Pullen v. . Corporation Commission

548 THE COURT. IN SUPREME

Pullеn v. Commission. in question to tbe prove printing plant There is evidence that pro- for of tbe was time to and out paid from time to added agent managing defendant was business; ceeds of tbe of tbe tbe for this plant and that be made some purchases plaintiff, out bis own funds. tbe jury His instructed Honor, think, correctly we clearly where on this an of tbe It is well established that feature ease. for is authorized himself, be agent purchases, immedi tbe title to tbe same for bis jmrchase principal, River Co. v. Deep Mining in tbe ately principal. vests Gold Fox, McKale, W., 644; 39 69 N. Edwards C., 61; N. Carroll v. Atl., 999; v. 24 v. 61 Dobley, E., 821; Bergner Bergner, N. vbl. 1471. Cyc., p. . makes where agent Tbe true tbe equally principle for benefit. own tbe private with bis funds jmrchase principal's 999; Oli 1441; Bergner, Atl., vol. v. Cyc., Bergner page Kastor, W., ver v. 101 S. 563. instruction, Tbe banded three which prayers defendant up was based. were tbe court and which tbe defense given by bis Honor clearly of tbe After them tbe stated reading jury law, gentlemen jury, “I tbe conceive that to be correctly: that owners of a joint piece where two people neither maintain an action tbe exclusive possession one can if has satisfy you other. So failed to against' tbe tbe plaintiff whatever bis then, is the sole owner of tbe property, should answer first issue be as tbe rights may partner, you ” No.’ and we are tried, We think case has been well and fairly tbe record of the defendant unable find error tbe can justly complain. No error.

JOHN T. PULLEN THE BANK COR RALEIGH SAVINGS PORATION COMMISSION.

(Filed May, 1910.) — — Property 1. Taxation Banks Personal Real and —Nontaxable State Bonds. value, assessed value All bank stock taxable at its less tbe although personal property, of tbe invested in North Carolina State bonds. real and tbe bank’s — Banks—Surplus—Nontaxable Assess- 2. State Bonds Taxation —' ment. tbe bank is not invested tbe much of So pur- tbe North Carolina issued bonds of State of nontaxable SPRING 0.] Ookpokation Assembly suance of the con- act General of 1909 is assessing sidered in the value of shares of stock for taxation.

3. Same — Exemption. surplus, provision Under the of so said act much of the capital, over and is as above bonds invested nontaxable exempt surplus assessing and must be deducted from the value stock for of the taxation. J., I-Ioke, J., dissenting.

Clabk, O. J., Guión, was a controversy without action submitted to This from from a judgment adverse to the filed 19 plaintiffs, Wahe, April, 1910, and have Court. appealed Omitting the formal of merely submission, parts facts agreed to as determining this stated: controversy thus 1. That the is a of Commission department State created Government, by law with certain charged duties, of which duties is among duties exercising powers and Tax Commissioners; State of that their officeis in the city Raleigh, County, Wake N. C. 2. Raleigh That the a a Savings Bank and Trust Company bank and savings institution, created duly by law,. having and a whose officeand of is in surplus, business place city of Raleigh, that John T. Pullen is a stockholder as therein, shown the books of the and is a citizen company, of Wake County. 2 (a). asylum That the or bonds, to, 1949 herein referred were sold of by the State North at a 103, Carolina of price same 4 cent bearing annum,- per payable interest semiannu- per ally, and not 1 July, due until 1949, expressed bondj said and that said were sold bonds the faith of as of in the act their That pledged authorizing issue. at the time such sale the rate interest for legal money loaned North was 6 cent all per Carolina per annum, banking institutions being authorized to take advance, interest and that time such sale the bonds the State of North outstanding 4 cent per Carolina interest were sold on financial bearing sales, markets at 102, such being price below brought by to. bonds above referred 3. That John T. Pullen is interested assess- directly ment of the as the stock, failure deduct these or 1949 asylum surplus' bonds at the arriving assessment will directly affect to his and loss that amount injury taxes State, county city him' said stock. paid by March, A. D. 1909, That on 5 the General Assembly “An Carolina North enacted act to issue out the carry act of care of 1907, State,” for the the insane which act SUPREME COURT. THE IN Coepobation Commission. copy Laws Public chapter is known said act A,” attached marked “Exhibit hereto which act follows: in section 4 as reading shall coupons 4. The said bonds and “Sec. or direct assessment, or all State, county municipal or for purposes whether indirect, special, imposed or general thereon otherwise, the interest paid or general revenue said nor shall income, taxation as for shall not be subject to constituting taxation when subject coupons bonds and other corpo- company trust part ration.” any bank, Caro- the State of North July, 5. That on about Treasurer, and State issued its Governor lina, acting through bonds, now ($500,000) asylum dollars five hundred thousand known referred just the act above as 1949 authorized bonds, and with- to various both within to, and sold the same parties, Carolina. out the State North 1909, 6. That General session acts, known re- Machinery the Revenue and Assembly passed same the list- 438 and spectively 440, regulating chapters for reve- raising and collection of taxes levied and imposed ing nue Carolina; 440, for the said chapter the State of North 33 relative other in section among (in part), things, providing banking savings to taxation of associations or institu- bank, , as follows: tions, is herein- “The value such shares shall be determined as in this association bank, banking after section provided. Every or or shall list its savings (whether National) institution State in real estate is or town which such real estate county, city located, State, county tax- purposes municipal ation. association or insti- Every banking savings such month list with shall, June, tution during annually Commission, the name and for its shareholders, Corporation residents, stock, all shares its whether held or capital by at market the first nonresidents, June, or, value on if day value, it no market then at its actual on that have value day, from which market or actual value shall be deducted the as- and personal' property sessed value the real which such bank, savings association or in the institution shall have listed banking such counties where real and county personal is located. actual of such where shares, estate value no value, have shall be ascertained by market adding capital stock, undivided together surplus profits the amount of real and therefrom deducting personal property said on which it pays tax, dividing (cid:127)owned institution by T910. TEEM, SPEING 0.] Corporation In- net of shares such institution. by amount the number debts due said institution be deducted may solvent to, if and sworn itemized profits surplus, items undivided tbe. cashier by and forwarded to the Commission Corporation have' shall of such institution. If the Commission Corporation in is value as given reason to believe that the market or actual value such ex- value, by its true shall ascertain such true it change seems investigations amination and as to it proper, true in to as it ascertains the the value as such amount given on the Com- be, Corporation value to which action part an action Court, mission be reviewed may Superior in its official ca- Commission brought against Corporation aggrieved.” pacity party Bank 7. That the and Trust Ealeigh Savings Company institution, surplus, bank and savings having capital in the issued and that of said invested known as the 510, asylum under Laws ch. commonly same bonds, bought bonds or 1949 and that Carolina, chapter faith of the State of North pledged for the same out of its sur- of the Public Laws paying plus. 8. That the Bank and Trust Ealeigh Savings Company said Commission, has made return to the as is Corporation required ch.’ Machinery (Laws 1909, section 33 of the Act for the of stock held the stock- 440), assessing the shares law, in accordance with which said holders said corporation, assessment the Commission is directed to make to the several counties where the stockholders re- and certify stock for side, as the value of said taxation. 9. That the Corporation Commission, accordance with the banks, for the assessment of stock of statute providing of the shares of stock of have assessed and value appraised Bank and to- Ealeigh Savings Company by adding Trust

gether stock, surplus undivided and de- profits, said therefrom the real and owned ducting personal property by tax, dividing on which it net amount institution, pays of shares in said institution. That the said Cor- the number by asy- did not deduct from the surplus Commission poration authorized 510 of the (those by chapter or 1949 bonds lum Bank Ealeigh Savings of owned said 1909) Public Laws and Trust that the same was Company, they holding not deduct- law, assessment; as a of at this to which ible, arriving matter Bank and Savings said Trust Ealeigh Company assessment the of a stockholder said have ex- Pullen, company, and John- T. of intention action bringing and announced their cepted IN THE SUPREME' COURT. Corporation Commission. of tbe against Commission tbe Court Corporation Superior of tbe

Wake in its official to review tbe action County capacity, said 10. all taxes, That tender of admitted tbe aggrieved par- con- due, ties to be bas been made before tbe submission of tbis without action. troversy tbe at a arriving "With view of determina- facilitating of tion tbe of tbe it bas been tbe rights parties, agreed present submission of tbis tbe facts con- case, containing upon tbe for its Court Wake troversy depends, Superior County tbe as if tbe ac- judgment thereon, determination and rendition tion trere pending. Honor, Tbe rendered bis tbe judgment above, facts, is as follows: Court.' Superior North Cabolina — . (Title Came.) Tbe court, by consent of beard having argument parties, tbis case agreed, ruling is of and so that tbe opinion, adjudges, of tbe Corporation Commission herein be and tbe same is hereby affirmed, and it is tbe invested adjudged $55,000 in these bonds should not be and shall in arriv- not be deducted value of each of taxa- ing tbe share tbe purpose tion. Tbe will tbe cost hereof. Plaintiffs plaintiffs 'pay except. Appeal by adjudged sufficient, $50 tbe Bond plaintiffs. on, and tbe casé entire in tbis con- appeal, agreed tbe papers troversy action, consent, without and tbis judgment will, by constitute tbe case on appeal. April, 1910. Tbe plaintiffs appealed. Jr., Pace, Andrews, W. II. A. B. R. II. Battle & Son for plaintiffs. Aycode & Winston for defendant. J. Tbe Assembly General tbis at its ses- Manning, sion in 1909, (cb. 510, authorized Public Laws tbe issue 19.09) of tbe State to $500,000 tbe pay expenditure sum, authorized tbe General for tbe Assembly en- of tbe State institutions for largement the care of its mental 4 of defectives. Section that act .provides: “Tbe said bonds shall from all State, or coupons munici- county or direct or assessment, indirect, pal whether general special, imposed purposes general otherwise,, revenue shall not subject and tbe interest thereon to taxation as paid 1910. SPRING N. O.] V.

