C. E. FULGHAM, Secretary of State, et al., Appellants, v. GULF, COLORADO & SANTA FE RAILWAY CO., Appellee.
No. 10380.
Court of Civil Appeals of Texas. Austin.
March 7, 1956.
Rehearing Denied March 28, 1956.
288 S.W.2d 811
We do not believe that the admission of the listing card for the limited purpose was so harmful or if so the same was cumulative of other evidence.
The listing card was аdmitted for the purpose of showing the value Mr. Holt had placed on the 65 acre tract of $40,000. There was other testimony that appellant had listed the land at $40,000, and appellant had testified that he had listed the property at $45,000 аnd at $35,000, and there was no question as to the land being the land involved in the suit. Hix v. Wirt, Tex.Civ.App., 220 S.W.2d 530, er. ref., n. r. e.;
We do not believe the court erred in admitting question and answer No. 50 from the deposition of E. S. Sutton and if so same was harmless and probably waived.
The appellant did nоt object to the question and answer at the time it was admitted in evidence and nothing was before the court to act on.
We believe that witness Sutton was properly allowed to state his opinion of the market value of the land. At thе time this evidence was tendered no objection was made. There was much testimony as to the value of the land both for subdivision and agricultural purposes, and Sutton‘s testimony was as to its agricultural value.
Complaint is made of the admission of the testimony of witness Jowers who testified that he made an offer to buy the property for $48,000. This testimony was admitted without objection.
There was other testimony as to the offer of Jowers to buy the property and the testimony of Jowers was сumulative.
Peerless Oil & Gas Co. v. Teas, 138 Tex. 301, 158 S.W.2d 758.
Finding no reversible error the judgment of the trial court is affirmed.
John Ben Shepperd, Atty. Gen., W. V. Geppert, L. P. Lollar and Henry Gates Steen, Asst. Attys. Gen., for appellants.
Wigley, McLeod, Mills & Shirley, Galveston, C. K. Richards, Austin, for appellee.
GRAY, Justice.
Appellee is a railroad corporation operating in Texas and other states. A portion of its lines of railroad in Texas extends through the counties of Hill, Bosque, Tom Green, Collin and Tarrant. The War Department of the Fedеral Government through its Corps of Engineers constructed dams and reservoirs for flood control and water conservation by reason of which portions of appellee‘s railroad lines in the above counties were affected and appellee was ordered and directed to relocate and reconstruct such lines. The lines were so relocated and reconstructed and the cost thereof was paid by the Federal Government. This cоst exceeded the book value of the previously existing lines by $5,259,895.87. In accordance with the requirements of the Interstate Commerce Commission,
In due time appellee filed its franchise tax return for the year 1954 wherein it listed the above sum of $5,259,895.87 as “Donations and Grants” and paid its franchise tax based on a deduction of this amount. Thereafter the Secretary of State assessed aрpellee with an additional sum of $477.50 and penalties in the sum of $119.38, and also pursuant to Chapter 2, Art. III, Sec. 1, Acts of the 53rd Legislature, First Called Session, 1954,
The facts show and the trial court found that the relocated railroad lines are 1.16 miles longer than the old lines; that some of the bridges and structures оn the relocated lines are longer than those on the old lines; that the cost of maintaining the bridges, structures and roadbed on the relocated lines will exceed such costs on the old lines; that the relocated lines do not contribute to a more efficient operation of appellee‘s lines of railroad and will not produce any additional revenue to appellee.
Appellants and appellee agree that the question to be here decided is: Does the $5,259,895.87 constitute surplus within the meaning of the franchise tax statutes, Arts. 7084, 7084 1/2 and 7089, Vernon‘s Ann.Civ. St.
