63 A. 562 | Md. | 1906
This is an appeal from the judgment of the Baltimore City Court dismissing the appeal of the appellant from the assessment made by the Appeal Tax Court of that city and confirming that assessment.
The parties entered into an agreed statement of facts, from which it appears that the appellant was incorporated by the State of Delaware on the 23rd December, 1902; and has its principal office, outside of that State, in the State of Maryland, in the city of Baltimore. It transacts its business throughout the United States, and has offices in the States of New York and Illinois. It has duly complied with the laws of the State of Maryland, regulating the admission of foreign corporations to transact business in this State. It has a capital stock of $500,000 divided into 5,000 shares of the par value of $100 each; of which $250,000 is preferred stock and $250,000 is common stock, all of which has been issued, with the exception of 37 shares of the common stock. The preferred stock bears interest at the rate of 5 per cent per aunum, payable in quarterly installments on the first days of January, April, July and Ootober in each year and has been promptly paid. No dividend has ever been paid on any of the common stock. The preferred stock is owned as follows, viz.: $150,000 by Mrs. Anna Wilkens, a citizen of this State and a resident of Baltimore City; $50,000 by Gustav A. Schlens, also a citizen of the State and a resident of Baltimore County; and $50,000 by Herman Schoenijahn, a citizen of New York, and a resident of New York City. That the preferred stock owned by Gustav Schlens was assessed to him by the County Commissioners of Baltimore County for the year 1905 at the regular rates and the tax was duly paid by him. But though the $150,000 of preferred stock has been owned by Anna Wilkens since the incorporation of the company, during all of which time she has been a resident of Baltimore City, no assessment was made on account of said stock, either against her or any other owner thereof. Said stock was assessed to Anna Wilkens for the year 1906. No assessment has ever been made *307 on account of the preferred stock owned by Herman Schoenijahn. Prior to the incorporation of the appellant in 1902, the business of the company was conducted by the parties named as co-partners, trading as William Wilkens and Company, and in 1898 an assessment was made by the Appeal Tax Court of Baltimore City against the firm as follows:
Stock 310 W. Pratt St. ........................ $10,000
Stock, c., Frederick Ave ..................... 52,310
Machinery, engines, c. ....................... 7,500
_______
$69,810
This was the only assessment ever made on account of the personal property of said firm, and it remained without change until it was abated on July 20th, 1905. After the incorporation of the appellant the assets of the firm were transferred and assigned to the appellant on the 1st day of January, 1903, but no assessment was made against the corporation until 18th July, 1905. That about February 8th, 1905, the appellant by its counsel appeared before the Appeal Tax Court with a bill for 1905 taxes made out against the firm of William Wilkens Co., upon the assessment already set forth, and represented that the said company had been succeeded in 1902 by the corporation, that the company had paid the assessment of 1904, and that the tax bill of 1905 should be against the corporation, provided "said personal property was legally assessable." Thereupon one of the assessors of the Appeal Tax Court, under the instructions of the Court, examined the company's plant and stock, and delivered to the company's secretary a "regular" form for the schedule and return of personal property. Schlens filled out said form and returned it to him, making at the time "some question whether a return of additional machinery should be made." The valuation placed by Mr. Schlens upon the company's property, as it appears from the said schedule, was as follows:
Horses and vehicles ........................... $ 6,231
Machinery, implements of trade or busness ..... 9,000
Other personal property ....................... 61,285
_______
Total ......................................... $76,516
*308
On notice to show cause why the corporation stock, horses, vehicles and machinery, should not be assessed for 1905 at a total valuation of $93,122, its counsel objected, that the proposed assessment was "illegal, erroneous and unequal," but not that same was excessive. And on July 18th, 1905, the following assessment for 1905 was made and entered against the corporation.
Stock ........................................ $61,285
Horses and Vehicles .......................... 6,231
Machinery .................................... 25,584
_______
$93,100
And on 20th July, 1905, the assessment against William Wilkens Co. for 1905 was abated. On the same day the tax Court on application abated the assessment of $25,584 on account of its plant and machinery, leaving the total assessment $67,516.
Thereupon the appellant filed his petition in the lower Court, in which after setting forth in substance the aforegoing facts, he prayed the Court to review the assessment, determine it improper, illegal, erroneous and unequal, and set it aside. The Court by the appellee's third prayer, instructed itself, sitting as a jury, that the personal property consisting of stock in trade, horses and vehicles situated in Baltimore City and belonging to a corporation incorporated under the laws of another State and transacting business in Maryland as a foreign corporation with its principal office (outside of Delaware), in Baltimore City, is assessable for taxation in said city, even though all of the corporation's shares of preferred stock are held and owned as follows:
By a resident of Baltimore City ............ $150,000
By a resident of Baltimore County .......... 50,000
By a resident of New York City ............. 50,000
________
Total ...................................... $250,000
And even though said preferred stock pays dividends and though the shares owned in Baltimore City and in Baltimore County respectively are legally assessable and taxable in Baltimore *309
City and County respectively." The petition was dismissed and the assessment appealed from was confirmed by the order of the Court from which this appeal is taken.
The position of the appellant as stated in his brief, is that the personal property of a foreign corporation, permanently located in the city of Baltimore, is not assessable and taxable for State and municipal taxes, when the shares of the capital stock of said corporation are assessed and taxed to the respective owners residing within the State.
