Commissioner of Corporations and Taxation v. City of Springfield

• Court: Supreme Judicial Court of Massachusetts
• Citation: Commissioner of Corporations and Taxation v. City of Springfield, 321 Mass. 31, 71 N.E.2d 593 (Mass. 1947)
• Decision Date: 13 February 1947
• Parties: COMMISSIONER OF CORPORATIONS AND TAXATION v. CITY OF SPRINGFIELD (and a companion case between the same parties).

321 Mass. 31

71 N.E.2d 593

COMMISSIONER OF CORPORATIONS AND TAXATION

v.

CITY OF SPRINGFIELD (and a companion case between the same parties).

Supreme Judicial Court of Massachusetts, Suffolk.

February 13, 1947

December 4, 1946.

Present: FIELD, C.

J., LUMMUS, QUA DOLAN, & RONAN, JJ.

Taxation Distribution of taxes, Corporate franchise tax. Notice. Electric Company. Corporation, Electric company, Stockholder. Trust, Express trust: what constitutes; Nonresident trustee. Partnership, What constitutes. Words, "Electric light . . companies," "Owners."

Notices required by law or by contract to be given by one party to another in order to establish rights or obligations must state with reasonable certainty the essential facts required by law or by contract, as the case may be. Per RONAN, J.

A certain letter sent by the commissioner of corporations and taxation to the treasurer of a city in November, 1942, respecting "taxes collected in 1942 and previous years . . . on account of gas, electric light and water corporations chapter 58, section 24," did not meet the requirements of a notice from the commissioner to the city treasurer under G. L. (Ter. Ed.) c. 58, Section 25, as amended, as to taxes collected in 1942; and where a notice by the commissioner under that statute, to the effect that nothing was due to the city, was given by the commissioner on August 9, 1944, pursuant to a stipulation in mandamus proceedings against the commissioner, an appeal by the city to the

Appellate Tax Board filed on August 14, 1944, gave the board jurisdiction.

A corporation incorporated for the purpose of furnishing light and power by electricity, which sold its electricity for both purposes, was an

"electric light company" within the provisions of G. L. (Ter. Ed.) c. 58, Section 24, as amended by St. 1933, c. 254, Section 23.

A trust and not a partnership was created by an instrument which established a voluntary association and vested the legal title to its property in trustees who were to manage and control its affairs, with authority to acquire securities of Massachusetts gas and electric companies, to sell the whole or any part of the trust estate in their uncontrolled discretion, to appoint officers and employees and fix their compensation, and to declare and pay dividends to shareholders at the discretion of the trustees; which gave to holders of beneficial shares therein the right to meet annually to determine the number of, and to elect, trustees and to vote on the issuance of shares, but no power to control actions of the trustees, and exempted the shareholders from liability for acts of the trustees, officers, agents or representatives of the association; and which provided that the death of a trustee or shareholder would not terminate the trust, but that it was to continue for seventy-five years unless sooner terminated by vote of two thirds of the shareholders.

Trustees holding in trust stock of an electric light company, and not the beneficiaries of the trust, must be regarded as the stockholders in determining what portion of the corporate franchise tax paid by the company, if any, shall be retained by the Commonwealth under G. L. (Ter.

Ed.) c. 58, Section 24, as amended.

So much of a corporate franchise tax which was paid by an electric light company, all of whose corporate stock was owned by trustees under an indenture of trust, as corresponded to the number of the trustees who were nonresidents of the Commonwealth should be retained by the

Commonwealth under the provisions of G. L. (Ter. Ed.) c. 58, Section 24, as amended.

APPEALS from decisions by the Appellate Tax Board. In this court the cases were submitted on briefs.

C. A. Barnes, Attorney General, & W.

G. Perrin, Assistant Attorney General, for the Commissioner of Corporations and Taxation.

S. A. Moynahan, City Solicitor, & C.

D. Sloan, Associate City Solicitor, for the city of Springfield.

RONAN, J. These are two appeals by the commissioner of corporations and taxation from decisions of the Appellate Tax Board that the city of Springfield is entitled to have distributed, credited and paid to it out of the corporate franchise tax paid by the United Electric Light Company to the commissioner in 1942 the sum of $44,650.41, and out of a similar tax paid by the Western Massachusetts Electric Company to the said commissioner in 1943 the sum of $36,793.04.

