10 Wyo. 54 | Wyo. | 1901
This case involves the validity of a municipal tax levied by the City of Laramie in 1897 against the Albany Mutual Building Association, on account' of certain moneys and credits assessed in the name of said association. Suit was brought for the recovery of the ta?: and judgment rendered in favor of the city. The association brings the case to this court on error.
The plaintiff in error is a building and loan association incorporated under the act of March 7, 1890, authorizing the incorporation of such an association for the purpose of “accumulating the. savings and funds of its members and lending them only the funds so accumulated.” The same act provided also for the organization of another kind of company to be known as a benefit, building, loan and trust association, the only practical difference between the purposes of the two being that the latter might loan its accumulated funds to others than members.
The act of 1890, so far as it related to the formation, regulation and conduct of building associations, was repealed by an act approved March 7, 1897, entitled “An act concerning the formation, regulation and conduct of domestic building associations.” That act granted to a domestic building and loan association the privilege of loaning its funds to non-members, if its by-laws should so provide.
The annual report of the association for the year ending December 25, 1896, showed that during that year it had made loans amounting to $23,600, and had among its assets the following: Bills receivable, $137,800; real estate, $1,000; cash on hand, $842.76; due from delinquents, $555.48, and fines due from delinquents, $55.55, making a total of $140,253.79. Among its liabilities were given $94,-980.00 as the amount of dues paid in on shares; $io„59i.34 as “unearned premiums,” and $34,682.45 as “net earnings.” The report for the succeeding year, 1897, disclosed an increase of $41,000.00 in bills, receivable, and that the “net earnings” had grown to the sum of $42,293.74.
In 1897 the plaintiff in error was assessed for taxation by the City of Laramie, not only upon its real estate, but in the sum of $20,000 upon moneys and credits. The amount of that assessment, it will be seen, is not only less than the net earnings, but also below the amount of the loans made in 1896, and a small percentage only of the aggregate of the face of the outstanding loans, or bills receivable. It is apparently conceded that the taxing authorities had in mind the amount'of the net earnings, or surplus, in fixing the value of moneys and credits of the association for the purposes of taxation. No question, therefore, arises as to over valuation. But the broad ground is taken by the association that it was not taxable upon moneys and credits.
It is insisted in the first place that the law made express provision for taxation in case of building associations, which
Section 3 of the act of 1890, under which act the plaintiff in error was incorporated, provided as follows: “The shares of stock of mutual loan and building associations shall be assessed at their cash value, but only the unredeemed shares of such stock shall be taxed, and these shall be listed to the individual owners thereof.” As to benefit, building, loan and trust associations, a different rule was adopted, it being declared in Section 9 that their shares should not be taxed, but that the association should be taxed upon its property and accumulated funds, the same as individuals. It is unnecessary to consider whether, as contended, the legal effect of Section 3 was to except from taxation the credit assets of a building and loan association, for we conceive the matter to be controlled by subsequent legislation.
An act of the Legislature approved January 9, 1891, provided that “the paid in capital stock of all incorporated companies or associations doing business in this State, together with the accumulated surplus, not including real estate situated in any other State than this, shall be assessed to the company or association issuing the same, and the persons holding the capital stock of such companies or associations shall not be assessed therefor;” and by that act all inconsistent acts were expressly repealed. (L. 1891, p. 169, Ch. 38.)
In 1895 the following statute was enacted: “The property of domestic corporations shall be returned, listed, assessed and taxed in the same manner as the property of individuals, but the capital stock of such corporations representing, as it does, simply the interests of the owners thereof in the property of such corporations shall not be taxed.” By Section 2 all acts and parts of acts inconsistent with the act were repealed. (L. 1895, p. 207, Ch. 87.) The statute
Building associations were not excepted from the provisions of either the act of 1891 or 1895. The former applied generally to all incorporated companies and .associations, and the latter to domestic corporations, and each manifestly included a building and loan association incorporated under the act of 1890. Moreover, there is nothing in the nature of such a corporation to render its property non-taxable, in the absence of a constitutional or valid statutory provision exempting it. (4 Ency. L., 2d Ed., 1012; Endlich on Building Associations, Sec. 459.)
