217 P. 681 | Mont. | 1923
Lead Opinion
delivered the opinion of the court.
In this action the attorney general as relator seeks a writ of mandate to compel Ed. J. Harrington, as assessor of Silver Bow county, to assess for the purpose of taxation certain shares of stock of the Inspiration Consolidated Copper Company and of the United Yerde Extension Mining Company, which the intervener, W. D. Thornton, owned on the first Monday of March, 1923. Upon the admitted facts gathered from the petition, answer of Harrington, and com-' plaint in intervention filed by Thornton, the latter was on the first Monday of March,. 1923, and for many years prior thereto had been, a legal resident of the city of Bntte. On that date he was the owner of the shares of stock named and these have never been listed for assessment in the state of Montana. The Inspiration Consolidated Copper Company is incorporated under the laws of the state of Maine, and the United Yerde Extension Mining Company under the laws of Delaware. The entire property of these corporations is within the state of Arizona. Neither corporation has ever owned or had any interest in any property within the state of Montana, nor has either ever transacted any business of any nature within this state. The stocks of these companies have been for many years, and are now, listed for sale upon the New York, Boston and other stock exchanges, and large numbers of the shares of these companies have been daily bought and sold for many years upon and through the medium of these stock exchanges.
In 1906 Thornton closed out his business affairs in this state which required his personal attention and went to the city of New York. There he engaged in the business of buy
Ever since 1906 and up to and including the present time Thornton has been absent almost continuously from the city of Butte and from the state of Montana, and has been within the city of New York, returning to this state only at infrequent intervals, usually for a period of four or five weeks during each year. While he has been a legal resident of u this state, his business as distinguished from his legal residence has been in the city of New York.
Upon the foregoing statements, admitted to be true for the purposes of this case, the intervener alleges that the stocks in question are not property in the state of Montana, are not subject to assessment by the officers of this state, ,are not taxable here, 'but the same are localized and have their situs in the city of New York, being property exclusively within the territorial limits of the state of New York and subject to the jurisdiction of that state for the purposes of taxation, o The concrete question presented is whether the laws of
Section 1, Article XII, of the Constitution, declares: “The necessary revenue for the support and maintenance of the state shall be provided by the legislative assembly, which shall levy a uniform rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation for taxation of all property, except that specially provided for in this article. * * * ” And section 1997, Revised Codes of 1921, provides: “All property in this state is subject to taxation, except as provided in the next section.” No question as to exemption from taxation is involved in this controversy.
The taxing power of the state does not extend beyond its
■ Section 17 of Article XII of the Constitution declares: “The word property as used in this article is hereby declared to include, moneys, credits, bonds, stocks, franchises and all matters and things (real, personal and mixed) capable of private ownership, but this shall not be construed so as to authorize the taxation of the stocks of any company or corporation when the property of such company or corporation represented by such stocks is within the state and has been taxed.” Respecting section 17 this court has said: “This lat'ter section, in its definition of that which may be made sub
By the provisions of section 2002, Revised Codes of 1921, the assessor is required to ascertain the names of all taxable inhabitants, and all property in his county subject to taxation, except such as is required to be assessed by the state board of equalization, and to assess such property to the persons by whom it was owned or claimed or in whose possession or control it was at 12 o’clock noon of the first Monday of March next preceding.
Section 2003 directs the assessor to require from each person 'a statement under oath setting forth specifically all the real and personal property owned by such person, or in his possession or under his control at 12 o’clock noon on the first Monday of March. Then follow sections relating to the property of absent or unknown owners (2008, 2009), to property situate in another county (2010), and section 2012 provides: “When a person is assessed as agent, trustee, bailee, guardian, executor, or administrator, his representative designation must be added to his name, and the assessment entered on a separate line from his individual assessment.” By section 2013 it is provided that “The property of every firm and corporation must be assessed in the county where the property is situate, and must be assessed in the name of the firm or corporation.” Section 2015 provides that “The capi
The foregoing statutes demonstrate the emphasis laid upon the actual situs of property for purposes of taxation by the law-making power, and also indicate a clear intention to include the property of nonresidents which has a situs here.
