Judy v. Beckwith

• Decision Date: 15 January 1908
• Citation: 114 N.W. 565,137 Iowa 24
• Parties: JUDY, COUNTY TREASURER, v. BECKWITH ET AL.
• Court: Iowa Supreme Court

137 Iowa 24

114 N.W. 565

JUDY, COUNTY TREASURER,

v.BECKWITH ET AL.

Supreme Court of Iowa.

Jan. 15, 1908.

Appeal from District Court, Henry County; James D. Smyth, Judge.

The opinion states the material facts. Reversed.

McCoid & Finley and Ben McCoy, for appellant.

W. I. Babb, for appellees.

WEAVER, J.

The appellees are the executors of the will of Warren Beckwith, late of Henry county, Iowa. The question at issue is the liability of the estate of said Beckwithfor the payment of certain taxes. In July, 1906, after the death of the testator, the treasurer and auditor of the county instituted proceedings under the statute which provides for the collection of taxes on property omitted from assessment. Notice being duly served, the executors entered an appearance to said proceedings and made answer, alleging that the testator had listed and paid taxes upon all of the property owned by him and legally subject to assessment in Henry county during all of the period covered by said claim, and that the property now sought to be taxed, consisting of certain shares of stock in corporations organized and doing business in the state of Illinois, was taxable alone in that state and had in fact been there taxed. They also allege that the imposition of taxes upon said property as asked would operate to subject it to double taxation, in violation of the Constitution of the state of Iowa and of the Constitution of the United States. The objections thus raised being overruled, the property was listed for taxation, and the defendants appealed therefrom to the district court, where the matter was submitted upon certain records and an agreed statement of facts. The records to which reference is here made consist of the books, papers, and entries pertaining to the proceedings had for the listing and assessment of the alleged omitted property, and as they appear to be formal, and are not material for our consideration in disposing of this appeal, it is not necessary that we set them out at large. The agreed facts are as follows:

First. That Warren Beckwith died testate in the year 1905, and defendants are his executors, residing in said county; that said Warren Beckwith was a resident of Mt. Pleasant, Iowa, during all the years named up to time of his death, and his estate is being administered upon in Henry county, Iowa. Second. That said Warren Beckwith owned on January 1, 1902, 1903, 1904, and 1905, 1,710 shares of stock, at the par value of $100 each, in the Western Wheeled Scraper Company, a corporation solely engaged in manufacturing business and organized under the laws of Illinois and doing business at Aurora, Ill., which was its principal place of business, and where its manufacturing business was carried on; that his executors held the same shares on January 1, 1906; that the fair market value of said stock in each of said years was $100 per share; that said Warren Beckwith also owned on the 1st day of January, 1903, 1904, and 1905, 1,710 shares of stock in the Austin Manufacturing Company, of the par value of $100 each, which corporation was engaged solely in the business of manufacturing and was organized under the laws of Illinois, its principal place of business being at Harvey, Ill., where its manufacturing business was carried on; that his executors held the same stock on January 1, 1906; that the fair market value of said stock was, on the 1st day of January of each of said years, the sum of $50 per share. Third. That both of said corporations were duly assessed by the proper authorities in each of said years in Illinois, where their principal place of business was located, on all their property, including the shares of the capital stock and franchise, as required by the laws of Illinois, which laws are shown in chapter 120 of the Revised Statutes of Illinois, compiled and edited by Henry B. Hurd, and published by the Chicago Legal News in 1887, and the taxes so assessed were paid each of said years by said respective corporations; that the same has not been listed nor assessed at Henry county, Iowa, for either of said years.

Upon this showing the district court found for the defendants and entered a decree annulling the assessment of the corporate shares of stock owned by said estate. From this finding the plaintiff has appealed. The one question presented in argument is whether the shares of stock which the testator concededly owned and held in an Illinois corporation were taxable to him at his place of residence in Iowa. This question is negatived by the appellee on several grounds, which we will now consider.

