Harrison Naval Stores Co. v. Adams

• Decision Date: 31 March 1913
• Docket Number: 15,725
• Citation: 104 Miss. 381,61 So. 417
• Court: Mississippi Supreme Court
• Parties: HARRISON NAVAL STORES CO. v. WIRT ADAMS, REVENUE AGENT

61 So. 417

104 Miss. 381

HARRISON NAVAL STORES CO. v. WIRT ADAMS, REVENUE AGENT

No. 15,725

Supreme Court of Mississippi

March 31, 1913

APPEAL from the circuit court of Harrison county, HON. GEO. S DODDS, Special Judge.

Suit by Wirt Adams, state revenue agent, against the Harrison Naval Stores Company. From a judgment for plaintiff, defendant appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Ford White & Ford, W. J. Gex and R. W. Stoutz, for appellant.

Numerous objections filed to the assessments raise the various points discussed in this brief. Most of the points discussed apply to all the cases. It is easier and more orderly, and preventive of repetition in argument, to discuss them all in order, the application to the separate cases being simple and easy. Case No. , in which the circuit court sustained our contention, is distinguishable from the other cases in that the Union Naval Stores Company, the holder of the lease attempted to be assessed in that case for the fiscal year 1906, was, as shown by the agreed state of facts, in no sense domesticated or doing business in Mississippi at that time so as to give its intangible property a situs for taxation in Mississippi. A turpentine lease owned by a foreign corporation, if such a property right as to be taxable at all, is of that character falling within the maxim "mobilia sequuntur personam," and having no situs for assessment for taxation at any place other than the domicile of the owner. The case of Adams v. Colonial Mortgage Co., 83 Miss. 263, is, we submit, decisive of this particular case, and the judgment of the circuit court in that case should be affirmed.

These assessments are an ingenious attempt at double taxation and an attempted evasion of the plain decision of this court and other courts that turpentine leases are not separately taxable, because the owner of the property leased has already been assessed with and paid taxes on the entire property leased. Those authorities are hereinafter set out.

The chief appeal made by counsel for the revenue agent at the trial below as the reason why these assessments should be sustained was that a considerable element of wealth in the state was not paying taxes. While the argument is ingenious it is untrue in fact for one reason and not a good legal argument for another reason. In the first place it ignores the fact which is plainly shown by the record, that the owner of the land has already paid taxes on the entire value of the land including every use to which the land might be put embracing turpentine operations and all other operations. In the second place, it is no legal argument to say that some wealth escapes taxation against the owner. The courts recognize the principle that much wealth very properly escapes taxation. Everything not within the spirit and letter of the taxation scheme necessarily escapes. A lawyer's most valuable asset--his legal learning--is certainly an important item of his wealth, but it is not taxable. The good will of a mercantile business may be highly valuable, especially when location and reputation of the goods are factors of value, but such good will is not taxable. In some states, like Alabama at the present time, a liquor license may be more valuable than the cost of it. Many more applications are filed than are permitted to be granted by law; hence, every license granted under the present system of limited numbers is valuable enough to command a premium. This is the wealth paid for with money and used in money-making and is not taxable. Some of the so-called baseball "franchises," being the privilege of operating a "big-league" club in a large city, are worth hundreds of thousands of dollars, yet they are not taxable, although their exercise brings tremendous profits. In many states corporate franchises are not taxable. In the state of Mississippi timber may be taxed as standing timber on the first of February, and before the first of the next February it will be cut down and manufactured into lumber and made tenfold more valuable. This increase amounts to millions of dollars each year, and is not taxable. The entire cotton crop of the state of Mississippi uniformly escapes taxation. The crop is planted after the first of February and harvested before the first of next February. Probably ninety-nine per cent. of it comes into being and passes out of the state before the beginning of the next fiscal year. Only one per cent., or other small fraction, remaining in factorage warehouses, can be found for taxation. So there is nothing in that argument. Undoubtedly it is a proper legislative aim to tax all property as nearly as might be in the light of the desirability for certainty and a fixed time for assessment. No legislative wisdom ever accomplished the task of bringing all property under assessment for taxation without large omissions. It is also a settled principle that it is legislative wisdom to tax property but once. While double taxation may not be always or necessarily unconstitutional, the principle of double taxation is abhorrent and opposed to that fairness and uniformity which are the ultimate object of most taxation systems.

