188 Pa. 169 | Pa. | 1898
Lead Opinion
Opinion by
All the material facts of this case are stated in the opinion of the court below. The finding of a fact determines the amount of the judgment; the accounting officers of the commonwealth and the court adopt a like construction of the statute, but differing in their views of the evidence, differ in results. The officers of the defendant corporation, putting a wholly different construction on the statute, largely differ from both as to the fact. The defendant appraises its capital stock as of no value whatever; the commonwealth appraises it at 134,480,577.70, the court below appraises it at less than half that amount. The main dispute between the commonwealth and defendant is as to the construction of the act of 1891. It may be conceded at once, that the legislative intent to levy the higher amount must be express or result from necessary implication, for if in a tax law the intent be doubtful it does not exist. The title of the act declares the purpose to be to tax “all the property of corporations, limited partnerships and joint stock associations having capital stock, at the rate of five mills on each dollar of its actual value.” Could legislative language be plainer ? All the property of corporations is to be taxed at the rate of five mills on each dollar of its actual value. The words “ having capital stock ” are used to distinguish such corporations from beneficial,
In Commonwealth v. Standard Oil Co., 101 Pa. 119, speaking by Paxson, J., this Court held: “It has been repeatedly decided and is settled law that a tax upon the capital stock of a company is a tax upon its property and assets.” Then in Fox’s Appeal, 112 Pa. 354, it is said: “ The capital stock is nothing; a myth, a mere name, excepting in so far as it is represented by investments made with the money paid into the treasury of the corporation on account of such capital stock. Hence it is that the courts have long since declared that a tax upon the capital stock of a corporation is a tax upon the assets and property of such corporation.” In Commonwealth v. Delaware, Susquehanna & Schuylkill R. R. Co., 165 Pa. 44, opinion by McCollum, J., we said: “ In ascertaining the actual value of the capital stock, was it proper to take into consideration, affecting that value, the franchise of the company ? We think this question is affirmatively answered by the act of June 8, 1891, under which the valuation was made. The capital stock represents the franchises as well as other property of the company. In the sixth preamble of the act there appears a plain legislative purpose to include the franchises in fixing the value of the stock, and tliis is in harmony with the title and the provisions in respect to the taxation of it.” There are other cases to the same effect. The statute having thus, in express terms, declared the sxibject of taxation to be all the property of corporations having capital stock, and the settled interpretation by this Court of a tax on capital stock of a corporation being, that it is'a tax upon all the property of the corporation, it is clear that the learned judge of the court below committed no error in the first sentence of his conclusion of law, thus: “A tax on the capital stock of a corporation is a tax on its property and assets, including its franchises.” °
In supporting their argument on each side, counsel ■ have given undue significance to the indebtedness of the corporation; strictly speaking, in view of the purpose of this statute, the debt is almost as much of a myth as the certificate of capital stock. The declared purpose is to tax the capital stock by ascertaining its value in view of the tangible assets of corporations, what was owing to them, the value of their franchises and the rights and privileges they possessed under their grants. The commonwealth no more sought by the act of 1891 to ascertain and tax the net assets of these artificial beings, than, by the usual tais; laws, she seeks to tax the net assets of natural ones ;
The argument that different methods were adopted by the commonwealth’s officers in ascertaining the actual value of the capital stock of corporations and, therefore, there has been want of uniformity and a discrimination, is not well founded. As the learned judge of the court below shows, prior to the act of 1891, the basis of taxation value, by the taxing' acts, was the net earnings, but the latter act declares that the capital stock shall be appraised “ at its actual value in cash, not less, however, than the average price which said stock sold for during said year, and not less than the price or value indicated or measured by net earnings, or by the amount of profit made, and either declared in dividends or carried into surplus ox sinking fund.” A minimum appraisement is here fixed for solvent corporations; in most cases, doubtless, the corporation officers and the commonwealth, in estimating the actual value of a solvent, well managed road, would adopt it, and properly, too, as a fair basis in estimating the actual value of the capital stock. But the act of 1891. was intended to reach also the bankrupt road, which may have the same mileage, the same traffic, and the same privileges as the solvent one. The state conferred upon it the right of eminent domain for location and extension of branches or feeders, as well as for necessary improvements; being constructed, it now has the right, under the protection of the laws, to operate it in carrying freight and passengers.
We can only say that, after a most careful examination of the whole case, we find neither error of fact nor law in the judgment of the court below, and it is therefore affirmed.
Dissenting Opinion
dissenting:
I dissent in this and the kindred cases, known as the capital stock cases, because I am of opinion that the decision is founded on a fundamental error in confusing a tax on the property of the corporation with the tax on the property of the individual shareholder therein, which is what the statute imposes. The subject-matter of taxation under the act of June 8, 1891, is capital stock, eo nomine, independently, and without reference to the property which it represents. It is to be taxed at its