Intermountain Agricultural Credit Association v. Payette County

• Decision Date: 24 March 1934
• Docket Number: 6080
• Citation: 54 Idaho 307,31 P.2d 267
• Parties: INTERMOUNTAIN AGRICULTURAL CREDIT ASSOCIATION, a Corporation, Appellant, v. PAYETTE COUNTY and O. E. BOSSEN, Assessor of Said County, Respondents
• Court: Idaho Supreme Court

31 P.2d 267

54 Idaho 307

INTERMOUNTAIN AGRICULTURAL CREDIT ASSOCIATION, a Corporation, Appellant, v. PAYETTE COUNTY and O. E. BOSSEN, Assessor of Said County, Respondents

No. 6080

Supreme Court of Idaho

March 24, 1934

TAXATION-CORPORATE SHARES-EXEMPTIONS-PLACE OF TAXATION.

1. Credit association maintaining principal place of business and keeping records within county held located within county for purposes of taxation (I. C. A., sec. 61-1401).

2. Credit association loaning only to dairymen who were members of co-operative creamery, but who loaned on chattel mortgages, held engaged in business in competition with banks, and hence its capital stock was taxable (I. C. A secs. 61-1401 to 61-1507).

3. Express exemption of building and loan associations from tax on capital stock for engaging in business of making loans and investments held not to exempt credit association engaged in business of loaning on chattel mortgages, since exemptions are strictly construed against taxpayer (I. C. A., secs 61-1401 to 61-1507).

4. Shares of corporate stock held taxable at corporation's principal place of business without regard to residence of owners of shares (I. C. A., secs. 61-1401 to 61-1507).

APPEAL from the District Court of the Seventh Judicial District, for Payette County. Hon. A. O. Sutton, Judge.

Cross-appeals by appellant from portion of judgment sustaining a tax on corporate shares owned within the state, by respondents from portion of judgment invalidating tax on corporate shares owned outside the state. Affirmed in part and reversed in part.

Judgment modified; costs awarded to respondents.

Freehafer & McClure, for Appellant.

In support of specification of error No. IV, we call the court's attention to the decision of your court on July 31, 1930, holding that shares of stock are personal property of individual stockholders, as regards taxation. (Utah Mortgage Loan Corp. v. Gillis, 49 Idaho 676, 290 P. 714; 7 R. C. L., p. 169, sec. 166; First Nat. Bank of Boston v. State of Maine, 284 U.S. 312, 52 S.Ct. 174, 76 L.Ed. 313.)

Also the questions of personal property and its situs for taxation and for inheritance are discussed by this court in the following cases: Vansickle v. Hazeltine, 29 Idaho 228, 158 P. 326; State ex rel. Peterson v. Dunlap et al., 28 Idaho 784, 156 P. 1141, Ann. Cas. 1918A, 546.

Bert H. Miller, Attorney General for the State of Idaho, and John T. Kenward, Prosecuting Attorney for Payette County, for Respondents.

A state may tax shares of stock in domestic corporations owned by nonresidents. (Cooley on Taxation, 4th ed., sec. 462, p. 1027; Corry v. Baltimore, 196 U.S. 466, 25 S.Ct. 297, 49 L.Ed. 556; Hawley v. Malden, 232 U.S. 1, 34 S.Ct. 201, 58 L.Ed. 477.)

For the purposes of taxation, the situs of shares of stock may be separated from the person of the owner, and the stockholder, even though a nonresident, may be taxed on account of his stock at the place where its situs is thus established. (Cooley on Taxation, 4th ed., sec. 462, p. 1027; Tappan v. Merchants' Nat. Bank, 19 Wall. 490, 22 L.Ed. 189; State v. Travelers' Ins. Co., 70 Conn. 590, 40 A. 465, 66 Am. St. 138.)

GIVENS, J. Holden and Wernette, JJ., and Winstead, D. J., concur.

OPINION

GIVENS, J.

On the second Monday in January, 1931, the appellant had outstanding 1132 shares of common stock and 83 shares of preferred stock owned by residents of Payette county, Idaho; 717 shares of common stock and 209 shares of preferred stock owned by residents of Idaho outside of Payette county; and, 32 shares of common stock and 124 shares of preferred stock owned by nonresidents of Idaho. On that day under sections 61-1401 to 61-1507, I. C. A., the assessor of Payette county assessed all of the shares of stock as in Payette county.

The trial court sustained the assessment of shares of stock owned within the state, but not of the shares owned outside of the state. The county and the assessor appealed from the latter portion of the judgment. The association appealed from the former portion of the judgment, first, on the ground that it was not a resident of Payette county.

Section 61-1401, I. C. A., provides:

"The shares of capital stock of any bank, . . . . or of any building and loan association, trust company or surety and fidelity company organized under the laws of this state and doing business within this state, shall be assessed for taxation where such bank, company, association or other corporation is located and not elsewhere, as in the same manner and upon the same basis of actual value, and uniformly with all other property assessed in the county in which such shares of capital stock are assessed, . . . . "

Appellant's principal place of business is at Payette, while it has some subsidiary offices in other towns where payments are received all records are kept at Payette. No office was ever maintained at Boise. Under these circumstances within the evident intent and meaning of the statute, and for taxation purposes, the corporation is located at Payette.

"A share of bank stock may be in itself intangible, but it represents that which is tangible. It represents money or property invested in the capital stock of the Bank. That capital is employed in business by the bank, and the business is very likely carried on at a place other than the residence of some of the shareholders. The shareholder is protected in his person by the government at the place where he resides; but his property in this stock is protected at the place where the bank transacts its business. . . .

"We have not felt called upon to consider whether the General Assembly could, under the provisions of the Act of Congress, provide for the taxation of the shareholders at any other place within the state than that in which the bank is located. It is sufficient for the purposes of this case that it might tax them there." (Tappan v. Merchants' Nat. Bank, 86 U.S. 490, 19 Wall. 490, 22 L.Ed. 189. To the same effect see: Portsmouth Tp. v. Cranage S. S. Co., 148 Mich. 230, 111 N.W. 749, 118 Am. St. 578; Detroit Transp. Co. v. Board of Assessors of City of Detroit, 91 Mich. 382, 51 N.W. 978; Home Fire Ins. Co. v. Benton, 106 Ark. 552, 153 S.W. 830; Inter-Southern Life Ins. Co. v. Milliken, 149 Ky. 516, 149 S.W. 875, L.R.A. 1917A 460; Woodsum Steamboat Co. v. Town of Sunapee, 74 N.H. 495, 69 A. 577; Georgia Fire Ins. Co. v. City of Cedartown, 134 Ga. 87, 67 S.E. 410, 19 Ann. Cas. 954.)

Appellant's second point is that the corporation is not in competition with banks; true the corporation loans only to "dairymen who were and are members of co-operative creameries . . . . " (designated) but, in other respects loans on chattel mortgages the same as banks.

Under similar circumstances the courts have held that the carrying on of such a business as appellant does here is the carrying on of a business in competition with banks.

"The restriction applies as well where the competition exists only with respect to particular features of the business of national banks or where moneyed capital 'is employed substantially as in the loan and investment features of banking, in making investments by way of loan discount or otherwise, in notes, bonds or other securities with a view to sale or repayment and reinvestment.' First...