Arkansas Anthracite Coal Co. v. State
| Decision Date | 30 May 1921 |
| Docket Number | 18 |
| Citation | 231 S.W. 184,149 Ark. 28 |
| Parties | ARKANSAS ANTHRACITE COAL COMPANY v. STATE |
| Court | Arkansas Supreme Court |
Appeal from Pulaski Chancery Court; J. E. Martineau, Chancellor affirmed.
Decree affirmed.
Rose Hemingway, Cantrell & Loughborough, for appellants.
The purpose of the act is only to levy a franchise tax upon those corporations which are doing business within the State, and as the appellant corporations are not doing any business, but are merely holding mineral rights for sale or lease, they are not within the purview of act No. 112, Acts of 1911, p. 67 or the amendatory act No. 122, Acts 1917. A foreign corporation who leases mines for a term of years is not doing business within the meaning of the statute. 237 U.S. 28; 228 Id. 295, 303-5; 220 Id. 145; 163 P. 148; 99 Kan. 671.
J. S Utley, Attorney General; A. L. Rotenberry and J. C. Marshall, special counsel, for appellee.
The case cited by appellant, 227 S.W. 411, does not settle the question, nor are 237 U.S. 28 and others cited in point. See 91 N.E. 266; 194 S.W. 820; 163 P. 148; 96 N.Y.S. 745, affirmed in 97 N.E. 1194; 87 N.E. 434. The corporations were clearly liable for the tax, as they were doing business in the State.
Two consolidated actions are involved in this appeal, each instituted by the State of Arkansas against domestic corporations to recover unpaid franchise taxes under the statute which provides that every corporation "organized and doing business under the laws of this State for profit shall make a report in writing to the Arkansas Tax Commission," the form and substance of such report being specified, and that upon the filing of such report the Tax Commission shall report the same to the Auditor of State, "who shall charge and certify to the Treasurer of State for collection from such corporation * * * a tax of one-tenth of one per cent. upon that part of its subscribed or issued capital employed in Arkansas." Crawford & Moses' Digest §§ 9799-9801.
The articles of incorporation of the Arkansas Anthracite Coal Company define its purposes to be "to buy, own and sell lands, mineral rights, oil, gas and timber rights; conduct mining operations; to run a general mercantile business; to manufacture lumber; to build, own and operate switches and tramroads; to buy, own and sell stocks of railroads and other corporations; to operate stone quarries; to manufacture stone and brick; to lay out cities." This corporation has a paid-up capital of $ 597,000, which is invested in mining rights and coal lands situated in this State.
The articles of incorporation of the Arkansas Anthracite Mining Company define its purposes to be, "the mining of coal and other minerals; the operation of railroads, steamboats, barges and tramroads; the buying, owning and selling of lands, merchandise, stocks in other companies; the selling of coal and other minerals, and the establishment of agencies for that purpose." This corporation has a paid up capital of $ 100,000, and invested the same as the other corporations.
The property owned by the two corporations constitutes a single coal field of about 15,000 acres. The coal company has made a lease of a tract of 328 acres of its mineral rights to a certain person, which said lease lapsed without any development work being done. The mining company leased 160 acres to an individual who assigned the lease to another corporation which has mined the coal and paid royalties to the mining company annually from the year 1918 up to the commencement of these actions. The coal company owns all of the capital stock of the mining company, which it received in consideration of a conveyance of 5,000 acres of its mineral right holdings to the mining company. This conveyance to the mining company was executed to enable the latter to mortgage the property for a loan of $ 50,000 to use in paying a bonus to a certain railroad company for building a railroad to the coal field. The reason for this was that it did not suit the purposes of the coal company to incur this obligation and the mining company was organized for the purpose of assuming the obligation under the arrangement just described. Neither of the corporations has transacted any other active business, if it be held that the above-recited transactions constitute "active business." The trial court rendered a decree for the recovery from each of the corporations of the several amounts claimed by the State as franchise taxes.
It is the contention of learned counsel for the corporations that neither have been "doing business" within the meaning of the statute, and that neither is liable for the payment of the franchise tax under the statute. The contention is that the corporations have been and are holding the property in which the capital stock is invested merely for the purpose of doing business in the future, and that this does not fall within the terms of the statute. Counsel argue that the words "doing business," as used in the statute, should...
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