34 Colo. 240 | Colo. | 1905
delivered the opinion of the court.
1. It will materially lessen our labors and shorten the opinion first to determine the nature of the burden imposed. If we find that it is a business or excise tax, that conclusion will answer some of the most serious objections urged. If it is a direct tax on property, the attorney general is disposed to concede that it would be repugnant to several clauses of our own constitution.
The language of section 65 is that every foreign corporation shall pay annually "a state license tax as follows: Four cents upon each one thousand dollars of its capital stock: Provided, that in cases of foreign corporations the par value of whose shares of stock is less than one dollar per share, they shall pay as such tax at the rate of two and one-half cents
“That the franchise, capital stock, business and profits of all corporations are liable to taxation in the place where they do business, and by the state which creates them, admits of no dispute at this day.” — State Railroad Tax Cases, 92 U. S. 575, 603; Parsons v. The People, 32 Colo. 221, 76 Pac. Rep. 666, 670.
In Louisville Tobacco Warehouse Co. v. Commonwealth of Kentucky, 57 L. R. A. 33, is found an elaborate note which throws much light upon this section. It is not always easy to determine whether a .tax like that here laid is a franchise, excise, business or property tax. It has been said that the usual and most certain test is whether the tax is upon the capital stock eo nomine, without regard to its value, or whether based upon its. assessed value. If the former, it is not, if the latter, it is, a tax upon property. Otherwise expressed, if a tax is imposed directly by the legislature without assessment, and its amount determined by the number of shares of stock, or amount of business done, or dividends declared, or some such standard, it is not usually considered a property tax; but where there is a precedent valuation of corporate property, and the levy of the tax is made upon such basis, it is usually considered a property tax.
We are clearly of opinion that, though in form this tax is upon the capital stock; it is not a property tax, though the privilege of doing business is a prop
2. The foregoing necessarily disposes of, as untenable, the objection that this section violates the uniformity clause of section 3 of article X of the constitution. That provision is applicable only to a direct ad valorem tax on property, and not to a tax upon privileges or occupations. — Denver City Ry. Co. v. City of Denver, 21 Colo. 350; Parsons v. The People, supra.
3. The contention that section 65 is invalid because the thing imposed is in the nature of a license under the police power, and not a tax under the sovereign power of taxation, and therefore not within the title of the act, which is “An Act in relation to Public Revenue,” cannot be upheld. That which is levied here is not for regulation, nor is it
4. Section 6 of article II of our state constitution provides that “courts of justice shall be open to every person, and a speedy remedy afforded for every injury to person, property or character; and that right and justice should be administered without sale, denial or delay. ’ ’ And paragraph 1 of the 14th amendment of the federal constitution provides that no state shall deny to any person within its jurisdiction the equal protection of the laws. Appellant says that section 66 contravenes these safeguards, because a forfeiture- of corporate franchises, for failure to pay a tax, is beyond- the power of the legislature to declare, and only the courts, upon due notice and hearing, can so decree, and such a remedy impairs the obligation of its charter Contract. And particularly obnoxious to its charter and constitutional rights to sue and defend is said to be the concluding portion of the section, which declares that a failure of the corporation to pay the tax imposed “may be pleaded and maintained as an absolute defense to any and all actions, suits or proceedings, in law or in equity, brought or maintained by or on behalf of such corporation in any court of competent jurisdiction within the limits of this state, until such tax is paid.” As appellant is here called upon in court to justify its refusal to pay the tax, we fail to perceive the pertinency of the first objection. Besides, the forfeiture is merely a remedy for the due enforcement or collection of the tax, which may be lifted by its payment, and appellant is denied no constitutional right when that penalty, in a proceeding
Certainly appellant is not in a position to raise • the last objection. It will be observed that failure to pay the tax is made a ground of defense to actions or suits brought or maintained by or on behalf of the defaulting corporation. This action is not brought or maintained by or on behalf of appellant and no private litigant is interposing the defense. On the contrary the proceeding is a direct one in the name and by the authority of the people of the state through its attorney general, and the corporation is brought in as a respondent and given full opportunity to be heard. It has been ruled that this is the proper practice. — Lumber Co. v. Ward, 30 W. Va. 43. It is difficult to see how appellant may, in this proceeding, raise any such constitutional objection, for we repeat that not only has its right to be heard not been denied, but such right is expressly recognized by summoning it into court to speak.— McMillan v. Anderson, 95 U. S. 40. If this were a case brought by or maintained in behalf of appellant against some defendant who sought to interpose the defense which the section authorizes, or if appellant were denied the right to defend in court, the case would be entirely different and we might then be called upon to pass upon the point. That this remedy impairs the obligation of a. charter contract is based upon the proposition that no tax can be levied upon appellant’s privilege to do business in this state, and this point receives consideration in connection with the next and most important general objection.
