22 F. 602 | U.S. Cir. Ct. | 1884
This is a demurrer to the amended complaint in an action to recover city and county and state taxes for the fiscal year, 1880-81, assessed upon the capital stock of a large number of corporations and upon solvent credits. A demurrer to the original complaint was sustained on the ground that the assessment is void as being double taxation, and a violation of the state constitution. See opinion of the court, 21 Fed. Rep. 539. Leave to amend having been given, an amended complaint has been filed, and therein it is sought, by certain allegations, to obviate the objections to the original complaint, and to take the case out of the principle of the former decision. These new allegations are that the tax is assessed “on said shares of stock of companies severally incorporated under the law of, and having their principal offices in the state of, California; that the aforesaid shares of stock is and are, and each of them are, shares of stock of corporations whose entire tangible property was situated in the state of Nevada, and that the entire property of said corporation was not assessed for said fiscal year, 1880-1881.” The allegation, “whose entire tangible property was situated in the state
Article 13, § 1, provides that “all property in the state * * * shall be taxed,” etc. It does not authorize the taxation of property not in the state. And section 10 of the same article provides that “all property * * *' shall bo assessed in the county, city, and county, town, township, or district in which it is situated.” And the statute follows the constitution in this respect. Pol. Code, § 3628. They do not authorize an assessment, except at the situs of the property. And section 3627 of the Political Code, as it stood in 1880, (St. 1880, p. 6,) when this assessment was made, recognizing this principle of the constitution and laws, and the inadmissibility of double taxation, provided, with reference to the stock of corporations having their principal place of business in this state, that “the proportionate value of the capital stock of corporations *• * * having their principal place of business in this state, for the purposes of assessment and taxation, shall bo its market value, deducting therefrom the value of all property assessed to them in this state or elsewhere of which such capital stock is the representative.” Thus the constitution does not authorize the taxation, in California, through the medium of its stock, of the tangible property of a California corporation situate and taxed in the state of Nevada; but, by stating what property should be taxed, and limiting it to property within this state, and limiting the assessment to the particular district in which the property is situated, by plain and necessary implications, excludes it from taxation. Bo, also, the provision of the Political Code cited, in express terms, excludes taxation, through the medium of the capital stock of the corporation, of all the property of the corporation of which the capital stock of the corporation is the representative assessed, either in this state'“or elsewhere.”
Now', all the tangible property of all theso corporations, according to the allegations of the complaint, which, for the purposes of the demurrer, are taken to be true, is situate in the state of Nevada, and beyond the jurisdiction of California, and, presumably, nothing to the contrary being shown, was taxed under the laws of Nevada to raise revenue for the purposes of the state and local governments of that commonwealth. The laws of Nevada, of which this court takes notice, require all property in that state to be taxed. It is true that to the allegation, “whose entire tangible property was situated in the state of Nevada,” is added, “and the entire property of said corporations was not assessed for said fiscal year, 1880-1881.” But this is only an allegation that it was not assessed in California
The interest of defendant in the capital stock of the corporation being incorporeal and intangible, and having no situs apart from the person of the owner, and he being a non-resident, without the jurisdiction of the state, and the tangible property of the corporation, of which the capital stock is the representative, being also situate outside of the state, it was not, without some express constitutional or statutory provision making it so, if any such valid provision there cou|xl be, subject to the jurisdiction óf the state, orto taxation within
“Tims shares in foreign railroad corporations held by citizens of this state are fully taxed here, and no deduction is made for any taxation to which the corporations are subject in the states where they are situated. So it is in regard to shares held by our citizens in banks, insurance companies, and other moneyed corporations situated in other states. Such shares, when held by oar citizens, are here treated as so much personal estate, following the person of the owner, and taxable at their full value in this commonwealth, regardless of what may be the foreign law as to taxation of the capital, or of any part of it, elsewhere. See State Tax on Foreign-held Bonds, 15 Wall. 328, 324; 18 Amer. Law Reg. 1879, (N. S.) 1, and cases there cited.” 11 Pac. C. Law J. 395.
The court then adds: “The above-quoted remarks are true of the system of taxation established in this state,” (Id.,) thus distinctly recognizing the principle that the situs of incorporeal, intangible shares of stock, like that of a debt due, for the purposes of taxation, follows the person of the owner, and is the residence of the owner; and putting the decision on that ground.