But it is contended that, outside of its real estate, it had no property.' The broad proposition is made that the ostensible assets of the association were not such in reality, and that the mortgages held by it do not constitute, in legal contemplation, assets taxable to the association.- This result is supposed to follow from the fact that the society is mutual in character, and from the peculiar features attending such an association, and the loan transactions between it and its members.
The modern building and loan association is defined by one law writer as “a private corporation designed for the accumulation, by the members, of their money, by periodical payments into its treasury, to be invested from time to time in loans to the members upon real estate for home purposes,
The argument of counsel for plaintiff in error upon the question of the taxable character of the mortgages and funds of the association cannot be better nor perhaps more briefly .stated than by quoting a portion of their brief. They say:
“The true significance of these securities is, therefore, that part of the members of the association (depending upon the length of time it has run) have, in anticipation of the maturity of their stock, received the money which would otherwise be paid to them at maturity; and, in order that the continued payment of their dues may be assured until maturity, they have given securities to the association. They are bound, further, to pay interest upon their advances in order to equalize the distribution of funds as between them and the members who do not receive their money so soon. The loan itself is never paid back, and is never intended to be paid back, and has no existence apart from the obligation (assumed at the organization of the concern) to pay the monthly stock dues. Every dollar of the funds of the association is put out in this way in the redemption of stock. The process begins at the first monthly meeting and continues as fast as the funds accumulate, until all the stock has been paid off. The nominal assets of the society go on increasing until they amount (just before maturity of the series) to hundreds of thousands of dollars. When the last two hundred dollars comes in it is handed over to the owner of the last unredeemed or unborrowed share and the whole bubble bursts; the vast array of assets is instantly dissipated and the association is at an end.”
Upon that statement of the nature of the securities, it is
What we consider to be an inaccurate statement of the situation lends plausibility to the argument. In the first place the association has and controls certain securities representing loans or advances of money, and it is immaterial, in this connection, whether the money • turned over to the mortgagor is to be called a loan or an advance. The securities, upon default, may be foreclosed for the amount remaining unpaid of the loan or advance. They are owned by the company, and are not the property of the shareholder in legal contemplation any more than the property of an ordinary corporation is the property of its shareholders. The interest of the stockholder in either case is represented by his stock. The shares of stock are the property of the shareholders. The by-laws, as well as the statute, refer to the transaction between the association-and the borrowing member as a loan, and all the provisions of the by-laws treat the transaction upon that basis.
We are here considering the subject of ownership of the securities, or the possession of taxable assets by the association ; and only as it affects that question are the company’s by-laws and its relation to its members material; and it is only in that aspect that we shall allude to or attempt to construe them.
It is only in the broadest possible sense that it can be said that the money received by the borrowing member is received in anticipation of the maturity of his stock. It is true that he is limited in borrowing to the par value of his stock, and that he expects his stock to mature, and in the end to equal in value the amount loaned to him. In all cases the expected may not happen. The association may become involved in losses to such'an extent that the stock may not
We do not understand that the object of the mortgages is to secure the continued payment of stock dues. In case of default it is not the estimated amount of dues necessary to mature the stock which constitutes the debt, but the debt
In regard to the right to treat the credits represented by loans, and the securities therefor as assets of the company, it is difficult to observe any substantial difference between a building association and any ordinary corporation. A debt due to an ordinary corporation by a stockholder, secured by mortgage and a pledge of the debtor’s shares, would surely constitute an asset in the hands of the corporation. We ought perhaps to say that in this case we are not concerned with any question as to the assessable value of mortgages or credits in the hands of a building association; whether they are assessable at their face value, or at the sum which would remain due after crediting the then actual value of the collateral shares, or upon the amount of surplus or net earnings, for it is apparent that, upon any basis, the assessment of $20,000 did not amount to an over valuation.
