City of Baltimore v. Machen

• Decision Date: 03 May 1918
• Docket Number: 22.
• Citation: City of Baltimore v. Machen, 132 Md. 618, 104 A. 175 (Md. 1918)
• Parties: MAYOR AND CITY COUNCIL OF BALTIMORE v. MACHEN et al.
• Court: Maryland Court of Appeals

104 A. 175

132 Md. 618

MAYOR AND CITY COUNCIL OF BALTIMORE v. MACHEN et al.

No. 22.

Court of Appeals of Maryland

May 3, 1918

Appeals from Baltimore City Court; Carroll T. Bond, Judge.

Action by the Mayor and City Council of Baltimore, a municipal corporation, against Mary Gresham Machen and Arthur W Machen, Jr., executors of the last will and testament of Arthur W. Machen, deceased.From an order affirming the action of the State Tax Commission vacating and annulling an assessment made by the appeal tax court of Baltimore city for state and city taxation, the Mayor and City Council appeal.Affirmed.

Argued before BOYD, C.J., and BRISCOE, THOMAS, PATTISON, URNERSTOCKBRIDGE, and CONSTABLE, JJ.

R. Contee Rose, Asst. City Sol., and S. S. Field, City Sol., both of Baltimore, for appellant.

Arthur W. Machen, Jr., of Baltimore (Machen & Williams, of Baltimore, on the brief), for appelleesMary Gresham Machen and Arthur W. Machen, Jr., executors.

PATTISON J.

This is an appeal from an order of the Baltimore city court affirming the action of the State Tax Commission of Maryland, vacating and annulling the assessment made by the appeal tax court of Baltimore city for the purpose of state and city taxation for the years 1913, 1914, 1915, and 1916 upon a deposit in the Safe Deposit & Trust Company of Baltimore, made by appellee's testator, Arthur W. Machen, in his lifetime.

By the agreed statement of facts found in the record, Arthur W. Machen, deceased, on or about June 8, 1896, deposited with the Safe Deposit & Trust Company of Baltimore, a corporation incorporated under the laws of Maryland, the sum of $25,000, and received for such deposit the following receipt:

"Safe Deposit & Trust Company of Baltimore, 13 South Street, Baltimore, June 8, 1896.Received of Mr. A. W. Machen, twenty-five thousand dollars ($25,000) on deposit returnable on demand.[Signed]Francis M. Darby, Treasurer."

On the back of said receipt was indorsed the following:

"$13,000 of this has been repaid to me some time ago.[Signed] A. W. Machen. Oct. 6, 1909."

That Arthur W. Machen in his lifetime withdrew $13,000 of said deposit, leaving a balance of $12,000 on deposit at the time of his death, which occurred on December 19, 1915, and for more than four years prior thereto.That interest at varying rates was paid by said trust company to said testator on said deposit, but at no time at a higher rate than 3 per cent. per annum.That the receipt remained in his possession until the time of his death, and has since been in the possession of his executors.That some time after the payment of the $13,000, a portion of the deposit, the testator made in pencil in his own handwriting the entry which appears on the back of the receipt.That the whole amount of the deposit was withdrawn by his executors, the appellees, upon the death of the testator, to wit, in or about July, 1916, and was used by them in paying pecuniary legacies and expenses.

The only question presented by this appeal is whether the above-mentioned deposit is taxable under the laws of this state.

The valuation and assessment was made by the appeal tax court under section 214 of article 81 of the Code of Public Civil Laws of this state (Code of 1912), which is as follows:

"All bonds, certificates of indebtedness or evidence of debt in whatsoever form made or issued by any public or private corporation incorporated by this state or any other state, territory, district or foreign country, or issued by any state (except the state of Maryland,) territory, district or foreign country not exempt from taxation by the laws of this state, and owned by residents of Maryland, shall be subject to valuation and assessment to the owners thereof in the county or city in which such owners may respectively reside, and they shall be assessed at their actual value in the market, and such upon which no interest shall be actually paid shall not be valued at all, and upon such valuation the regular rate of taxation for state purposes shall be paid, and there shall also be paid on such valuation thirty cents (and no more) on each one hundred dollars for county, city and municipal taxation in such county or city of this state in which the owner may reside."

The city contends that the deposit is taxable under the aforegoing section of the Code, in that the aforesaid receipt is a "certificate of indebtedness or an evidence of debt" within the meaning of the provision of the statute, and as such is taxable; and, as we understand the city's contention, the deposit would be taxable if the acknowledgment of its receipt were evidenced by the usual certificate of deposit, or by bank passbook, or by the mere entry of such deposit upon the ledger of the bank if interest is paid on such deposit.In other words, any evidence in writing of a deposit, in whatever form it might appear, is a "certificate of indebtedness or an evidence of debt" within the meaning of the statute and taxable thereunder, as contended by the appellant.

This construction of the statute is not the one that has been placed thereon by those whose duty it has been, since the passage of the act in 1896(Laws 1896, c. 120), more than 20 years ago, to value and assess the taxable property included within its provisions.It was not, so far as we are informed, until 1911, 16 years after the statute was passed, that any doubt was entertained as to the meaning of the statute in respect to the question here raised.To such time the deposits were never regarded as taxable.

In 1911 this identical question was submitted to the circuit court for Carroll county for its decision, and the arguments there made were the same as those made in this court in the case now before us.That court held, however, that deposits were not taxable, and no appeal was taken therefrom.

The statute has remained the same, and since that time no further attempt has been made to tax bank deposits except in some instances, where it had been disclosed in the settlement of estates in the orphans' court of Baltimore city that the decedent had money on deposit in bank, the city authorities,...