164 Pa. 284 | Pa. | 1894
COMMONWEALTH, APPELLANT, V. EDGERTON COAL CO.
It seems to us, the clear and forcible opinion of the learned president judge of the court below ought to have compelled the assent of the commonwealth to this judgment.
The act of 1891 declares that each corporation “shall be subject to, and pay into the treasury of the commonwealth annuallj'-, a tax at the rate of five mills upon the dollar of the actual value of its whole capital stock of all kinds, including common, special and preferred, ascertained in the manner prescribed in said twentieth section.”
Thus, the subject of taxation, “ whole capital stock,” common, special and preferred, is defined. Then the kind of value to be multiplied by the rate of taxation, is distinctly fixed ; the stock may have several values; a market value determined by the selling price of its shares in open market; a speculative value based on calculation of future prospects and contingencies ; or an actual value, ascertainable from the intrinsic worth of its assets immediately available or unavailable; on its profits or losses, covering a fixed period, and on business calculations for the future. And other elements of value besides these, in the mind of the business man, may be taken into account in arriving at a correct conclusion as to the actual value of the whole capital stock.
The act, then, prescribes a method for ascertainment of the actual value : “ In every case, any two of the following named officers of such corporation, limited partnership or joint stock association, namely, the president, chairman, secretary and treasurer, after being duly sworn or affirmed to do and perform the same with fidelity, and according to the best of their knowledge and belief, shall, between the first and fifteenth days of November in each year, estimate and appraise the capital stock of
The act, thus far, directs what shall be taxed, the “ whole capital stock; ” at what rate, “ five mills; ” at what value, “ its actual value in cash ; ” then how and by whom, in the first instance, this value shall be ascertained. In the case before us, two of the officers, the chairman and treasurer, under oath, made an appraisement of the actual cash value, placing each of the 200 shares of the company at $200, and the aggregate at $40,000. There were no sales of stock during the year for which the report was made, so that this element prescribed as determining a minimum of value, was not present in this case. One dividend of 20 per cent, or $4,000, for the whole authorized stock, was declared, although $44,938.48 was the surplus or net earnings; the surplus, however, was appropriated to payment of the floating debt of the company. The two appraisers, designated by the act, made oath that they had performed their duty with fidelity according to the best of their knowledge and belief in their appraisement of the stock at an actual cash value of $200 per share.
On their certificate being filed with the auditor general, it became subject to his scrutiny and that of the state treasurer under this proviso to the law: “Provided that if the auditor general and state treasurer, or either of them, is not satisfied with the appraisement and valuation so made and returned, they are hereby authorized and empowered to make a valuation thereof, based upon the facts contained in the report herein required, or upon any information in their possession, or that shall come into their possession, and to settle an account on the valuation so made by them for the taxes, penalties and interest due the commonwealth thereon.”
The two appraisers designated by the act, having either full
In this view, large net earnings may largely depreciate the actual value of the stock. For example, suppose the greater part of the paid-up capital stock is represented by a tract of coal land, and that large net earnings in the year reported are attributable to large production; this large production would indicate large exhaustion of the coal, and, necessarily, impairment of the capital.
To arrive at the actual value, possibilities and probabilities, as well as things certain, are properly considered.
The legislature, instead of saying the actual cash value should be that sum, 6 per cent of which would equal the net earnings, thus plainly expressing an intention of which they have left no doubt in the estimate to be made on the average price of sales, go no further than to declare that net earnings shall constitute one fact as the ground of an estimate of the actual cash value. The prominent idea or thought of the whole act, as the learned judge of the court below has so clearly shown, was to base taxation on the actual cash value, and that this should be determined from facts, not theories, in all cases except the one, that this value should in no case be less than the average price at which the stock sold during the year. In thus, in this one case, fixing a minimum, it is the only theoretical estimate adopted; and this has in it a foundation of at least approximate certainty; the worth of anything is “Just so much money as ’ twill bring.” The man who parts with his property at a price, and he who buys it, may be assumed to have that knowledge which warrants the one in not accepting less, and the other in not paying more than the actual value. The wisdom and justice, both to the taxpayer and the commonwealth, of thus basing taxation on actual value, are so manifest, so completely in accord with the common sense of justice, that it would require a very convincing demonstration that the legislature intended otherwise, before we would disturb this judgment ; the learned attorney general has failed to so convince us, while the judgment of the court below is vindicated by the soundest reasoning, leading to conclusions that are irresistible.
