City of Baltimore v. Canton Co. of Baltimore

• Decision Date: 11 March 1885
• Citation: 63 Md. 218
• Parties: THE MAYOR AND CITY COUNCIL OF BALTIMORE v. THE CANTON COMPANY OF BALTIMORE.
• Court: Maryland Court of Appeals

63 Md. 218

THE MAYOR AND CITY COUNCIL OF BALTIMORE v. THE CANTON COMPANY OF BALTIMORE.

Court of Appeals of Maryland

March 11, 1885

Appeal from the Baltimore City Court.

The case is stated in the opinion of the court. Verdict and judgment were rendered for the plaintiff for $476.48, with interest and costs. The plaintiff appealed.

The cause was argued before ALVEY, C.J., IRVING, RITCHIE and BRYAN, JJ.

Bernard Carter, City Solicitor, for the appellant.

The uniform practice in Baltimore and throughout the State has been to assess lots of ground held under ninety-nine year leases, as a whole, to the party having the leasehold estate therein and whose duty it has been, since the Act of 1812 ch. 191, to pay the taxes on the whole. For all purposes connected with valuation and assessment of real property under our system of leases, the law treats the tenant as the owner, and charges him, as such, with the payment of all taxes levied on the premises, whether his lease contains a covenant to pay taxes or not. Hughes v. Young, 5 G. & J. 67; Cooley on Taxation, 288; Burroughs on Taxation, 223; R. R. Co. v. Appeal Tax Court, 50 Md. 410-413.

Under the tax system of this State, and within the meaning of all laws regulating the valuation of property and the collection of taxes, the owner of real property is the actual holder of the ninety-nine year term, and this without regard to what other interest may be held by parties in reversion or otherwise. The decisions of this court in Appeal Tax Court v. R. R. Co., 50 Md. 298, and R. R. Co. v Appeal Tax Court, Ib. 410-413, which were relied upon below to sustain the claim for a separate valuation and assessment of the respective interests of the lessor and lessee, not only do not establish that position, but are entirely consistent with and support the present contention of the appellant. In both cases the court recognized that the whole taxable value of the lot of ground was to be valued and assessed as a whole to the tenant for ninety-nine years. It happened that in the cases then before the court the entire interest of the lessor in the premises was exempt, and only the leasehold estate was subject to taxation; hence the decision was that the value of the leasehold estate only subject to the rent reserved in the lease, should be assessed to the tenant. But clearly whatever and whosesoever interests in such lots were taxable at all, were to be valued and assessed to the tenant as the taxable owner of the whole.

Nothing in the Act of 1880, ch. 20, nor in that of 1878, ch. 178, suggests any intention on the part of the Legislature to make so sweeping a change in the long-established practice of the State. On the contrary, all that was intended by these Acts was to provide for a valuation of the real property owned by corporations of this State, in the several counties or cities where such property might be located, and a separate valuation of the shares of their capital stock, and this they do in plain terms. These Acts form a part of the entire system of law regulating the assessment and collection of taxes in Maryland, and are to be read in connection with the other legislation on the same subject.

The list of real property owned by the corporation which is required to be valued to it separately is to include only such real property as the tax laws of the State recognize the corporation as the owner of. And this is all real property on which these laws require the corporation to pay the taxes, and none other. The entire system of tax legislation, of which the Act of 1880, ch. 20, and the Act of 1878, ch. 178, now form a part, knows no owner of land, under a lease for ninety-nine years, other than the lessee, and the Legislature is to be presumed to have so intended in the Act now before the court.

In the first place, the Act of

1880, ch. 20, amending the Code of Pub. Gen. Laws, Art. 81, sec. 151, provides that at the time of making the returns of stockholders, as required by law, the president of the corporation shall furnish to the Appeal Tax Court a true statement of the real property owned by such corporation in the city, "and such real property shall be valued and assessed to the said corporation so owning the same," etc.; and "State, county and city taxes shall be levied upon and paid by such corporation on such assessment in the same manner as the same are levied upon and paid by individual owners;" and "a duplicate certificate of such valuation and assessment shall be sent to the State Tax Commissioner," who is then required to deduct the assessed value of such real property, according to these certificates, from the aggregate value of the shares of stock.