1. It is said that the policy of this state has always been to tax the shares of capital stock to the corporation and not to the shareholder, and that it is a necessary extension of this policy to hold that shares issued by a nonresident corporation, which is subject to taxation in the jurisdiction where it is organized, should not be burdened with taxation in the hands of an owner of such shares in Iowa. An examination of our tax statute will not bear out this argument. By Code, § 1308, “corporation shares or stock not otherwise assessed or excepted” are expressly included in the enumeration of taxable property. By section 1310 “corporation shares or stocks” are again classed as taxable with moneys and credits and other securities. By section 1312 every inhabitant of the state is required to list for the assessor “all property subject to taxation in the state of which he is the owner.” Section 1313 provides that “corporate shares or stocks not otherwise assessed shall be listed and assessed where the owner lives, except as otherwise provided.” It will be seen from this statute, therefore, that it is the duty of every holder of shares of corporate stock to list the same for taxation, except in those instances where the statute has especially provided for its taxation in some other manner. Counsel seek to avoid this result in the following manner: They say in substance that the statute requires the owner to list only those corporate shares not otherwise assessed or otherwise taxed in kind, and as the shares now in question were assessed in Illinois they are therefore not taxable here. But this construction cannot be allowed. In the first place, as we shall hereinafter see, the shares owned by the testatorwere not assessed in Illinois. But even if that point be waived, and it be conceded that the shares were in fact assessed in Illinois, it cannot be presumed, at least in the absence of a clearly expressed purpose to that effect, that the Legislature undertook to relinquish in favor of another state its sovereign right to tax any and all property found within its jurisdiction. The plain and simple meaning of the language upon which appellees place reliance is not far to seek nor difficult to comprehend. The chapter in which it is found provides several different methods for assessing and taxing the property and shares of different classes of corporations. For instance, we find that shares of stock in manufacturing corporations organized in this state, where the corporate property is assessed in kind, are exempted entirely (Code, § 1319); shares in a national bank are made assessable only at the place where the bank is located (Code, § 1322); shares in corporations for pecuniary profit generally are made taxable at the principal place of business of each corporation (Code, § 1323); and shares in state and savings banks are assessable direct to the banks, and not to the shareholders (Code, § 1322). In view of these various provisions, the Legislature wisely sought to avoid confusion and possible double taxation by requiring the owner to list only such shares held by him as are not exempted, or assessed, or taxed in kind, under other provisions of the same statute. In other words, the apparent and reasonable intent of the Legislature was not to yield its taxing power to that of another state, but to harmonize the several provisions of our own scheme of taxation in such manner that, when a share of stock shall have once been properly assessed or exempted under one section of the statute, it shall not be subject to be taxed under another section. Without taking time for further reference to the statute, we feel entirely safe in the assertion that there is no existing legislation in this state which expressly or by implication excepts from the category of taxable property the shares of capital stock owned or held by residents of the state in a foreign corporation. On the contrary, the statutory provisions to which we have made reference very clearly require the assessment and taxation of all such property to the owner at his place of residence, unless we are to hold that as a matter of law the property has no situs within the statute, and is therefore beyond the territorial jurisdiction or power of our Legislature to provide for its taxation, or that the statute authorizing such taxation is obnoxious to some provision of the federal or state Constitution.

2. Bearing upon the first phase of this question, counsel for appellee say that shares of stock are in only a very limited and qualified sense to be classified as personal property, and are rather merely written evidence of the fact that the shareholder has a certain interest in the property of the corporation. While corporate shares possess some peculiar qualities and characteristics, we think that none have ever been discovered which take them out of the class ordinarily termed “personal property.” True, it is a property which is somewhat intangible in character, but scarcely more so than are those other items of property embraced in the familiar general term “moneys and credits.” For the purposes of taxation, as for most other purposes, all property may be classified in two great divisions--real estate and personalty. So far as we have been able to discover by reference to the almost innumerable cases bearing in some degree upon the...