The court, it will be seen, also cites State Railroad Tax on Foreign-held Bonds, 15 Wall. 323, 324, as sustaining the same position, thereby recognizing it as an authority directly on this point. The statute itself, manifestly, recognizes and is framed upon the same principle, including the very sections cited by complainant as being entirely consistent with the provisions of section 3627 of the Political Code as amended in 1880, cited and relied on by defendant. Section 3629, Pol. Code, (Amend. 1880,) p. 7, provides that the assessor “must exact from each person a statement * *' '* of all real and personal property owned by such person, or in his possession, or under his control, * * * showing, separately, among other things, in subdivision 5, “the certificates of shares of the capital stock of any cor
Under the other view, there would be one law to govern the rights of residents and another those of non-residents. The constitution
The obvious tendency of discrimination, — double, unequal, and unjust taxation, — is to drive our citizens having a large amount of personal property out of the state to escape that kind of oppression. If, notwithstanding their departure, they can still be taxed upon their incorporeal and intangible property through their stock in domestic corporations, and thereby be taxed on the same property in both states, the next step will bo for business men either to withdraw their investments from the state, or change them from domestic into foreign corporations, as has sometimes been dono, and the business will hereafter, to a large extent, be carried on by non-residents in their individual characters, or by foreign corporations over which the state has little control, and the state will be confined for its revenue to the tangible property of such non-residents and foreign corporations found within its borders. A policy that recognizes the principle stated, for the purpose of taxing the stock of resident citizens in foreign corporations, as following the person, but repudiates it for the purpose of taxing the stock of citizens and residents of other states in domestic corporations, thereby imposing upon them the burdens of taxation upon the same property in both states, cannot fail to be inimical to the best interests of the state, and to discourage investments by both resident and non-resident capitalists, thereby greatly retarding the future development of its resources. It also places foreign on a bettor footing than domestic corporations, in violation of the constitution. The principle should be altogether repu
There are two items of property assessed as “solvent credits— money, valued at two hundred and fifty thousand dollars; solvent credits, valued at two hundred and fifty thousand dollars.” What is meant by the terms “solvent credits — money,” is not entirely clear. I suppose it means money credits, or credits for moneys, as contradis-tinguished from credits for goods, wares, merchandise, labor, etc. I do not find the terms in that form in any provision of the constitution or statutes brought to my notice. As both the constitution and statutes make a distinction, between credits secured by a mortgage and “solvent credits” not so secured, it may be that moneys loaned and due, secured by mortgage, are called “solvent credits — money;” or the terms are more likely used to designate moneys deposited in solvent banks, subject to be drawn out as wanted on checks of the depositor in the ordinary course of business. I do not perceive that it can make any difference which it is; for in the former case it is not taxable at all, as such, but the mortgage must be assessed “as an interest in the land affe'cted thereby,” and it must be “assessed and taxed to the owner thereof in the county, city, or district hi which the property affected thereby is situate." Const, art. 13, § 4. And the Code follows the constitution. Pol. Code, § 3627. But if taxable as “money credits,” then in either class of credits, independently of statutory definition to the contrary, it can only be regarded as a solvent credit. No particular number of coins can be set aside as belonging to any particular depositor. The general depositary has a right to mingle the money with other moneys; use the surplus moneys deposited as his own, and at his own discretion. The deposit is not special. It is simply an open money account. 'The depositor is only entitled to so much money in amount, and to no particular money, which may or may not be paid when his check is presented, according to the ability and will of the bank with which it is deposited. The depositor is, in law, only a creditor to the amount of the balance held by and due from the bank or banker on an open account. He could not replevy or recover possession of any particular money. The only way to enforce payment would be to bring a suit for any balance due, as in case of money due on any other open account, as for goods sold and delivered. - It is but a chose in action. Under the authorities cited, clearly, independent of statutory provisions to the contrary, such credits have no situs for taxation against the creditor apart from the person of the depositor. See 15 Wall, supra; People v. Eastman, 25 Cal. 603; People v. Whartenby, 38 Cal. 466, 467. The assessment in question seems to be an effort to reach for taxation tangible property in another state through the stock in a domestic corporation