Commonwealth v. Sciimelz

• Decision Date: 16 January 1913
• Citation: 76 S.E. 905,114 Va. 364
• Court: Virginia Supreme Court
• Parties: COMMONWEALTH et al. v. SCIIMELZ.

76 S.E. 905

114 Va. 364

COMMONWEALTH et al.

v.SCIIMELZ.

Supreme Court of Appeals of Virginia.

Jan. 16, 1913.

1. Taxation (§ 273^*)—Assessment—Personal Property of Firm—Situs.

Code 1904, § 492, provides that firm property shall be listed for taxation by and be taxed to the firm. Section 494 declares that the commissioner shall make a personal application to each person, linn, or corporation residing, doing business, or having an office in his district to disclose property of the person, firm, or corporation not otherwise taxed and subject to assessment, and Tax Bill, § 143 (Code 1904, p. 2265), provides that, when a firm is engaged in more than one business which is subject to taxation, the firm shall pay taxes on each branch of its business. Held that, where a firm maintained separate places of business in two counties, the property in each place was taxable in the county where it was located, and the firm was not taxable on the property in both places in the county where the members resided.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 447; Dec. Dig. § 273.*]

2. Taxation (§ 90*)—Property of Firm— Firm as Entity—"Partnership."

For purposes of taxation, a partnership is treated as an entity separate and distinct from its members, as provided by Code 1904, §§ 492, 494, and Tax Bill, § 143 (Code 1904, p. 2265), and its property is to be taxed to the firm, and not to its individual members.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 180; Dec. Dig. § 90.*

For other definitions, see Words and Phrases, vol. 6, pp. 5191-5202; vol. 8, pp. 7746, 7747.]

3. Taxation (§ 494*)—Assessment—Objections—Evidence of Omitted Property.

Code 1904, § 567, provides that any person assessed with taxes who is aggrieved, within two years from the 1st day of September of the year in which the assessment is made, may apply to the proper court for relief. Section 568 declares that, if the court is satisfied that the applicant has been erroneously assessed, it may order the assessment corrected, and order the applicant exonerated from the payment of any excess, and, if the assessment is less than the proper amount, the court shall order the applicant to pay the proper taxes. Held that, where the surviving partner of a firm instituted proceedings to be relieved from taxes erroneously assessed against the firm on property located in a different county, the commonwealth was entitled to introduce proof of omitted property of such firm within the county in order to as-certain the correct amount of the objector's tax in the county of the forum.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. §§ 884-888; Dec. Dig. § 494.*]

Error to Circuit Court, Elizabeth City County.

Proceeding by H. L. Schmelz against the Commonwealth and others to be relieved from an alleged erroneous assessment of taxes. From a judgment for complainant, defendants bring error. Reversed.

The Attorney General, S. Gordon Gumming, E. E. Montague, and Wm. C. L. Taliaferro, all of Hampton, for plaintiffs in error.

J. W. Read, of Newport News, and J. G. Pollard, of Richmond, for defendant in error.

BUCHANAN, J. This is a proceeding instituted by Henry L. Schmelz, surviving and continuing partner of Schmelz Bros., Bankers, under section 567 of the Code, to be relieved from an alleged erroneous assessment of taxes and levies upon personal property of the said partnership for the years 1891 to and including the year 1911.

Upon the hearing of the motion the circuit court of Elizabeth City county was of opinion that the assessment complained of was erroneous, in this: that the property assessed was not taxable in the county of Elizabeth City or in the city of Hampton, and entered an order exonerating the firm from the payment of all taxes and levies on said property in the said county and city. The auditor of public accounts, not being satisfied with that decision, petitioned the court, in accordance with the provisions of section 573 of the Code, for a rehearing. Upon the rehearing, which was de novo, the court being of opinion that its order on the original hearing was correct, adhered to and confirmed it. To that order this writ of error was awarded upon the petition of the commonwealth, the county of Elizabeth City, and the city of Hampton.

The court certifies in its order that upon the rehearing the following facts were proved: "That from 1886 to 1903 H. L. Schmelz and Geo. A. Schmelz conducted a private banking business in the town of Hampton, Va., under the firm name and style of 'Schmelz Bros., Bankers, Hampton, Virginia, ' and that on July 1, 1903, they discontinued the banking business in Hampton, but continued to own and hold property in Elizabeth City county. In 1891 the same partners opened a bank in the city of Newport News, Va., under the firm name and style of 'Schmelz Bros., Bankers, Newport News, Virginia, ' and the said business in Newport News has continued until the present time. After the death of the said Geo. A. Schmelz in January, 1911, the business of Schmelz Bros., Bankers, Newport News, Va., was continued by his surviving partner. The two banks were entirely separate and distinct, both as to. capital and the conduct of the businesses, their relations being those of separate and distinct banks. H. L. Schmelz has continuously resided in the town of Hampton, county of Elizabeth City. Geo. A. Schmelz continuously resided in the town (or city) of Hampton from March, 1908, until the time of his death, and previous to March, 1908, and until his death in the county of Elizabeth City. The assessments and all taxes and levies based thereon, from which relief is sought in this proceeding, were made and extended against the property of the firm of 'Schmelz Bros., Bankers, Newport News, Va., ' and no assessment has ever been made against the property of the firm, of 'Schmelz Bros., Bankers, Hampton, Va., ' other than the real estate of said firm."

Two questions are raised by this writ oferror for the decision of this court. The first, in the language of the petition, is: "(A) Granting that the only property assessed, from which relief was sought in the pending proceeding, was personal property not otherwise taxed, used solely in Newport News, was it not taxable in Elizabeth City county, where both partners resided?"

The question raised by this assignment of error is whether property invested in a partnership business, and not otherwise taxed, is subject to taxation where the partners reside, or where the partnership business is conducted.

In many, if not in most, of the states the situs for the taxation of partnership property is fixed by statute; but, where it is not so, the decisions do not seem to be in accord, though the weight of authority and the better reason seem to be in favor of the view that the situs of such property for taxation is where the partnership business is carried on. See Cooley on Taxation (3d Ed.) pp. 659, 660; Burrough on Taxation, § 98; Desty on Taxation, § 62; 37 Cyc. 958; 27 Am. & Eng. Enc. (2d Ed.) 655; and note to Clay v. Douglas County, 7 Ann. Cas. pp. 758-762.

By section 492 of the Code, which declares by whom property is to be listed and to whom taxed, it is provided that: "If the property belong to a company or firm...