Dallas County v. Home Fire Ins. Co.

• Citation: 133 S.W. 1113
• Parties: DALLAS COUNTY v. HOME FIRE INS. CO.
• Decision Date: 16 January 1911
• Court: Supreme Court of Arkansas

Page 1113

133 S.W. 1113

DALLAS COUNTY v. HOME FIRE INS. CO.

Supreme Court of Arkansas.

January 16, 1911.

Appeal from Circuit Court, Dallas County; Henry W. Wells, Judge.

Petition by the Home Fire Insurance Company against Dallas County for relief from an assessment. Judgment for petitioner, and defendant appeals. Reversed and remanded, with directions.

The Home Fire Insurance Company filed a petition in the county court of Dallas county, asking to be relieved from an alleged illegal assessment. It alleged that it is an insurance corporation organized under the laws of the state of Arkansas, with its domicile at Fordyce in Dallas county; that the county board of equalization increased the assessed valuation of its capital stock and surplus from $1,000 to $162,500 for the taxes of 1909; that its capital stock is $325,000; that the sum of $317,703.75 of said capital stock is invested in the capital stock of other corporations organized under the laws of the state of Arkansas, and $4,000 in corporations organized in the state of Louisiana, and $2,260 in corporations in the state of Texas. The prayer is that the increased valuation of the capital stock be reduced from the amount assessed by the county board of equalization to the amount assessed in the first instance, viz., $1,000. The county court denied its petition, and it appealed to the circuit court. Upon a demurrer to the petition, the circuit court found that "the capital stock and surplus of said petitioner, a list of which is set out in exhibit, which is invested in the shares of stock in other corporations that assess and pay on their capital and property in this state and elsewhere, is not subject to taxation," and judgment was rendered accordingly. Dallas county has duly prosecuted an appeal to this court.

Mehaffy & Williams and Morton & Morton, for appellant. Gaughan & Sifford, T. D. Wynne, and Rose, Hemingway, Cantrell & Loughborough, for appellee.

HART, J. (after stating the facts as above).

It is agreed by counsel that the only question presented for our determination by the appeal is, Did the fact that appellee invested the greater part of its capital stock in the certificates of stock in other corporations in this state and elsewhere, exempt both its capital stock so invested and the certificates of stock so purchased from taxation?

On the subject of finance and taxation our Constitution (1874, art. 16) contains the following:

"Sec. 5. All property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the state. No one species of property from which a tax may be collected shall be taxed higher than another species of property of equal value," etc.

"Sec. 6. All laws exempting property from taxation other than as provided in this Constitution shall be void.

"Sec. 7. The power to tax corporations and corporate property shall not be surrendered or suspended by any contract or grant to which the state may be a party."

The Constitution expressly exempts churches and certain other named property from taxation, but corporate property is not included in the exemption. Statutes relative to the assessment and taxation of property must be construed in connection with the Constitution. Hence it may be said at the outset that the Legislature has not intended to exempt the property of corporations from taxation contrary to the provisions of our Constitution. There is a hopeless conflict in the decisions of the various states as to the right and power of a state to tax corporations upon their capital stock or their property and assets, and their stockholders upon their shares of stock. Any one interested in the question will find a collection of the cases in the following reports: Inhabitants of East Livermore v. Livermore Falls Trust & Banking Co., 103 Me. 418, 69 Atl. 306, 15 L. R. A. (N. S.) 952, and note, 13 Am. & Eng. Ann. Cas. 631, and note at 636; State Board of Equalization v. People ex rel. Goggin, 191 Ill. 528, 61 N. E. 339, 58 L. R. A. 589, and note; William Wilkens Co. v. Baltimore, 103 Md. 293, 63 Atl. 562, 7 Am. & Eng. Ann. Cas. 1192. It is not necessary to make further reference to them because our court is committed to the doctrine that the taxation both of the capital stock and property of a corporation and of the shares of its stock is double taxation.

Section 6902, Kirby's Dig., provides, in substance, that no person shall be required to list for taxation any shares of stock owned by him in any corporation which is required to return its capital and property for taxation in this state. This section was construed in the case of Dallas County v. Banks, 87 Ark. 484, 113 S. W. 37, and was held to be valid. Banks owned shares of stock in certain insurance companies, and filed a petition in the county court asking the court to strike the assessed value of these shares of stock from his assessment list. The court held that, because the insurance corporations were required to list their capital stock for taxation, the shares of stock of such corporation were not assessable to the stockholders. The court, after discussing the various provisions of the statutes relating to assessments, said: "We think it clear from a consideration of these various provisions of the revenue law that the insurance companies whose stock appellee (Banks) held were required to list the stock for taxation." In conclusion, the court said: "Conceding, without deciding (for the question is not before us), that the sections requiring other designated companies and corporations to file a different schedule from that demanded by section 6906, supra, are not merely cumulative provisions, and conceding that the companies and corporations named are exempt by these specific provisions from the requirement of the general provision contained in section 6906, it does not follow that insurance companies are also exempt from the operation of the latter section. On the contrary, the fact that insurance companies are exempt from the requirements of section 6936, as to other corporations, by the express language thereof, leads to the inevitable conclusion that the Legislature intended that they should file the schedule required by sections 6906 and 6910. The contention that these sections refer only to the assessment by individuals ignores the provision contained in section 6872, above quoted, that `the word "person," as used in this act shall be held to mean and include firm, company and...