PUTEEN COMMISSION. CORPORATION to taxa- subject or coupons nor be income, shall said trust bank, any of constituting surplus tion when a part other corporation.” or company State, certainly and of The uniform well-settled policy since 1852—and so to have been power to do seems never doubted or its own bonds and been questioned —has 1852, 10, 4; certificates of debt from taxation. Laws ch. sec. sec.. sec. Code, 3; Code, Rev. ch. Laws ch. see. 90, 5; 1819, 98, ch. 3573; 543, 4; 1905, 5022, Laws sec. Rev. secs. In the act (sec. 4, herein Laws ch. this quoted 510) pur- pose and intent is so clear expressed unambig- and language can admit of no uncertainty. uous'that it particular inhibition of this which is section, presented interpretation, our and ichich is not preceding any found bonis, act issue authorizing clause, State is the last these words: “Nor shall said bonds and coupons subject a taxation constituting part when or other company the trust these words corporation.” Omitting from section, it is clear that the bonds coupons paid interest thereon from all or are exempted county or municipal assessment, direct or or indirect, general imposed for special, whether or general otherwise; revenue is this true regardless their whether indi- ownership, viduals, or partnerships, joint-stock associations, corporations, and whether constituting part or capital, surplus undi- profits vided In the hands of corporation. owner, and however held, regardless what his money them, invested in the State bonds issued under act are clearly exempted all or general special, direct This being indirect. the clear intent and of the State policy speaking through the legislative department, exercising power recognized uniformly conceded, our plain duty the will uphold of the State and to be astute to search for . wаys to it. . evade It likewise well settled language of our State Con- stitution, by decisions of this many Court, and the Supreme States, Court the United and now generally accepted law, that of a shareholder of in its corporation stock is a separate and distinct species property, whether real, personal mixed, held and owned the corporation itself as a legal entity. It would be useless to authority cite to support so proposition well established and generally accepted. The Art. sec. Constitution, V, 3, commands that: “Laws sliall passed taxing, aby uniform all rule, moneys, credits, investments in bonds, joint-stock stocks, com- SUPREME COURT. IN THE

554 Coepoeation v. Commission. property also all real and in otherwise; personal panies, according an is It money.” apparent to its true value State, legislative of the the examination of the laws taxing the mandate to observe and enforce has department attempted of the Constitution. Co., discussing In Comrs. in the C., 441, v. Tobacco N. subject were several forms of to which corporations said: “As to Constitution, corporations, under the this Court to is in the of the authorities, power all the it by in its discretion or more of them taxes, the two lay following in this (including time: To tax the franchise (1) at the same ; dividends) (2) capital to tax, also, corporate power property corporation. the real and imperative stools; (3) personal ad, under the valo- discretionary is and not This tax in the the shares of stock Constitution; (4) rem of the feature and not dis- of the stockholder. This is also imperative hands cretionary.” for the it was competent In that case the Court also held that it, tax the shares in the method to Legislature, stock in adopted ,to shareholders, requirе corporation hands to a list of the shareholders and its officer file by corporation and “this does proper stock, taxes assessed the shares against to pay to tax as the not affect the of the shares liability for convenience shareholders, but is simply of the property change State in the tax. The effectis to collecting merely of the shares for taxation the residence the situs of the is to where the chief officeof locality corporation owner Commissioners, situated, 399.” In Home C., v. Wiley as was held Moines, Bank Des Savings S., 503, 205 U. States, through Court of the United speaking the Supreme McKenna, “It, however, uncommon, Justice is an said: method of entirely legitimate collecting taxes, require shareholders, a first instance the taxes as the the of the corporation, agent pay .shares, as the upon for owners, and look to the shareholders reimbursement.” The would be a tax the shares of upon stock, tax such cases corporation. It not a tax would be mere method of of tax, change subject-matter and not collecting taxation. power within the is, likewise, Legislature, It under the Constitution, prescribe the method which of all the value taxation is to be ascertained and subject deter- mined; Legislature, and the' method prescribed many years, which has been for for prescribed fixing the value shares, 440, of bank found ch. sec. Laws for taxation TERM, 1910. SPRING N. 0.]

Ptjllen Cobpobation association or follows: “Every banking and is as shall list its State or (whether National) institution savings real estate real or town which such estate county, city taxa- located, municipal the purpose county institu- tion. association or Every bank, banking savings tion the month of list' with ‍‌​​​​​​‌‌‌‌​​​​​​​‌‌​‌‌‌​‌‌‌‌‌‌‌​‌​​‌‌​​‌​‌‌‌‌​‌‍the shall, during June, annually Corporation Commission, shаreholders, the name and all the shares of its stock, whether held residents if nonresidents, June, or, its market value the first day no value, have market then at its actual value on that day, from which market or sessedvalue shall as- actual value be deducted the of the real and which such personal property association or for banking saving institution shall have listed taxation in the located. The actual is county counties wherein such real estate of where shares, value such such have no market value, shall be ascertained by adding together the capital stock, and undivided profits, deducting therefrom the amount real and owned personal property by on said institution amount which it the net pays tax, dividing the number of shares said Insolvent by institution. debts due said institution be deducted from may the items of if undivided warded to the itemized and sworn and for- profits surplus, to, Commission the cashier of such Corporation by institution.” if is further It that the Commission provided may, desire, it make such examination and as it investigation may believe to be advisable to value, ascertain the market or actual action, and its action be reviewed an as may by the pres- case inis, ent the Court. Superior This has for years been the method many substantially pre scribed by legislature the State the tax ascertaining able shares of institutions, value whether banking State or National, and the note was made only change by the Laws of the authorities to changing appraise stock from the Auditor State Com Corporation mission. In section, of this this speaking Court, Lumber Co. Smith, Holce, v. Mr. C., 70, Justice “In through said: banks, the case report tbeir listed in realty and, county, section, made as the value of required by the shares and determined appraised Commission, with this, stockholders, the sworn list оf to certified the commissioners county authorities, to the end that amount proper against may be assessed individual holders of the same. This is in order to conform the done taxation of all banks to permissible the method the case of banks, National and in order to make the equal taxation and uniform throughout' the THE SUPREME IN COURT. much to be State oil all institutions of that class. There is contained these said in of the scheme support' consistency statutes, tending, does, uniformity it presented, on the various and

