87 Md. 687 | Md. | 1898
delivered the opinion of the Court.
This suit was brought by the State of Maryland in the Court of Common Pleas of Baltimore City to recover from
The aforegoing statement substantially presents the facts essential to a proper understanding of the nature and character of the controversy, arising on this appeal. The appellee offered one instruction in the Court below which was granted and sought to exclude certain testimony, by means of four motions offered for that purpose, each of which was overruled by the Court. The appellant offered six prayers all of which were rejected except the fifth, which was granted. The finding and judgment being against the appellant, it prosecutes this appeal.
The questions here presented are important to the interests of both parties. Important to the appellee, not only because its revenues are affected by the determination of the issues here presented, but because it adopts and declares the rule of law to be adhered to.in all cases of like character with the one now under consideration. It is clearly important to the appellant by virtue of the fact that it involves the question of its liability for the payment, vel non, of the taxes assessed upon a large and valuable property, which the Court of last resort of an adjoining sister State, whose decisions are entitled to and receive the highest consideration by this Court, has declared adversely to the contention of the appellee advanced and sought to be maintained on this appeal.
The leading question which this appeal presents is, whether in the assessment of the capital stock of the appellant company for purposes of taxation, the appellant is entitled to have the assessment limited to the value of the
Mr. Chief Justice McSherry speaking for this Court n the case of The Electric Power and Light Co. v. State, 79 Md. 70, has forcibly said that, “ The taxable value of shares of capital stock is fixed by the State Tax Commissioner. He is required by the statutes to deduct from the aggregate value of all the shares of the capital stock of banks and other corporations the assessed value of the real estate owned by the company, and to divide the residuum by the number of shares of the stock, and the quotient is declared to be taxable value of each share for State purposes of taxation. Upon the valuation thus ascertained the State tax is levied. But the tax is not a tax upon the stock or upon the corporation, but upon the owners of the shares of stock, though the. officers of the corporation are made the agents of the State for the collection of the State tax. It is not material what assets or other property make up the value of the shares. Those shares are property, and under existing laws are taxable property. They belong to the stockholders respectively and individually, and when for the sake of convenience in collecting the tax thereon, the corporation pays the State tax upon these shares into the State Treasury, it pays the tax not upon the company’s own property, nor for the company, but upon the property of each stockholder and for each stockholder respectively, by whom the company is entitled to be reimbursed. Hence when the owner of the shares is taxed on account of his
This statement of the law recently announced by this Court gives to the statute a construction so clear and free of doubt that no suggestion of uncertainty can fairly arise as to its meaning and effect. Under the sections of the Code just referred to, the taxes in controversy here have been levied and assessed, without regard to the value of the United States patents. The State Tax Commissioner has, in the proper discharge of his official duty, assessed the value of the shares of stock in the appellant corporation, and has certified and returned said valuation and assessment to the Comptroller of the Treasury, who has duly notified the appellant of such valuation and assessment, and upon appeal the Comptroller and Treasurer have corrected the same and made their final valuation and assessment, which is final and absolute unless they shall have committed some error in the discharge of their official duties. It is insisted that they have erroneously valued and assessed the Patent Rights in question, and this is the chief grievance of the appellant. But why should not the shares of stock in the appellant corporation be valued and assessed and taxes paid thereon ? The number of corporations incorporated under the laws of this State, engaged in business here, employing vast sums of money and possessed of extensive property rights, is almost unlimited and yet most of them, in the proper and successful management of their business, have been compelled to purchase and use patent rights, to enable them to compete successfully with other corporations engaged in a similar business. They are without exception compelled to pay taxes on their shares of stock levied and assessed in like manner with those in controversy here. It is a total misconception of the object sought to be maintained on this appeal to assert that this is an effort to tax patent rights. It is not, however, necessary to the determination of the rights involved in this controversy, to decide any such ques
We have given careful scrutiny to the various authorities, to which we have been referred, bearing upon the questipns raised by this appeal, and have found the propositions contended for both novel and interesting. The result of our investigation is that we have found but two cases directly bearing upon the subject of the taxation of patent rights, as such, which is not the specific question to be determined on this appeal. The case which supports the theory of the exemption of patent rights from taxation is the case of the Commonwealth v. Westinghouse Electric, &c., Co., 151 Pa. St. 265. The Supreme Court of Pennsylvania having filed no opinion, adopted that of the lower Court, from which we briefly quote and which sufficiently marks the distinction between the Pennsylvania case and the one now under consideration. The former case maintains that, “The tax being upon the capital stock, it is a tax upon the company’s property and assets.” This is not the law of Maryland and such view is not the accepted doctrine held by the U. S. Supreme Court. Bank of Commerce v. Tennessee, 161 U. S. 146. “Taxes being made the sole means by which sov
We have referred to the one case, that of 151 Pa. St. supra, which maintains the non-liability to taxation of patent rights ; the case of the People v. Campbell, 138 N. Y. 543, maintains a doctrine directly contrary to the Pennsylvania case. The New York case was a proceeding by certiorari to review the action of the State Comptroller in imposing a tax upon the relator, the Edison Electric Light Company, a domestic corporation, under the Corporation Tax Act. The entire capital stock of the relator was originally invested in patent rights. Corporations wei'e formed in New York and other States, to whom the relator granted the right to use these patents, receiving in compensation stock in such corporations. It was decided that as to so much of such stock as was in corporations organized in New York, it was the capital of the relator employed in that State, and as such was a basis of taxation, but that the stock in corporations in other States was capital employed outside the State, and not taxable. It was also claimed in that case that the relator held bonds of foreign corporations, issued to it in payment for patent rights granted, and on this question it was
We have thus presented both sides of this controversy, at perhaps greater length than was necessary, but the question is yet in limine and may be regarded as opening a new avenue of judicial investigation. If the Comptroller and Treasurer have in reviewing the action of the State Tax Commissioner discharged their duty in accordance with the provisions of the Code, under which they were acting, and we think they have, their action is final, and from it no appeal will lie.
The second contention which we are called upon to consider on this appeal is, whether there is any prohibition in the Constitution of the United States compelling the appellee to make any reduction in the amount of taxes assessed on the shares of stock of the appellant by reason of certain patents granted by the Federal Government, and now owned by the appellant. Much that we have already said meets this objection. We fail to see how a State tax upon patent rights themselves, would directly or indirectly conflict with the power conferred upon the Federal Government “ tó promote the progress of science and useful arts, by securing for a limited time to authors and inventors the exclusive right to their respective writings and discoveries.” Art. i, sec. .8 of U. S. Const. The power of Congress (giving effect to this provision) goes no further than to secure to the author or inventor a right of property, which like every other species of property, must be used and enjoyed within each State according to the laws of each State. Ch. Kent in Livingston v. Van Ingen, 9 Johns. (N. Y.) 581. This, we think, correctly announces the rule of construction which ought to be applied to the section of the Constitution just referred to. We entertain no doubt as to its meaning and effect and find the questions raised on
It follows from the views expressed that the judgment of the Court below must be affirmed.
Judgment affirmed with costs.