Endicott, Johnson & Co. v. Multnomah County

• Decision Date: 06 July 1920
• Citation: 96 Or. 679,190 P. 1109
• Parties: ENDICOTT, JOHNSON & CO. v. MULTNOMAH COUNTY.
• Court: Oregon Supreme Court

190 P. 1109

96 Or. 679

ENDICOTT, JOHNSON & CO. v. MULTNOMAH COUNTY.

Supreme Court of Oregon

July 6, 1920

Department 1.

Appeal from Circuit Court, Multnomah County; J. P. Kavanaugh, Judge.

Application by Endicott, Johnson & Co. against Multnomah County, Or., for cancellation of an assessment for taxation. On appeal from the board of equalization the circuit court ordered the assessment annulled, and the county appeals. Affirmed.

The assessor of Multnomah county made an assessment against Endicott, Johnson & Co. for "money, notes and accounts" in the sum of $5,000, and for "office furniture, library, instruments," in the sum of $30. The board of equalization for Multnomah county denied an application made by Endicott, Johnson & Co. for the cancellation of the assessment, and Endicott, Johnson & Co. appealed to the circuit court. After a hearing the circuit court ordered that the assessment be annulled, and the county appealed to this court.

Endicott Johnson & Co. are manufacturers of shoes, and have their factory and place of business in Endicott, N.Y. W. H. Ambler is employed by Endicott, Johnson & Co. as a traveling salesman. His territory includes all that part of Oregon which is west of Bend; and he visits merchants in that territory, displays samples, takes orders for shoes, and sends the orders to Endicott, N.Y. The orders are filled in Endicott, "billed on 60 days' time," and "the merchants remit directly to the house for the merchandise when the bills are due." Ambler maintains an office in the Worcester Block in Portland, and on the door appear the words, "Endicott, Johnson & Co., Wholesale Shoes, W. H. Ambler, Agent." The furniture in the office is the personal property of Ambler; and, when asked why he caused the name of Endicott, Johnson & Co. to appear on the door in addition to his own, he explained that--

"Endicott-Johnson is much better known than W. H. Ambler; and a merchant looking for the office of Endicott, Johnson & Co. would look for their name, not for mine."

Ambler had no authority except to solicit and send orders for goods to Endicott, N. Y., where they were accepted or rejected and, if accepted, were filled. Endicott, Johnson & Co. do not maintain a branch office, or a place of business, or a warehouse in Oregon. Merchants buying goods remit to Endicott. There are no moneys deposited to the credit of Endicott, Johnson & Co. in Oregon. On March 1, 1918, the date as of which the assessment was made, Endicott, Johnson & Co. had no property physically located in Oregon. On that date however, there were unpaid accounts due from Oregon merchants to whom Endicott, Johnson & Co. had sold shoes, and possibly Endicott, Johnson & Co. also had in their possession at Endicott, N. Y., promissory notes given by Oregon merchants for shoes purchased by them.

George Mowry, Deputy Dist. Atty., of Portland, for appellant.

F. M Saxton, of Nome, Alaska, and Sidney Teiser, of Portland (J F. Boothe, of Portland, on the brief), for respondent.

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

The county concedes that the assessment of $30 against Endicott, Johnson & Co. on account of "office furniture, library, instruments," was properly set aside; but the annulment of the assessment of $5,000 on account of "money, notes and accounts" is strenuously resisted. The county also concedes that the company had no money within its jurisdiction. The position of the county is that, inasmuch as Endicott, Johnson & Co. had no money in Multnomah county, but did have notes and accounts arising out of sales made to Oregon merchants, it must be presumed that the assessment was not intended to cover money, but that it was designed to embrace only notes and accounts. For the purposes of this case, we shall assume, without deciding, that the word "money" appearing on the assessor's records may be ignored, and that the assessment was intended to cover, and that it does cover, nothing but notes and accounts.

It affirmatively appears from the evidence that the company had in its possession at Endicott, N. Y., promissory notes; but it does not clearly appear whether any of these notes were given on account of sales made in Oregon; and, moreover, the findings of the trial court, although indefinite in this respect, rather indicate that it was the opinion of the circuit court that the company did not have any notes signed by Oregon merchants. We shall not attempt to determine what the actual facts are, but we shall assume that the county's contention is correct, and that on March 1, 1918, Endicott, Johnson & Co. did "own notes and accounts that were owing to them from residents of Multnomah county," and that these were the notes and accounts covered by the assessment, and that $5,000 was their aggregate value.