It is clear that the real property is only to be assessed to the corporation when it has to pay the taxes, and therefore no real property, the taxes on which are not to be paid by the corporation, can be included in the statement here provided for and assessed to the corporation, the very language of the statute being that all taxes levied on the real property thus assessed to the corporation shall be paid by it.

It will not escape the notice of the court that the construction contended for by the appellee will result in this state of things, that just in proportion as the instrinsic value of the shares of stock of the defendant corporation is enhanced, their taxable value will diminish. And its present claim is for deductions on account of reversions, largely in excess of the value of its shares of capital stock.

William George Weld and Arthur George Brown, for the appellee.

The Act of 1880, ch. 20, is the law of this case. The object of that statute is to avoid the very result which this appellant by this suit seeks to attain, namely, a tax both upon the land and upon the value of the land as included in the value of the shares of stock. Under any other construction of its purpose, the statute would be void. State v. R. R. Co., 40 Md. 22; Cooley on Const. Lim. 612. That statute was before this court for construction in Amer. Coal Co. v. County Com'rs, 59 Md. 197, where the court said: "The corporation itself is under no duty or obligation to pay the taxes assessed upon the shares of stock of the individual stockholder, except as provided by the statute."

The statute requires that the value of real estate owned by the corporation shall be subtracted from the value of its shares of stock.

In this regard it follows substantially the provision of the Act of 1878, ch. 178, sec. 151, which has been passed upon by this court in the following terms:

"The purpose of this section was, in the first place, to furnish the local boards with the basis of taxation on the shares of stock of all corporations liable to assessment, and, in the next, to make the taxes on such shares for county and municipal purposes payable to the county or city in which such stockholders resided." Baltimore v. Balto. City Pass. Rwy., 57 Md. 36.

In American Coal Co. v. County Com'rs, 59 Md. 193, the court further say: "And while it is true that the shares of the capital stock of the corporation represent the capital stock and everything of which the capital stock is composed, whether invested in real estate or other kind of property, the situs of the investment (other than the real estate of the company situated in this State) is wholly immaterial." And page 194: "It is exclusively with the shares of stock and their true value as representing the entire corporate assets that the tax commissioner has to deal, and not with the nature and locality of the investment of the capital stock of the corporation, except as to the real estate of the company situate within this State."

These ground rents are real estate--"real property," strictly and technically such within the express terms and the meaning of the Act of 1880, ch. 20. There is nothing ambiguous in the terms of the statute--all rules of construction are out of the case. Potter's Dwarris on Statutes, 143.

The ground rents now in question are rent services as contradistinguished from rent charges. Ehrman v. Mayer, 57 Md. 612, 621, 622; Williams on Real Prop. 242, 243, 247, 339.

The estate of the lessor is land--real estate. Mayer on Ground Rents, 62, 64; Myers v. Silljacks, 58 Md. 330.

The estate of the lessee is personal property. Myers v. Silljacks, 58 Md. 330; Taylor v. Taylor, 47 Md. 299; 2 Blackstone's Com. 386.

These estates are susceptible of separate taxation. Where the City of Baltimore was owner of a reversion, which was therefore exempt from taxation, this court held the tenant liable only for the leasehold value of the premises for purposes of taxation, he having covenanted to pay all taxes on the property. R. R. Co. v. Appeal Tax Court, 50 Md. 410; and similarly, although the lease be redeemable. Appeal Tax Court v. R. R. Co., 50 Md. 297, 298.

The court in the former case, at page 413, say:

"If this were a case between landlord and tenant, where the question was made as to the amount of taxes for which the tenant should be allowed as against the rent claimed, the lease being silent, or requiring the landlord to pay the taxes without special reference to improvements, the tenant would claim only in respect to the property as he leased it, and not for all the taxes paid upon its enhanced value by reason of large improvements placed thereon by himself and for his own exclusive use and benefit."

The landlord's interest, then, is susceptible of

and liable to separate taxation as real estate.

The landlord is liable for all taxes, unless there is an agreement to the contrary. Taylor's Landlord & Tenant, sec. 341; R. R. Co. v. Appeal Tax Court, 50 Md. 411.

The tenant, although liable by statute for taxes on the demised premises, has his action against the...