5. This is that section 65 violates section 11 of article II of the state constitution and paragraph 1 of section 10, article I, of the federal constitution in that it is an ex post facto law, retrospective in its
For several reasons we are unable to agree with appellant. The fee paid to the secretary of state for the use of the state when the certificate is filed is not, in any sense, a tax. It is the conventional price or bonus which the corporation pays to the state for the privilege of entering this state to do business as a corporation, subject to all legitimate taxation which the state may impose upon the property that it may acquire in the exercise of its franchise rights, and upon the use of the privileges thus purchased. The right or privilege to be a corporation is a franchise itself, often called a primary franchise, and while it was not this franchise which appellant obtained by the payment of the filing fee, because that had already been granted by the state of New Jersey, yet it was for the right to come into this state and do business as a corporation that the bonus was exacted. The secondary franchise or right of making use of the purchased privilege, which the books denominate the franchise to do, is entirely distinct and separate from the franchise to be, or to exist here as a corpo
Moreover, unless the filing fee is a tax, and is to be considered as a substitute for, or the equivalent, or in lieu of the entire tax which the general assembly intended to exact of foreign corporations for the privilege of doing business in this state, they cannot escape the license tax imposed by section 65, even though the filing fee statute expressly granted the exemption; for by section 9 of article X of our constitution the power to tax corporations and corporate property can never be relinquished or suspended.
But, as already observed, the particular claim here is that the filing fee paid when appellant’s certificate was filed with the secretary of state was the payment of a tax in a lump sum for the privilege of exercising its corporate franchises and transacting its business in this, state for the full term of its corporate existence, free from all further taxation; in other words, a business tax for the entire period. We have already held that this filing- fee was the conventional price for appellant’s right of entrance as a corporation, and when paid merely entitles it to come into this state to do business as a corporation, and gives it a standing similar to that which is secured by a domestic corporation which files its. original certificate of incorporation with the secretary of
But suppose it was such a tax as appellant says it is. Aside from the constitutional reason just given it cannot, for another reason, be given the scope claimed for it. There is nothing in the language of the filing statute which expressly or by implication exempts corporations from subsequent or additional taxation either upon their property or upon their right to transact business; and the universal rule in such cases is that exemptions are not favored, but must be clearly established or found in the contract or enactment under which they are claimed, either by express words or by implication so strong as to lead irresistibly to the conclusion that exemption was intended. — 10 Cyc. Law and Pro. 200 and notes. There is nothing in our act expressly conferring the exemption.
The appellant, conceding that to be so,' insists that it is implied, for it says when the state granted the privilege of doing business in this state for a specified price, and did not expressly reserve the right to increase it, to add to .the agreed consideration is beyond its power. In support of this contention the main reliance is upon Gordon et al. v. Appeal Tax Court, 3 How. 133, and other cases which have followed and approved it. That case has been so often criticised and disapproved by the supreme court of the United States itself that it can no.longer be considered as authority for the particular contention which appellant hen* makes. Two subsequent cases in the supreme court of the United States uphold the validity of a tax imposed by the statute there attacked which is practically the same as that we are now considering. In
“But the answer is that the company took their charter subject to the same right of taxation in the state that applies to all other privileges and to all other property. If they wished or intended to have an exemption of any kind from taxation or felt that it was necessary to the profitable working of their business they should have required a provision to that effect in their charter.”
And quoting from Erie Ry. Co. v. Pennsylvania, 21 Wall. 492, the court declared: “The language in which the surrender [of the right of taxation] is made must be clear and unmistakable.” In our statute, as in the Memphis Gas Company case, there is no express language which attempts to exempt appellant from taxation, nor is there even the remotest implication of such exemption. In New Orleans City etc. Co. v. New Orleans, 143 U. S. 192, the same doctrine was announced, and Gordon v. Appeal Tax Court, supra, commented upon and explained. See
In U. P. Ry. Co. v. De Busk, 12 Colo. 294, 307, our own court, in referring to the claim there made that a state statute impaired the obligation of the contract which was included in a corporate charter, quotes approvingly the well considered case of Rodemacher v. Ry. Co., 41 Iowa 297, in which it was declared that: “There is no implied contract between a state and a corporation that there shall be no change in the laws existing at the time of the incorporation which shall render the use of a franchise more burdensome or-less lucrative.” The corporation takes “its charter subject to the general laws, and of course subject to such changes as shall be rightfully made in such laws.” This applies to tax laws as well as to others. That the right of exemption must be clearly shown, in cases like the one in hand, has often been decided. — Wells v. Savannah, 181 U. S. 531; Delaware Railway Tax, 18 Wall. 206; 2 Cook on Corporations (5th ed.) § 572b; Att’y General v. Bay State Mining Co., 99 Mass. 148, 152; 4 Thompson on Corporations, §§ 5571, 5572; Judson on Taxation, § 41; Adams Express Co. v. Ohio State Auditor, 166 U. S. 185; Lumber Co. v. Ward, 30 W. Va. 43, 48; Standard etc. Cable Co. v. Att’y General, 46 N. J. E. 270.