So far as pertinent to our inquiry here
“Surplus” is used in Art. 7084 and Art. 7089, supra, but the Legislature has not seen fit to define the term nor has the term as there used been defined by the courts of this State. Hоwever in United North & South Development Co. v. Heath, Tex.Civ.App., 78 S.W.2d 650, 652, er. ref., the term was applied to the facts before the court and it was said:
“As used in the franchise tax law in arriving at a proper meaning of that term, the purposes of the Legislature should be looked to. It is to be borne in mind that a franchise tax is not a tax upon the property of the corporation nor one upon its income, though both are to be regarded in measuring such tax, but a charge made by the stаte against the corporation for the privilege granted it to do business in the state. State ex rel. Marquette Hotel Inv. Co. v. State Tax Comm., 282 Mo. 213, 221 S.W. 721, 726; Southern Realty Co. v. McCallum, 5 Cir., 65 F.2d 934. Manifestly, as appears both from
article 7084, R.S., as amended , and fromamended article 7089, R.S. , prescribing the information such corporation is required to furnish the secretary of state, it wаs the purpose of the Legislature to levy against the corporation a tax commensurate with the value of the privilege granted, as that value is reflected by the information contained in the corporation‘s franchisе tax report.”
The Court further said:
“Since such tax is payable in advance, the state may, in computing such tax, look to the property owned by the corporation and available to it, for use during the ensuing year in carrying on its business. Such was clearly, we think, the legislative intent.
“In the instant case we think that any strict or technical definition of the term ‘surplus’ as used in the statute should not be applied, but one which would effectuate the legislative intent.”
In Edwards v. Douglas, 269 U.S. 204, 205, 46 S. Ct. 85, 88, 70 L. Ed. 235, cited in United North & South Development Co. v. Heath, supra, Judge Brandeis discussed surplus of a corporation as used in the Federal Revenue Act and, among other things said:
“The surplus account represents the net assets of a corporation in excess of all liabilities including its capital stock. This surplus may be ‘paid-in surplus,’ wherе the stock is issued at a price above par; it may be ‘earned surplus,’ as where it was derived wholly from undistributed profits; or it may, among other things, represent the increase in valuation of land or other assets made upon a revaluаtion of the company‘s fixed property.”
The value of appellee‘s relocated and reconstructed lines is an increase in the value of its railroad lines used in conducting its business and therefore constitutes an increаse in the value of its property or assets.
We think that the intent of the Legislature to include property values in computing
The parties agree that the Secretary of State is not bound by the bookkeeping rules and regulations of the Interstate Commerce Commission. However appellee says that the Railroad Commission of Texas on August 28, 1914 issued a rule for the classification of Texas railroad corporations, the same being Circular No. A-13, wherein it adopted “Classification of Accounts as prescribed by the Interstate Commerce Commission in accordance with Section 20 of the act to regulate commerce, issue of 1914.”
The statutes,
Appellee further says that the question presented is: Dоes appellee come within the statutory provisions imposing the tax as to the $5,259,895.87 in question? and says that because the question is open to doubt that the doubt should be resolved in favor of the taxpayer and cites Carpenter v. Bass, Tex. Civ.App., 142 S.W.2d 406. Affirmed Texas Unemplоyment Compensation Commission v. Bass, 137 Tex. 1, 151 S.W.2d 567. We think an application of this rule of law to the facts here is not called for because if what we have already said is correct then doubt does not exist.
The franchise tax in the amount of $477.50 was not paid when due as provided by
“Any corporation * * * which shall fail to pay any franchise tax provided for in this Chapter when the same shall become due and payable under the provisions of this Chapter, shall thereupon become liable to a penalty of twenty-five per cent (25%) of the amount of such franchise tax due by such corporation. * * *”
The statute assesses the penalty for the failure to pay the tax when due and the Secretary of Stаte is not vested with discretion in the matter or compelled to notify the party in default before such penalty accrues. Clark v. International Harvester Co., Tex.Civ.App., 115 S.W.2d 1022, er. ref.
The judgment of the trial court is reversed and judgment is here rendered that appellants recover of appellee the sums of money supra paid by appellee under protest.
Reversed and rendered.
HUGHES, Justice (concurring).
In testing appellee‘s main contention I have assumed the opposite fact situation from the one presented. If instead of increasing the value of appellee‘s facilities by over five million dollars through relocation of certain lines the value of such facilities had been diminished by five million dollars it seems certain to me that appellee would have demanded and would have been entitled to receive a pro tanto decrease in its franchise tax liability. The rule should work both ways.
The Heath case cited by the Court is also authority for holding immaterial the manner in which this item was carried by appellee on its books.