60 W. Va. 357 | W. Va. | 1906
The State, at the relation of Charles W. Dillon, State Tax Commissioner, seeks a writ of mandamus to compel J. Walter Graybeal, Assessor of McDowell county, to assess the McDowell County Bank in accordance with what the relator conceives to be the law applicable to the assessment of said bank, in view of the nature and character of its property and assets. If his conception of the law be right, the value will be about $115,000.00, and if it be as assumed by the assessor, the assessed value will be about $29,-000.00. They did not disagree concerning the total value of capital, surplus and undivided profits of the bank, which is $154,519.36, but they did differ respecting the amounts and character of deductions to be made from said total values in ascertaining the sum with which to charge the bank on the personal property book. These differences involves two items, one of which is the tangible property, (real estate, furniture and fixtures,) the assessed value of which is $35,-610.00 and its actual value $11,121.71; and the other, five hundred shares of the capital stock of the Pocahontas Consolidated Coal Company preferred, of the aggregate par value of $50,000,00, owned by the bank. The assessor proposes to deduct $71,721.71 on account of the tangible property and $50,000.00 on account of the Coal Company stock, while the State insists that only $39,333.47 should be deducted, it
Though the right of the State Tax Commissioner to enforce, by proper remedies, the performance of legal duty by an assessor is not denied or questioned here, it is well, in view of the importance and extent 'of the power thus claimed and asserted, to ascertain whether it is well founded. Chapter 4 of the Act of 1904 created the office of Tax Commissioner, and that Act, together with chapter 35 of the Acts of 1905, amending chapter 4 of the Acts of 1904, conferred upon said officer certain supervisory powers over the assessment and collection of taxes and levies, which had imeviously been vested in the Auditor of the State and probably increased and extended them. Certain it is that, in transferring these powers from the Auditor to the State Tax Commissioner, the Legislature did not narrow them in any respect. The provisions of the two acts by which the transfer was made and the duties of the Tax Commissioner prescribed', confer very broad powers in general terms and supplement them by specifications and enumerations which clearly show that they are intended to vest all the authority which this Court, in State v. Buchanan, 24 W. Va. 362, held to have been conferred upon the Auditor by statutes less comprehensive and definite in the terms used. His right to invoke mandamus to compel an assessor to perform a legal duty is, we think, perfectly clear.
The statute under which banks are assessed is found in section -79 of chapter 35 of the Acts of 1905 which reads as follows:
‘ ‘ The shares of stock in a bank, trust company or national banking association, shall be assessed at their true and actual value, according to the rule prescribed in section twelve of this chapter, to the several holders of such stock in the county, district and town where such bank, company or association, is located, and not elsewhere, whether such holders reside there or not. The real and actual value of such sharés shall be ascertained according to the best information which the assessor may be able to obtain, whether from any return made by such bank, company or associa
This section, it will be observed, prescribes, first, the mode of assessment for banks, trust companies and national banking associations, when such bank, company or association does not elect to have the assessment made in another way; and, second, the mode of assessment which must be adopted when the bank, company or association does elect to have the assessment made under it. The first plan of assessment requires the shareholders of the capital stock to be assessed with the actual value of their shares, less the proportionate value of the real estate. Under this plan, the bank itself is not assessed. The shares only are charged to the persons owning them, and, this being done, there is . no assessment at all in the name of the bank, except in respect
Prior to the passage of this statute, shares in banks were required to be listed by their owners and taxed along with their other personal property, unless the bank in which they were caused itself to be assessed with the value of its capital invested or employed. Code 1899, ch. 29 section 41. When a bank did cause itself to be assessed, its personal property was not listed for taxation like that of a natural person. The assessment was made as a single item, called the value of the capital employed, and it was the aggregate value of all the ijersonal property of the bank, not exempt from taxation, including money, credits and investments, less indebtedness of the bank. Code 1899, ch. 29 section 64. The real estate was charged to the bank on the land book and no no-, tice of it taken in ascertaining the amount to be entered in the personal property book. There was no requirement that any tangible property be entered on the personal property book, but it was considered in estimating the value of the capital. Substantially the same method was prescribed for the assessment of individuals and firms not incorporated, engaged in any trade or business taxable by law. Code 1899, chapter 29, section 65. The direct subjects of taxation in these instances were not the several articles of property
