186 Iowa 1216 | Iowa | 1919
I. The corporation in question was organized under the laws of this state at Council Bluffs, and its articles of corporation designate that city as its principal place of business. Its articles are not embodied in the record, but it appears without controversy that the organization was promoted and effected for the purpose of purchasing land at International Falls, in northern Minnesota, and subdividing the same into smaller parcels or lots, on which it was hoped to develop a city or town of importance. The authorized capital is said to be $1,000,000, of which sum stock to the par value of $468,000 has been issued. On the theory that these shares of stock were taxable at Council Bluffs, the county treasurer, finding that they had not been listed for taxation, assessed the same to the corporation, and entered thereon the taxes now in controversy.
The corporation, claiming that such action was unauthorized, objected to the assessment, alleging that its entire capital had been and was then invested in real estate in Minnesota, in which form of property it had been duly assessed each year, and the taxes thereon duly paid; and that, aside from such real estate, it had no other property-of substantial value, except certain shares of stock in a Minnesota corporation which had been formed for the pur
The appeal from the assessment having been taken, the company filed a petition restating its objections thereto, and further contending that the assessment was void because the corporation at no time had any property or assets of value in this state; that it has never done any business in this state, except to hold its stockholders’ meeting at Council Bluffs; and that, with the exception of five shares, all of its stock is held and owned by residents of other states, and is, therefore, not taxable in this jurisdiction.
Except the testimony of ’an officer of the company, who estimates the actual value of its stock at not to exceed $150,000, no evidence was offered to show such value, except as it may be drawn as a matter of inference or argument from certain other testimony concerning its assets and liabilities. The witness says he has no knowledge of any share or shares of the stock’s being bought or sold since the year 1905, and that in this sense it has no market value; nor is this in any manner disputed. He further shows that the entire holding of land, constituting the only property or resource giving the stock any actual value, during the period covered by these taxes, has been not to exceed a sum varying from $200,000 to $275,000; and that, during all the same period, the bona-fide corporate indebtedness has been from $162,000 to $195,000.
The taxes assessed by the treasurer against the corporation were levied upon the basis of a taxable valuation of $100,000 for its shares of stock.
II. The statute which the appellant relies upon for authority to assess the stock, without regard to the residence of the stockholders, is found in Code Section 1323, which reads as follows:
It is the contention of appellant that this statute has no effect to make the shares of stock in this company taxable in Iowa, because the capital is wholly invested outside of the state, its shareholders are nonresidents, and all its business is transacted in a foreign jurisdiction. This proposition, we think, is unsound; and if no better reason existed for sustaining the judgment below, we should be compelled to reverse it.
Assuming, without deciding, that this rule is applicable to lands owned by the corporation in another state, we turn to the evidence, and ñnd that the showing as to the assessed value of the appellee’s real estate holdings in Minnesota indicates the aggregate as varying from $224,711, in 1908 and 1909, to $285,741 for the year 1912.
The further provision of the statute that this deduction shall be made from the “real value” of the shares does not
Under the terms of our statute, then, the shares of a corporation are taxable only to the extent of their excess in real value over and above the amount of capital invested in real estate, as indicated by the' value at which such real estate is assessed for taxation. If there be no excess, — that is, if the real value of the shares be no more than the assessed value of the real estate,- — then there is no taxable margin. This being settl^, the controversy before us is reduced to one of fact.
The inquiry made in this case developed, in substance, that the entire capital of the corporation had been invested in the Minnesota real estate, and that its income from sales of land had been expended in improvements and enterprises designed to improve the value and salability of the property on hand. No dividends appear to have been declared or paid. It had no accumulated surplus, but, on the con
This question was recently before us in Marshalltown L. & P. Co. v. Welker, 185 Iowa 165, where we said that:
“In arriving at-j^he value of its capital stock, where the corporate property consists exclusively of real estate and other tangible property, the indebtedness must be taken into account in determining same.”
It would be of no material interest for us to extend this opinion for a more detailed statement of the property, business, and financial condition of the plaintiff company; but we think it reasonably clear, from the entire showing, that this is one of those enterprises in which, though large profits have been hoped for, and may still be realized in the future, it has not yet so far advanced beyond the tentative and experimental stage as to justify a finding of large value in its stock. The estimate of its value at $150,000 by the only witness who attempts to speak on the subject may be too low; yet we find no substantial basis in the evidence for a finding that such value is in excess of the assessed value of the lands in which the capital has been invested.
This is equally true of the record in both of the consolidated cases. Taxes have been regularly levied and paid upon all the tangible property of the corporation, and we concur in the holding of the trial court that there was no taxable margin of value in the stock, after making the statutory deductions therefrom. This conclusion renders immaterial other matters argued by counsel. '