Ewald Iron Co. v. Commonwealth

• Decision Date: 22 November 1910
• Citation: 131 S.W. 774,140 Ky. 692
• Parties: EWALD IRON CO. v. COMMONWEALTH.
• Court: Kentucky Court of Appeals

131 S.W. 774

140 Ky. 692

EWALD IRON CO. v. COMMONWEALTH.

Court of Appeals of Kentucky.

November 22, 1910

Appeal from Circuit Court, Lyon County.

Action by the Commonwealth, at the instance of Arthur E. Hopkins Revenue Agent, against the Ewald Iron Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

O'Rear J., dissenting.

C. H Gibson, Gibson, Marshall & Gibson, John C. Yates, and P. B Muir, for appellant.

M. J. Holt, McQuown & Beckham, and J. S. Hodges, for appellee.

Clayton B. Blakey, amicus curiæ.

HOBSON J.

Arthur E. Hopkins, as revenue agent, instituted this action in the Lyon circuit court against the Ewald Iron Company to list for taxation $1,800,000 in money as omitted property as of September 1, 1909, for the year 1910. The county court entered a judgment in favor of the plaintiff. An appeal was taken to the circuit court, which sustained the county court. From this judgment, the appeal before us is prosecuted.

The case was submitted in the county court and in the circuit court on an agreed statement of facts, which are in substance as follows: The Ewald Iron Company was incorporated under the General Statutes of Kentucky on November 5, 1880, for a term of 25 years with its principal office and place of business in Lyon county as specified in the articles of incorporation. The company conducted its business in Lyon county for a number of years, but prior to the year 1900 it removed its active place of business to the city of Louisville, and thereafter continued its business operations at Louisville, retaining but not using its property in Lyon county. Prior to November 5, 1905, L. P. Ewald became and continued to be the sole stockholder of the company. He resided in Louisville and died there in July, 1909, leaving a will which was afterwards probated. All the capital stock of the Ewald Iron Company outstanding came into the hands of his executor. The business of the Ewald Iron Company was continued after the expiration of the charter, on November 5, 1905, in its corporate name in all respects as if its corporate, existence had continued until September 1, 1909, when the company was formally dissolved, and its affairs have since been practically wound up. There was until then no change of title to any of its extensive and valuable properties in Lyon county, and Jefferson county, Ky. and in St. Louis, Mo. It continued to make contracts, incur debts, and carry on a large business after its charter expired in exactly the same way as it had done before it expired. For some time prior to November 5, 1905, and continuously until his death, it was the purpose of L. P. Ewald to reincorporate the Ewald Iron Company, and for this purpose he caused articles of incorporation to be prepared which he repeatedly declared his intention to have executed. But this he neglected to do, and the business was continued in the name of the old company until his death, and until the company was dissolved after his death, subsequent to September 1, 1909. On September 1, 1909, the Ewald Iron Company had on deposit in various banks in St. Louis, Mo., the sum of $1,800,000, which represented and was in fact the accumulated earnings and profits of the company which had never been distributed. For more than half of this sum, interest-bearing certificates of deposit had been issued to the Ewald Iron Company payable to it, and the balance was deposited as an open account in the name of the company bearing interest and payable only on the check of the Ewald Iron Company. The books of the Ewald Iron Company showed all of these deposits, and they were carried on the books as assets of the company on the 1st day of September, 1909. In October, 1909, the deposits were all paid by the banks holding them to the treasurer of the Ewald Iron Company, and were afterwards disposed of by the directors of the company in liquidating its affairs, until which time there had been no change of title to any of said money from the Ewald Iron Company. The executor of L. P. Ewald had transferred some shares of stock of the company to other persons, and caused a board of directors and all necessary officers to be elected, so that the company had an effective corporate organization. This was done with a view to dissolving and winding up the company, but after September 1, 1909. The assessors of the city of Louisville and of Jefferson county, claiming that the money on deposit in St. Louis in the name of the Ewald Iron Company was in law and in fact the money of L. P. Ewald's estate, assessed it, as of September 1, 1909, for the year 1910 in the name of L. P. Ewald's executor, and tax bills based on these assessments were placed in the hands of the collector of taxes for collection. No other property of the Ewald Iron Company except this money has been omitted from taxation for the year 1910. Its other properties have all been assessed in its name in Lyon county and in Jefferson county.

There is no dispute between the parties that the property is liable to assessment. The only question made is whether it should be assessed as the property of the Ewald Iron Company in Lyon county, or in the name of L. P. Ewald in Jefferson county. It is agreed that Lyon county was the...