Barnes v. Jones, 24365

CourtUnited States State Supreme Court of Mississippi
Citation103 So. 773,139 Miss. 675
Decision Date13 April 1925
Docket Number24365

103 So. 773

139 Miss. 675


JONES. [*]

No. 24365

Supreme Court of Mississippi

April 13, 1925

(In Banc.)

1. TAXATION. Tax on right of residents to own stock of nonresident corporations held void.

The tax "of one-half of one per centum upon the right of residents of Mississippi to own each and every share of the capital stock of nonresident corporations, stock companies, associations or [139 Miss. 676] trust estates, organized and conducting business for profit," imposed by chapter 129, Laws of 1924, is a property tax and not a privilege tax, and violates section 112 of the Constitution of 1890, providing that taxation shall be uniform and equal throughout the state.

2. PLEADING. Demurrer admits only well-pleaded facts; recital in declaration of alleged claim or defense of defendant is not averment of fact, existence of which is admitted by demurrer.

A demurrer admits only facts that are well pleaded, and does not admit conclusions, either of fact or of law, and a mere recital in a declaration of an alleged claim or defense of the defendant is not an averment of a fact, the existence of which is admitted by a demurrer.

3. TAXATION. State may tax stock of foreign corporation owned by residents; "personal property."

The shares of capital stock of a corporation are "personal property," and the state has the power to tax shares of stock of a foreign corporation which are owned by the residents of the state.

4. TAXATION. Burden is on one claiming exemption from taxation to establish right thereto.

An exemption from taxation will never be presumed, and the burden is on one claiming such an exemption to establish clearly his right therto.

5. TAXATION. Exemption from taxation should not be enlarged by construction.

If an exemption from taxation is granted, it should not be enlarged by construction, since the presumption is that the state has granted all it intended to grant.

6. TAXATION. All property within state is to be taxed except that specifically exempted.

Section 4251, Code of 1906, section 6878, Hemingway's Code, declares the general law and policy of the state in regard to exemptions from taxation, and provides that all property within the territorial limits of the state shall be taxed, except such as may be specifically exempted.

7. TAXATION. Capital stock of foreign corporation owned by resident not exempt from taxation.

Section 4251, Code of 1906, section 6878, Hemingway's Code, which enumerates the property that shall be exempt from taxation in this state, contains no exemption of the capital stock of a foreign corporation, and no such exemption is found in any statute of the state.

[139 Miss. 677]

8. TAXATION. All taxable property brought into state or acquired or held by any person before February 1st in any year is subject to assessment and taxation.

Section 4257, Code of 1906, section 6888, Hemingway's Code, requires that all taxable property brought into the state or acquired or held by any person before the 1st day of February in any year shall be assessed, and the taxes thereon paid for that year.

9. TAXATION. Taxpayer is required to return value of stock in corporation domiciled outside state.

Chapter 101, Laws of 1916, section 6904, Hemingway's Code, providing a form for printed lists or assessment blanks to be furnished the taxpayers for use in returning their property for assessment, expressly requires that the taxpayer shall return for taxation, among other items of property, the value of all shares or certificates of stock in any corporation, stock company, or association domiciled outside of this state.

10. TAXATION. Taxpayer is required to list shares of stock in foreign corporation and execute oath that list is true account of all taxable personal property.

Under section 4272, Code of 1906, section 6906, Hemingway's Code, a taxpayer, in returning his property for assessment and taxation, is required to fill out a printed assessment list or blank in the form prescribed by chapter 101, Laws of 1916, section 6904, Hemingway's Code, which requires the disclosure and listing of the "value of all shares or certificates of stock in any corporation, stock company or association, domiciled outside of this state," owned by the taxpayer; while under sections 4267 and 4271, Code of 1906, sections 6901 and 6905, Hemingway's Code, the taxpayer is required to execute an oath that the list or assessment returned is a just and true account of all of his taxable personal property.

11. TAXATION. Under provisions of Code, stock of foreign corporation owned by resident is taxable, and such taxation not unconstitutional.

Section 4251, Code of 1906, section 6878, Hemingway's Code, declaring that all property in the state shall be taxed except that which is specifically exempt, and chapter 101, Laws of 1916, section 6904, requiring the taxpayer to return for taxation the value of all shares of stock in foreign corporations owned by him, and other pertinent statutes quoted, clearly and unequivocally impose taxes on the shares of stock of a foreign corporation owned by residents of this state, and the taxation of such [139 Miss. 678] stock violates no constitutional provision of this state or of the United States.