But it is insisted that, assuming the mortgages to represent real debts, they are not taxable assets for the reason
A proper system of bookkeeping, no doubt, requires the amount of dues paid in upon stock, as well as the earnings or surplus, to be counted as liabilities, over and against bills receivable and other assets; but, in our opinion, such liabilities are not debts within the meaning of the statute authorizing a deduction from the gross amount of moneys and credits, of bona ñde debts owing by the taxpayer. (R. S., 1887, Sec. 3792; R. S., 1899, Sec. 1776.) It seems to be conceded that the assessment in this case was intended to reach the net earnings of the company. The right of any •shareholder to withdraw prior to the maturity of the stock is limited by the by-laws to the amount paid in by him upon his stock, and then only after twelve months, and on thirty days’ notice, out of the first unappropriated funds collected. Net earnings are, therefore, not to be withdrawn. The statute, however, is not to be construed as comprehending by the language “bona ñde debts owing by him” the assets of a corporation which would be divided among shareholders upon dissolution, nor in case of a building association the assets which, when the stock matures, will be distributed to the owners thereof. Some idea of the purpose and effect of the statute is to be obtained from the provision that no obligation for an unpaid subscription to any society nor for a subscription to or installment on the capital stock of any corporation is to be deducted from moneys and credits of the taxpayer.
It would be just as true of any corporation probably that, by considering its capital stock paid in, and its surplus, as debts, its assets and liabilities would equal each other. That such liabilities are not regarded as debts to be deducted from credit assets within the meaning of tax laws is made plain by a consideration of the authorities. The argument, after all, is but another way of stating the proposition that the assets or property of a company are in reality the assets and
As already pointed out, the ownership of the shareholder in the company’s assets is figurative only. The company owns its property, while the stockholder owns his shares of stock. In an ordinary corporation the shareholder may have paid in the par value of his shares, and receive a part of the profits of the concern by way of periodical dividends; while with a building association the stock is paid for in small monthly installments, and the profits are permitted to remain until their increase, together with the monthly dues, shall bring the stock up to its par value, and then, if but one series of stock is issued, or to be issued, the company dissolves and the shareholders become entitled to their share in the general distribution. If more than one series of stock is issued, the result is practically the same as to the shareholders in each series, for as to them there is a practical dissolution when the series matures. But that distinction between a building association and an ordinary corporation does not create a distinction in legal contemplation as to the ownership of company property.
Our views above expressed are sustained by the great weight of authority. Indeed, it is almost the unanimous holding of the courts that the mortgages or credits of a building association constitute taxable assets of the association. Mr. Endlich says that they are to be considered as “synonymous with property for the purposes .of taxation.” (Endlich on Building Associations, Sec. 458.)
In a leading case if was said: “The money which came to the hands of the stockholders was a part of the assets of the corporation. It remained there as a part of such assets. The stockholders pay interest upon the entire sum, for its use, until the dissolution of the societyand, again: “But it is impossible to read the constitution of this society and assent to the view that these loans ever cease to be assets until the dissolution of the corporation. This is ao-parent from the language of Article 9, Section 1, relative
The same conclusion was announced in Illinois in the case or People’s Loan and Homestead Association v. Keith, Collector, 153 Ill., 609. Respecting loans made by the building association to its members, the court said: “So far as the nature of the transaction is concerned, it is simply a loan of money made by the association, and the note and mortgage executed by the borrower represent a debt due from the borrower, to the association for money loaned. * * * And if the transaction is a loan, and the note (or contract) and mortgage are to be treated as a credit, upon that principle can it be claimed that a credit of that character should be exempt from taxation, when an ordinary loan, evidenced by the same security, is not?” The court then, alluding to an
In Minnesota it was held that mortgages held my mutual building associations were taxable, the stock of the association not having been taxed. (State v. Redwood Falls B. & L. Assn., 45 Minn., 154.)
In Pennsylvania, under a general law providing for the taxation of the capital stock of “every company or association whatever,” &c., “excepting foreign insurance companies, banks and savings institutions,” it was held that a building association was a corporation taxable under the act; and that the appellant association had a paid up capital of $50,113.45, that being the amount of money which had been paid in by shareholders, and, as it appeared, had been loaned out to members on mortgage security. (Bourguignon B. Assn., 98 Pa. St., 54.)