The new tax law found in chapter 35 of the Acts of 1905 made very radical changes. As to all.corporations except railroad, foreign insurance and telegraph companies, telephone, pipe line, car line companies, and banks and trust companies, it requires the valuation to be put not upon the capital invested or used, but upon the property owned by them which is required to be listed in the personal property book under several and distinct items. Until the year 1909, this list is not to include the value of the real estate, but thereafter it shall be listed and returned to the assessor for taxation, but entered in the land book, while all other property returned is to be entered in the personal property book, and the statute, section 78 of said chapter, says the property mentioned in items c. d. e. and f. shall constitute all the property on which any corporation shall be liable to pay taxes. Items a. and b. in the list to be returned show the amount of capital authorized to be employed by the corporation and the amount of cash capital paid on each share of the stock. As to these corporations, there is no taxation of the capital stock, but only taxation of the property owned by them as in the case of individuals. Turning now to section 79, relating to banks and trust companies, it is to be noticed that there is no taxation on their property eo nomine. The taxes as to them are assessed against the share holders on the shares owned by them under one plan, or against the bank on account of the value of the capital, surplus and undivided profits; and the capital to be so taxed is defined in that section to be the capital stock, not merely the money employed in carrying on its business. As to all corporations other than those excepted by sections 77 and 78, the subjects of taxation are the properties owned by them, while in the case of banks and trust companies, the subjects of taxation are the shares in the hands of the holders thereof or the capital stock, surplus and undivided profits. They are not charged with any property as such in either case. No property, other than capital stock, surplus and undivided profits, is listed or assessed in their names.
Other provisions to be kept in mind are as follows: “When the property, stock or capital of any company, whether in-
These provisions constitute the basis of claim for deduction of the value of the stock of the coal company owned by the McDowell County Bank, it being admitted that said coal -company has caused itself to be assessed in its own name with all of its property, wherefore the shares of its stock are not to be taxed in the hands ' of the owner thereof. The •contention is that this bank, being the holder of shares in said coal company, has the same status, with reference ■to them as a natural person would have, and that since, if it were a natural person, the shares could not be taxed in its hand, it is entitled to have a deduction made from the value of its capital stock, surplus and undivided profits equal to the value of the shares. It is further contended, in view •of the provisions above quoted, that the deduction of the value of these shares is expressly authorized by section 79 because they are, within the meaning of that chapter, property ■exempt from taxation.
If we regarded only the letter of the statute, it is apparent that no assessment can be made against any bank upon its property, as such, in the manner in which property is assessed in the names of natural persons. Neither its tangible property nor its dioses in action nor its stocks are listed for taxation. In the case of banks, the specific articles of property owned by them, though imparting value to their •stock, and being in part its representative, are not the subjects of taxation. They are neither listed nor taxed. They •are simply reported to the assessor for the purpose of aiding him in determining the value of the capital stock, surplus .and undivided profits. The statute says that the assessor, -upon consideration of the matters shown by the list and of
If the legislature intended in this way to burden banks-o and trust companies somewhat more heavily than natural persons and those corporations which are required to pay taxes on the property they own, no constitutional limitation-upon the powers of the legislature is encountered. It is a mere incidental result of which the limitation takes no notice.. There are numerous instances of it to be found in the system of law relating to taxation. The owner of real estate owing practically its entire value as mortgaged indebtedness pays taxes on it at its full value, while the mortgagee is-taxed on the amount of the debt for which he has a lien upon the property and which may amount to practically its. entire value. This, although in practical effect double taxation, is not so regarded by any court. In the recent case of Harvey v. Coal Co., 59 W. Va. 605, this Court decided that a lease upon land, already taxed at its full value by the acre, might be put upon the personal property books and made to bear taxation, notwithstanding the practical effect of it is to compel the land owner to pay an additional tax on his land by way of abatement from the rent which he would be able to obtain but for the tax on the lease, and although it requires the lessee to pay a tax on a right carved out of a thing already taxed to its full value. This conclusion was-reached by adhering to the legal principle that the lease and the land covered by it are, in law, two separate and
For the position that several distinct kinds of property are to be found in corporations, many decisions of the Supreme Court of the United States, as well as of the highest courts of the several states, may be cited. In Tennessee v. Whitworth, 117 U. S. 129, 136, Chief Justice Waite said: “In corporations four elements of taxable value are sometimes found: 1, franchises; 2, capital stock in the hands of the corporation; 3, corporate property; and 4, shares of the capital stock in the hands of the individual stockholders.” In Farrington v. Tennessee, 95 U. S. 687. Mr. Justice Swayne made the following enumeration of objects liable to be taxed, other than the capital stock of a corporation: “1. The franchise to be a corporation and exercise its powers in the prosecution of its business. 2. Accumulated earnings. 3. Profits and dividends. 4. Real estate belonging to the corporation and necessary for its business.” In Bank of Commerce v. Tennessee, 161 U. S. 134, the accumulated surplus of a bank was held liable to taxation notwithstanding a provision in its charter which declared that the payment of one-half of one per cent on each share of its capital stock should be in lieu of all other taxes.