Our conclusion is that the payment of the filing fee was not intended as a tax in a lump sum for the privilege granted to a corporation of exercising its charter powers, but merely the purchase price or bonus for the privilege of existing here as a corporation. But if it should be considered as a tax for the privilege of doing business in the state, this would not, in the absence of a clear exemption from further or additional burden — which was not granted it— prevent the legislature from imposing an additional tax upon its business. No provision of the state or
In Kiowa County v. Dunn, 21 Colo. 185, it was said that,the property or business of a nonresident cannot be taxed in a different manner or at a different rate than that of a resident. A business or occupation tax was not involved in that case. But it is clear that in a license or business tax upon corporations the state may discriminate against a foreign and in favor of a domestic corporation, though it may not between a resident and nonresident natural person. This is declared in the leading case of Paul v. Virginia, 8 Wall. 168, 181, and the cases following that authority. In Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, 188, the supreme court of the United States, in considering the claim that in imposing license or franchise taxes the foreign corporations must be treated the same as domestic ones, said: “The power of the state to discriminate between her own domestic corporations and those of other states desirous of transacting business within her jurisdiction was clearly established,” subject only to such limitations as may be found in the fundamental law of the Union. — Copper Co. v. Scherr, 50 W. Va. 533; 13 Am. & Eng. Ency. Law (2d ed.) 844 et seq., 860.
Nor is the objection that foreign corporations the par value of whose shares of stock is less than one dollar per share are required to pay a less tax than those whose shares of stock are of a greater value good; for it is within the power of the general assembly, in imposing taxes of this kind, to make reasonable classifications for the purposes of taxation. In what particular, if at all, the classifications of this section are unreasonable, we are not advised.
6. Appellant is engaged in the business of mining, smelting and refining ores, and marketing the refined product, and the ores which it smelts in Colo
We do not perceive the force of the argument. The tax is not levied upon any article that is imported into or exported from this state, nor is any instrument of interstate or foreign commerce taxed nor is any burden placed upon that commerce in the sense in which that term is used in the federal constitution. If there is any burden at all, it is only incidental, and such as results from all legitimate taxation. — Waters-Pierce Oil Co. v. Texas, 177 U. S. 28; Judson on Taxation, §158.; Ashby v. Ryan, 153 U. S. 436; Postal Tel. Co. v. Charlestown, 135 U. S. 692.
The fact that only a portion of its capital is employed and only a -relatively small part of its property situate in Colorado does not relieve it from the payment of a tax of this nature. This has been expressly ruled in Horn Silver Mining Co. v. New York, 143 U. S. 305. The particular objection that it is unfair and unjust and oppressive to the corporation not to take into consideration the fact that the larger portion of its capital and its property are situate without this state was referred to in that case, and
7. The late case of People of the State of N. Y. ex rel. The Met. Street Ry. Co. v. State Board of Tax Commissioners, 199 U. S. 1, decided by the supreme court of the United States after oral argument of the case at bar, answers all the substantial objections which the appellant has made against the validity of this tax. The' court there held that the principal objection to the tax made in that case, which was the same as that here, viz, that when the state grants, a privilege on condition of the payment of a lump or of an annual sum the contract implies that the public shall exact no larger amount for that privilege, and that thereafter to impose a tax upon it is simply increasing the price which the grantee is called upon to pay for the privilege — finds no justification in principle or authority. See also the same case reported in 174 N. Y. 417, 446.
We are satisfied that this corporation license tax is on the business of foreign corporations which are established and doing business in this state, and as such is not subject to any of the constitutional objections interposed by appellant. The judgment below which sustained the tax should therefore be affirmed, and it is so ordered. Affirmed.
Decision by the court en banc.