
"4. Chase issues credit cards—both Visa and MasterCard.
"5. Chase has been issuing Visa credit cards since February, 1982 and MasterCard credit cards since March, 1985.
"6. Chase has issued Visa and Mastercard credit card accounts to persons residing in Alabama as well as to persons residing in other states.
"7. Since 1982 Chase has opened approximately 50,000 Visa and MasterCard credit card accounts with persons having billing addresses in Alabama out of a total of more than 4,000,000 credit card accounts opened by Chase during such period.
"8. From outside Alabama by direct mail Chase solicits credit card applications from persons residing throughout the United States, including from time to time persons residing in Alabama.
"9. Since 1982, Chase has from outside Alabama by direct mail solicited applications for credit card accounts from persons residing throughout the United States including, from time to time, persons residing in Alabama, and continues to solicit applications by direct mail from time to time from persons with Alabama addresses along with persons having addresses elsewhere.
"10. The Visa and MasterCard credit cards that are issued to persons residing in Alabama are valid for a term certain, up to 2 years, and the credit card may be used by the cardholder as long as he or she complies with the terms of the credit card agreement. The credit cards remain the property of Chase, and may be recalled by Chase or returned by the cardholder for any reason, or for no reason and have no value as a tangible item in and of themselves.
"11. An annual fee of $20.00 is charged on most Visa and MasterCard credit card accounts maintained with Chase by persons residing in Alabama; interest and fees are charged by Chase pursuant to the credit agreement ... in connection with said accounts.
"12. Chase has on occasion used the courts of Alabama to collect accounts of persons residing in Alabama which are delinquent.
"13. Persons residing in Alabama may use Visa and Mastercards throughout the United States and the world to purchase merchandise and services or to obtain cash advances.
"14. When Chase opens a credit card account in Delaware with a person residing in Alabama, that person is given a line of credit.
"15. Chase has never filed an excise tax return with the State of Alabama Department of Revenue.
"16. Chase has never paid any excise taxes to the State of Alabama Department of Revenue.
"17. Chase pays state franchise tax based on net income to the State of Delaware based upon 100% of its net income, and Chase does not pay income tax, Financial Institution Excise Tax, or any other income-based tax to any state except the State of Delaware.
"19. A person residing in Alabama may obtain a Visa or MasterCard credit card account with Chase and obtain an extension of credit with respect to such account as follows:
"20. Chase Visa and MasterCard accounts may also be accessed through the use of credit card checks which when used are negotiated like any other check and clear through the Federal Reserve System in the same manner as checks drawn on checking accounts and are honored or dishonored by Chase in Delaware. A credit card may be used to obtain a cash advance from certain banks. Drafts for cash advances are settled through Visa (USA) Inc. or MasterCard International, Inc. interchange centers located outside Alabama along with sales slips amounts as described in paragraph 19(8).
"21. The relationship between the cardholder and Chase is governed by the Agreement....
"23. Chase has no directors, officers, agents or employees in Alabama, and it does not regularly send its directors, officers, agents or employees into Alabama in connection with performance of their duties for the bank.
"24. Chase does not receive payments in Alabama.
"25. Chase has no material contacts with Alabama other than those relating to credit card accounts described above.
"26. No national bank located outside the State of Alabama currently or in the past has paid the Financial Institution Excise Tax to the State of Alabama.
"27. No state or national bank, which does not have an office or branch in Alabama, pays or has paid the Financial Institution Excise Tax nor has such tax ever been assessed against any such entity by the State of Alabama. A number of such state and national banks without offices or branches in Alabama issue credit cards or provide other financial services to Alabama residents.
"28. Financial institutions with offices in Alabama pay the Financial Institution Excise Tax based on 100% of their income attributable to such offices regardless of the residence of their customers."