rulings important questions law is intelligent under an and conservative administration These system. itself to be a and workable proving satisfactory considera- matters, however, more properly legislative being and are not for us tion, upon, dwelt only question and its correct inter- power Legislature law, enact pretation.” Act Machinery It will be observed in the section of the that, com under it is made the defendant consideration, duty market and the actual value mission to deduct the shares of both the the taxable it, fixing as ascertained before stock, value of such of the real and shares, aggregate personal The banking principle listed institution. is further in the cases of individuals recognized deduction corporations, 'credits, in come to list their solvent they when credits are authorized deduct their solvent .to due and the balance is to be obligations by them, their or debts is recognized listed as taxable solvent credits. This principle in Loan constitutional, Court of Illinois by Assn. Supreme Keith, has for Ill., many it has years system taxation; this as recognized equitable in our years system been for more than incorporated twenty-five has well notwithstanding and this been decisions of this and other courts that shares settled by repeated and dis are, shareholder, of stock in hands of the separate the from the of the property corporation. tinct property of deductions in justness The fairness and of the principle subjects the taxable value of the ascertaining the method of taxation, inequity in order avoid the’essential harshness to think, long- we sanctioned as taxation, was, distinctly of double Wake, C., R. v. N. 414. That as in R. Comrs. 87 ago 1882, by parties was to this Court on both from appeal case presented Court, delivering of the the unan judgment Superior the Smith, Justice Court, pertinent imous opinion the Chief object commissioners fur matter’, said: “The to the present stock should be preferred assessed value the the ther value of the real estate and as taxed reduced the franchise by by in the several counties traversed the road. The separately the reduction is directing obviously of the Court made ruling tax, of a double since the value of all to avoid the imposition consisting, whatever by corporation, owned property true and fair franchise, measure of the including the N. 1910. 557 SPRING 0.] value of all stock, its tbe General Assembly permits hence stockholders, shares, tbeir their ratable valuing 'deduct proportion of tax paid by the corporation upon property such in this State.’ some- 8, Sec. The section leaves it par. what uncertain by whether the value of stock is to be reduced the value of and the tax levied corporate property taxed, upon the difference, or the tax upon former to be abated extent of the tax but we the latter upon latter; interpret to to meaning. ruling The effect of the ‘of the Court is deprive the through counties which the road assess- passes of. ments of the and transfer them to corporate property each, it in our county Wake, is, opinion, purpose while the statute to allow the shareholder to deduct taxpaying tax on his shares a of the tax paid upon ratable corporate elsewhere but. not property by itself, corporation to withdraw from in other counties such the corporation therein as is liable to assessment and taxation.” Alamance, in R. R. this Again, C., 454, v. Comrs. N. inter- Justice, Court said the- Chief again, speaking through concluding “In the 1881, Laws sec. 8: preting chapter 117, to remove clause, 363, 8, amended the act ch. sec. by Wake, C., R. out in R. v. Comrs. obscurity pointed 'stockholders in their valuing it is provided deduct of the value of taxable may their ratable proportion ” the tax property, whereof is paid by corporation.’ deductions to be of the to authorize Legislature power it has for ascer- made in the method taxpayer prescribed of the of taxations subjects value of some taining has taxable the interpretation been exercised under continuously . in the cases cited above. Constitution Court a deduction If concede moving Legislature the reason taxation, double was based a desire to avoid apparently discretion, of its we cannot and this was a exercise legitimate to exercise a similar discretion see favor of a it could not be moved why which the fixed policy species half a has been to State, century, for more than in the has, its act which the State, forbidden to be taxed terms, most unequivocal or indi- town, generally specially, directly county, city taxation can be of advantage This inhibition of rectly. stranger to the own citizens and corporations; the State’s as, limits beyond the territorial advantage, living of no can be of of its taxing power. the reach beyond he are not without taxpayers compensating State and its The from taxation conferred for this advantage COURT. SUPREME IN TI-IE Cobpoeation sell to enabled thereby it is because State, by

bonds issued at their cent, only per interest at bonds, its bearing and citizens if residents thus a value, premium, but par in taxes —own it tribute liable to pay of the State —those subdivisions, taxing its the State and State, of the what bonds to the bonds by permitting lose revenue it, may created by in having taxpayers State and its taxed, is saved by interest on the bonds. rate of much reduced pay argument remaining question, presented The only act is: Does the us, to be determined record, arising upon con- made when to be bonds authorize the deduction these or bank, company trust any stituting part meaning to be the appear ? Does this plainly other corporation intent ? act and legislative a statute is that construction statutory settled rule of The scope intended to the construed with reference should be the pur to ascertain in order of the Legislature, purpose and pro all of its clauses give courts must effect pose, funda of the violate the provisions to do so would visions unless in the statute conflicts irreconcilable law produce mental terms improper will use of inaccurate itself; or inapt, nor Leg of the statute, meaning when the real invalidate phrases general context or from the can be from the gathered islature R., 137 v. R. Spencer 140 N. the enactment. and tenor of purpose Commissioners, Board C., 322; 119; Fortune v. C.,N. Commissioners, Inter Black on C., 63; 137 N. Education Law Lec in Mordecai’s It is also said Laws, pretation execu to a statute given 22: construction “The tures, p. tive officers with contemporaneously Government with the courts.” weight is entitled to great passage many that for of the State from the records public It appears was of the State while the Auditor 1909, prior years value to ascertain and appraise authorized authority the advice institutions, deducted, he under in banking stock the law officer the banks bonds held the State was suggested assets. Some doubt from their total office. practice of this Auditor’s uniform validity consideration, added now under the act enacting Legislature, coupons shall said bonds words: “Nor to section these of the surplus when constituting to taxation subject same This or other corporation.” trust company 1909, being Laws in sec. ch. also be found will language the act off the bonds to pay the issue State “to authorize of* 1910.” July, the first day fall due on State the issue authorizing in no other act found words will be These N. SPRING O.] Corpobation

Pullen Commission. of State bonds. We must assume that these acts of such public importance, affecting authorizing the credit the State and the bonds, issue the examination and received careful scrutiny of incor- Assembly; the provisions General in them not in not porated found other similar acts could pass unobserved and ex- would not have been unless adopted pressed some new and intent. The acts were legislative distinct for- required by Constitution and were with distinct passed mality. The bills had to on in each days be read three several branch of the General and on the second and third Assembly readings the and noes ayes recorded, were required, journals each house. In Laws 1905, ch. in 543, 5, legislation sec. authorizing issue bonds in Dakota judgment settlement of the South and the Schafer bonds, is, used “Said bonds only language shall be from all tax.” The exempt income including language used in other acts the issue of State bonds authorizing will be found sections 5022 and Rev. 1905. In 5031, using language the act now under consideration must there been, have observed, hereinbefore some legislative distinct intent, and we think this will be found Act. Machinery The fact that the taxation made ex property exempt another empt by act different from the Act does not Machinery support argument it is not from taxationnor exempt does the fact that the Machinery Act in terms does not author ize the bonds to deducted, it was support argument that not legislative .intent to have them for in section deducted; 440, 1909, ch. Laws that section which what specifies prop shall list for erty taxpayer taxation, and calls specifically for the listing credits, the amount there is no reference whatever to State or other bonds the State’s subdivi sions that are legally taxation. To ascertain this tax exemption the and the lister must each look else taxpayer where, to other acts will provisions whose be considered pari Jordan, materia. Wilson v. C., 683, and cases cited Annotated Reports. Looking examining Act, to and we find that Machinery only connection which the word is in used “surplus” of shares of in a ascertaining the taxable value corpora- tion, whether the entire tax is to be corporation paid its shareholder or in the shareholder himself. This is of all true the act but acts extend- previous since over ing the period many years, Legislature adopted method the shares present ascertaining appraising taxation. So, then, stock for it seems to us our scheme of . SUPREME COURT. IN THE taxation the signification, word has a distinct “surplus” legal have in the act signification and must been used witb that legislative now under review branch of the Govern- has taxing system, created established our ment, so inter- so. we alone has the to do Unless power and which effect fail to force and statute, we give shall iore! language. tory of statu- a well-settled rule do, This we under cannot in addition These were needed words interpretation. section to of the unambiguous language to other clear and the bank, of a the these from taxation as exempt of or undivided of a consisting part capital, surplus whether for this other of section were profits; plenary the words the of the Court But it the objected Supreme purpose. United U. Tennessee, 161 Bank States has in Commerce v. held of as a dis- of a be taxed S., 134, may the bank surplus not hold that but decision does tinct species property; taxed. it be bonds, may of nontaxable surplus when that We consists the The question. not think that case decisive of piresent do of Ten- State facts in it are these: Thd presented substantially stipu-' in a charter to the Bank Commerce granting

nessee stock for a lien on the that “said institution shall have lated in it preference debts due the stockholders before to the taxes, shall creditors, pay other the State for except on each share an annual tax of one-half of one cent per State all shall be other taxes.” Sub- stock, which in lieu the State act that “the sequently passed providing surplus association, such pirofits banking and undivided to said or other cor- other shall be assessable bank corporation shall in the assess- and the same not be considered poration, ment, State had of the stock therein.” Previous to this act the stock in tax their shares of shareholders attempted addition upon the quoted, to the in the charter above amount provided tax, in a to test of this and which validity suit the brought States, of the finally Supreme suit reached the Court United Tennessee, it “the 95 U. was held that Farrington S., a State bank limit- was between the and the contract exenxption a stock, and that subse- the amount of tax on each share ing the State which additional taxes imposed revenue law of quent on hands of shareholders the ob- impaired In Bank Com- and was void.” ligation contract, case, to the supra, Court, referring Farrington merce case, we said: “We not think under circumstances that do of ex- to a conclusion ought question to come different was arrived at Court from that which emption case.” Court held that the provision And the Farrington - SPRING- NO.] Coepobation

tbe bank charter having been construed to a limita- be contract tion of the power to tax the shares of stock as the property the shareholder, it would not extend its benefits corporate only and as the act revenue taxed the surplus undivided of the profits corporation, tax did not impair obligation contract and was within power State; and therefore the State could tax entire capital, surplus undivided of the bank. We profits do not think that case authority against our interpretation the act now under consideration. The of a primary bank is the purpose accumulation surplus of a sum against which bad debts so>that at may charged, all times the capital may This is kept unimpaired. required National Act. Banking which, connection as we have observed, the word taxing used our system, now established for more than of a- quarter century, that it appears method prescribed ascertaining taxable value of shares of stock. Ve was within the think, therеfore, that power authorize deduc- tion of the bonds issued under the of this provisions particular act of the General when Assembly they constituted the surplus of a banking institution, in ascertaining taxable value of shares stock, the. of and that the intent to legislative have such deduction is made with Sufficient clearness expressed for this Court to intent, discover such when this act especially is construed in connection with .section Laws 440, chapter known as the Act. Machinery By interpretation give we effect to the intent legislative disregarding any without act, clause the which we could not do other by any interpre- tation; and the same we to the give time effect well-settled tax in policy plan our to the shares of stock banking institutions as a separate and distinct species prop- erty. The deduction of in a investment these bonds bank by can when a be made the bonds constitute part the sur- of such institution. If or all of plus part capital the the or undivided are invested in bonds, these claim of profits the' shareholder for a deduction cannot sustained, be as the language of the act If all comprehends only the the surplus. in surplus bonds, invested these and are no particular there undivided then the shares of stock profits, would be appraised at not over their to value, subject the deduction of par the value estate and of the real owned the and personal property by bank As taxed. to the deduction of already estate and If a less amount than the entire validity the real no property, question seems to be personal raised. in surplus invested these

