Commonwealth v. Kottmyer

• Decision Date: 04 February 1919
• Citation: 208 S.W. 823,183 Ky. 163
• Parties: COMMONWEALTH v. KOTTMYER.
• Court: Kentucky Court of Appeals

208 S.W. 823

183 Ky. 163

COMMONWEALTH v. KOTTMYER.

Court of Appeals of Kentucky.

February 4, 1919

Appeal from Circuit Court, Boone County.

Action by a revenue agent in the name of the Commonwealth against Henry Kottmyer, to recover a franchise tax. From a judgment for defendant, plaintiff appeals. Affirmed.

S. W Tolin, of Burlington, for the Commonwealth.

O. M Rogers, of Covington, and Joel C. Clore, of Cincinnati, Ohio for appellee.

SAMPSON J.

Kottmyer owns a small steam ferryboat, a gasoline boat and some other small boats, which he uses in operating a ferry on the Ohio river between Constance, Boone county. Ky. and a certain point in the state of Ohio. He has and had at all the times complained of, an exclusive franchise for the operation of a ferry at that point. To the ferry property belongs about nine acres of land at Constance. On this land are situated two or more residences and some other buildings used in connection with the ferry.

This action was instituted by a revenue agent in the name of the commonwealth to recover of Kottmyer a franchise tax upon the ferry for the years 1912, 1913, 1914, 1915, and 1916. The tangible property belonging to Kottmyer, and used in connection with the ferry, was listed for the years 1912 and 1913 at $3,000, for each of said years; for the year 1914, at $20,080; for the year 1915, at $15,600; for the year 1916, at $15,600. The average gross earnings of the ferry were $5,800 per year. This action proceeds upon the ground that the difference between the earning capacity of the property, which has a fixed value in this case--$5,800--and the necessary operating expenses, is the true basis upon which to capitalize the value of the franchise, computing the interest at 6 per cent. and then deducting the assessed value of the tangible property from the sum so realized from this capitalized value.

The appellee, Kottmyer, contends that in fixing the value of the franchise for the purpose of taxation for each of these years the gross amount expended for operating the ferry should be deducted from the gross income of the ferry, and the difference, if any, capitalized at 6 per cent., in the manner set forth above, and find the value of the franchise. According to Kottmyer, his operating expenses, including repairs, oil, ropes, coal, gasoline, repair of wharves and labor, amount to $4,336, exclusive of his time, upon an average annually for the years named....