We must consider whether Alabama's excise tax can be imposed on the credit card business conducted by national banks located outside Alabama with Alabama residents. The State argues that the trial court would have held that the State could tax income derived by Chase from Alabama credit card holders "but for" the existence of 12 U.S.C. § 548, see infra, when the statute levying the excise tax (the "Excise Tax Statute") was enacted in 1935. In reaching its decision, the trial court relied on this Court's holding in Ex parte Louisville & Nashville R.R., 398 So.2d 291 (Ala. 1981), Ex parte Dixie Tool & Die Co., supra, and N. Singer, 2A Sutherland Statutory Construction § 45.12 (Sands 4th ed. 1984), in finding that the legislature is presumed to be aware of existing federal laws and judicial enlargements when statutes are enacted or amended. Consequently, the trial court reasoned, the failure of the legislature to amend or reenact the Excise Tax Statute once Congress changed federal law to allow states to impose taxes on out-of-state national banks indicates the legislature's intent not to impose the excise tax on out-of-state national banks.
The State contends that the only impediment to the trial court's imposition of the excise tax on Chase is that the Excise Tax Statute was enacted when federal law prohibited such taxation. The State asserts that once that impediment was removed, the excise tax became fully applicable to out-of-state national banks. The State further argues that from the inception of the excise tax in 1935 to the most recent amendment in 1978 the Excise Tax Statute included any person, firm, or corporation doing business in Alabama as a national banking association.
To determine whether the excise tax applies to out-of-state national banks such as Chase, we must look to the language of the statute to determine the legislature's intent. See Tin Man Roofing Co. v. Birmingham Board of Educ., 536 So.2d 1383 (Ala.1988), and Ex parte Holladay, 466 So.2d 956 (Ala.1985) (duty of court in construing statute is to ascertain legislative intent, which may be gleaned from the language used, reason and necessity for the act or statute, and the purpose sought to be obtained). When determining legislative intent from the language used in a statute, a court may explain the language but it may not detract from or add to the statute. State ex rel. Graddick v. Jebsen S. (U.K.) Ltd., 377 So.2d 940 (Ala.1979); Town of Loxley v. Rosinton Water, Sewer & Fire Protection Auth., Inc. 376 So.2d 705 (Ala.1979); Employees' Retirement Sys. of Alabama v. Head, 369 So.2d 1227 (Ala.1979); Alabama Indus. Bank v. State ex rel. Avinger, 286 Ala. 59, 237 So.2d 108 (1970); May v. Head, 210 Ala. 112, 96 So. 869 (1923). Courts may not improve a statute, but may only expound it. Lewis v. Hitt, 370 So.2d 1369 (Ala.1979); Alabama Indus. Bank, supra. In the case of taxing statutes, such statutes are to be construed strictly in favor of the taxpayer and against the taxing authority. Eagerton v. Terra Resources, Inc., 426 So.2d 807 (Ala. 1982).
Accordingly, we must first look at the language of the Excise Tax Statute to determine the legislative intent. The excise tax applies to every "financial institution." That term is defined in Ala.Code 1975, § 40-16-1(1), in part, as follows:
The Excise Tax Statute further provides:
Ala.Code 1975, § 40-16-4.
Although the Excise Tax Statute defines "financial institution" as "any person, firm, corporation and any legal entity whatsoever doing business in this state as a national banking association," it does not explicitly include out-of-state national banks operating in the State in the same manner as Chase. In looking at the statute as a
Because the Excise Tax Statute does not expressly encompass national banks located outside Alabama and because no provision is made for the distribution of any proceeds derived from financial institutions not located in a county or a municipality in the State, we must look beyond the language of the statute. Although rules of statutory construction aid in ascertaining legislative intent, other factors may also be considered in resolving questions of legislative intent. Ex parte Burns, 266 Ala. 241, 96 So.2d 308 (1957). In addition to looking at the language of the statute, courts may also look to the history of a statute. Bowlin Horn v. Citizens Hosp., 425 So.2d 1065 (Ala.1982). Courts, however, may not indulge in conjecture or search for imaginary purposes. Alabama Indus. Bank v. State ex rel. Avinger, supra; State v. Zewen, 270 Ala. 52, 116 So.2d 373 (1959). Additionally, courts may not "amend statutes so as to make them express what [the courts] conceive the legislature would have done or should have done." Town of Loxley v. Rosinton Water, Sewer & Fire Protection Auth., Inc., supra, at 708 (relying on May v. Head, supra). Neither is it the role of the courts to "usurp the role of the legislature and correct defective legislation or amend statutes under the guise of [judicial] construction." Town of Loxley v. Rosinton Water, Sewer & Fire Protection Auth., Inc., supra, at 708 (relying on Employees' Retirement Sys. of Ala., supra); see also Ex parte Holladay, 466 So.2d 956 (Ala.1985).
