Household Finance Corp. v. Robertson
| Decision Date | 14 January 1963 |
| Docket Number | No. 49227,49227 |
| Citation | 364 S.W.2d 595 |
| Parties | HOUSEHOLD FINANCE CORPORATION, a Corporation, Respondent, v. James M. ROBERTSON, J. Ralph Hutchison, and John A. Williams, as Members of the State Tax Commission of the State of Missouri; M. E. Morris, Director of Revenue, State of Missouri; and Milton Carpenter, as Treasurer of State of Missouri, Appellants. |
| Court | Missouri Supreme Court |
Thomas F. Eagleton, Atty. Gen., Joseph Nessenfeld, Asst. Atty. Gen., Jefferson City, for defendants-appellants.
Floyd E. Britton, Hubachek & Kelly, Chicago, Ill., E. R. Morrison, John A. Morrison, John R. Gibson, Morrison, Hecker, Cozad & Morrison, Kansas City, for respondent.
Defendants, respectively, the three members of the State Tax Commission, the Director of Revenue and the Treasurer of the State of Missouri, have appealed from a summary judgment of the Circuit Court of Cole County declaring void certain assessments for Missouri corporation franchise taxes against plaintiff, granting an injunction against enforcement of the collection of said portion of the taxes based upon said assessments and an injunction against any future assessment of such taxes against plaintiff by use of the same method.
Plaintiff's petition alleged and the trial court, among other findings adverse to defendants, held that the uniform method of assessment of such franchise taxes adopted by the Missouri State Tax Commission deprived plaintiff of its property without due process of law in violation of the Fourteenth Amendment to the Constitution of the United States and Article I, Section 10, of the Constitution of Missouri, V.A.M.S. Consequently, this court has exclusive jurisdiction of the appeal because construction of certain of the revenue laws of the State is involved, state officers as such are parties, and the case involves construction of the Constitutions of the United States and of this State. Article V, Sec. 3, Constitution of Missouri, V.A.M.S.
The specific questions for determination rest primarily upon the purview and meaning of that portion of Sec. 147.010 RSMo 1959, V.A.M.S., relating to the franchise tax imposed upon foreign corporations doing business in this state, as supplemented by Sec. 147.030. That portion of Sec. 147.010 in material substance reads:
'Every foreign corporation engaged in business in this state * * * shall pay an annual franchise tax to the state of Missouri equal to one-twentieth of one per cent of the par value of its outstanding shares and surplus employed in business in this state, * * * and for the purposes in this chapter such corporation shall be deemed to have employed in this state that portion of its entire outstanding shares and surplus that its property and assets in this state bear to all its property and assets wherever located.'
It should also be borne in mind that the first portion of Sec. 147.010 makes identical provisions for payment of franchise taxes by domestic corporations; and that Sec. 147.030 in material substance reads:
Defendants' basic contention is that implicit in the second clause of the above quoted portion of Sec. 147.010 is the meaning: '* * * and for the purposes in this chapter such corporation shall be deemed to have employed in this state that portion of its entire outstanding shares and surplus that its property and assets [employed] in this state bear to all its property and assets wherever located.' Plaintiff insists that the fact that the Legislature did not include the above bracketed word 'employed' in the second clause of Par. 2 of Sec. 147.010 shows that had the Legislature intended the phrase 'property and assets in this state' to mean 'property and assets employed in this state', it had but so to say; and that, therefore, the omission indicates a conscious intention on the part of the Legislature that the word 'employed' should be omitted.
The trial court, on motion of plaintiff, rendered summary judgment under S.Ct. Rule 74.04, V.A.M.R., on the theory there was no genuine issue as to any material fact. The facts, therefore, are the allegations of the petition as admitted by and pleaded in the answer and in an affidavit and supplemental affidavit filed on behalf of plaintiff.
Plaintiff is a Delaware corporation with its principal place of business and administrative office in Chicago. It is engaged in the business of loaning money. It is authorized to do business in Missouri and, pursuant to such authorization, owns and operates 17 local branch loan offices in Missouri. It also owns all of the capital stock of numerous subsidiary corporations, seven of which are authorized to do business in Missouri, each of which is organized under the laws of Delaware, has its principal office in Chicago and operates a separate loan office in this state.
