Charleston Fed. Sav. v. James, (No. 8834)

• Citation: 120 W.Va. 781
• Decision Date: 08 December 1938
• Docket Number: (No. 8834)
• Court: Supreme Court of West Virginia
• Parties: Charleston Federal Savings & Loan Association et al. v. Ernest K. James, Tax Commissioner, et al.

120 W.Va. 781

Charleston Federal Savings & Loan Association et al.v. Ernest K. James, Tax Commissioner, et al.

(No. 8834)

Supreme Court of Appeals of West Virginia.

Submitted October 19, 1938.

Decided December 8, 1938.

Taxation

Both state and federal building and loan associations are incorporated companies within the meaning of Code, 11-3-12, and are corporations within the meaning of Code, 11-3-13. Therefore, their intangible and other personal property is subject to taxation.

Fox, Judge, absent.

Suit by the Charleston Federal Savings & Loan Association and others against Ernest K. James, Tax Commissioner, and another to enjoin the defendants from assessing for taxation purposes the intangible and personal property of plaintiffs as if they were ordinary business corporations, wherein the Farmers' Building & Loan Association filed an intervening petition. From adverse decrees, the defendants appeal.

Reversed; bill and petition dismissed. Maxwell, President, dissenting.

Clarence W. Meadows, Attorney General, Ira J. Partlow, Assistant Attorney General, and Marlyn Lugar, Special Assistant Attorney General, for appellants.

Lively & Lively, Ritchie, Hill & Thomas, Charles Ritchie, M. E. Boiarsky and Emery J. Woodall, for appellees.

Kenna, Judge:

The Charleston Federal Savings & Loan Association and two other organizations of like nature were, on June 2, 1938, granted an injunction by the Circuit Court of Kanawha County restraining Ernest K. James, State Tax Commissioner, and J. H. Abbott, Assessor of Kanawha County, "from assessing for taxation purposes the intangible and personal property of plaintiffs, as if they were ordinary business corporations, under the provisions of Sections 12 and 13, Article 3, Chapter 11 of the Code of West Virginia, as last amended, which said sections provide for the assessment of corporate property in this State; * * *." On June 24, 1938, upon the intervening petition of Farmers' Building & Loan Association, a West Virginia corporation, a similar injunction order was entered as to it. The appeals from both orders were granted by this Court upon the application of the State Tax Commissioner.

The respondents demurred to both the bill of complamc and the intervening petition and filed a verified answer to each. The question of law, the decision of which resulted in the court's overruling-both demurrers and holding that the answers did not set up a sufficient defense to the allegations of the bill of complaint, was whether or not state building and loan associations are to be classified as ordinary business corporations and are taxable as such. The Federal Statute (12 U. S. C. A., section 1464 [h]) provides, in effect, that federal building and loan associations shall not be subjected to taxation by the local taxing authorities except to the extent that state building and loan associations are taxed. Therefore, a solution of the question of whether or not the state building and loan associations are taxable as ordinary business corporations under Code, 11-3-12, 13, is applicable to both classes of building and loan associations.

The law of West Virginia has been assumed to be in conflict with the law of nearly every other state where the question has arisen since 1896 when this Court decided the case of Ohio Valley Building & Loan Association v. County Court, 42 W. Va. 818, 26 S. E. 203, the only syllabus of which reads as follows: "Building and loan associations are not to be assessed with a capital stock. The members are to be assessed with their shares." The decision ofl this case followed the decision of the Indiana Supreme Court in Denniston v. Terry, 141 Ind. 677, 41 N. E. 143, which also had to do with the question of whether the stock or shares in a building and loan association were taxable in the name of the stockholder or in that of the association. The statute under consideration in the West Virginia case was section sixty-four of chapter twenty-nine of the Code of 1891, which provided that the assessor should "ascertain from the proper officers or agents of all incorporated companies in his district (except railroads and foreign insurance, telegraph and express companies), the actual value of the capital employed or invested by them in their trade or business (exclusive of real estate and property exempt by law from taxation), and enter the same in his personal property book." There was no statutory provision placing building and loan associations in the same category with the corporations exempted from the provisions of this section.

In the opinion handed down by this Court in Ohio Valley Building & Loan Association V. County Court, 42 W. Va. 818, 26 S. E. 203, the Indiana case that was followed was the only decided case cited or discussed.

In 1900, the Supreme Court of New Mexico, in the case of Territory v. Co-operative Buildvng & Loan Association of Albuquerque, 10 N. M. 337, 62 P. 1097, rendered an opinion based upon both constitutional and statutory provisions similar to those of this state. In that case it was held that the shares of stock in a building and loan association were subject to taxation and could be assessed in the name of the corporation, and that neither the stock nor the mortgages to secure loans "of such corporations" were exempt from taxation.

The New Jersey Supreme Court, in the case of State, Washington B. & L. Association, Pros. v. Creveling, Collector, etc., 39 N. J. L. 465, held that building and loan associations were to be assessed and taxed at the full amount of their capital stock and accumulated surplus. The case of State, W. B. & L. Association, Pros. v. Hornbacker, 41 N. J. L. 519, was decided in the New Jersey Supreme Court in 1879, and it was there held that the intangible personal property of a building and loan association were assets and assessable as property of the corporation. The New Jersey Court of Errors and Appeals granted a certiorari, but upon submission of the case (42 N. J. L. 635) affirmed the holding of the Supreme Court holding that the statutory provisions concerning corporations were applicable to building and loan associations and that their property was assessable "like that of individuals."

In Turco Paint & Varnish Company v. Kalodner (1936), 320 Pa. 421, 184 Atl. 37, the Supreme Court...