County of Grand forks v. Cream of Wheat Co.

• Decision Date: 30 November 1918
• Court: North Dakota Supreme Court

170 N.W. 863

41 N.D. 330

COUNTY OF GRAND FORKS, in the State of North Dakota, a Municipal Corporation, Appellant, v. CREAM OF WHEAT COMPANY, a Corporation, Respondent

Supreme Court of North Dakota

November 30, 1918

From a judgment of the District Court of Grand Forks County, Cooley J., plaintiff appeals.

Reversed.

Judgment reversed, and judgment entered in favor of the plaintiff.

Geo. E Wallace and O. B. Burtness, for appellant.

The law which prescribes the time of review of taxation assessments gives all the notice required; and the proceedings by which the valuation is determined, although it may lead to the sale of the delinquent property for taxes, is due process. Merchants etc. Bank v. Pennsylvania, 167 U.S. 461 42 L.Ed. 236; Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 33 L.Ed. 492; Spencer v. Merchant, 125 U.S. 345, 31 L.Ed. 763; Palmer v. McMahon, 133 U.S. 660, 33 L.Ed. 772; Lent v. Tillson, 140 U.S. 316, 35 L.Ed. 419; Paulson v. Portland, 149 U.S. 30, 37 L.Ed. 637.

The process of taxation does not require the same kind of notice as is required in a suit at law. Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 33 L.Ed. 892; 4 Enc. U.S. S.Ct. 365, and note 5; Connolly v. Union Sewer Pipe Co. 184 U.S. 540, 46 L.Ed. 679; Kidd v. Pearson, 128 U.S. 1, 32 L.Ed. 346; Cook v. Marshall County, 196 U.S. 261, 49 L.Ed. 471; Comstock v. Grand Rapids, 54 Mich. 641; First Nat. Bank v. St. Joseph, 46 Mich. 526; Smith v. Marshall Town, 86 Iowa 516.

Greater latitude is permitted in the exercise of the taxing power than is accorded private suitors. 4 Enc. U.S. S.Ct. 365 and note 5; Connolly v. Union Sewer Pipe Co. 184 U.S. 540, 46 L.Ed. 679; Kidd v. Pearson, 128 U.S. 1, 32 L.Ed. 346; Cook v. Marshall County, 196 U.S. 261, 49 L.Ed. 471.

Failure to appear before the board of review of assessments estops a taxpayer to complain. Comstock v. Grand Rapids, 55 Mich. 641; First Nat. Bank v. St. Joseph, 46 Mich. 526; Smith v. Marshall Town, 86 Iowa 516; Swenson v. McLaren, 2 Tex.App. 331, 21 S.W. 300; Mortz v. Detroit, 18 Mich. 496; Republican Ins. Co. v. Pollak, 75 Ill. 300.

Unless restrained by constitutional provisions, the power of the state in matters of taxation is unlimited. Elevator Co. v. Traill County, 9 N.D. 216; 37 Cyc. 737; Spencer v. People, 68 Ill. 510; Kirkpatrick v. New Brunswick, 40 N. J. E. 46; Florida R. Co. v. Reynolds, 46 L.Ed. 283; Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 33 L.Ed. 892; Michigan R. Tax Cases, 138 F. 236, affirmed in 201 U.S. 246, 50 L.Ed. 744.

Regardless of the arbitrary selection and discrimination, when all persons in the same class are treated alike, taxation measures will be upheld by the courts. People ex rel. v. Reardon, 184 N.Y. 43, 8 L.R.A.(N.S.) 314, 77 N.E. 970; Re McPherson, 104 N.Y. 306, 10 N.E. 685; Re Gould, 156 N.Y. 423, 51 N.E. 287; Kentucky R. Cases, 115 U.S. 321, 29 L.Ed. 414; Magoun v. Bank, 170 U.S. 283, 42 L.Ed. 1037; Hayes v. Missouri, 120 U.S. 68, 30 L.Ed. 578; Barbier v. Connolly, 113 U.S. 27, 28 L.Ed. 923; 1 Cooley, Taxn. 3d ed. 260; Michigan C. R. Co. v. Powers, 210 U.S. 245, 301; Home Ins. Co. v. New York, 134 U.S. 594, 33 L.Ed. 1025.