152 —36 SUPREME COURT. THE IN Corporation for taxation shares of stock o£ the bonds, tben appraisement think this do not increased. We would be corresрondingly of the right in'anywise impairs of the act interpretation in section 5219 State, under of Congress given the consent of. tax shares States, the Revised of the United to Statutes in for stock National our banking associations; interpretation in no way violates either the two restrictions imposed that section of much say the Revised Statutes. We of the in Na- reference the effect upon .banks, tional on the suggested argu- because the was question ment and of counsel for the defendant. the brief We conclude, therefore, judgment Superior Court sustaining ruling Commission in the. appraising stock of the Pullen in the Sav plaintiff Raleigh and

ings Rank Trust in that invest Company erroneous, ment of a part the said bank and trust com pany these known as have bonds, bonds, should asylum been deducted aggregate from the value of the assets of said and bank value trust company ascertaining appraising stock in shares of said taxation. corporation The judgment is reversed the cause remanded for further proceeding with accordance this1 opinion. Reversed. views J., concurring: agree lucidly to the so fully I Brown, Mr. strongly presented Manning. opinion of the Court Jus- tice I that ‍‌​​​​​​‌‌‌‌​​​​​​​‌‌​‌‌‌​‌‌‌‌‌‌‌​‌​​‌‌​​‌​‌‌‌‌​‌‍it is well settled that the shares of stock agree, also, by individuals, when owned corporation, separate assets from the corporation may distinct property taxed But it must be conceded that rests exclu- such. with determine how what sively method such shares are legislature taxation, as be valued for much so all other lands and valuing property. method provide its own bonds State to right and when the Gen- conceded, universally from all taxation is taxed should Assembly expressly eral declared of a it exercised of the surplus when constituting part, never been denied has which heretofore an undoubted power, em- were such words to determine why it. It remains only ac- intended to what in end were the statute ployed I in the demonstrated, think, clearly has been That complish. of the Court. opinion relat- Congress act any contained No such language here- own statutes of our nor bonds, any to National ing (cid:127) SPRING 0.] Cokpoeation tofore, and benee tbe cases cited are of no value. Tbis new provision introduced in tbis State no new method of valuing bank stock. It was plainly intended to give legislative sanc- a tion to practice wbicb bad been followed bere many years to 1909. up Under tbe of tbe former ruling tbe Auditor Attorney-General, of tbe State in tbe assessing value of bank stock for taxation always deducted from tbe bank’s all North Carolina surplus bonds, because they were nontaxable, and that was tbe only way under our system bank taxation of tbe law and obeying from exempting them taxation. It is well known when tbe of 1909 Assembly General was considering tbis act for of tbe State refunding large part debt, it intended to tbe bill wbicb incorporate provision would make that practice mandatory future. Hence tbe that purpose, was provision put tbe bill and drawn for that expressly is generally understood, by present Attorney- General at tbe instance of tbe Committee on Finance. ' It is also well known that tbe same we are giv- construction ing tbis statute has been given to it tbe State ad- present ministration under tbe opinion tbe Attorney-General, that tbe bonds were purchased and for in paid reliance upon that construction. If I were doubtful about tbe true meaning purpose tbe General struction by wbicb the I Assembly, should solve it favor of that con- faith of good tbe State is maintained.

As I is, have no thаt tbe administration, doubt State under tbe advice of tbe has Attorney-General, construed tbe act cor- rectly. .Any other -in construction, tbe my opinion, destroys purpose converts into foolish and tbe language meaningless terms, snare with wbicb to trap unwary pur- chaser. Tbe charge we are bank stock from exempting taxation is without foundation it. As support pointed out in tbe of tbe opinion Court, such stock cannot possibly escape taxation at its full value. par Tbis, however, is not matter of grave State as we are led to importance tbe

believe. I have it from tbe Treasurer tbe although years our State bonds have past been deducted invariably tbe yet of banks shares of. stock for assessing not more than 10 cent of tbe State debt has at per any time been in North owned Carolina. verbatim, I quote tbe tbe State Treasurer: opinion no time more than 10 “At has cent of tbe bonds been held per SUPREME COURT. THE IN V. COMMISSION.

PULLEN CORPORATION is any proba- think there and I do not Carolina, inside of North in the held being in of more than that amount bility the future think I do not State, and of that banks. only part cent this State can million dollars’ worth of per absorb four in securities, but the increased value of these bonds the State will in entire my affect the value of the judgment issue, as the outside bidders will the value always regard the home market.” This statement from the efficient and ex- perienced Treasurer of Mr. State, Lacy, shows how utterly groundless is the assertion that the construction we place upon will statute four millions of from taxation. The-wisdom and of this policy legislation is not a for matter our consideration. We should not eral Assembly because we do an destroy act of the Gen- of it. approve not It is for us to declare law, it. not make But I am of opiniоn line with a legislation wise and enlightened public policy. Our State debt recognized dollars, is over seven million which will not be off paid many generations to come. The debt will from time time be refunded and new bonds issued. The wisdom of the General Assembly prompted it to if create, possible, reliable home market for our bonds, so that the large sums out paid State as interest may kept at home. It therefore offered the corporations stockholders of banks and other of this State inducement to purchase its bonds them from by exempting tax- ation when the surplus earnings the bank over and above its capital shall be invested them. The of a stockholders bank will not permit in- surplus be invested these low rate if terest bonds their thereby shares of stock are to be valued just as if high was invested in more productive investments. Therefore it is manifest perfectly me General Assembly intended to valu- provide ing the for. taxation State bonds must be exempted by them from deducting the surplus. It is a matter of common in the financial world knowledge that commercial not,- banks do as a rule, invest such bonds. Their deposit accounts are active discounting too short- time is much paper more lucrative. It is generally savings institutions that their invest in State bonds. deposits In the New and other England States, where banks savings fostered, are greatly have been to invest encouraged their funds securities of own their because such institutions are of thrift and productive prosperity among because people, but such investments are the safest and best for their depositors’ funds. n SPRING- O.] V. CORPORATION COMMISSION.

PUIiEN Sueb bas been the enlightened of tbe policy statesmen of France, most thrifty nation, and as result of it was which enabled, without outside off at once the most stu- help, pay fine efer pendous imposed upon сonquered in the his- people tory world. The of stockholders the plaintiff bank, having purchased bonds,

these at admittedly large the premium, relying upon of language the statute and of the the opinion officials, State’s are entitled to them have deducted from the valuing their stock. "With I others, deference to think perfect good that fair dealing faith and it. require dissenting: C. J., much has on Though been said the Clark, to this decision argument regard affecting the State price bonds, reference the the complaint and of the Cor judgment poration Commission discloses that the sole the ac purpose tion, and the only is as to whether point presented, the-stock holders in a bank which holds State bonds are to the exempt amount of these bonds of taxes on their indi payment vidual property- which sell will and they buy shares —the as much their private (though larger paying as the profits) his horses and with which farmer makes plows or living the taxed tools which a mechanic uses. When bonds, State issues its it has never denied it can ex been that them from taxation empt by State, county and' au municipal thorities. This is on the that issuance bonds principle agency government. Besides, State in effect does collect it in deducting tax the rate of interest which the bonds bear. The $55,000 of State bonds in are this-case owned by

Raleigh and Trust Savings Company and have not ;Bank paid cent of one tax to the no city, one has ever county or does now suggested, suggest, they should. reason of By that such from taxation saves an- exemption $1,375 the bank some nually, which swells that extent the fund available annually content with that, be divided Not among stockholders. the stockholders case are for a asking exemption, this second the another $1,375 annually, by again deducting $55,000, same assessing the value their shares of private property, stock, do not taxation. shareholders own these bonds. They are owned bank and the -bank has been itself, $55,000 from taxation on already exempted account them. bank’s ownership Nothing is better settled decisions uniform and of States Court the United Court than that Supreme COURT. IN THE.SUPREME V. COMMISSION. CORPORATION

