Cherry River Nat. Bank v. Lorenson, 19999
| Decision Date | 25 July 1991 |
| Docket Number | No. 19999,19999 |
| Citation | 406 S.E.2d 714,185 W.Va. 283 |
| Court | West Virginia Supreme Court |
| Parties | CHERRY RIVER NATIONAL BANK, Peoples Bank of Richwood, Inc., One Valley Bank of Summersville, Inc., and Nicholas County Bank, Appellees, Petitioners Below, v. The Honorable Charles O. LORENSON, as Tax Commissioner, State of West Virginia, and the Honorable Fred A. Roberts, as Assessor, Nicholas County, West Virginia, Appellants, Respondents Below. |
Syllabus by the Court
1. Although the legislature may not exempt property from taxation in violation of our Constitution, it may establish reasonable methods for assessing taxes.
2. Double taxation, when constitutionally permitted, should be done only by the specific direction of the legislature.
Gordon C. Lane, Keith A. Jones, Bowles Rice McDavid Graff & Love, Charleston, for appellees.
Mario J. Palumbo, Atty. Gen., and James Alex, Asst. Atty. Gen., Charleston, for appellants.
In 1988, appellant Tax Assessor for Nicholas County requested that the appellee banks 1 supply him with information about the tangible personal property owned by them for the purpose of separate assessment and taxation of that property as Class IV property. 2 In January 1989 each bank returned the requested form under protest. After the assessor refused the protest, the assessor and the Banks requested a ruling from the appellant tax commissioner. 3 On 28 February 1989 the tax commissioner issued taxability ruling 89-5, which said that bank personal property was taxable as Class IV property and that the value of the property, which was not realized in the ad valorem taxation of each bank's stock, was to be taxed as Class IV property. On December 5, 1989 the circuit court reversed taxability ruling 89-5, and the State now appeals. We affirm.
The question before us today is whether tangible personal property owned by a bank may be separately taxed in addition to the tax on the bank's shares of stock.
The State argues that assessors are required to tax the tangible personal property owned by banks under W.Va. Const., art. X, § 1. 4 The Banks contend, however, that the legislature has decided to assess tangible personal property taxes against banks by taxing outstanding shares of stock rather than by attempting to evaluate each piece of tangible personal property. 5
The State asserts that to interpret the statutes in the manner requested by the Banks would require a finding that the statutes are unconstitutional. The State suggests that because the statutes do not specifically exempt the tangible personal property of banks from ad valorem taxation, the statutes do not foreclose the taxation of tangible personal property owned by the Banks, pursuant to W.Va. Const., art. X, § 1.
The State's argument demonstrates a fundamental misunderstanding of the law. We held in Harris v. MacCorkle, 146 W.Va. 946, 955-56, 123 S.E.2d 888, 894 (1962) ( W.Va.Code, 11-3-14a [1959] ):
The statute in question clearly provides for a method or mode of assessment for the purpose of taxation, and the legislature, without question has such power.... It makes no difference what reason the legislature gives in providing for the method of assessment for taxation if it is clear that it pertains to a method or mode to guide the assessor, which the statute in question clearly does....
Although the legislature may not exempt property from taxation in violation of our Constitution, it may establish reasonable methods for assessing taxes against property.
Traditionally, the State has taxed banks in two ways. First, all real property owned by banks is subject to an ad valorem tax. Second, all outstanding stock of banks is subject to taxation, with an offset for the ad valorem real property tax paid. The State has taxed banks this way since this Court's decision in State ex rel. Dillon v. Graybeal, 60 W.Va. 357, 55 S.E. 398 (1906). Before January 1, 1972, the State was prohibited from taxing the tangible personal property of banks under the U.S. Supreme Court's holding in McCulloch v. Maryland, 17 U.S. (4 Wheat) 316, 4 L.Ed. 579 (1819). After 1972, however, banks have been subject to such taxation. See 12 U.S.C. § 548 (1969). The State's argument, therefore, suggests that the tax commissioner and his predecessors have been violating W.Va. Const. art. X, § 1 since January 1, 1972. We do not view the tax commissioner's previous actions in so harsh a light. 6
Our Constitution provides that all property shall be taxed, but it does not require that property be taxed more than once. In fact, we have held that, "[double taxation] is frowned upon by courts and should be done only by the specific direction of the legislature." Harris, supra 146 W.Va. at 954, 123 S.E.2d at 893. In the case before us, taxing a bank's stock provides a reasonable way to tax a bank's assets. Therefore, the commissioner was taxing banks on their full value before taxability ruling 89-5 was issued. To prevent double taxation, the banks were provided with a credit for the real property taxes that they paid. The tax commission now seeks to impose double tax liability on banks through ruling 89-5. Even if, under applicable constitutional principles, the legislature could decide to tax banks twice, by taxing both their shares and their property, the legislature explicitly has chosen not to do so. See, W.Va.Code, §§ 11-3-12 [1972] and 11-3-14 [1933]. 7 W.Va. Const., art. X, § 1, does not require the position set forth in taxability ruling 89-5; and the legislature has explicitly chosen a method of assessing taxes on banks contrary to taxability ruling 89-5.
Therefore, for the reasons set forth above, the judgment of the Circuit Court of Nicholas County is affirmed.
Affirmed.
1 The appellees are four banks: Cherry River National Bank, Peoples Bank of Richwood, Inc., One Valley Bank of Summersville, Inc., and Nicholas County Bank; hereinafter the Banks.
2 W.Va.Code, 11-8-5 [1961], provides the scheme under which taxable property is...
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