In Georgia, mortgages held by a building association were held to be taxable to it, the same as if held by an individual, and an act was adjudged unconstitutional that provided for a tax upon the portion of the stock of such associations upon which no advance had been made or money borrowed, at its true market value, in lieu of all other taxes against the association. The court said, among other things, “That act, so far as building and loan associations are concerned, made but one item taxable; that is to say, shares of stock. If the association is possessed of other property, land, houses, bonds, mortgages, office furniture, etc., why should not this property also bear its proportion of the burden imposed by the government? Similar property of individuals and other
In New Mexico, upon the theory that mortgages held by a building and loan association were valuable property in the hands of the corporation, they were held to be taxable against the association. (Territory v. Co-operative B. & L. Assn., 62 Pac., 1097. See also Rochester B. & L. Assn. v. Rochester, 45 Atl., 255 (N. H.); State, Wash. B. & L. Assn. v. Creveling, 39 N. J. L., 465.)
In North Carolina the capital stock of a building association is held to be “property,” and taxable against the association. (Charlotte B. & L. Assn. v. Commissioners, 105 N. C., 410.)
Cases are cited from Maryland and West Virginia which are deemed to announce a contrary doctrine. They should perhaps be so understood, at least the opinions do not appear in their reasoning to be in harmony with the views expressed by the other courts. In the Maryland case (Faust v. the Twenty-third German Am. B. Assn., 84 Md., 186) it was held that an act exempting building association mortgages from taxation was not repealed by a subsequent act relating to the taxation of mortgages. In arriving at its conclusion, the court construed the later act, on account of some of its expressions, as intended to apply only to a transaction wherein money is received by one party., and a contract is made by him to repay it to the other party; and it was said that in a building association mortgage the contract was not of 'that nature. The courts of Maryland decline to consider the sum advanced by a building association to its shareholder, for which a mortgage is executed, as either a debt to the association or a loan by it.
In the West Virginia case (Ohio Valley B. & L. Assn. v. County Court, 42 W. Va., 818) it was held that building and loan associations are not to be assessed with a capital stock,
We do not regard the case cited from Missouri (Kansas City v. Merc. Mutual B. & L. Assn., 145 Mo., 50) as in point on this question. In that case the court had under consideration the provisions of a municipal charter which authorized the taxation of the property of corporations “except incorporated banks and such other corporations as áre excepted by state law.” By state law the property of building and loan associations was excepted from taxation; the law providing for the taxation of such corporations by assessing the shareholders on their shares, and from them collecting the tax.
So far as the cases from Indiana are applicable, they incline to the support of the position of the defendant in error, in this case, the city. In that State, by statute, building and loan associations are assessable with the amount paid into the association upon outstanding shares of stock, less the amount loaned to shareholders secured by mortgage upon property listed for taxation; and it is provided that neither the association nor the shareholders shall be liable to other taxation upon said shares of stock. Nevertheless, it is held that the law did not intend to limit the right to further tax the holders of stock upon their shares. (Deniston v. Terry, 141 Ind., 677.) In a later case it is said that the theory of the law mentioned above was not the taxation of the stock, but “the taxation of the balance on hand or remaining to the credit of the association.” (Harn v. Woodward, 151 Ind., 132. See also State ex rel. v. Workingmen’s B. & L., etc., Assn., 152 Ind., 278.)
So far we have considered only the proposition contended for that the credits in the hands of the association were not, in reality, credits, assets or property of the association, and
The further objection is urged against the tax that it was not based upon a valid assessment. The item in controversy was not included in the schedule of the company’s taxable property handed in by its secretary, and the evidence is conflicting as to whether it was placed on the roll before its return by the assessor, or was added by the Board of Equalization. We will not extend this opinion by a review of the evidence upon the question, but the conclusion seems more reasonable from a consideration of all the facts that the item was added to the assessment by direction of the board. The assessor doubtless made out a separate schedule, but in the roll the item was not carried into the amount of the total assessment. Moreover, the conflicting evidence will receive that construction which will sustain the judgment, this court assuming that the District Court took that view of it. If there is any doubt, as contended, about the power of the assessor to individually act in the matter and insert in the roll items omitted by the taxpayer from his list, which we do not decide, there is no doubt about the right of the board to do so; and hence, in view of the conflict, we will adopt the theory which we deem amply supported by the facts and the evidence that the board increased the association’s assessment by adding the contested item .