The distribution of the proceeds of corporate franchise taxes assessed and collected by the commissioner in accordance with G. L. (Ter. Ed.) c. 63 is governed by G. L. (Ter. Ed.) c. 58, Section 24, as amended by St. 1933, c. 254, Section 23, which provides that the portion of the "corporate franchise tax paid by gas, electric light, gas and electric light and water companies" on account of stock owned by nonresidents of the State shall be retained by the Commonwealth and the remainder of the tax shall be distributed, credited and paid to the town in this Commonwealth where the company conducts its business and, if its business is carried on in more than one town, then to those towns in certain proportions. Interest paid on said taxes shall be treated as principal in distributing the tax, and abatements shall be deducted in such distribution. Section 24A of said c. 58, as appearing in St. 1934, c. 323, Section 2. The commissioner shall determine the amount due to each town, shall notify the treasurer of the town, and shall certify to the State treasurer the amount so determined, and the latter shall pay the said amount to the town. The decision of the commissioner is subject to appeal to the Appellate Tax Board. G. L. (Ter. Ed.) c. 58, Section 25, as appearing in St. 1934, c. 323, Section 3, and as amended by St. 1939, c. 451, Section 17; St. 1941, c. 729, Section 11; c. 58A, Section 6, as appearing in St. 1938, c. 478, Section 4, and as amended by St. 1941, c. 609, Section 2; c. 726, Section 1. See now St. 1945, c. 687.

The United Electric Light Company was engaged in the business of furnishing electricity for light and power principally in Springfield and also in four towns in the immediate vicinity. It was merged on January 1, 1943, with the Western Massachusetts Electric Company. The sole stockholder of these two companies was the Western Massachusetts Companies, an association formed by a declaration of trust.

The commissioner on November 19, 1942, certified in a written communication to the Treasurer and Receiver General that there was due to Springfield, for the years

1940 and 1941, $11,540.75 and $58,063.56, respectively, on account of franchise taxes collected from gas, electric light and water companies under G. L. (Ter. Ed.) c. 58, Section 24, as amended. The State treasurer on the next day notified the city to the same effect. Under date of November 27, 1942, the commissioner sent a letter to the treasurer and assessors of Springfield stating that there had been credited to the city certain amounts "from taxes collected in 1942 and previous years." The letter then continued with a list of three items, the last one being "On account of Gas, Electric Light & Water Corporations Chapter 58, Section 24 . . . $69,604.31." Then came a statement that there had been previously forwarded to the city in 1942 certain amounts shown on a list of five items but with the amounts stated in three items. One of the items for which no amount was mentioned read, "On account of Gas, Electric Light & Water Corporations Chapter 58, Section 24 . . . $ none." A letter similar in form to that of November 27, 1942, was sent to the treasurer and assessors of Springfield on November 22, 1943, but this letter did not refer to any corporate franchise taxes collected for any year.

The city brought a petition for a writ of mandamus sometime in 1944 to compel the commissioner to determine, and notify the city of, the amounts due to it from the corporate franchise taxes collected in 1942 and 1943 from the two companies we have mentioned. When the petition came on for a hearing before the single justice on August 9, 1944, the commissioner entered into a stipulation with the city in which he stated that he had determined that nothing was due to the city from these taxes and that he would forthwith give notice of this determination to the city treasurer, and the parties stipulated that the petition might be dismissed. The commissioner on the same date gave such notice to the city treasurer. The city filed with the board on August 14, 1944, an appeal from the decision of the commissioner on the 1942 tax, and a second appeal with reference to the 1943 tax. The board found that the notices of November 27, 1942, and November 22, 1943, were insufficient and that the first and only notices of the decisions of the commissioner that nothing was due to that city from the 1942 and 1943 taxes were his letters of August 9, 1944.

The letters of November 27, 1942, and November 22, 1943, to the assessors and the city treasurer, even if read with the letter of November 20, 1942, from the State treasurer, did not comply with G. L. (Ter. Ed.) c. 58, Section 25, as amended. The letter of the State treasurer made no mention whatever of the 1942 tax. The letters of November 27, 1942, and November 22 1943, from the commissioner did not in terms or by reasonable inference state that he had determined that the city was not entitled to any part of the 1942 or 1943 tax. On the other hand, the statement that the city was credited with the "following amounts received from taxes collected in 1942 and previous years" fairly indicates that some part of the 1942 tax was credited to the city. The letters of the commissioner are not wholly consistent with the letter of the State treasurer. In the next place, the lump sum stated by the...