HOLDEN, J., and SMITH, C. J., dissenting.


APPEAL from circuit court of Covington county, HON. W. L. CRANFORD, Judge.

Suit by Willis J. Barnes, sheriff and tax collector, against Henry T. Jones. From judgment sustaining separate demurrers to count and declaration, plaintiff appeals. Judgment sustaining demurrer to first count sustained, and reversed as to sustaining demurrer to second count, and cause remanded.

Judgment reversed, and cause remanded.

Green, Green & Potter, for appellant.

The court below on a demurrer to a declaration held this act violative of section 112 of the Constitution. But, with deference, that section does not apply: (a) To privilege taxes: Clarksdale Insurance Agency v. Cole, 87 Miss. 637, 40 So. 228; State v. Lawrence, 108 Miss. 291, 66 So. 747; Postal Telegraph Co. v. Robertson, 76 So. 562, 116 Miss. 204. (b) To special assessments: Daley v. Swope, 47 Miss. 369; Cox v. Wallace, 100 Miss. 525, 56 So. 461; Jones v. Drainage District, 102 Miss. 796, 59 So. 921. (c) To excise taxes: Hattiesburg Grocery Co. v. Robertson, 88 So. 4, 126 Miss. 34; Enochs v. State, 97 So. 534 (Miss.).

The decision made was predicated upon a demurrer, not on a full development of the facts requisite, so that if there is any possible state of case under which this act may be found constitutional, it is obligatory upon this [139 Miss. 679] court to assume that condition to exist because an act of the legislature raising revenue is not to be stricken down save when void beyond a reasonable doubt, and then only at the express instance of one whose right is transgressed thereby. Lamar Life Insurance Co. v. Jackson, 95 So. 855, 132 Miss. 838.

Let us assume that all of the physical property, including good will and going value, of the Lumber Mineral Company, was situated in Mississippi, with nothing outside of the state except its domicile. The legislature well knew it could not tax the shares of a corporation so situated upon a basis different from that of a local corporation. Both must be taxed alike. Chalker v. Birmingham, etc., R. R. Co., 249 U.S. 522; Guano Co. v. Virginia, 253 U.S. 412; Insurance Co. v. Conn., 185 U.S. 366; R. R. Co. v. Green, 216 U.S. 417.

Under the Federal Constitution, therefore, when a foreign corporation has all of its property located within Mississippi though chartered by another state, it may be, constitutionally, taxed on all of said property, and, in addition thereto, upon its stock, when a Mississippi corporation is taxed only on its property and not on its stock.

We do not seek to exclude taxation of all corporate property to the same extent as property owned by an individual. Every character of property corporatively owned is taxable when similar property of an individual is taxed. But shares of a corporation doing business in Mississippi with its property locally sitused, cannot be constitutionally taxed both upon its physical property and upon the shares as well. Robertson v. Mississippi Valley Co., 81 So. 800, 120 Miss. 169.

All of the property of a foreign corporation being situated in a foreign state from which the corporation as such could not migrate, a resident of Mississippi obtained an interest in such property so thus there taxed by the sovereignty which created it but had his participation in such foreignly sitused property evidenced by [139 Miss. 680] a certificate of ownership--a corporate stock certificate. That was in Mississippi wherein the corporation did no business. It was contended that state taxation in virtue of individual ownership of corporate shares in a foreign corporation whose entire property was extraterritorial, violated the Federal Constitution. Hawley v. Maulden, 232 U.S. 8, 58 L.Ed. 481; Kidd v. Alabama, 188 U.S. 730, 47 L.Ed. 669. But this power, though existent, need not be exercised when its exercise imposes double taxation--a most unjust and onerous burden.

Therefore, when Mississippi found no revenue was being paid upon foreign shares because of the intolerable burden that would arise from such taxation, and that the actual property representing these shares was sitused in a foreign state, and not, as such, taxable in Mississippi, in pursuance of a wise policy, the legislature recognized the equity of the situation as to those corporations which had no property of any kind in Mississippi, and imposed this privilege tax upon the right of a resident to own these certificates substantially equivalent to a stamp tax.

Our interpretation of this privilege tax act is that it applies solely and only to shares of stock owned by residents of Mississippi where there is no property...

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