Where taxes on franchises are privilege taxes, the rule requiring uniformity does not apply. Phoenix Carpet Co. v. State, 118 Ala. 143, 22 So. 627; Phoenix Assur. Co. v. Fire Dept. 117 Ala. 631, 42 L.R.A. 468, 23 So. 843; Bank v. Worrell, 67 Miss. 47, 7 So. 219; Scottish Union etc. Co. v. Herriott, 109 Iowa 606, 80 N.W. 665; Southern etc. Asso. v. Norman, 98 Ky. 294, 31 L.R.A. 41, 32 S.W. 952; State v. Fosdick, 21 La.Ann. 434; Portland Bank v. Apthorp, 12 Mass. 252; Connecticut etc. Co. v. Com. 133 Mass. 161; Com. v. Bank, 5 Allen, 428; State v. Ry. Co. 45 Md. 361, 24 Am. St. Rep. 511; State v. Telegraph Co. 73 Me. 518; State v. Railway Co. 74 Me. 376; Boston etc. Co. v. State, 62 N.H. 648; Standard etc. Cable Co. v. Atty. Gen. 46 N.J.Eq. 270, 19 A. 733; Trenton Sav. Fund v. Richards, 52 N.J.L. 156, 18 A. 582; Southern Gum Co. v. Laylin, 66 Ohio St. 578, 64 N.E. 564; Western etc. Tel. Co. v. Mayer, 28 Ohio St. 537.

A corporate franchise is taxable. Comp. Laws 1913, § 2110; 37 Cyc. 816, 817; Bank v. California, 142 Cal. 276, 100 Am. St. Rep. 130, 64 L.R.A. 918, 75 P. 832; Spring Valley Waterworks v. Schottler, 52 Cal. 69; Horn Silver Min. Co. v. New York, 143 N.Y. 305, 36 L.Ed. 164; Central P. R. Co. v. California, 162 U.S. 91, 40 L.Ed. 913; Southern Gum Co. v. Lyalin, 66 Ohio St. 578, 64 N.E. 564; State ex rel. Milwaukee Street R. Co. v. Anderson, 90 Wis. 550, 63 N.W. 746; Home Ins. Co. v. New York, 134 U.S. 594, 33 L.Ed. 1025; State R. Tax Cases, 92 U.S. 575, 23 L.Ed. 663; 2 Morawetz, Priv. Corp. 3922; Maine v. Grand Trunk R. Co. 142 U.S. 217, 35 L.Ed. 994; Horn S. M. Co. v. New York, 143 U.S. 325; Hamilton Co. v. Massachusetts, 6 Wall. 632, 638, 18 L.Ed. 904; Central P. R. Co. v. California, 162 U.S. 91, 125; Cooley, Taxn. 3d ed. p. 686; People ex rel. v. Tax Comrs. 196 N.Y. 39; Bank of California v. San Francisco, 142 Cal. 276, 100 Am. St. Rep. 130, 75 P. 832; Commercial etc. Power Co. v. Judson, 21 Wash. 49, 57 L.R.A. 78.

The party assailing an assessment must show that the method by which the assessors arrived at the assessment was wrong, and that it does not represent the fair value of the property. People v. Commissioners, 99 N.Y. 154; People v. Commissioners, 104 N.Y. 240; People v. Wells, 184 N.Y. 275; Gray, Limitations of Taxing Power, p. 34; Maine v. Grand Trunk R. Co. 142 U.S. 217, 35 L.Ed. 994; Carbon Iron Co. v. Carbon Co. 39 Pa. 251; Phoenix Iron Co. v. Com. 59 Pa. 104; State v. Philadelphia etc. R. Co. 45 Md. 361; Cumberland etc. R. Co. v. State, 92 Md. 668.

Brown & Gussner, Harry S. Carson, and Murphy & Toner, for respondent.