PULLEN en are 'of stockholder of a shares bank tbe distinct, taxation, exemption, and that the tirely separate other. dr of the one is in nowise a taxation Commissioners, Tobacco C., 415; Belo v. 82 N. Commissioners ., prin so is this C., Indeed, thoroughly Co Court Supreme settled decisions ciple by repeated Bank, S., 140, 161 U. States that in Co. Shelby United now disputes separate declared that no one distinct classes property. holding in banks, In numerous cases which stockholders in such that their shares bonds, United States have contended United were from taxation to extent bank the their bonds should de- of' States bonds and that the value Court of stock for ducted assessing rejected ground has the contention uniformly such, were of the bank and exempt the property entitled that the were the of individuals not shares their on account any assessing value contention which so the bank. This by very bonds the held re- case which has been making are in this plaintiffs land.' Court in the jected by highest whenever presented Assessors, Wall., v. v. 4 573; People, Van Allen Wall., Bradley Lander, 459; S., Trust Co. v. 184 U. 111. Co., C., following In Commissioners Tobacco N. United States the decisions the Court Supreme Court, it said: “The capital decisions was previous The shares or certificates belongs corporation. stock stock are share- belong a matter. to the entirely They different taxed individually, holders under Constitution must be holder, valorem other to the inde- belonging ad like franсhises, pendently etc.” corporation, If as to it now held otherwise shareholders plaintiffs, a bank, bonds, as to our State this case all reversing pre- from the books decisions, may vious we not strike tax we $4,000,000 banks, of stock in State but value shares all be National banks from may very probably taxation exempting The State cannot discriminate against whatsoever. States bonds. United act 1. The The before us three classes exempts property: from all indi- themselves are direct or exempt bonds rect, 2. dividends on paid The general special. 3. subject not to taxation as income tax. The surplus are of bonds, of such shall consisting when any bank, is said shares from taxation. Not word about exempting stock. SPRING- O.] Corporation Tbe bank argument that stock the plaintiff’s fact nontaxable is due in to the because their value if divided, the bank was wound and the up surplus pro- ceeds of bonds, thereof, such nontaxable derived the sale would be shareholders, divided is fallacious because among confounds surplus, owned, held and controlled by with the shares of stock, owned, which are held and controlled individuals. Commission required law to assess in all the value of shares of stock banks taxa- tion. When this matter was it assessed presented body, the value of the share, $104.'40 shares of stock at plaintiff’s per and its decision was in the words: following “In in this assessing the shares bank the Corporation Commission statute, followed the direction of the as it did such shares appear value, had market by adding together stock, undivided there- profits deducting from the of real and said amount owned personal property follows:, institution which it taxes, paid Capital stock.$15,000.00 Surplus 60,000.00 . . 342.25

Undivided profits a total of as- making $75,342.25, and therefrom the deducting sessed value reаl and as follows: personal property, furniture.$3,000.00 Office Commercial 8,700.00 National Bank stock. 1,000.00 Bank stock. Fidelity making $12,700, total of balance of leaving $62,642.25, which, divided the number of shares of stock of said bank, ascertained of each share to $104.40, subject the value * to taxation. “There was no that was allegation any there insolvent debt due institution. this Pullen, “This assessment is to John T. who satisfactory not contends, owns fourteen shares of stock in institution. He shows, on which this assessment is based that the report a of has invested of this $60,000, $55,000

bank has surplus bonds, State issued under chapter North Carolina surplus claims this amount should also be 512, 1909, Laws and he all value of the shares of stock. In aggregate from the deducted other that, in addition words, the contention to the assessed on which the property corporation of real and personal value because this of deducted, should be much taxes, $55,000 pays THE SUPREME COURT. IN V. CORPORATION COMMISSION.

PtTIXBN in tbe above-namedbonds. of tbe was invested surplus bank to see force of tbis failed tbe “Tbe Commission or sur- stock, as tbe contention, assessing capital were of of bank, species or tbe but distinct plus, undivided profits in the hands law to list wit, shares stoclcof tbe bank property, tbe of of by any the shareholder. Tbe not required bank stock, profits undivided surplus, its wbetber property, in real or it as is invested so property, except other mucb bas bad tbe already estate inside tbe State.. And tbis bank Carolina State bonds. full from taxation its North for office listed tbe bank taxation Tbe property was stock, $8,700; Bank furniture, Commercial National $3,000; these amounts were de- stock, $1,000, and ducted. Bank Fidelity value tbe did not intend that tbe Assembly “Tbe General a corporation is owned by from taxation which property exempt all shares from tbe value of tbe аggregate should be deducted in appears ascertain value of of such shares of tbe statute: of in said order to tbe corporation from directions as tbe taxation, plain of stock in tbe bands ‘The -value such shares have no value. If they shareholders shall be tbe market by adding together tbe shall ‍‌​​​​​​‌‌‌‌​​​​​​​‌‌​‌‌‌​‌‌‌‌‌‌‌​‌​​‌‌​​‌​‌‌‌‌​‌‍be ascertained value, market value there- deducting and undivided profits tbe capital, from taxation, but ‘the from,’ not such property exempt institution of real owned said amount and personal cb. Act, 1909, Laws it See Machinery taxes.’ pays tbis statute and chap- is no conflict between 440, sec. There ter Laws 1909. stoclc bands shareholders “That tbe tbe corporation, owned tbe species distinct to be taxed Assembly require General can and.that tbe or of tbe bank’s part tbe whole value, notwithstanding funds held bas been are invested property exempt Commissioners, C., 415; in Belo v. 82 N. in our courts Co., C., and numerous 116 N. Commissioners Tobacco of tbe States tbe Court United cases; Supreme other Lander, S., 111, 184 U. Company Trust case of Cleveland tbe number words Notwithstanding R. L. Ed., 456. U. S. shall namely, coupons ‘The bonds and same, tbe used or taxation municipal from all county be exempt im indirect, special, or wbetber or assessment, general direct paid and tbe interest otherwise, or revenue general posed thereon nor shall income, subject shall not be taxation subject constituting when coupons State bonds cor- other company trust tbe surplus SPRING 0.] V. CORPORATION COMMISSION. PULLEN we of cannot con- poration,’ are tbat tbe same opinion, tbe so strued as to authorize tbe deduction contended tbe in view of plaintiff, tbe authorities cited above. McNeill,

“Fkanklin "Chairman.” Tbe statute taxation on requires tbat tbe shares banlcstoclс bands of owners shall tbe individual be laid tbe value stock, such which shall valuation be reached: (1) Taking tbe stock; market value of tbe (2) tbe value of Deducting tbe real and personal bank, tbe which has been already remainder taxed; (3) By dividing tbe thus left tbe number By shares. these tbe Commission process.es tbe $62,672 found tbat balance was tbat tbe shares stock are $104.40 worth share. Tbe per plaintiffs seeking, owner, case, this $55,000 (on deduct which its has bank, tbe bad already shares tbe taxation exemption), leaving value tbe total bank $7,642, this for taxation a little more being than $12 a share. It is matter of universal knowledge tbat within tbe last three months large stock—in more fact, than five- sixths thereof—has been another bank at purchased by $175 or per share, seven value par times tbe shares for ($25). On tbe purchasers $175 is now tbat paid asked assessment for taxation against said shall be laid at little more purchasers than share. per $12 The statute law of State, Laws oh. sec. 33 (p. “The 705), provides: residents this State who are sharehold- ers in any bank, association or banking savings institution State or (whether shall list National) their shares in respective county, town, or or city reside, where precinct village they * * * for the purpose of school or county, taxation. municipal shares, All whether owned residents or nonresidents, shall be at the listing listed list the sa'me time for taxes. The commissioners, county county takers and other officers shall have municipal power listing enforce stock in any bank, such or banking savings institution, association whether hqve nonresidents, held residents or enforcing of their listing personal property. shares of. any such association or banking corporation, savings shall institution, greater not be rate than is assessed upon citizens, other mоneyed capital hands individual whether taxation is for school county, municipal And the section provides next purposes.” assessing of the shares of the highest value stock of sales of price IN THE SUPREME COURT. T—I Corporation during of sales of stock during year average price These provisions shall be into consideration. year taken decisions are at one with the lawmaking powers show that the are entirely shares of stock of the that the considering courts held from the propierty and distinct separate property bank itself. “Tax- State, Y, 3, Art. sec. provides: The Constitution Laws shall be passed ation shall he rule ad valorem. hy uniform in bonds all investments credits, uniform taxing by moneys, rule in money.” to its true value according and personal property which authorizes article, 5 of the same And then follows section held and property cemeteries Assembly exempt the General also like, personal charities, and the by schools, churches, taxpayer. $300 not to exceed to each property, 63, sec. 1909, 440, Laws ch. State, law of the The statute Constitution, provides accordance with the provisions no other shall personal property : “The (p. 725) following follow the local.” Then from State and exempt taxation, an and charity property school exemptions property, wearing apparel, $25” “not exceeding exemption (p. 726) etc., mis- any then, prevent possible to each And taxpayer. ex- all other 438, 5, ch. sec. 1909, repeals Laws understanding, which than that above enumerated other kind emptions shows conclu- This granted. legislation have heretofore been Legislature was no intention on the sively that there held shares of bank stock to extend an to the exеmption best proverbially Such plaintiffs. property stock, by management whose good and the shareholders of bank 1,” to “7 for from has increased value and exemption in “an infant industry” requir- do not own an interest certainly in the shape exemption from the State ing subsidy for public pmrposes, taxation. to increased demands Owing to less grant was able to has felt that the State Legislature head, per $300 taxpayers exemption prosperous it is the ex- but restricts Constitution, to do authorized it intended to assume that $25. It is not reasonable emption to shape of dollars from taxation thousands exempt many of shares the banks. sec. de- 696), Laws ch. statute, (p. As the 14% is sold for which property market value as the amount fines the it would seem dealing, in the course ordinary for cash is in not Commission Corporation in the action of the the error and the share- $104.40, instead of $175 this assessing thus, have already, cannot certainly complain, holders received share deducted from the “true $70 per a 40 cent per exemption. value,” SPRING- O.] V. CORPORATION COMMISSION. PULLEN that, inasmuch plaintiff It was further argued in the that in value of the shares assessing statute provided Commission should shareholders,