While the Attorney General admits that the stocks are and always have been in New York, he urges that, as Thornton is a resident of this state, the situs of the stocks in question is here under the doctrine of moiilia sequuntur personam— movables .follow the person. In order to arrive at a proper understanding of the problem presented it will be of advantage to consider briefly two theories of taxation bearing upon the subject, one of which may be called the Massachusetts, the other the New York, doctrine, tracing then the course of legislative action in the territory and state of Montana with respect thereto.
The statutes of Massachusetts provided that all property, real and personal, situated within the commonwealth, and all personal property of the inhabitants of the commonwealth
New York’s statute provided, in effect, that all lands and all personal estate within the state should be liable to taxation, subject to certain exemptions. Under this statute the supreme court, in the leading case of People v. Commissioners of Taxes, 23 N. Y. 224, denied the fiction of law that personal estate has. no situs away from the person or residence of the owner, and held the actual situs of the property to be controlling. These conflicting doctrines were well understood when the territory came into existence.
Our first legislative assembly adopted “an Act providing for the collection of the revenue.” (Bannack Laws, p. 411.) Section 3 thereof provided that all property of every kind and nature whatsoever, within this territory, with certain exceptions, should be subject to taxation. Section 4, a lengthy one, provided in part: “All other property, real and personal, within the territory, is subject to taxation, in the manner herein directed, and this is intended to embrace [after enumerating certain kinds of real and personal property] stock or shares in any bank or company incorporated or otherwise, and whether incorporated by this or any other territory or state, and whether situated in this territory or not. * =:;= * ” This was supplemented by section 6, which declared that “Every inhabitant of this territory, of full age and sound mind, shall list all property, subject to taxation in this territory, of which he is the owner, or has the control or management, in the manner hereinafter directed. * * * ” Thus the legislature practically adopted the Massachusetts doctrine.
The 1887 Act had a brief existence. It was enacted in March, and in August an extraordinary session was called— reputed generally for the purpose of repealing the Prairie Dog and Ground Squirrel Bounty Act, also passed-in March, 18'87. The extraordinary session repealed the Revenue Act enacted at its first session, and enacted another which embraces portions of all former Acts. (Laws Ex. Sess. 1887, p. 82.) As section 4 of the new Act it re-enacted substantially section 4 of the Bannaek Laws, but with some alterations and additions, notably the following: In place of the above-quoted excerpt from section 4 this appears: “Stocks or shares in any bank or company, incorporated or otherwise, and whether incorporated by this or any other territory or state, or whether situated in this territory or not, except that where the entire capital stock of any- incorporated company shall be invested in assessable property in the territory of Montana, such capital stock shall not be taxed. * * * ”
When the legislature met in 1889 it again amended the Revenue Act and did so in contemplation of impending statehood. (Laws 1889, p. 219.) While the 1889 Act did not in terms repeal section 4, the first section of the new Act, amending section 3 of the Act of the extraordinary session, declared that “All real and personal property in the territory (or state) of Montana * * * shall be listed and assessed
"Whether section 4 of the Act passed by the extraordinary session was repealed by the 1889 Act is not necessary to be .decided now; but it is perfectly clear that the last expression of the territorial legislature was a departure from the Massachusetts and a recognition of the New York doctrine.
At the next session of the legislature — the first following the adoption of the Constitution and the attainment of statehood— a revenue measure was passed and approved (Laws 1891, p. 73), and this, with minor amendments and modifications, is still in force. (Hayes v. Smith, supra.) The 1891 Act followed the policy of the 1889 Act closely. As above adverted to, it adopted many of its important provisions, some literally, many substantially.
