Georgia R. & Banking Co. v. Wright

• Decision Date: 09 January 1906
• Citation: 53 S.E. 251,124 Ga. 596
• Parties: GEORGIA R. & BANKING CO. v. WRIGHT, Comptroller General, et al.
• Court: Georgia Supreme Court

53 S.E. 251

124 Ga. 596

GEORGIA R. & BANKING CO. v. WRIGHT, Comptroller General, et al.

Supreme Court of Georgia

January 9, 1906

Syllabus by the Court.

In a suit in equity in the Circuit Court of the United States, A and B. were nominally codefendants, though, in reality B.'s interests were adverse to those of A. and identical with those of the plaintiff. Judgment was rendered for the plaintiff, whereupon A. notified his codefendant to join in an appeal. This B. declined to do, expressing himself as content with the decree rendered; and A. then took an order allowing him to sever and appeal alone. On final trial in the United States Supreme Court the judgment of the trial court was reversed and the original bill dismissed; that in a subsequent action by B. against A., growing out of the same cause of action in the state courts, B. was estopped to set up any matter which was or might have been pleaded by him in his own substantial interest in the federal court.

A suit to enjoin the collection of taxes for one year is no bar to a suit to enjoin similar taxes for another year. This is so because the taxes for each year constitute a separate cause of action. (Lumpkin, J., dissenting.)

If there is any estoppel by judgment at all in this case, under the pleadings and decree in the record from the federal court, it extends not alone to the tax of one year, but to the taxability of the stock. Under the pleadings and evidence before it and the prayers of the bill, the decree of the Circuit Court of the United States contained the following "It is further ordered and adjudged that the said William A. Wright, Comptroller General, is without any authority of law to undertake to collect taxes upon said shares of stock, and is not authorized as Comptroller General so to do, and he is hereby perpetually enjoined from issuing any execution or taking any steps to collect said taxes upon said shares of stock, and that the said Georgia Railroad & Banking Company is enjoined from making any return of said shares of stock for the purpose of taxation, or from paying any taxes thereon, or doing any act or thing recognizing liability of said shares of stock to be taxed." This was the decree reversed by the Supreme Court of the United States. (Per Lumpkin, J.)

The case of Wright v. Southwestern R. Co., 64 Ga. 783 announced as the law of this state that the situs of stock in a foreign railroad corporation whose road was located outside of Georgia was in the state where the road was located, and that therefore the stock was not taxable in this state. That case was of binding statutory effect until the passage of the act approved October 20, 1885, which gave such stock a situs for purposes of taxation in Georgia.

Under the title "An act to provide for the correct returns of the property in this state for the purpose of taxation, and for other purposes" (Acts 1884-85, p. 30) the General Assembly could constitutionally enact that certain specified objects should be considered personal property for the purpose of taxation."

The failure of the compilers of the Code of 1895 to embrace therein the provisions of the act of 1885 (Acts 1884-85, p 30) referred to in the third headnote did not, in the absence of conflicting statutes in that Code, amount to a repeal by implication of the portion of the act referred; and that portion of the act is still the law of Georgia.

The failure of the taxing authorities to directly tax shares of stock in domestic corporations whose property is located in Georgia as property in the hands of the shareholders (the corporate property being taxed instead), while at the same time levying a direct tax upon shares of stock in foreign corporations whose property is outside the state belonging to citizens of Georgia, is not a denial to the holder of the foreign shares of the equal protection of the laws.

It is not in this case necessary to determine whether shares of stock in a domestic corporation in the hands of a stockholder are required to be taxed as such in order to comply with the uniformity clause of the Constitution. Nor is it necessary to determine, if domestic shares are taxable, whether it would be double taxation to assess them for taxation in the hands of the shareholder and also include them in the return made by the president of the corporation as required by law.