The cases, however, in which these distinctions are made
A careful examination of the many decisions distinguishing between a tax upon the franchise and a tax upon the property and upholding both against the corporation, will show that the former was purely a franchise tax and not a tax upon both the franchise and the property. The presumption against any intent on the part of the legislature to impose a double tax either directly or indirectly has always been observed by the courts, and, while they do not deny to the legislature the power to doubly tax property in a practical sense, they seldom or never uphold a construction of the statute which leads to this result, unless the intent is so plainly expressed as to preclude any other view. In Tennessee v. Whitworth, 117 U. S. 129, Chief Justice Waite said: “ Double taxation is, however, never to be presumed. Justice requires that the burdens of government shall as far as practicable be laid equally on all, and, if property is taxed once in one way, it would ordinarily be wrong to
In view of this general rule, it is proper to observe here that the policy of this State, as disclosed by the chapter of the legislative acts providing for the assessment of property, is emphatically against taxation of the capital of a corporation in its name and the stock of that corporation in the hands of the holders of its shares at the same time, While such taxation may not be. inhibited by the constitutional requirement of equality and uniformity in taxation, it is plain that the legislature deems unwise and impolitic. Technically it may not be double taxation, but practically it is. Therefore, the legislature has expressly exonerated the shareholder when the capital stock or property of the corporation in which his shares are held has been assessed.
Section 29 does not say whether the status of a bank as the holder of stock in another corporation shall be the same as that of a natural person or not. It requires the capital, surplus and undivided profits to be taxed after making certain deductions, in which is included property exempt from taxation. Shares of corporation stock are not exempt from taxation in the ordinary legal sense of the terms, for they are to be taxed in the name of the owner along with his other personal property, if the corporation does not cause itself to be taxed with its property or capital stock. Still it is conditionally exempted in the case of natural person's, and may be so exempted in the case of banks without destroying or impairing so much of the tax imposed upon them as may be regarded in any sense as founded upon the banking franchise. To illustrate, let us suppose a bank, the capital stock, surplus and undivided profits of which, have an aggregate value of $150,000.00 and all the property of which, except the franchise, has an aggregate value of $145,000.00. If $10,000.00 of that property be stock in another corporation and is deducted, it does not relieve the bank of the $5,000.00 which may be supposed to represent the value of the franchise. It simply relieves the bank
The claim of right to deduct the actual value of the real estate instead of its assessed value is predicated upon the failure of the legislature to- limit the word “value” in the latter part of section Y9 by the use of the word “assessed” in connection with it, as it did in the first part of the section. To sustain this contention would impute to the legislature either a grave oversight, by which the taxes on vast amounts of values in the capital of banks and trust companies would be lost to the state, counties and municipalities, or an intention to allow these values to escape taxation. Such institutions are located in the cities and towns,
From these views it results, that so much of the prayer of the petition as relates to the deduction on account of the real estate valuation must be granted and the writ awarded as to it, but refused as to the proposed deduction on account of the coal company stock owned by the bank.
Writ Awarded.