hands the Corporation has on which the bank deduct “the real and personal property should paid taxes,” that, therefore, the Commission Corporation taxes. also has not paid deduct which the bank had It is this as If the logic. impossible adopt and in it, meant to do have said so, certainly would “all shall be shares of bank stock simpler way, by saying that to. since that is what it would amount taxation,” Commission, case, Rut the have deducted “on which value of real and the at the personal property the bank has wit, $12,700, arriving to before taxes,” paid Though amount at shares were аssessed. which the plaintiffs’ here and attention, the is not is well to call it point presented, have now, to we what all the courts deny, the fact that unless are held, that the of stock in the hands of individuals shares the from the of the corporation, and distinct separate of prop- in favor of the shareholders of the value the exemption in of the on bank has taxes is violation erty which the paid and the which forbids provision exemption, the Constitution annually in State has of dollars taxation many lost thousands is clear very not been It point having this considered. on because man an his exemption one cannot have his man has own property. another taxes paid counsel, in argument, by‘the plaintiffs’ It was contended the the of a this Court the that the effect decision taxation the exempted hands of shareholders would be bank, a the would create State bonds owned amount whole of the issue take up possibly demand which would of a court of no of the province of bonds. It is $4,000,000 part an- fine or effect, way because of the render decisions justice to and stocks market which bonds other, on the financial whether the Leg- before us are only, for. The questions traded shares power, to and had the islature attempted, it when provided of the shareholders hands stock “the bonds and from all State, county shall be exempt coupons indirect, assessment, general or direct-or municipal otherwise, revenue or general imposed whether or special, subject shall not be to taxation thereon interest paid and the coupons to taxation subject bonds and income, nor shall trust com- bank, the surplus any constituting part when have not been sub- These bonds corporation.” or other pany indirect, or either as special, general or tax, direct any ject The exemption way. other any or THE- IN SUPREME COURT. . PuniBsr CORPORATIONCommission. owner, or a bank, whether an individual and is to tbe given latter. of the constituting part surplus word “indirect” when be con- But it contended that the should has which to the bank only strued to extend the exemption, to the share- but further already exemption, had benefit ex- in the statute. The. holders. There is no such intimation in this connection known, is well “indirect taxes” pression it can or indirect, general special,” mean “direct only taxes owner, wit, on the bonds in the hands themselves for would give bank. To it the construction contended give has never been placed which word “indirect” a construction shares in the hands of A tax on the court. any of-the bank. owner tax on the property cannot possibly has correct, If the contention plaintiffs’ If individual effect: singular an act which has passed it is owns one these bonds other than bank corporation single owner's hands —a exemp- from all taxes exempt tion; share- it, surplus, if owns but a bank individual like amount on their holders to the get exemption their, taxa- shares of stock—a double property, tion. shares of Ra- and owner of more than five-sixths Bank is another and Trust leigh Savings Company of the ex- if rendered favor decision, effect of the value of the shares would be to increase vastly emption, Bank and Trust Company, stock in the Raleigh Savings now also of stock the bank the value of shares of former bank. holds five-sixths suit; of this object avers the true frankly The complaint a most valuable exemption which is to obtain coveted and It of the shares in the hands of the shareholders. the State are to benefit seeking does hot aver that the plaintiffs nor that arе here bonds, they of the State 'by raising the value an ex- seeking State. They to advance the interests of the shares of State bonds which the bank their because emption that suppose has and it is not reasonable to already bought, which of State bonds they should wish to advance value purchase. for the hereafter desire to may either bank Counsel would be the effect. however, have contended that such plaintiffs, matter, to consider such be may If it is for the Court proper answer brief, from the defendant’s here, well to insert make to the suggestion: which they plaintiff’s $15,000. Its sur- stock of the bank is “The capital $55,000 bonds It holds these nontaxable $60,000. plus of these nontaxable bonds-is a of its The 'life surplus. part SPRING 0.] PULI/EN V. CORPORATION COMMISSION. if Let see wbat State

forty years. ns would be result to tbe tbe tbe law $55,000 tbe to deduct these requires taxing power bonds from tbe actual value of of tbis tbe bank order finally to ascertain tbe of stock value tbe shares therein: “Tbe total tax rate Two and one- Raleigh $2.50. about half per cent of $55,000 $1,375. $1,375, times equals Forty that is to tbe loss of tbe say, multiplied by taxes each year, number of tbe So tbe years run, $55,000. that bonds equals State in forty years bonds; would lose tbe of tbe principal for wbat ?—to gain one wKen first sold point by way premium (record, p. A sure! It will 2). pretty costly whistle, be noted that tbe states that ex- 'controversy by without action’ empting tbe shares of stock from taxation tbe tbe premium . bonds will therefore, these Taking, increased one point. $55,000 of basis, by bonds as tbe State would receive way extra premium, for, if sold with tbe 1 per contended exemptions cent, or State, etc., $550. But at tbe tbe end forty years above, lose, would of ex- $55,000, and under tbe contention if emption, tbe tax is not on allowed because tbe but all of all tbe National banks scot free corporation, go would

taxes. And we are authorized to state from tbe yet Corporation matter Commission that it is tbe financial view tbis not tbe Court, would call to tbe attention of tbe but legal of tbe same. We statute phases contend simply which results in to tbe financially such disastrous consequences Court, be, State should tbe as contended interpreted tbe unless tbe is clear be- appellant, tbe statute meaning yond doubt, without And inference and without presumption. we maintain tbe have not shown cannot show plaintiffs that in tbe intention of tbe is clear all doubt beyond to tbis matter.” respect subsequently In con- that, tbe counsel reply plaintiff’s tended that small only very bought of tbe bonds would be tbe banks in tbis State. If such a small demand so, very could not materially Indeed, tbe of tbe bonds. tbe price affect Commission, only evidence adduced before tbe tbe tbe these would be raised of tbe shares of stock would affect price bonds, price is that of a witness who tbe thought, perhaps., of 1 cent. was bis per opinion, That % contrary price that tbe tbe would not opinion tbe be affected all is large majority entertained probably tbe officials of bank tbis State. just fair share of from its and Exemption any property taxation all other public paid by property. burdens increases tbe IN THE SUPREME COURT. Cobbobation Commission.

Sueb exemption has, therefore, by been expressly prohibited State Constitution. no Indeed, may with truth be said that can be legislation unjust more or more odious. For many years the State contended for the of an from exemption annulment taxation which had been to railroads in the granted great two grant State. Such had been made when railroads time were an “infant and the State their construc industry,” thought tion should encouraged contribution from the other tax by payers by exempting Besides, those railroads from taxation. now, at that time there was no< provision Constitution, forbidding the Yet exemption any iiroperty. the State contended for strongly illegal, years unjust that the was and exemption finally and act was held valid this was repealing Allsbrook, Court in R. R. v. 110 N. C., 137, opinion affirmed a writ of error the United States Supreme Court. In that this 110 N. opinion by Court, C., p. 147, it was Field, Chase, J., JJ., from C. and Miller said, quoting Rouse, Washington v. 441: Wall., “We do not believe under a any legislative body, sitting State Constitution of the character, usual has a right sell, give, bargain away to- * * * forever the of the State. If the taxing power Legis can exempt, land, lature one it can ex perpetuity, piece all land. can as well empt exempt persons corporations. It They go that rich men and rich with the say corporations known to appliances they use, may obtain perpetual exemp tion ‘from taxation and east government the burden of and the payment debts on those who are or too honest to poor too such 'with as full buy for immunity’; say further, respect of former decisions as from authority belongs, teaching habit, in the common-law judges system juris trained we think that there prudence, may questions touching legislative bodies which can never be closed powers the decisions of the finally courts, the one have here considered we in this view of the strengthened is of character.’ We are this the fact that a series of dissents doctrine subject by it has never received our shows that predecessors some full of this to those dissents Court, referring the more elaborate defense of our assent ourselves with views, we content a dоctrine which we think renewing against thus protest must be abandoned.” finally invalid an holding In above case we were did not forbid a Constitution which under granted on the that the ground exemption, purely case In the present exemption. an irrevocable grant could not to shares which refer words is not given by the exemption SPRING- 1910. 575 0.] V. CORPORATION COMMISSION. PUIHDN stock or to sbareb.old.ers, is a most far-fetcbed deduction

from tbe use of tbe word “indirect,” and if it can be construed to convey meaning tbe then tbe ‍‌​​​​​​‌‌‌‌​​​​​​​‌‌​‌‌‌​‌‌‌‌‌‌‌​‌​​‌‌​​‌​‌‌‌‌​‌‍plaintiffs contend, exemp- tbe tion is in direct violation of tbe Constitution of tbe State.