The power of taxation, although an inherent attribute of sovereignty, is necessarily limited to subjects within the jurisdiction of the state exercising the power. "These subjects," as stated in State Tax on Foreign Held Bonds, 15 Wall. 300, 21 L.Ed. 179, "are persons, property, and business." A state cannot tax a person or property or a business unless it first acquires jurisdiction over such person, property, or business. It is the prerogative of the Legislature to decide what persons and what property shall be taxed; but legislation of a given state can be made to operate only upon persons and property within the sphere of its territorial limits. A tax imposed without jurisdiction over either persons or property is void. St. Louis v. Ferry Co., 78 U.S. (11 Wall.) 423, 20 L.Ed. 192; Tappan v. Merchants' National Bank, 19 Wall. 490, 22 L.Ed. 189; New York, L. E. & W. R. Co. v. Pa., 153 U.S. 628, 14 S.Ct. 952, 38 L.Ed. 854; Metropolitan Life Ins. Co. v. New Orleans, 205 U.S. 395, 27 S.Ct. 499, 51 L.Ed. 853 (affirming 115 La. 698, 39 So. 846, 9 L. R. A. (N. S.) 1240, 116 Am. St. Rep. 179; City of Augusta v. Kimball, 91 Me. 605, 40 A. 666, 41 L. R. A. 475.

The maxim mobilia sequuntur personam expresses a comprehensive and general rule applicable to personal property, and, subject to a considerable number of exceptions, this general rule is, for taxation purposes, invoked to determine the situs of personal property. Callender Navigation Co. v. Pomeroy, 61 Or. 343, 352, 122 P. 758. The rule mobilia sequuntur personam does not arise out of any requirements of the Constitution, but is a mere fiction of the law, contrived for convenience and intended to work out justice; and therefore it is not permitted to govern when justice does not demand that it should do so, and it cannot prevail when inconsistent with express provisions of statute. Board of Assessors v. Comptoir National, 191 U.S. 388, 24 S.Ct. 109, 48 L.Ed. 232; Union Refrigerator Transit Co. v. Lynch, 18 Utah, 378, 55 P. 639, 48 L. R. A. 790; Poppleton v. Yamhill Co., 18 Or. 377, 382, 23 P. 253, 7 L. R. A. 449.

Personal property includes intangibles as well as tangibles, for not only money, but also promissory notes, and accounts not represented by any written evidence of indebtedness, are generally treated as property, and therefore subject to taxation. 26 R. C. L. 138.

Notwithstanding the general rule expressed by the maxim mobilia sequuntur personam, it is now firmly established that tangible personal property may be taxed at the situs where it is physically located, even though the owner resides in another jurisdiction. It is not necessary here to discuss the extent or the limitations or the requisites of this established doctrine, for the reason that we are not called upon to decide any question concerning tangibles. While the assessment included the items of "furniture, library, instruments," and "money," it is conceded by the county that Endicott, Johnson & Co. did not have any of these tangibles in Multnomah county; and consequently our attention will be confined to the two intangibles mentioned in the assessment, notes, and accounts.

If Endicott, Johnson & Co. owned any promissory notes given for shoes sold to Oregon customers, the instruments were held in New York, and were not physically located in Oregon. There are cases in which statements may be found indicating a tendency to treat a promissory note, not merely as evidence of property, but as property itself, on the theory that the debt is inseparable from the paper which declares and constitutes it, and hence the paper is deemed to be so important an element of the value of what it represents as to make it analogous to tangible property. Blackstone v. Miller, 188 U.S. 189, 23 S.Ct. 277, 47 L.Ed. 439; Wheeler v. Sohmer, 233 U.S. 434, 34 S.Ct. 607 58 L.Ed. 1030; Walker v. Jack, 31 C. C. A. 462, 88 F. 576.

Since the owners, Endicott, Johnson & Co., are domiciled in the state of New York, and the notes upon which they are assessed are held by them and are physically located in New York, it will not be necessary to decide whether, as was held in Johnson v. City Council, 3 Or. 13, the situs of a note for property taxation purposes is determined by the domicile of the owner regardless of the physical location of the paper evidencing the debt, or whether, as was indicated in Blackstone v. Miller and kindred cases, a promissory note may be assimilated to tangibles on the ground that it not only declares the existence of the debt, but also constitutes the debt, and the paper itself, being tangible, is capable of physical location.

If jurisdiction to levy a property tax is to be determined solely by the domicile of the owner, then the disputed assessment was void for the reason that the owners of the notes and accounts are domiciled in the state of New York. While it is settled as a matter of constitutional law that the situs of the debt or credit, for the purposes of property...