Now, in order to arrive at a proper construction of our constitutional provisions quoted above, let us consider the subject “in the light of our history, the surrounding circumstances, the subject matter under consideration, and the object to be attained.” (Northern Pac. Ry. Co. v. Mjelde, 48 Mont. 287, 137 Pac. 386; State ex rel. Hillis v. Sullivan, 48 Mont. 320, 137 Pac. 392.) Not only do we find the territorial policy at the time the Constitution was framed and adopted to have been inclined strongly against the Massachusetts and in favor of the New York rule, but also that the first state legislature followed the policy then indicated — a contemporaneous construction, undisturbed now for a generation.
The inquiry naturally follows: "What has been the attitude of this court respecting the maxim mobilia sequuntur personam
In Holland v. Commissioners, 15 Mont. 460, 27 L. R. A. 797, 39 Pac. 579, the court recognized the principle of the maxim. The case had to do with the assessment of mortgages belonging to nonresidents. It-said: “Regarding a. mortgage, therefore, for the purposes of taxation, as nothing more than a collateral security, depending upon some outside obligation to secure which it is given, it is established by the great weight of authority that the mortgage belongs to the owner of the debt, and passes with the debt to any lawful holder thereof. * * * The debt, therefore, if owned and controlled by one not a resident of the state, is not ‘property in the state subject to taxation,’ as provided by the Revenue Act of 1891, but can be assessed only at the domicile or place of residence of the creditor, without regard to the domicile of the debtor.” But further on it is said: “It may be that if, as a fact, notes and mortgages owned by nonresidents are actually within the state, and are controlled by the agents therein, who retain them and make the
In Flowerree Cattle Co. v. Lewis & Clark County, 33 Mont. 32, 8 Ann. Cas. 674, 81 Pac. 398, this court affirmed the annulment of an assessment upon cattle only temporarily within Lewis and Clark county, which was the residence of their owner, the situs of the cattle being not in the residence of their owner but in the county of their accustomed and permanent range. This was a distinct denial of the maxim respecting personal property within the state, actual situs being held controlling in that instance. ■
In Monidah Trust v. Sheehan, 45 Mont. 424, 123 Pac. 692, the facts were that Monidah Trust, a corporation under the laws of Delaware, and transacting business in Montana and elsewhere, had loaned money upon property situated in this state and had taken notes as evidence of the loan, the notes being secured by mortgage. The assessor assessed the company on solvent credits for the full face value of the notes secured by the mortgages, whereupon the company obtained an injunction restraining the county treasurer from collecting the tax assessed thereon. The notes and mortgages were held by the plaintiff corporation at its domicile in Delaware. The court said: “Assuming that the domicile of this plaintiff is in the state of Delaware, these credits presumptively have their situs in that state. There is not any evidence in the record that the mortgages were in this state at any time during the year 1911; while the testimony, though not very direct or certain, tends to show that they were not. The presumption is in favor of their situs in the state of Delaware, and this presumption was not overcome.” In the process of the opinion the court said: “Counsel for appellants contend that any foreign corporation doing business in this state is liable to taxation upon its solvent credits, so far as the same arise out of business transacted in this state. ‘ Mobilia personam sequuntur’ is a maxim of law as old as the law itself, and, while it cannot be invoked merely
The maxim, as the foregoing authorities show, is not one of
In Catlin v. Hull, 21 Vt. 152, it is said: “This rule is merely a legal fiction, adopted from considerations of general convenience and policy, for the benefit of commerce and to enable persons to dispose of their property, at their decease, agreeably to their wishes, without being embarrassed by their want of knowledge in relation to the laws of the country, where the same is situated.”
The supreme court of the United States, in Pullman Palace Car Co. v. Pennsylvania, 141 U. S. 18, 35 L. Ed. 613, 11 Sup. Ct. Rep. 876, said: “The old rule, expressed in the maxim mobilia sequuntur personam, by which personal property was regarded as subject to the law of the owner’s domicile, grew up in the middle ages, when movable property consisted chiefly of gold and jewels, which could be easily carried by the owner from place to place, or secreted in spots known only to himself. In modern times, since the great increase in amount and variety of personal property, not immediately connected with the person of the owner, that rule has yielded more and more to the lex situs.”
