211 Mass. 207 | Mass. | 1912
This is a petition under St. 1909, c. 490, Part III, §§ 70, 71, for the abatement of a tax assessed upon the petitioner under § 21 of said act, upon the average amount of its deposits for the six months preceding November 1,1910.
The petitioner, a savings bank incorporated under the laws of this Commonwealth, was restrained in 1909 from receiving deposits and from exercising certain powers. In June, 1910, the bank commissioner, acting under authority of St. 1910, c. 399, took, and has since retained, possession of the property and business of the petitioner because he had reason to conclude that it .was in an unsound and unsafe condition and could not expe
The tax provided by the statute is an excise tax and, speaking generally, such taxes are valid. Commonwealth v. People’s Five Cents Savings Bank, 5 Allen, 428. Provident Institution v. Massachusetts, 6 Wall. 611. In Commonwealth v. Lancaster Savings Bank, 123 Mass. 493, it appeared that the bank was in the hands of receivers, perpetually prohibited from doing the business for which it was chartered and deprived of the right to exercise its franchise, and thus had practically ceased to exist, and it was held that no tax could be assessed.
In Commonwealth v. Barnstable Savings Bank, 126 Mass. 526, the bank had been enjoined from receiving deposits or paying depositors, from conveying real estate, except on terms approved by the bank commissioners, was limited in making investments to certain securities, but otherwise its officers were permitted to exercise their judgment in preserving and caring for the property of the bank, and it was held liable for th'e tax. The case at bar is not covered precisely by either of these decisions.
It is necessary to examine critically what it is which is made subject to the excise tax. The language of the statute, namely, that “Every savings bank . . . shall pay ... an annual tax of one half of one per cent on the amount of its deposits” is not decisive. In Attorney General v. Massachusetts Pipe Line Gas Co. 179 Mass. 15, at page 19, it was said by Knowlton, J., in denying the claim that no tax could be assessed so long as the corporation had not done business, nor done all that the law required before it could legally commence business: “The franchise which subjects the corporation to taxation is the right to do business legally by complying with the laws. A corporation having this right under legislative action cannot relieve itself from liability to taxation by neglecting to do business, or ceasing to do business. Its franchise remains, and it may do business when it chooses.” If the test here stated is applied to the facts at bar, there is no liability for the tax because the corporation cannot resume business at will. It can only do so when it is deemed safe to do so by the bank commissioner or the court. The bank commissioner, under the
The mere capacity to exist as a corporation is a franchise. California v. Central Pacific Railroad, 127 U. S. 1, 40. It has been said that an excise may be laid upon this even when its exercise is enjoined. In re United States Car Co. 15 Dick. 514. The more general rule is that there must also be either an actual exercise or a right to exercise the privileges conferred by the
The conclusion that there must be a right to exercise the corporate powers before liability for the tax attaches is fortified by the provisions of St. 1909, c. 490, respecting its assessment. Part III, § 22 of that act requires the bank to make a return to the tax commissioner signed and sworn to by its president and treasurer, stating the amount of its deposits on the first days of May and November, and of the average of its deposits for the six months preceding those dates, and imposes a penalty upon the bank for failure to make such return. But the books on which such return must be based have been taken over by the bank commissioner and are no longer available as of right to the officers of the bank. One of the means for collection of the tax is an action of contract, § 61, or an information by the Attorney General, on which an injunction may issue restraining the corporation from doing further business until it is paid, § 62. Neither of these remedies are available against a corporation in possession of the bank commissioner under said c. 399.
It was said by Holmes, C. J., in City National Bank v. Charles Baker Co. 180 Mass. 40, that the franchise of a corporation in the hands of a receiver was not taxed. However that may be in instances where the franchise is exercised by the receiver, as in receivership of railroads and other public service or business corporations, it applies to a savings bank, of which the bank commissioner has taken possession under said c. 399, even when no perpetual injunction has been issued against resuming its business. The tax is based solely on the value of the franchise “es
Such a corporation is not subject to an excise tax when it has no right nor power to exercise its franchise and when its franchise is not in fact exercised by any one in its behalf and interest, even though there is a legal possibility that its corporate functions may be resumed.
Tax illegally exacted; decree for the petitioner with costs,,