The views of this court on this important question are aptly expressed in the following language in the opinion of the court in the case of State v. Simmons, 70 Miss. 497:

"It seems to be conceded by counsel for appellant that the legislative purpose is and has been to tax both the capital stock of the company and also its real and personal property, and his argument is addressed to the right of the state to tax not only the property of the corporation and its stock, but, in addition thereto, to tax the shares of the stock to the stockholder. Our examination of the statutes has held to a conclusion which renders unnecessary a consideration of the question of the existence of this power. Whether the power does or does not exist, the rule of construction is universal that no such purpose is to be attributed to the state; and, to prevent such results, the courts will, as far as possible, without doing violence to the words of the law, restrain such provisions of statutes as apparently authorize a double burden to be laid upon the same property or persons. Keeping constantly in view the justice of equality of taxation, and assuming the legislative will to be that no other result shall be reached by the plan it provides, the courts have uniformly construed revenue acts, unless unequivocally and clearly expressing a different purpose, as intended to levy a single tax only upon the same property, even though the words of the law would ordinarily and naturally bear a broader and more general meaning."

Harris & Potter and S.W. Davis, for appellee.

The claim of the revenue agent is that the money employed by the Harrison Naval Stores Company in the turpentine business was subject to taxation, and he bases his right to subject it to taxation, on section 4266, Code of Mississippi of 1906, which is as follows:

"Every person, resident or nonresident, whether corporate or otherwise, and the agent of such nonresident, having money loaned at interest in this state, or employed in the purchase or discount of bonds, notes, bills, checks, or other securities for money, or employed in any kind of trade or business, shall be taxable for the same in the county in which such person may reside, or have a place of business, or be temporarily located at the time of the assessments," etc.

The question therefore, for this court to determine, is whether a person engaged in the business of manufacturing turpentine and rosin is engaged "in any kind of trade or business," and, if so, whether money employed in the purchase of turpentine leases for the purpose of carrying on that business is money "employed in any kind of trade or business," and, therefore, subject to taxation under the section of the Code above referred to.

The court will bear in mind that the entire discussion of the brief of counsel representing the appellants is upon the idea that the revenue agent was attempting to assess turpentine leases per se (this was done in one of the cases to be referred to later), and there devoted a good deal of time to citing authorities on the point that leases are not taxable.

In the case under immediate discussion, and in three others of the cases, the leases are referred to merely as evidence of the fact that the Naval Stores Company had that much money employed in the business which had escaped taxation.

The section of the Code of 1906, 4266, under which the revenue agent is proceeding, is section 3757 of the Code of 1892 which is an exact reproduction of section 497 of the Code of 1880, which is substantially article 23, page 76 of the Code of 1857.

This statute has received judicial interpretation and construction by this court in the following cases: Jahier v. Rascoe, 62 Miss. 699; State v. Smith, 68 Miss. 79; Adams, Revenue Agent, v. Mortgage Co., 82 Miss. 363, 392.

In all of these cases the property of nonresidents was sought to be subjected to taxation, and it is by virtue of this statute that solvent credits of all kinds and capital of money employed in business of all kinds have been for years subjected to taxation in this state. The statute is broad and sweeping in its provisions and applies broadly to money "employed in any kind of trade or business," and, as above stated, the contention of the revenue agent here is that money employed in the turpentine business is as much subject to taxation as money employed in any other business, whether that money be invested in notes, bonds, mortgages, or other securities, or any kind of personal property, including turpentine leases.

There seems to be no question on the part of c...