It bas been uniformly beld tbe United States Supreme Court, by Court, courts of other States, by tbis respect to corporations “tbe can two or levy any more of tbe following on tbe fran taxes, simultaneously: (1) chise (including on tbe dividends); stock; (3) on (2) capital tbe tangible on tbe shares (4) corporation; in tbe bands of subjects tbe shareholders. The tax on the two Co., last named is imperative Commissioners v. Tobacco N. C., 441, and cases there cited. That action was brought by an eminent now a lawyer, Court, member of tbis whose conten tions to tbe effect were above sustained. Notwithstanding was there it beld that a must tax corporation pay on all its else, like one’ tbe counsel for property, that every says truly defendant “not a bank in North Carolina one cent tax to-day pays town, tax, tax, to the county income nor for franchise tax its any whatever taxes are upon (which op tional luith the nor Legislature), upon any its property last'tax is (which imperative by the save the Constiiution), tax on house and like” banking (in and the tbis furniture case and even that tax is $12,700), recouped unconstitution the amount ally deducting assessment thus taxed from the shares Tbis is in against the shareholders. direct violаtion of tbe Constitution. If tbe and other farmers, citizens and all other were treated to a like total corporations, from all exemption they, too, would show a de great mills nor gree railroads, Neither cotton prosperity. other than corporation, banks, practically exempted thus from all taxation, nor are in any corporations shareholders other than banks authorized to of the value estimating deduct on which their for taxation tbe amount of property bas tax. tbe corporation paid any To sum up: “Exemptions regarded taxation are as .in of tbe and of tbe derogation sovereign right, and, common there fore, not to be extended tbe exact and beyond express require strictissimi R. R. language used, juris.” ments tbe construed Thomas, S., U. 174. Here there are no words conferring an exemption upon banks, requires stockholders tbe it an and most unusual of tbe words “in ingenious interpretation an plaintiffs. direct tax” to confer tbe exemption arises as to tbe existence of tbe exemption, “Where doubt Tennessee, in favor of the State.” Bank v. be decided it THE SUPREME COURT. IN v. Cobeobation Commission. S., 104 U. an requires ingenious construction, Here

unusual word to doubt favor of tbe one, single raise a exemption. in- and will not be “Tbe stated clearly must to tbe exist- do not irresistibly point ferred facts wbicb can Taxation, sec. 86. There ence contract.” Judson if tbe made, Legisla- no lawful of even .exemption contract inbe violation so tbeir would intended, ture bad because action of tbe Constitution. sustained un claim of can be “No exemption 93 Supervisors, all doubt.” R. R. v. less established beyond Missouri, this of case, R. 569. In 595; S., R. U. U. S., judicial whom, tbe laws of this nine officers under tbe a, matter bare of submitted, three, majority has been only .this been Court, this that such has exemption granted. considered tbe Tbe three of Commissioners, judge Superior tbe Corporation a contrary of this have Court, Court, opinion. and two judges all doubt” —the beyond tbe is not “established Surely, point applies. of States which tbe Court tbe United test Supreme and unambigu in clear Such must be exemptions expressed Allsbrook, C., R. 158. Can one R. v. N. ous terms. nor here “shares” is tbe case when neither claim statute, “shareholders” to them named tbe nor are exemption as tbe of tbe bonds when owned exemption wbicb refers to of tbe ? bank of tbe bonds, Court buyers bolding of tbe tbe claim that tbe stock, may shareholders on tbeir exempt tbe are of contract, an bank exemption is a decision Court bonds, being a double $4,000,000 to tbe annexed exemption forty is irrevoca- exemption, exemption that such years, tbe act, strike out ble, even should though either opinion, express contrary tbe Court should hereafter in another suit or and change in this case rehearing now constituted, of tbe Court, one member opinion a will dissenting opinions Tbe change personnel. if tbe notice that value, buyers upon without bond they put unconstitutional, no valid contract construed, act, tbe thus There granted. nothing of shares has been tbe wbicb of tbe Commission judgment have a right complain. plaintiffs dissenting: I am constrained to differ from tbe Hoke, J., case, question presented in its of this and tbe Court decision litigant matter both tbe and to parties being importance I I should state tbe briefly deem it public, proper tbe for my reasons position. SPRING 0.] Cobpokation bas It been long accepted that shares of stock principle in a bank, when owned by individuals, entirely separate distinct from the corporate property and assets. was held This for law in Nolan, Van Allen v. and several other of like eases import, sometimes called the bank cases, tax decided as far back as 1865, and reported S., 70 U. p. 573. The question there chiefly determined was whether the the United States Government should be first deducted in estimating value of shares of stock in the hands of individual owners for purpose State taxation, permissible under the Federal statute; and it was held that while the bonds of the Federal Government were any and all forms direct or indirect, yet the shares of stock owned by individuals being an entirely distinct and separate species property, Government bonds, though held and owned bank, should not be deducted determining the value of these shares: Nelson, In the case referred Associate to, Justice delivering the opinion, thus states the it as principle the reason for follows: “But in addition to this tax view, the on the shares is not a tax on the bank. The corporation legal owner of all the real and personal; within the powers conferred upon by charter, the and for the purposes which it was created, can deal with the corporate property absolutely as a his private individual can deal with own. This is familiar law, and will be work every found that be on the may opened corporations. subject v v v v íJí . “The interest of the shareholder him to participate entitles net in the earned the bank in of its profits by the employment during the existence of its to the capital, charter, proportion number of his its shares; and, termination, dissolution or upon to his that proportion property may remain of the cor- distinct, after the of its This is a poration payment debts. interest or held the like independent proрerty, by shareholder (cid:127) Allen other that to him.” Van v. any may belong Nolan, S., 70 U. 573. a divided originally "While this was established principle Court, repeatedly it has been since affirmed and applied Tennessee, United as in Bank v. Supreme States, Court of the Moines, Bank Des S., 161 205 U. and S., 134; many U. long recognized other and has so and acted cases; been in the of flsso- Legislatures impressive language courts and' Moody, ciate Justice in the case last delivering opinion mingled has come to be with all cited, inextricably taxing “It 152 —37 IN THE SUPREME COURT. Cokpoeation into them

systems bringing and. cannot be without disregarded confusion that would be little short chaos.” pronounced equally The decisions of our own State are Co., Commissioners v. Tobacco recognition this principle. Commissioners, In the C., 116 N. Belo v. 82 N. 415. C., 441; Smith, said: question, to this case, speaking last Justice Chief on “In an author of that work able valuable opinion law, he ‘We here find railways, commenting clear the says: recognition corporate of this kind of taxable property, in the of the corporators, shares hands corporation, tax- corporate distinctly able species property, defined as fourth only stock; (2) owners or holders: The capital (1) corporate franchise property; (3) corporation, all of which to the shares corporation; is taxable stock, which are taxable to the shareholders.’ capital Red. Am. R. Cases, 497. “A dif- tax on shares of stockholders in a is a corporation stock, itself, ferent a tax thing corporation on the

n be taxation of the may corporation laid irrespective it. Lim.,169; where no contract relations forbid Const. Cooley on Corp., Field :¡: % >;< Assessors, Wall., “In Van Allen v. it is held that shares holder, may although in a National bank taxed to the National Govern- capital whole invested securities of the tax- ment, which an act of declares to be Congress ation authority.” State it now being universally prevails, This the doctrine as method of Revenue Acts of the State establishing all the shares of banks applicable provide banks State shall be taxed National, of this both said owners, and for purpose the individual if they value, and, shall at their be assessed market that this value; no at their actual value, have market then shall ascer- value, value, there is no market actual when sur- stock, together by adding tained determined value therefrom the deducting and undivided plus profits on tax under pays which of the real and personal property itemized and debts, if assessment, properly

local and insolvent also be to, may sworn deducted. are and shares of stock assessed It will be here the noted determining be only are to made taxed, and the deductions owners, and of individual the value of these as property bank, assets from the property distinct separate TEEM, SEEING 579 O.] V. CORPORATION COMMISSION. PUULEN only deductions allowed tbe law the real are personal property assessed taxed insolvent locally debts. This, then, being provision of the law under assessed, taxes are enacted chapter 510, Laws 1909, entitled, “An act to care bonds, etc., issue to for the insane of the State”; and, after providing such issue to an of $500,000, amount the statute contains the following section: “Seo. 4. The said bonds and shall from be coupons exempt all or State, county or municipal assessment, taxation or direct indirect, general special, whether imposed purposes general revenue or otherwise, and the interest thereon paid shall subject nоt be as for income, nor shall said bonds and coupons subject be to taxation when -a constituting part any or other bank, trust cor- company poration.” It contended that under and virtue of this provision, the bonds to be shall issued under this act not be considered determining value shares in the hands individual owners for of taxation laws purposes under revenue above referred to. This claim for being taxation, from it can exemption only be allowed in case is clearly the claim R. R. established. Allsbrook, Missouri, C., 137; 110 N. R. R. U. S., 569; R. R. v. Supervisors, S.,U. on 595; Taxation, Judson sec. 86. case, In Allsbrook's supra, it was held: “2. The of an grant exemption taxation must be ex- pressed words too if a mistaken; doubt arise as plain to the intent doubt Legislature, that must be resolved favor of the State.” Missouri, In R. supra, R. v. held: it was from taxation will not be “Immunity unless recognized too granted terms be mistaken.” plain decisions, These while condi- quoted indicating tion under which from taxation should ever can be considered allowed, sented hardly apposite question pre- ; in mind that that shares for, bearing cardinal principle of stock in hands of individual distinct entirely owners of the nowhere question statute pro- shares, vides that the valuation these diminished holders, way individual of should be reason any on of the bonds in ownership question banks, my nor in does it words opinion justify use or per- The section question. quoted mit of doubt pro- : vides 1. That bonds shall be from all direct etc. indirect, COUNT. IN THE SUPBEME V. COMMISSION. CORPORATION