The charter of the city contains several sections providing a method for the assessment, levy and collection of taxes for general revenue purposes, which it is declared shall be applicable until an ordinance be enacted covering the subject. (R. S., 1887, Sec. 222; R. S., 1899, Sec. 1348.) So
The City Clerk, who is clerk of the corporate board, is ex-officio assessor. The Board of Trustees and assesor of the city‘is constituted a board for the equalization of assessments, with power to add omitted property, and to increase, diminish, or otherwise alter and correct any assessment. (R. S'., 1887, Sec. 229.) The use of the term “Board of Trustees” is doubtless an inadvertence, and it was apparently borrowed from a former charter, which designated the corporate board by that name. Under the later charter, however, the governing board is composed of a Mayor and a certain number of Councilmen, and. is generally referred to as “the Mayor and Council,” or “the City Council.” No independent Board of Trustees by' that name is provided for, so it is evident that the regular corporate board was intended and understood by the term “Board of Trustees.” The statute should receive a reasonable interpretation, and one which will render it operative. It is immaterial, in our judgment, to any issue in this case whether the Mayor is a regular member of the board or not. He attended the sessions, but without him there was a quorum, and no injury could possibly have resulted from his attendance, even if it should be held that he was not a member; but from a reading of the whole statute we incline to the opinion that the Board of Trustees, constituted with the assessor a Board of Equalization, is the City Council, composed of the Mayor and Council, or, in other words, the corporate board.
The original act (R. S-, 1887, Sec. 229) provides that the Board of Trustees (corporate board) and assessor shall constitute a Board of Equalization, and shall hold a special meeting within five days after the return of the assessment roll, and shall have the right to adjourn such meeting from
By an act of February 20, 1897, it was provided that in cities of the second class the Board of Equalization should have power to be in session for a period of fifteen days, exclusive of Sundays. (E. 1897, Ch. 28, Sec. 14.) It is clear that the session intended to be affected by that provision is the special meeting originally limited in the Laramie Charter to three days, since it is understood that Laramie at that time was the only city in the State to which the act applied.
It has seemed advisable to go into the matter of the con-stition of the board and its powers as to assessments and meetings, to properly dispose of the contention of plaintiff in error upon the validity of the assessment. The Board of Equalization in 1897, in the City of Laramie, commenced its session June 17, but did very little, apparently, until June 22. Their sessions were held, as shown by their record introduced in evidence, upon the following named
It appears that either on or after July 3 the secretary of the association appeared at the meeting of the board and protested against the assessment of moneys and credits. He testified that he had received no notice of the raise, but upon looking over the roll he had observed it. Counsel insists that the Board of Equalization was functus officio on July 3d, and could transact no business then or thereafter in relation to the assessment. In the first place, it appears, by a recital in the minutes of the meeting of June 25, that the work of equalization was completed, and the board adjourned until a subsequent date. The copy of minutes in the record states that the adjournment was until July 30. That is doubtless an error of the copyist, since they met on July 2, “pursuant to adjournment.” It is evident, therefore, the evidence disclosing nothing to the contrary, that we must consider the addition to the assessment as made on or before June 25. The power of the board to be in session at its first meeting had not ceased at that time. It did not cease until the close of July 3, two Sundays having intervened. The board did nothing with the assessment thereafter, except to refuse to disturb it after hearing the protest. There is nothing, therefore, in the point as to. expiration of time for the meeting of the board in respect to the addition to the roll of the assessment complained of, unless it is to be considered as well made regarding the meeting when the company’s secretary appeared and was heard in opposition to the assessment. But having had actual notice of the increase, and having appeared and entered its protest, we are of the opinion that it cannot now complain of the absence of written notice, and of a possible irregularity as to the time of meeting. The evidence seems to show rather clearly that the time for the hearing was agreed upon between the board and the managing official of the company. At least, an evening was set apart for it, and the representa
An ordinance adopted by the Council prior to the commencement of this suit provides for the recovery by suit in a court of competent jurisdiction of taxes delinquent for sixty days.; and the passage of the ordinance was followed by a resolution directing the City Attorney to bring suit against the plaintiff in error and others to recover all taxes levied and assessed against them, with interest and penalties. The charter provides that the assessment, levy and collection of taxes shall be made as may be provided by ordinance. The city, therefore, had authority to provide for collection of taxes by suit, and having done so, and the time having long expired for the payment of the taxes levied against the moneys and credits of the association in 1897, upon the basis of the assessment aforesaid, and there being no claim of payment, we observe no reason why the suit may not be maintained for the collection of the delinquent taxes for that year.
