Gunkle v. O.

• Decision Date: 07 March 1925
• Docket Number: 26,023
• Citation: 118 Kan. 154,233 P. 803
• Parties: HULDA GUNKLE et al., Appellees, v. O. V. KILLINGSWORTH, as County Treasurer of Lyon County, Appellant
• Court: Kansas Supreme Court

233 P. 803

118 Kan. 154

HULDA GUNKLE et al., Appellees, v. O. V. KILLINGSWORTH, as County Treasurer of Lyon County, Appellant

No. 26,023

Supreme Court of Kansas

March 7, 1925

Decided January, 1925.

Appeal from Lyon district court; WILLIAM C. HARRIS, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

BUILDING AND LOAN ASSOCIATIONS--Rural-credit Loans--Exemption from Taxation--Constitutionality. Under chapter 96 of the Laws of 1915 (R. S. 17-1052, 17-1058), building and loan associations are authorized to issue rural-credit shares and invest the proceeds in rural-credit loans, and the legislature by the act provided and intended that such shares should be exempt from taxation. Held, that the provision for exemption was within the constitutional power of the legislature.

Roland Boynton, of Emporia, for the appellant.

Bennett R. Wheeler, S. M. Brewster, John L. Hunt, all of Topeka, and W. S. Kretsinger, of Emporia, for the appellees.

OPINION

JOHNSTON, C. J.:

The question involved in this controversy is whether rural-credit shares issued by building and loan associations are exempt from taxation.

The plaintiffs are the owners of rural-credit shares of the Mutual Building and Loan Association to the value of $ 3,500, and of like shares in the Citizens Building and Loan Association of the value of $ 4,000. In the assessment of 1924 the assessor entered these shares upon the assessment rolls for taxation. The plaintiffs made an application to the board of county commissioners to strike them from the rolls, contending that the shares were exempt from taxation, but that tribunal refused to cancel the assessment. This proceeding was begun to enjoin the collection of the taxes on the rural-credit shares, with the result that the trial court upheld the contention of plaintiffs and determined that the shares were exempt from taxation.

A general provision of the statute is to the effect that each building and loan association shall return for assessment and taxation the value of its office furniture and fixtures; also the value of its assets in excess of the cash surrender value of its withdrawal shares, deducting therefrom the assessed value of any real estate to which the association holds title and in which its surplus and assets had been invested, such real estate to be assessed as other real estate is assessed. (R. S. 79-326.) In the succeeding section it is provided, in substance, that a shareholder in such an association shall individually list for taxation the cash withdrawable value of all shares of stock held by him except those upon which there is an indebtedness to the association secured by mortgage or pledged as collateral, and the withdrawable value of such shares shall be listed at such value less any bona fide indebtedness secured thereby. (R. S. 79-327.)

Later, and in 1915, the legislature inaugurated a new policy and system as to rural credits, and provided for an exemption of such credits from taxation. The act was entitled:

"An act authorizing building and loan associations to issue rural-credit shares and invest the proceeds in rural-credit loans, and regulating such shares and loans." (ch. 96.)

It provided:

"Building and loan associations incorporated under the laws of the state of Kansas may issue rural-credit shares on which a definite or agreed rate of interest or dividends may be paid. All dividends thereon shall be distributed semiannually. Payment on said shares and the withdrawal of the amount credited to same or any part thereof may be made in accordance with the provisions of the by-laws of the association, but subject to the building-and-loan laws of Kansas with reference to notice of withdrawal and the amount to be used in any one month for such purposes. No interest or dividend shall be forfeited on any sum withdrawn on such shares except such interest or dividend as may have accrued since the dividend date immediately preceding the date of withdrawal. No entrance fees, premiums, fines, fees or penalties shall be charged on any such shares.

"Any association issuing such shares shall, whenever possible to do so with proper security, invest the amount to the credit of such shares in first-mortgage rural-credit loans on farms in the state of Kansas within the county in which such association is located: Provided, however, That any money remaining undisposed of may be invested in such securities as are now permitted for the investment of the surplus funds of...