Consumers' Ice Co. of Baltimore City v. State

• Citation: 33 A. 427,82 Md. 132
• Parties: CONSUMERS' ICE CO. OF BALTIMORE CITY v. STATE.
• Decision Date: 06 December 1895
• Court: Court of Appeals of Maryland

33 A. 427

82 Md. 132

CONSUMERS' ICE CO. OF BALTIMORE CITY v. STATE.

Court of Appeals of Maryland

December 6, 1895

Appeal from court of common pleas.

Action by the state of Maryland against the Consumers' Ice Company of Baltimore City. From a judgment for plaintiff defendant appeals. Reversed.

Argued before ROBINSON, C.J., and BRYAN, McSHERRY, FOWLER, BRISCOE ROBERTS, and BOYD, JJ.

Edgar H. Gans and B. Howard Haman, for appellant.

James A. Preston and R. L. Preston, for appellee.

BOYD J.

The appellee sued the appellant for state taxes levied and assessed on the latter's capital stock. The tax was laid on 4,000 shares of stock assessed at $25 per share. At the trial the defendant proved that there were only 3,277 shares of stock issued, and that the state tax commissioner was informed that there were 723 shares unissued. On motion of the plaintiff the court below struck out this evidence, which had been admitted subject to exception, and granted a prayer that the plaintiff was entitled to recover the amount of taxes set forth in the bill of particulars, with 5 per centum additional thereon, and interest. From this action of the court this appeal was taken. We are therefore called on to decide whether the state tax commissioner can lawfully assess unissued stock of a corporation. If he can, that will end the controversy; but if we reach the contrary conclusion we must then determine whether the defendant can set up that defense in a proceeding of this character. Section 132 of article 81 of the Code of Public General Laws requires the tax commissioner to assess for state purposes, on or before the 15th day of May in each year, "the shares of capital stock in all the banks, state or national, banking associations or other incorporated institutions or companies incorporated under the authority of this state, or located or doing business therein, whose shares of capital stock are liable to assessment and taxation by the laws of this state," and he has broad powers given him to enable him to obtain information concerning the same. Section 138 of that article requires the president or other proper officer of banks or other incorporated institutions to furnish annually on or before the 1st day of March to the county commissioners of each county and the appeal tax court of Baltimore city in which any of its stockholders may reside, a list of the said stockholders, together with the number of shares held by each, and also to make out and deliver to the county commissioners of the county or appeal tax court where said corporation is situate an account of the number of shares of stock in such corporation held by persons not residents of this state, and provides that the same shall be valued at its actual cash value to and in the names of such stockholders respectively. That section further requires the corporation to pay the tax levied on the stock held by nonresidents. Section 141 provides for the assessment of the real estate of corporations by the county commissioners and the appeal tax court of Baltimore city, and for the payment by the company of state, county, or city taxes thereon, in the same manner as the same are levied upon and paid by individual owners of real property. It then prescribes the method of ascertaining the value of the shares of stock of corporations by the tax commissioner, who is to deduct the assessed value of the real property belonging to the company from the aggregate value of all the shares of such company and divide the residuum by the number of shares of capital stock, "and the quotient shall be the taxable value of such respective shares for state purposes." The tax commissioner is then required to certify to the county commissioners of each county where any of the stockholders reside, and to the appeal tax court of Baltimore city, if any reside there, the assessed taxable value of such respective shares of stock so ascertained; and the taxable value of such shares of stock owned by residents of this state and taxable within this state shall, for county and municipal purposes, be valued to the owners thereof in the counties or cities in which they respectively reside, but the taxes so assessed are to be paid by the company and charged to the respective stockholders. Section 131 determines where the stock shall be deemed to be situate for the purpose of valuing stock held by nonresidents. Taking all these sections together, it would seem to be perfectly clear that the tax commissioner is not authorized to assess unissued shares of stock, and any other construction might very materially affect the taxable value of stock for the purposes of county or municipal taxation. Take, for example, a corporation of an authorized capital of $100,000,--1,000 shares of the par value of $100 each. Suppose 500 shares are subscribed for and paid up, thus giving the company $50,000, with part of which it purchases real estate of the value of and assessed at $20,000. The tax commissioner would then, under section 141, deduct the assessed value of the real estate ($20,000) from the aggregate value of all the shares of stock ($50,000, assuming that to be the aggregate value), and would have a residuum of $30,000. Then, if the state's contention be correct, he should divide this residuum by the...