The petition in this case contains two causes of action. We have so far considered the second cause of action which sets out the liability for the taxes levied against the company. By the first cause of action the city seeks to recover the sum of two hundred dollárs as a penalty for the alleged refusal of the association to assist the assessor in making out a list of its moneys and credits.
By a provision of the charter (R. S., 1899, Sec. 1351; R. S., 1887, Sec. 225) a penalty of two hundred dollars is imposed upon “any person who shall refuse to assist in making out a list of his property, or of any property of which he is required by law to assist in listing,” and the same is made recoverable by action in the name of the city.
The secretary of the company prepared a list, and made oath to it, and delivered the same to the assessor, but refused to include moneys and credits, insisting to the assessor that no such property was taxable to the association. Counsel for the city contend that the wilful omission of said
In the first place, we cannot but regard the right to recover the penalty from the company as extremely doubtful, even if it should be conceded that, under the circumstances, someone became subject to the prescribed penalty. The preceding section provides that the assessor shall enter all taxable property upon the assessment books “with the assistance of each person required by law to list property for himself or for another.” A corporation as such, independ-. ent of some individual, cannot, in the nature of things, assist the assessor in listing its property. Such assistance must come from an officer or agent of the company. The officer or agent is covered by the provision for assistance by a person required to list property for another. The same is true, for example, of a guardian, executor, or trustee. Doubtless the statute might make the company liable for the omission of its officer, or the estate of a minor for the neglect of his guardian, but in this respect the question is, Has the statute done so ? The penalty is imposed upon the person who shall refuse to assist as to property which he is required by law to assist. It would be pertinent, therefore, to inquire who refused. If there was such a refusal as to make the penalty enforceable, the refusal must have come from someone required by law to assist. A corporation is a fictitious person, a legal entity. It is usually included in the term “person” as used in statutes, but it must act through its officers or agents. The general revenue laws required the property of a corporation to be listed by its principal accounting officer or agent .in the county where the property was located. (R. S., 1887, Sec. 3778.) We do not care to further continue the discussion of this feature of the question, enough having been said, we think, to show that, in the present condition of the statute, the liability of the company for the penalty may well be doubted, even admitting that it might be recovered upon the facts in the case from the person refusing assistance.
The statute is penal in character and must receive a strict construction. To concede the correctness of the proposition maintained by counsel for the city would be to hold that any taxpayer who omits from his list any of his property, in the best of faith, honestly believing the same nontaxable, either as exempt or for any other reason, .is liable to pay the penalty of two hundred dollars, if it should be determined that his belief was erroneous.
If that is to be the policy of the law, it should be clearly expressed. That is not, in our judgment, the purpose and effect of the statute under consideration. It would have been easy to have said that anyone omitting any property shall forfeit two hundred dollars. The Legislature, however, did not so say. In the succeeding section the case of
In regard to this question, we have confined our discussion to whether an omission from a list made out and sworn to permits the enforcement of the penalty.. That, in our view of the evidence, is the only fact upon which the penalty is sought to be recovered. Whether the refusal of one required to list property to furnish information, upon request, of property not included in the list, to enable the •assessor to list it, would of itself amount to a refusal to assist, within the contemplation of the statute, and subject the one refusing to the penalty, wé do not consider, for the reason that we do not understand such a matter to be involved here, even if the company could be held liable in any case.
The only request for information, as shown by the testimony, was a request by the assessor of the secretary for the last published statement of the association, and the assessor testified that the secretary replied that “he had none — had given them all away,” and upon a similar request the treasurer said, after being informed by the assessor that the secretary had none left, “I am out, too.” There is no evidence that the officers had the statements. The request was made of the secretary, as we understand, after the company’s list had been delivered, and occurred at an interview during which the assessor informed the secretary that he would assess the company upon moneys and credits. Not obtaining the statement from the officials aforesaid, the assessor procured one from a newspaper office. The first demand made upon the secretary was that he list the company’s property upon a blank furnished him. The assessor afterward asked him why he did not list moneys and credits, and the answer was that they had none. There is no doubt but that the secretary believed they had no moneys and credits, relying upon the proposition that they were not taxable, and, therefore, his reply accorded with his understanding of the law.
Modified mid affirmed.