PULLEN to taxation subject not be shall interest thereon 2. That the as for income. when, of the constituting part be taxed 3. Nor shall of the bank. surplus are all the And both and these language explicit in plain or There is which the statute sanctions allows. exemptions in in such case nothing ambiguous them, obscure and is, entirely courts no an powеr my mind, have add what distinct wit: “Nor shall said bonds be considered provision, in when and determining the value of the shares assessed taxed as the property of individual stockholders.” subject not' law, The in the “shall be specified first exemption to sions comes the deci- indirect,” clearly direct under which to, referred hold that United States Government shall the shares estimating not be deducted in value of exemption in National banks for of taxation. An purposes statute be more and expressed comprehensive cannot terms than that arises from the searching principle bonds of National taxed may our Government not be inde- States. Such a as an power very involves existence pendent sovereignty, notwithstanding this, bonds, these and, when a bank, determining owned are not deducted in entirely shares, because, stated, value shares are distinct separate species property. The terms of the statute are not second discussion, third, relevant to the and the “Nor shall the bonds bank,” of the of the constituting taxed when part constituting clear terms to the bonds when and express applies valua- no affects corporate property, way shares, tion which are the the individual. It from the insisted, support proposed change shall express law, it interpreted terms unless it meaningless; the valuation the shares would be affecting and it urged history legislation is further that the the action of the Executive the State Govern- Departments ment force position principal should lend to' the taken these are considerations and rules of construction opinion; but when language permissible interpretation no when its ex- statute of doubtful meaning, place have and do construction. pressions plain permit Lаws, In sec. with Interpretation 26, quoted ap Black on License, 143 N. In is said: proval Applicants C., re meaning sought of a statute must first be “Sec. 26. of the statute itself. language plain ‘If the and free from ambi- language “And further: (cid:127) SPRING O.] and sensible guity simple, meaning, definite expressed which meaning conclusively meaning to be the presumed the Legislature intended to convey.’ “And in Lewis’ Southerland Construction Statutory (2 Ed.), sec. it is said: ‘When the intention of the is so apparent the face of the statute that there can be no ques- ” tion as to its meaning, there is no room for construction.’ Cornwell, Allen, J., In v. McCluskey Y., 601, quotes J., Johnson, with the rule as in Newell approval expressed by v. The People, 3 as follows: Selden, 1897, “Whether considering agreement between parties, we a statute or a with a view to its the constitution, interpretation, thing we are to seek is the which it To thought expresses. ascertain in all this, resort, cases, the first is to the natural in signification grammat- the words the order and employed, ical arrangement which the framers the instrument have them. If placed meaning, tween regarded embody thus words definite which involves and no absurdity no contradiction be- different of the same then parts 'writing, meaning apparent the face of the instrument is the one which alone upon we are at to was intended to be liberty say conveyed.” in- same it is said further: opinion And and in- contracts, “In construction both statutes of the framers and of all in sought-first tent parties words and and if language employed, the words are free from or and doubt, clearly distinctly ambiguity express plainly, no instrument, the sense the framers of the there is occasion to other means of It is not allowable interpretation. to resort to words have a or, what has no need of when the interрret interpretation, elsewhere in precise meaning, go definite conjecture meaning. search of order to or extend the restrict should be read and understood the nat- according Statutes hral and most obvious without import language, resorting forced construction for the lim- purpose subtle and either Oto iting extending operation.” or their quoted approval opinion These views are with both R., in Nance R. 149 N. dissenting C., 366, ex opinions stated, of law. As heretofore press well-recognized principle, terms, statute which in nothing express by any there is refers to omission of these bonds in intendment, permissible of shares when taxed determining the value courts, and the are without my opinion, individual holders, law. to add such a power provision Associate Jus Speaking generally question presented, to the Peckham, in Bank of the Court delivering opinion tice Tennessee, 161 S., 146-147, says: Commerce v. U. IN THE SUPREME COURT. Coepobation “These eases show which is founded principle upon clearly must be

rule that a claim for from taxation exemption sovereignties made out. Taxes means which being sole one can maintain their claim on the existence, any taxes on from the full of his share of to be exempt payment clearly of his must on that account be any portion no must be There language. defined founded upon plain the claim used language upon doubt ambiguity a well- It has said that to the is founded. been in- will be doubt is to the no claim; application founded dulged fatal used as language construing for the purpose is not founded the claim for such claim giving- exemption, where taxing intention clearly expressed plain power. into which and the shares “The stock of capital corporation shareholders and held individual such stock be divided may stock and the pieces property. are two distinct both be may in the hands of shareholders shares of stock Assessors, Allen v. Van it is double taxation. taxed, and Commissioners, cited Wall., 244, 4 People v. Wall., 573; Tennessee, S., 95 U. 687. Farrington in various many times “This statement has been reiterated one. by any not now disputed and is Court, decisions ‘corporate property/ this bank is- belonging to surplus “The the cor- in the hands of from the stock capital and is distinct anof payment terms, upon poration. exemption, each share of of one cent per upon annual tax of one-half taxes. The in lieu of all other which shall be stock, capital than the in its greater scope in our not, judgment, exemption subject there is a dif- do, as we that Recognizing, tax. from stock capital is described ferent which than ‍‌​​​​​​‌‌‌‌​​​​​​​‌‌​‌‌‌​‌‌‌‌‌‌‌​‌​​‌‌​​‌​‌‌‌‌​‌‍capital other as corporate property which is described a clear expres- is for necessity remembering and stock, there will be before the intention to sion of the granted has not been the surplus must hold that granted, we discus- in the charter under clause contained exemption by sion. The a difference. There implies name of very surplus beyond above over, is a. surplus and there bank is the stock, the capital among stockholders.” it is divided until honor and repu- for the jealous is more who is no one There I the writer. than its government State and of this tation know, meet fixed purpose is their desire that it well full an enlight- them as incumbent duty obligation every such pur- and where people, and Christian ened, progressive SPRING 1910.. 0.] Phillips Orb.

pose bas been enacted into law their courts at all should times all and under it; circumstances be swift to enforce but this for- sentiment, deep is, contrаry, does not it permit it the—on from bids—that tbeir laws we should depart expounding their statutes fixed or read into principles interpretation, effect and to the clear their terms. meaning contrary import I affirmed. am of. that the below should be opinion judgment PHILLIPS, Administrator, B. ORR et T. v. W. S. al. May,

(Filed 1910.) Evidence, How 1. Construed. Nonsuit — motions non- The rule of the construction of evidence on ante, 54, suit, Co., affirmed. as laid v. Lumber down Morton Bathing Duty Liable —Police of Owners —Who Not Are Resorts — Regulations —Officers. negligently, permitting damages In an for action drowning swimming plaintiff’s a lake intestate while park, appeared control over had no the defendants regulations except, police park, the lake or under therein, town, prevent persons bathing were nude toll from a no without control over them bathers received though bathing, rent limited the defendants did Held, unsupplied: was shown and bathing to those who came number under suits negligence the evidence no actionable laying judgment down properly allowed. The decisions of nonsuit was duty proprietors public owed the rule owners distinguished. bathing resorts, cited and J., Webb, Appeal Term, November Meck- LENBURG. moved judg- evidence defendant At the close plaintiff’s motion the close of and renewed nonsuit, ment ex- allowed, motion was plaintiff evidence. The entire appealed. cepted are as follows: Horace evidence facts The established 15 and between intestate, boy years the plaintiff’s Phillips, healthy, good sound and apparently good size age, in a July, 1908, of 5 chi afternoon was swimmer, drowned of Charlotte. city park in the Park, in Latta lake or pond white, is the or pond; so lake public, is open was that bathers of the lake the use placed upon restriction long by was 100 yards The lake about go in nude. should

Case Details

Case Name: Pullen v. . Corporation Commission

Court Name: Supreme Court of North Carolina

Date Published: May 11, 1910

Citation: 68 S.E. 155

Court Abbreviation: N.C.