All property in the state, not exempt under the Constitution, must be taxed. Stock in corporations is property. When the corporate property is in Georgia, a tax upon it is in effect a tax also upon the stock. When the corporate property is outside the state and cannot be taxed, and the stock is held by a citizen of Georgia, the stock must be directly taxed as the property of the citizen. This is not a violation of the constitutional provision that "all taxation shall be uniform upon the same class of subjects, and ad valorem on all property subject to be taxed within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws." (Per Candler, J.)

The court below was fully authorized to find that in the administration of the law the policy of the state was not such as to deny to the plaintiff in error the equal protection of the laws.

The sections of the Political Code which prescribe the steps to be taken by the Comptroller General in the event of the failure of individuals or corporations to make returns for taxation are not restricted to cases where no return whatever is made, but apply equally to cases where property owned by the citizen and subject to taxation is withheld from the return.

The acceptance by the Comptroller General of a return from which taxable property of the citizen has been omitted does not bar the state of its right subsequently to proceed against the delinquent for the tax due on the omitted property.

The Georgia scheme of taxation requires the citizen to know what property owned by him is subject to taxation and contemplates that he will disclose it fully to the taxing officer. Every opportunity in the way of notices, protest, hearing, and arbitration is afforded him to correct any mistake of that officer and to obtain exact and even justice. To the defaulter no "machinery" is furnished for the correction of his own error. He is entitled to no notice, hearing, or arbitration; but the officer is required, from the best information obtainable, to ascertain the value of the property and assess it accordingly. This scheme of taxation is not unconstitutional.

It does not appear that the Comptroller General, who, in arriving at the value of the property taxed, was only obliged to proceed upon "the best information he could procure," made an excessive assessment.

The fact that the plaintiff in error made annual statements showing its ownership of the stock sought to be taxed, and that these statements were accessible to the Comptroller General, does not bar the right of the state to collect the tax on the stock for the years when it was not returned.

Until the passage of the act approved November 11, 1889 (Laws 1889, p. 31), taxes did not bear interest in this state.

The assessments made showed on their face every jurisdictional fact necessary to authorize the Comptroller General to proceed thereunder.

A statement made to the taxing officer "for the purpose of furnishing the office of the Comptroller General with information sought by said office, and not for the purpose of making a return of property for state taxation," cannot be treated as in any sense a return.

Section 3777 of the Civil Code of 1895, providing a bar for the state in certain cases when the citizen would under like circumstances be barred, is in derogation of the common law and of the right of the state to exercise its sovereign power of taxation, and should be strictly construed.

Section 3775 of the Civil Code of 1895, providing an equitable bar in cases where "from the lapse of time and laches of the complainant, it would be inequitable to allow a party to enforce his legal rights," is not available to a complainant in an equitable proceeding to enjoin the enforcement of a purely legal right.

A tax is not a debt in the sense that it will be barred by a statute of limitations against "actions upon open account, or for the breach of any contract not under the hand of the party sought to be charged, or upon any implied assumpsit or undertaking."

The act of 1887 (Pol. Code 1895, § § 890, 891), when construed as a whole, provides a statute of limitation against the right of the state and its subordinate public corporations to enforce a lien for taxes. Such a lien is barred, not only by a failure to have the proper entries made on the tax execution and recorded as required by the act, but also by a failure to issue the tax execution within seven years from the date that such execution may be lawfully issued. The lien of the state or its subordinate public corporations is to this extent placed by the act above referred to fully under the operation of the "dormant judgment act." (Candler, J., dissenting.)

Sections 890 and 891 of the Political Code of 1895 interpose a bar to the enforcement of claims for taxes only after they have been placed in execution, and do not apply to the state's claim for taxes before an execution has been issued. (Per Candler, J.)

The statute of limitations does not run against the state during the time that the Comptroller General was enjoined by the federal court from issuing any executions for taxes on the stock in dispute.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Suit by the Georgia Railroad & Banking Company against William A Wright, as Comptroller General, and others, to enjoin the enforcement of executions issued for...