The “fiction of law” that “all intangible property is presumed to have its situs at the domicile of the owner * # * must give way, # * * in the face of contrary facts.” (In re Thourot’s Estate, 52 Utah, 106, 172 Pac. 697.) And see Marshall Hardware Co. v. Multnomah County, 58 Or. 469, 115 Pac. 150; Mayor etc. of Mobile v. Baldwin, 57 Ala. 61, 29 Am. Rep. 712; Adams Express Co. v. Ohio, 166 U. S. 185, 41 L. Ed. 965, 17 Sup. Ct. Rep. 604 [see, also, Rose’s U. S. Notes]; Blackstone v. Miller, 188 U. S. 189, 47 L. Ed. 439, 23 Sup. Ct. Rep. 277; State Board of Assessors v. Comptoir National, 191 U. S. 388, 48 L. Ed. 232, 24 Sup. Ct. Rep. 109; Liverpool etc. Ins. Co. v. Assessors, 221 U. S. 346, 55 L. Ed. 762, L. R. A. 1915C, 903, 31 Sup. Ct. Rep. 550.
That it is the policy of this state to tax tangible property without its territorial limits is not asserted. As illustrative, if the intervener’s business in New York consisted of maintaining a store on Fifth Avenue in which he dealt only in wearing apparel, it is clear that this state would not attempt to tax that merchandise. To cite other well-known instances, it will not
Again, not only is the operation of state laws limited to persons and property within the boundaries of the state, but property which is wholly and exclusively within the jurisdiction of another state receives none of the protection for which the tax is supposed to be compensation. In Catlin v. Hull, supra, it is said: “We think it entirely just and equitable that, if persons residing abroad bring their property and invest it in this state, for the purpose of deriving profit from its use and employment here, and thus avail themselves of the benefit and advantages of our laws for the protection of their property, their property should yield its due proportion towards the support of the government, which thus protects it.” (See Armour Packing Co. v. City Council of Augusta, 118 Ga. 552, 98 Am. St. Rep. 128, 45 S. E. 424; Wilkey v. City of Pekin, 19 Ill. 160; State Board of Assessors v. Comptoir National, supra; Redmond v. Commissioners, 87 N. C. 122; State v. Falkinburge, 15 N. J. L. 320; People v. Gardner, 51 Barb. (N. Y.) 352; Poppleton v. Yamhill County, 18 Or. 377, 7 L. R. A. 449, 23 Pac. 253.) In State v. Falkinburge, supra, it is said: “A man’s personal property, his choses in action, his trade and business, need and receive the protection of the laws of that country where they are situate, accruing, or carried on. They have all the benefit resulting from the society in whose midst they are, without regard to the owner’s residence. They should therefore pay .their part of the expense of maintaining and administering those laws, and supporting that society.”
Counsel have argued at great length as to whether shares of
Our Constitution and statutes, in so far as the principles of taxation are concerned, do not make any distinction between tangible and intangible property whatever. Both are taxable. That shares of stock are recognized directly as objects of tax-ability we have already adverted to. If they are owned by one who has his domicile in this state the presumption is that they have their situs here. (Monidah Trust v. Sheehan, supra; Holland v. Commissioners, supra.) That this state may tax a
That the stocks of nonresidents which have a situs here should be taxed here is clearly within the intent of the language of section 17, Article XII, Constitution, and sections 1996 to 2012, Revised Codes of 1921. If we were to read into the statute the fiction mobilia sequuntur personam imposing an opposite principle, the state thus would not be able to tax such stocks because their situs would be presumed conclusively to be at the domicile of their owner. Acknowledging that we have the right to tax the stocks of nonresidents which have a situs here, we must by correct principles of comity allow a corelative right to every other taxing jurisdiction.
But, as indicated above, there is well-recognized exception to the general rule that intangibles have their situs at the domicile of their owner, as where there is such a combination of circumstances “as produce what is referred to in the books as a business situs as distinguished from the domicile of the owner.”