The franchises of these corporations were not intended to be made subject to taxation as a separate item of personal property. Comp. Laws 1913, §§ 1524, 1530; Henderson v. Com. 99 Ky. 623, 31 S.W. 486; State v. Duluth Gas & Water Co. 76 Minn. 103.

The personal property of a corporation is assessed and also its capital stock; there is no franchise tax in North Dakota. Beale, Taxn. of Corporations both Foreign & Domestic, § 546.

A tax on the value of the capital stock of a corporation is a tax on the property in which that capital is invested, and no tax can be levied which includes property which is otherwise exempt. Joyce, Franchises, 1909, § 424, p. 752; Bank of Commerce v. New York, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Pullman's Car Co. v. Pennsylvania, 141 U.S. 18, 25; Fargo v. Hart, 193 U.S. 490, 498; Com. v. Standard Oil Co. 101 Pa. 145; Fox's Appeal, 112 Pa. 337; Merchants Ins. Co. v. Newark, 54 N.J.L. 138; Newark City Bank v. Assessor, 30 N.J.L. 13; State v. Haight, 35 N.J.L. 279; Nichols v. New Haven & N. Co. 42 Conn. 103; State v. Stonewall Ins. Co. 89 Ala. 335; Com. v. American Waterworks & G. Co. 8 Pa. 268.

A tax on the value of the capital stock of a corporation is a property tax, and not a franchise tax. A state cannot tax property beyond its borders, nor attain the same end by taxing the entranced value of the stock of a corporation when the property lies permanently beyond its borders. Delaware, L. etc. R. Co. v. Pennsylvania, 198 U.S. 341; Brown v. Houston, 114 U.S. 622; Com. v. Standard Oil Co. 101 Pa. 145; Fox's Appeal, 112 Pa. 337; Com. v. Delaware etc. R. Co. 165 Pa. 44; Bank of Commerce v. New York, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Pullman's Car Co. v. Pennsylvania, 141 U.S. 18, 25; Fargo v. Hart, 193 U.S. 490, 498, 499; Adams Exp. Co. v. Ohio, 165 U.S. 194, 166 U.S. 185; Western U. Teleg. Co. v. Massachusetts, 125 U.S. 530; Massachusetts v. Western U. Teleg. Co. 141 U.S. 40; Maine v. Grand Trunk R. Co. 142 U.S. 217; Pittsburgh, C. etc. R. Co. v. Backus, 154 U.S. 421; Cleveland, C. etc. R. Co. v. Backus, 154 U.S. 439; Western U. Teleg. Co. v. Taggart, 163 U.S. 1; Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18; Louisville etc. Ferry Co. v. Kentucky, 188 U.S. 385; Com. v. West India Oil Ref. Co. 138 Ky. 828, 129 S.W. 301.

Section 2110, Comp. Laws 1913, provides the only method of taxing intangible property. State v. Duluth Gas & Water Co. 76 Minn. 96; State v. Leech, 33 N.D. 513, 157 N.W. 492.

CHRISTIANSON, J. GRACE, J., concurring in the result. ROBINSON, J. (dissenting).

OPINION

CHRISTIANSON, J.

This is an action by the county of Grand Forks to recover from the defendant certain alleged delinquent personal property taxes for the years 1908 to 1914, both inclusive. The complaint alleges that the defendant is, and at all times therein mentioned was, a corporation organized under the laws of the state of North Dakota, with its principal place of business at the city of Grand Forks, in said Grand Forks county. And that in the year 1914 the county auditor under the direction of the state tax commission duly assessed certain property situated in said city of Grand Forks, to wit, "bonds and stocks" for the years 1908, 1909, 1910, 1911, 1912, and 1913, as property having escaped taxation; that such property, during each of the said years, had been the property of the defendant and had not been assessed; that such assessment was thereafter equalized by the board of equalization of the county and later by the state board of equalization; that such taxes were duly entered by the county auditor and by him extended upon the tax lists of said county against the personal property of the defendant for each of said years at the same rate and for all the purposes for which taxes were levied upon property in said Grand Forks county in each of said years. It is further alleged that such personal property was duly assessed by the city assessor in the year 1914, and such assessment duly reviewed and equalized as provided by law. The complaint also shows...