A statute levying an excise tax was first enacted on October 22, 1932 (Ala.Acts 1932, Extra Session, Act No. 111, p. 107), but that statute was later repealed and was reenacted with amendments on April 4, 1933 (Ala.Acts 1933, Extra Session, Act No. 111, p. 104). The legislature repealed that statute and enacted the present Excise Tax Statute as part of the general revenue bill of 1935. Ala.Acts 1935, Act No. 194, Art. XII, Ch. I, §§ 346.1-346.6, pp. 428-34. Subsequent amendments have been adopted, but the legislature has never made provisions to include out-of-state national banks.
The purpose in levying the excise tax is to raise revenue for the State, not to enforce national or state banking laws. First Nat'l Bank v. State, 262 Ala. 155, 164, 77 So.2d 653, 660 (1954) (Department of Revenue assessed an excise tax against a national bank on net income earned on a exchange/sales transaction). This Court has recognized that the Excise Tax Statute did not apply to out-of-state national banks because of the federal prohibition against such taxation. In State v. First Nat'l Bank of Mobile, 239 Ala. 492, 196 So. 114 (1940), the Court addressed the issue of whether bond premium amortization deductions made by a national bank in computing
Id. at 494, 196 So. 114. The Court further stated:
Id. at 496, 196 So. 114.
In 1969, Congress added a temporary amendment and a permanent amendment
Act of December 24, 1969, Pub.L. No. 91-156, 1969 U.S.Code Cong. & Admin.News (83 Stat.) 457-58.
In 1973, Congress imposed a moratorium until September 12, 1976, during which time States could impose only one tax in addition to those enumerated in the temporary amendment to Public L. No. 91-156.
In addition to the changes made by Congress, the United States Supreme Court has changed its analysis of the application of the Commerce Clause to state taxing statutes. Prior to its decision in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), the
In the case presently before us, the trial court in its opinion stated that Ex parte Dixie Tool & Die Co., supra, controlled the resolution of the case:
In Dixie Tool & Die Co., the Alabama Department of Revenue assessed a sales tax against an Alabama corporation for sales made to out-of-state buyers and to federal government contractors. The Court in Dixie Tool & Die Co. considered whether sales made by the corporation to out-of-state purchasers were subject to Alabama's sales tax. The sales tax provision in question was Ala.Code 1975, § 40-23-4(a)(17). This code section provides:
In its opinion, the Court in Dixie Tool & Die Co. recognized that the United States Supreme Court allowed taxation of interstate
537 So.2d at 925 (quoting Ex parte Louisville & Nashville R.R., 398 So.2d 291, 293 (Ala.1981) (emphasis in original)).
The trial court also relied on Ex parte Louisville & Nashville R.R., supra. In Ex parte Louisville & Nashville R.R., the Court considered "whether Alabama's gross receipts tax upon a railroad's earnings from `intrastate business' applies to receipts generated by the L & N Railroad's movement of goods between two points in Alabama." Id. at 292. The railroad gross receipts tax statute in question, Ala.Code 1975, § 40-21-57, provided:
The Court stated that the controlling issue in the case was whether in originally enacting the statute the legislature intended to tax these transactions:
398 So.2d at 296-97. See also State v. Southern Elec. Generating Co., 274 Ala. 668, 151 So.2d 216 (1963).
Like the question in Dixie Tool & Die Co. and Ex parte Louisville & Nashville R.R., the question before us is whether in originally enacting the Alabama Excise Tax Statute, the legislature intended to tax the net income derived by out-of-state national banks from solicitation of credit card applications from Alabama residents.
