Caldwell Lumber & Land Co. v. Smith
| Decision Date | 29 September 1909 |
| Parties | CALDWELL LUMBER & LAND CO. v. SMITH et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Caldwell County; Murphy, Judge.
Action by the Caldwell Lumber & Land Company against John M. Smith sheriff and tax collector, and others. Judgment for plaintiff, and defendants appeal. Affirmed.
Civil action to restrain the collection of a tax alleged to be illegal. On the hearing it appeared: That plaintiff was a domestic industrial corporation, having its principal place of business in Lenoir, Caldwell county, N. C., and the defendants were the sheriff and board of commissioners of said county. That, under the machinery act of 1909 (Laws 1909, p. 688, c. 440), the commissioners of Caldwell county acting under the impression that plaintiff during the years 1902 and 1903 held a solvent credit, subject to taxation at and in said county, same being a note of $417,750, and that same had not been listed nor any tax paid thereon, entered the note, to the amount indicated, on the tax list, and assessed the plaintiff for taxation thereon for the said years in the sum of $7,655.16, and the defendant John M Smith, sheriff and tax collector of said county, in enforcement of this claim, had levied on plaintiff's property, and was proceeding to sell the same when stayed by order of court issued in this cause. This alleged solvent credit was a note to the amount stated given to plaintiff by George O. Shakespeare as part of the purchase money for certain lands in Caldwell county, which has been conveyed to said Shakespeare by plaintiff company, and was secured by a mortgage to the company on the lands so conveyed. That the plaintiff company had paid tax on its capital stock for the year 1902, assessed in accordance with the report of the Treasurer and Auditor of the state, transmitted to the board of commissioners by said officers, pursuant to the law as it had then existed, but had paid no such tax in the county for the year 1903, and in neither year had this note and mortgage been listed as a separate item of taxation, nor any tax paid thereon as such. There was evidence on part of plaintiff tending to show that the note of $417,750 was not a solvent credit to anything like the amount of its face value, and that the company was indebted in a considerable sum, which is claimed should be deducted in case the note could be lawfully listed against it; and, further, that the tax on the land embraced in the mortgage had been paid for both years. The court, being of opinion that the commissioners of the county had no power to list the note for taxation, and that the tax assessed against plaintiff by reason of same was illegal, gave judgment perpetually restraining the county officials from collecting the tax, and defendants excepted and appealed.
Mark Squires, M. N. Harshaw, and Lawrence Wakefield, for appellants.
Jones & Whisnant and W. C. Newland, for respondent.
HOKE J. (after stating the facts as above).
On a former appeal in this cause (Lumber Co. v. Smith, reported in 146 N.C. 199, 59 S.E. 653), it was held that on an assessment of the kind indicated here the party affected was entitled to notice, and, in the absence of such notice, should be afforded opportunity to be heard before the assessment should become a fixed and final charge upon his property. This opportunity having been allowed on the trial below, the question of proper notice is no longer material. City of Kinston v. Loftin, 149 N.C. 255, 62 S.E. 1069, citing Davidson v. New Orleans, 96 U.S. 104, 24 L.Ed. 616. And on the merits of the controversy we fully concur in the decision of the judge below, to the effect that a domestic industrial corporation is not now required to list its mortgages, bonds, or other securities as separate items of taxation, but values arising from these sources are all to be included and considered in the assessment of its capital stock referred by the statute as it then stood to the State Auditor and Treasurer, changed to the Corporation Commission by the revenue acts of 1909 (Laws 1909, p. 655, c. 438) and that the assessment imposed upon the plaintiff in this instance by reason of the note of $417,750 was without warrant of law, and its collection was therefore properly enjoined. Subject to certain well-recognized constitutional restrictions, the Legislature undoubtedly has plenary power in this matter of public taxation, both in designating the property, fixing the rate, and establishing the methods of collection. Commissioners v. Tobacco Co., 116 N.C. 441, 21 S.E. 423. And, while regulations affecting these methods are many of them regarded as directory, such a position does not permit or sanction a procedure in direct contravention of a positive and essential legislative requirement. And we are of opinion that a perusal of the statutes in the Revisal of 1905 concerning the revenue, this being in all respects substantially similar to the law as it prevailed at the time, notably sections 5108, 5270, and 5274, leads clearly to the conclusion that all the intangible property and assets of these industrial corporations should be included and considered in estimating for taxation the value of their "capital stock"; that this duty has been referred by the law exclusively to the Corporation Commission (at that time to the State Auditor and Treasurer), subject to a stated right of exception and appeal to the courts, and their estimate forms the only basis of assessment for taxation, and any other or further imposition of taxes on this portion of their assets is forbidden.
As heretofore stated, the powers and duties relevant to the inquiry which were conferred and imposed by the Revisal on the State Auditor and Treasurer have by a subsequent statute (Revenue Acts of 1909 [Laws 1909, p. 655, c. 438]) been transferred to the Corporation Commission, and this body will be hereafter named in reference to them. Under section 5270 "Every domestic industrial corporation of the state is required annually to make report to the Corporation Commission giving the data from which a correct estimate of the capital stock may be made; and the president, treasurer, or other accredited officer of the corporation, must himself, under oath, make an estimate and appraisement of the 'capital stock of the company' at...
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