Section 2 of Article 81 of the Code of 1904 provides in substance that all property "of every kind, nature and description within the State," shall be valued and assessed for the purposes of State, county and municipal taxation, to the respective owners thereof, c., except as provided in secs. 4 and 89-91, and 214-224 — which two latter sections relate to taxation of savings banks and distilled spirits.
Section 4 exempts the personal property of those corporations having stock incorporated by this State "when the shares of said corporation are subject to taxation under the laws of this State;" but there is no exemption of the personal property of foreign corporations. The language of the Act declaring what shall be subject to taxation is broad enough to include the assessment of every kind of property in the State — and to authorize its exemption from taxation there must be shown some legal authority that it cannot be taxed. The doctrine stated inCo. Commrs. v. A. E.R.R.,
But conceding that our statutes authorize the assessment of personal property situate in Maryland and belonging to a foreign corporation doing business here, the appellant also contends that to assess it after its shares of stock have been taxed, would result in double taxation and prohibited by the Constitutions of the State of Maryland and the United States. To support this contention the following cases are relied on. The *310 Tax Cases, 12 G. J. 117; P., W. B.R.R. Co. v. Bayless,
2 Gill, 355; Gordon v. Baltimore, 5 Gill, 231; Baltimore v.B. O.R.R. Co., 6 Gill, 288; State v. Sterling,
An examination of these decisions will enable us to determine how far the principles therein laid down are applicable to the facts here involved. In the present case, the corporation is a foreign corporation, with a large amount of its stock held by an owner who is a non-resident of the State. It is not claimed that the share of the non-resident stockholders is liable to taxation. Schoenijahn, a resident of the State of New York, holds one-fifth of the total number of shares and cannot be assessed. It is a case where the entire stock is taxable and therefore it would seem that if the principle contended for here by the appellant be applicable, no personal property located within the State belonging to a foreign corporation would be taxable, if any of its shareholders do not reside within the State. In the cases cited by the appellant as above, there was none in which the question of double taxation was involved. In some of them as 6 Gill, 48 Md. and 52 Md., the Court was enquiring into the true construction of provisions of the charters of the corporations, for the purposes of determining with precision the extent to which the respective corporations were entitled to exemption. This was clearly expressed, in State v. B. O.R.R.,
1st. That the tax on the shares of stock, is not a tax on the corporation, but upon the owners of the shares, and being property, they are taxable, and
2. That the tax on the gross receipts, is a tax on the corporation not measured by the value of its stock, but by the amount of its gross receipts.
3. That the two taxes therefore are not upon the same individual, natural or artificial, in consequence of his or its ownership of the same property, notwithstanding the franchises of the corporation in some measure gave value to the shares of stock. But, the opinion proceeds, "if this were conceded to be a double tax it would not necessarily on that account be void. The Declaration of Rights requires equality in taxation, and in so far as a double tax destroys that equality it is invalid but not otherwise. Cooley on Taxation, 161, et seq. Taxes are levied upon the individual and not upon property though the value of the property owned by him is the standard by which the extent of the individual's liability is ascertained and measured. Hence the imposition of a tax twice upon one person for the same purpose because of his ownership of a particular piece of property would be a double tax which, in consequence of its inequality, would not be sustained. But when the same property represents distinct values belonging to different persons, be those persons natural or artificial, both persons may be lawfully taxed, and the amounts of their separate contributions would be fixed by values which the same property represented in the hands of each respectively. And this would not be double taxation in the sense in which it is obnoxious to the organic law."
The subsequent decisions in this State all seem to be in harmony with the case just cited. We will refer to them, without however undertaking to review them at length.
Crown Cork Seal Co. v. State,
The principles laid down in 79 Md., supra, are sustained by the great preponderance of authority elsewhere. In the Bank ofCommerce v. Tennessee,
It seems therefore to be clear upon authority, as well as upon reason, as set forth in the case of 79 Md., supra, that the assessment of the personal property permanently located in the State of Maryland belonging to the appellant, is not obnoxious to any provisions of the Constitution of the State although the shares of stock belonging to and held by residents of Maryland have also been assessed and the taxes thereon paid. The property being subject to assessment under the laws of the State of Maryland it is objected that it is in violation to the Fourteenth Amendment to the Constitution of the *314 United States. But it has been shown that the reason why the personal property of Maryland corporations is not taxed after their stock has been taxed, is if for no other reason because the statute provides it shall not be. The State has full power to exempt any class of property as it may deem best according to its views of public policy. It cannot be now questioned that a State may classify property in all proper and reasonable ways, provided the discriminations made are based upon sound reasons of public policy and are not arbitrary or hostile. "Such classification may properly be based upon the want of adaptability to the same methods." 27 A. E. Enc. of Law, p. 27, note 2.
The appellant by its sixth prayer asked the Court to rule that the assessment was erroneous because it was not made until July 18th, 1905. This ruling could clearly not have been made, because of the fact that it appeared from the agreed statement that the transfer from the account of Wilkens Co. to that of the appellant, was made at the suggestion of the latter. On February 8th, 1905, its counsel appeared before the Appeal Tax Court with the tax bill for 1905 made out against the firm and stated it should be against the corporation. Later one of the assessors made out a regular form, delivered it to one of the officers of the corporation, who filled it out and returned it to the Tax Court. The valuation given by the appellant was adopted and the assessment was then made out. No objection was then or ever made before those proceedings. Under these circumstances the appellant is estopped from raising this objection. In re McLean,
The order of the lower Court must be affirmed.
Affirmed with costs.
(Decided March 28th, 1906.) *315