Georgia Fire Ins. Co. v. City of Cedartown

• Decision Date: 21 February 1910
• Citation: 67 S.E. 410,134 Ga. 87
• Parties: GEORGIA FIRE INS. CO. v. CITY OF CEDARTOWN et al.
• Court: Georgia Supreme Court

67 S.E. 410

134 Ga. 87

GEORGIA FIRE INS. CO. v. CITY OF CEDARTOWN et al.

Supreme Court of Georgia

February 21, 1910

Syllabus by the Court.

It was stated in the application for a charter for an insurance company that its principal office would be located in a named county of this state. It established an office in a municipal corporation of that county, where its president and secretary and treasurer had their offices, where the executive committee of the directors met, and where all the business of the company was transacted, except as stated below. In a by-law it was declared that an annual meeting of the stockholders should be held "at their home office in Polk county, Georgia, at the home of W. S. Coleman, one and one-quarter miles south of the courthouse, or with branch offices at Cedartown, or at other places in Georgia, as may be determined by the directors." There was a similar rule as to the place of meetings of directors. Meetings of directors and stockholders were held at the residence of Coleman, who furnished a room for the purpose, free of rent. The minutes indicated that the directors held one or more meetings at the Cedartown office. An iron safe was bought later and placed at Coleman's house, when he was elected treasurer, and the company's securities were kept in it except when there was occasion to bring them to the city office for the purpose of transfer. The company returned for municipal taxation its furniture in the city offices, but declined to return or pay municipal tax on its other personal property. Held, that the presiding judge did not err in denying an injunction to restrain the municipal authorities from collecting the tax on the personal property of the corporation, because it was claimed that its principal or home office was not within the limits of the city.

Section 6 of the general tax act of August 22, 1907 (Acts 1907, p 37), did not exempt the personal property of an insurance company incorporated in this state from taxation because of the payment of a business or occupation tax.

(a) If the section referred to should be construed as seeking to exempt from taxation property because of the payment of an occupation or business tax by the owner, it would doubtless be unconstitutional; and, if there may be two constructions of an act of the Legislature, one constitutional and the other unconstitutional, the former is to be preferred.

Error from Superior Court, Polk County; R. W. Freeman, Judge.

Action by the Georgia Fire Insurance Company against the City of Cedartown and others. Judgment for defendants, and plaintiff brings error. Affirmed.

Chas G. Janes and Bunn & Bunn, for plaintiff in error.

J. L Tison, Trawick & Ault, and John K. Davis, for defendants in error.

LUMPKIN J.

The Georgia Fire Insurance Company filed a petition seeking to enjoin the mayor and council of Cedartown from collecting ad valorem taxes on certain personal property consisting principally of notes, mortgages, securities, and money. The injunction was denied, and the plaintiff excepted. Two controlling questions are presented in this case: (1) Was the evidence on the question as to where the principal office of the company was located relatively to liability to taxation sufficient to authorize the presiding judge to deny the injunction? (2) If the principal office of the company was located in Cedartown in 1908, was the complainant relieved from the payment of an ad valorem tax on its personal property by section 6 of the general tax act of 1907 (Acts 1907, p. 37)?

In Civ. Code, § 2008, which makes provision in regard to the incorporation of insurance companies in this state, one requirement is that the petition for incorporation shall state that the applicants "have given thirty days' notice of their intention to apply for said charter, by the publication of said petition in the newspaper publishing the legal advertisements of the county where the principal office of said company is to be located, once a week for four weeks before the filing of said petition." The statements of the petition are required to be verified by affidavit. This shows a location in a particular county, and thus indicates the domicile of the corporation there; but the law makes no requirement for naming in the petition for incorporation a particular house or locality in the county as the home of the company. Relatively to the question of liability for taxation, if it has two offices or places for the transaction of business in that county, the question which is the principal office is one of substance and of fact, rather than one of mere declaration. A corporation may establish its principal office at a place within the county, inside of a municipality or outside of it. So an individual may live without the limits of an incorporated town, although he may transact business therein. If his residence is outside of the incorporation, personal property which would be considered as located at the place of his residence would not be subject to municipal taxation. But, if an individual actually lives in a city all the year round, he cannot escape municipal taxation on personalty by renting a room outside of the city, declaring it to be his home for the purpose of evading taxes, and going there and transacting business for an hour or two at a time two or three times a year. Neither can a corporation avoid municipal taxation, if its actual principal office is in a town or city in the county of its incorporation, where all of its business is transacted and its officers have their offices, by claiming as its principal office a place just outside the city or town, where valuable papers are kept in an iron safe, and meetings of stockholders or directors are held (though the by-laws permit them to be held elsewhere), but where no other business is transacted, and no agency is maintained, this being done with a view to nonpayment to the municipality of taxes on personal property. In Clark and Marshall on Corporations, § 293 (a), p. 768, it is said: "Where a corporation, for the purpose of evading taxation, states in its articles of association or certificate of incorporation that its principal place of business is in a certain place, when in reality it is located and does its business in another place, the latter place may be treated as its place of business for the purpose of taxation." Detroit Transportation Co. v. Board of Assessors, 91 Mich. 382, 51 N.W. 978; Milwaukee Steamship Co. v. Milwaukee, 83 Wis. 590, 53 N.W. 839, 18 L.R.A. 353; Detroit, etc., Ry. Co. v. City of Detroit, 141 Mich. 5, 104 N.W. 327. Where the law provides for naming the principal office or place of business in the articles of incorporation, it has sometimes been held that thus fixing such a place was conclusive; but even this has been doubted, if the statement was only for the purpose of evading taxation. Milwaukee Steamship Co. v. Milwaukee, 83 Wis. 590, 598, 53 N.W. 839, 18 L.R.A. 353.

In the case at bar the application for the charter did not have to fix the exact location of the principal office in Polk county, except as above stated. The meeting for organization took place at what is claimed to have been a temporary or branch office in Cedartown. One section of the by-laws provided that an annual meeting of the stockholders should be held "at their home office in Polk county, Ga., at the home of W. S. Coleman, one and one-quarter miles south of court-house, or with branch offices at Cedartown, or other places in Georgia as may be determined by the directors." Another section provided for meetings of the board of directors, but did not state in terms where they should take place. Another, which was headed, "Place of Meetings of Stockholders and Directors," stated that "the meetings of the stockholders and the board of directors, both regular and special, shall be held at the home office in Polk county, Georgia, or with the branch office at Cedartown or other places in Georgia." Still another provided that the president should appoint from the board of directors an executive committee, who should, in the interim between the meetings of the board of directors exercise the powers of such board in the ordinary course of business, that "said committee shall hold its meetings at Cedartown, Ga.," and have entire charge of all the investments of the company, as well as determining from time to time the company's financial policy, employing agents, making contracts, paying losses, and all things necessary to the conduct of...