In determining the intent of the legislature, we presume that in enacting the Excise Tax Statute the legislature was aware of existing prohibitions against the State's power to tax national banks. When the Excise Tax Statute was enacted in 1935, federal law and judicial interpretation prohibited states from taxing out-of-state national banks. It was not until the Congressional moratorium expired in 1976 that states were allowed to tax out-of-state national banks. Even after the expiration of the moratorium in 1976, the Alabama legislature failed to amend or to reenact the Excise Tax Statute in light of the federal change. See Freeman v. Jefferson County, 334 So.2d 902, 904 (Ala.1976) ("the rejection of an [a]mendment by the Congress which would have made the statute applicable to a given situation furnishes a strong inference that the statute was not intended to be applicable to that given situation"). Also, the Alabama legislature failed to amend or to reenact the Excise Tax Statute after the United States Supreme Court's 1977 announcement that there would no longer be a per se ban on taxation of interstate commerce. In fact, the last amendment to the Excise Tax Statute occurred in 1978, after the change in both federal statutory and judicial law that would have allowed taxation of out-of-state national banks, and no provision was then made for such taxation. Ala.Acts 1978, Special and Regular Sessions, Act No. 840, p. 1247. We do note, however, that a bill was introduced in the 1990 Regular Session of the Alabama legislature for the stated purpose of extending the Excise Tax Statute to out-of-state national banks, but it was not enacted. House Bill No. 944, Legislative Digest, Final Status p. 14 (May 3, 1990).
In the present case, we recognize that under existing federal law and judicial enlargement states are able to tax out-ofstate national banks if their taxing measures are nondiscriminatory. See 12 U.S.C. § 548 (1988). However, when the Excise Tax Statute was enacted in 1935, federal law prevented taxation of out-of-state national banks. In addition to the changes implemented by Congress in 1976, the United States Supreme Court changed its position so as to allow taxation of interstate commerce. See Complete Auto Transit, Inc. v. Brady, supra.
Under prevailing Alabama statutory construction law, we presume that the legislature was aware of the federal law in 1935 and of the subsequent changes in that law in 1976, as well as the changes in the United States Supreme Court's analysis of the taxation of interstate commerce. Ex parte Louisville & Nashville R.R., supra,
This Court's role is not to displace the legislature by amending statutes to make them express what we think the legislature should have done. Nor is it this Court's role to assume the legislative prerogative to correct defective legislation or amend statutes. Consequently, we conclude that the Excise Tax Statute applies today in the same manner that it did when it was first enacted. Because states were prohibited from taxing out-of-state national banks at the time the statute levying the excise tax was first enacted and judicial interpretation disallowed taxation of interstate commerce, the State may not tax Chase, an out-ofstate national bank, in the absence of additional action by the Alabama legislature.
Because we hold that the Excise Tax Statute does not apply to Chase, we need not address any further issues raised. Consequently, the trial court's summary judgment in Chase's favor is due to be affirmed.
ALMON, SHORES, HOUSTON, and KENNEDY, JJ., concur.
MADDOX and STEAGALL, JJ., concur specially, with opinion by STEAGALL, J.
STEAGALL, Justice (concurring specially).
I write specially to say that, in my opinion, out-of-state banks should be taxed in the same manner that in-state banks are taxed on revenues generated through credit cards held by Alabama citizens. This course of action is now available because existing federal laws permit taxation of out-of-state national banks. If I were in the legislature, I would support legislation to accomplish this result. However, I agree with the majority that the role of the judiciary is limited and that this matter should remain in the hands of the legislature.
MADDOX, J., concurs.
Dept. of Rev.Reg., Preamble (emphasis added).