In thus expressing our approval of this judgment, we do not intend to, in any degree, deny the power of supervision
We hold with the court below, in its first conclusion of law on the facts, that:
“ The amount and rate per cent of dividends made, and the amount carried to surplus and sinking fund during the tax year, do not furnish an absolute indication or measure of the actual value in cash of the capital stock of a corporation, but are to be considered with all other relevant facts, in determining what is its actual value in cash.”
Therefore the judgment is affirmed, and the appeal is dismissed at costs of appellant.
COMMONWEALTH V. EDGERTON COAL COMPANY, APPELLANT.
Oct. 1, 1894:
All the questions raised on this appeal have been decided in appeal of Commonwealth between the .same parties, No. 27 May Term, 1894, and of defendant in Commonwealth v. Sharon Coal Company, Nos. 22 and 28 May Term, 1894. The judgment is affirmed and appeal dismissed at costs of appellant.
Oct. 1,1894:
The rule stated by the learned judge of the court below in Commonwealth v. Edgerton Coal Company, No. 27 May Term, 1894, of this court, in which opinion has this day been filed, we think applicable to the facts in this case. Its application here in no wajr affects the judgment. The court has found as a fact that the actual cash value of the whole stock was the amount estimated by the appraisers, on the construction of the act of 1891, that: “ The amount and rate per cent of dividends made, and the amount carried to surplus and sinking fund during the tax year, do not furnish an absolute indication or measure of the actual value in cash of the capital stock of a corporation, but are to be considered with all other relevant facts in determining what is its actual value in cash.” On that rule, we affirm this judgment. .
The further claim is made by appellant that the act of 1891 is unconstitutional, in that,—1. It discriminates for purposes of taxation between property owned by appellant, and property owned by natural persons and other corporations. 2. It is in conflict with section 1, article ix, of the constitution of Pennsylvania, and section 1, article xiv, of the constitution of the United States, because it imposes a tax of five mills on capital stock of appellant, and on stock of other corporations only three mills, and on other property of the same class only four mills. 3. The fourth and fifth sections of the act are void, the subject thereof not being clearly expressed in the title, as required by article 3, section in,- of the constitution of Pennsylvania.
As to the first and second objections, it has been settled that the legislature can, without making the revenue statute obnoxious to the constitution, classify corporations for purposes of taxation; may sever a small class from a larger one; might subject one class to taxation, and leave others uiitaxed: Commonwealth v. Brewing Co., 145 Pa. 85, and the cases there cited. And in Commonwealth v. Delaware Division Canal Co., 123 Pa. 596, it was decided that a different basis of taxation might be adopted on mortgages and loans held by individuals, and those held by corporations.
As to the third objection, that two sections of the act are void because their subject is not expressed in the title, we think it cannot be sustained. The act is entitled, “ An act to pro,vide increased revenues for the purpose of relieving local taxation, being supplementary to an act, etc.,” and then follows an enumeration of the acts of which it is a supplement. The act is a supplement to provide increased revenues by taxation. Every section of it is germane to the subject of the original bill, and it is decided in State Line and Juniata Railroad Co.’s Appeal, 77 Pa. 431; Millvale Borough v. Evergreen Railway Company, 131 Pa. 19, and in Craig v. Presbyterian Church, 88 Pa. 42, that if the subject of the supplementary act be germane to the subject of the original act, it is a sufficient compliance with the mandate of the constitution.
None of appellant’s assignments of error are sustained, therefore the judgment is affirmed and appeal dismissed at costs of appellant.
COMMONWEALTH, APPELLANT, v. SHARON COAL COMPANY.
Oct. 1,1894:
This is an appeal by the commonwealth from the same judgement affirmed in appeal of defendant, opinion filed this day. The assignments of error call for no further notice. The judg7 ment is affirmed and appeal is dismissed at costs of appellant.
COMMONWEALTH V. PHILA. CO. ET AL.
Oct. 1,1894:
As these cases are ruled by Commonwealth v. Edgerton Coal Company, and Commonwealth v. Sharon Coal Company, opinions filed this day, the judgments are affirmed and the appeals dismissed at costs of appellants. :