In February, 1959, plaintiff filed its corporation franchise tax report, which showed, as of December 31, 1958, property and assets in the State of Missouri of the value of $12,444,391.98. According to the report, these assets consisted of cash in the amount of $111,017.16, loans receivable in the amount of $12,231,403.87, office furniture and fixtures in the amount of $75,167.27, and deferred charges in the amount of $26,803.08. Attached to the report was the general balance sheet of plaintiff corporation, showing its total assets, wherever situated, in the aggregate amount of $579,899,711.46, as of December 31, 1958. Among other items, the balance sheet showed cash in the amount of $26,601,884.74. It also showed plaintiff's investment in subsidiaries (including the seven operating in Missouri) in the total sum of $261,333,611.36, consisting of advances and capital stock. Also, as shown by the pleadings, the total amount of interest-bearing advances (loans) made by plaintiff to the seven subsidiary corporations operating in Missouri, as of December 31, 1958, was $4,563,132.00 and plaintiff's investment in the capital stock of said seven subsidiary corporations was $560,000.00.
After the report was filed, the Commission calculated the total value of the property and assets of plaintiff employed in business in this state and necessarily to be included in fixing the franchise tax owed by plaintiff for the year of 1959, so that the total Missouri assets upon which the franchise tax was to be computed were increased from the reported figure of $12,444,391.98 to $18,595,385.00. As a result of that action, plaintiff's franchise tax for the year 1959 was increased by the Commission from $6,222.19 to $9,297.69. This increase was predicated upon computations made by the Commission with respect to three items:
(1) The item of cash employed in Missouri, which was shown on the report as $111,017.16, was increased to $1,138,879.00 by the use of the following formula: The Commission first found the percentage of loans receivable and tangible assets reported by plaintiff as part of its Missouri assets as compared to like items in plaintiff's total balance sheet. This percentage, .042812, was applied to the entire amount of plaintiff's cash, wherever physically located, shown in plaintiff's total balance sheet; and the amount of cash thus computed was substituted for the amount of cash in Missouri reported by plaintiff in its 1959 franchise tax report.
(2) The sum of $560,000.00, comprising plaintiff's investment in the capital stock of its seven wholly owned corporate subsidiaries operating in Missouri, was by the Commission added to the amount shown in plaintiff's return for the reason that all of said capital stock of said seven subsidiaries was acquired by plaintiff at the time of the organization of these corporations. In this connection, it was admitted and agreed that all of the transactions incident to the creation of these corporations took place entirely within the State of Illinois; that the stock in each instance was subscribed for at the time of the organization of these corporations pursuant to an agreement made in Illinois and payment for and delivery of the stock certificates to plaintiff were made in that state; that the money paid as the purchase price of said shares of stock, which was used in Missouri, was taken to this state by the subsidiaries and constituted capital employed by said subsidiaries in Missouri; and that the stock certificates have remained in the possession of plaintiff in Chicago ever since their receipt.
(3) The sum of $4,563,132.00 which constituted the advances made by plaintiff to its seven subsidiaries, organized under the laws of Delaware and operating in Missouri, was by the Commission added to plaintiff's return for the reason that plaintiff admitted that these 'advances' constituted interest-bearing loans which the subsidiaries bacame obligated to pay to plaintiff on demand and on which they do pay interest. In this connection, it was also admitted and agreed that all transactions relating thereto were negotiated, agreed to and performed by the officers and agents of plaintiff and the respective subsidiaries in Chicago; that the money represented by these transactions was paid to said subsidiaries in Chicago; that the funds so borrowed, upon being transferred to Missouri by the subsidiaries, was employed by them, respectively, in their business in Missouri; that all payments of interest and principal made to plaintiff upon such advances were made to plaintiff in Chicago; that each of the seven subsidiary corporations filed its own franchise reports in Missouri for the years 1959 and 1960, in which it reported the market value of its property and assets in Missouri...
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