The general principle underlying this exception has been recognized by the supreme court of the United States in many eases (Tappan v. Blerchants’ National Bank, 19 Wall. 490, 22 L. Ed. 189 [see, also, Rose’s U. S. Notes]; Pullman Car Co. v. Pennsylvania, 141 U. S. 18, 35 L. Ed. 613, 11 Sup. Ct. Rep.
Of course, if the shares of stock in a given instance are kept
In the instant case it is unquestioned that the Thornton shares have a business situs in the state of New York; they are actually there, and always have been. Under the admitted facts it must be held under the policy so long maintained in the territory and state of Montana, which we believe to be consonant with the true principles governing taxation — a policy which frowns upon double taxation in any form; and which simply demands of persons a just contribution to the support of the government under which they enjoy the protection which makes their business possible — the assessment of the Thornton
We are under obligation to respective counsel for the very able and exhaustive briefs which they have presented.
The order to show cause is discharged and the proceeding dismissed.
Dismissed.
Rehearing
On Motion for Rehearing.
delivered the opinion of the court.
The attorney general has filed a petition for rehearing which, like many such documents, consists chiefly of the loser’s assertion of dissatisfaction over an adverse decision.
Changing front, he now urges that, in view of our decision and upon the assumption that New York does not tax shares of stock, those in question are not taxed anywhere, and therefore we should have reached a different conclusion. Upon the trial of this cause he represented to the court in his argument, and correctly, that whether New York taxes the stocks is wholly immaterial to this inquiry. In his original brief he said: “As a matter of fact, New York does not now impose and has not for many years imposed a tax upon stocks of foreign corporations held within the state by her own citizens, much less on those held by citizens domiciled elsewhere. New York, no doubt, finds this policy sufficiently remunerative by reason of the great number of stocks attracted to that state by the stock markets and the collection of sales taxes on shares bought and
Montana levies its taxes without reference to the laws of other states, and regardless of what they do in that respect. So it is obvious that it makes no difference to Montana what New York does with respect to taxing these stocks. If they were in California, that state would tax them if they had a situ# there, irrespective of the domicile of their owner. Nearly all states would do the like. In our original opinion we said “that this state may tax a resident upon his stocks in foreign corporations which have no situs other than the domicile of their owner is beyond any question whatever,” and, while unnecessary to say so, it may be added this state may impose the tax-even if the stocks are also taxed in the home state of the corporation. (See authorities in original opinion.)
The only question presented or which could be presented to us in this ease is whether under our laws the stocks are subject to the taxing jurisdiction of this state. Upon the agreed facts as counsel have made up the record, there is not a Montana dollar invested in the Thornton stocks. As a fact, as distinguished from fiction, they are as foreign to our jurisdiction as if they were cattle browsing upon the Adirondack hills. The stocks were bought with New York money, and are' a part of a New York business. Yet in view of these facts the attorney general asserts that the court’s opinion is not consonant with the trend of modern authority. In this he is in error; the contrary is the fact. As noted in the opinion, the ancient fiction mobilia, sequuntur personam, while satisfactory under the primitive conditions of the middle ages, is not suited to modern business conditions as a rule of universal application. The law has developed progressively beyond the narrow limits of the maxim. The fact is that the rule growing out of the business situs of intangibles, as distinguished from the domicile of the owner, is not only consistent with the trend of modern
This court’s decision is based upon the law of this state which has been in force for a third of a century. It is not based upon a rule of comity initiated by this court.
Remarkable to relate, the attorney general has assumed that
Trite as it may appear, we again call attention to the fact that this court has no legislative functions, and will not attempt to assume any. This court is not concerned with policy or politics. It will endeavor to declare the law as it finds it. If the law as declared does not meet with popular approval, there is always a way to amend it. We should be unfaithful to our duty if we were to say the law authorizes that which it does not.
The motion for rehearing is denied.