Merchants' Ice & Cold Storage Co. v. Commonwealth

• Decision Date: 17 June 1913
• Citation: 157 S.W. 717,154 Ky. 452
• Parties: MERCHANTS' ICE & COLD STORAGE CO. v. COMMONWEALTH.
• Court: Kentucky Court of Appeals

157 S.W. 717

154 Ky. 452

MERCHANTS' ICE & COLD STORAGE CO. v. COMMONWEALTH.

Court of Appeals of Kentucky.

June 17, 1913

Appeal from Circuit Court, Franklin County.

Action by the Commonwealth, by a revenue agent, against the Merchants' Ice & Cold Storage Company. From a judgment for plaintiff, defendant appeals. Reversed for further proceedings.

Gibson & Crawford, of Louisville, for appellant.

Arthur E. Hopkins, of Louisville, and McQuown & Beckham, of Frankfort, for the Commonwealth.

TURNER J.

Appellant is a domestic corporation engaged in manufacturing and selling ice, and in conducting a cold storage business in the city of Louisville.

This action was instituted against it by a revenue agent seeking to tax its total capital stock of $1,500,000 at the rate of 30 cents on each $1,000 thereof under the provisions of the revenue act of 1906. The petition alleges that under the act it was the duty of the defendant to file with the auditor of public accounts on or before the 1st day of February in each of the years of 1907, 1908, 1909, 1910, and 1911, a verified report showing, among other things, the total amount of its authorized capital stock, the value of the property owned and used by it in Kentucky and out of Kentucky, the aggregate amount of business transacted by it during the preceding year, and the proportion of such business transacted in Kentucky, in order that the auditor might ascertain the amount of taxes due by it, and that it failed in each of these years to file any such report; and it is alleged that said revenue act provides that such failure to so report shall be deemed conclusive evidence that such corporation so failing elects to pay such tax upon its entire authorized capital stock, and makes it the duty of the board of valuation and assessment to so fix its license tax, and alleges that it was so fixed by such board for each of the said years, that notice of such action of the board was given the defendant, and that it failed to appear before the board either in person or by attorney within 30 days thereafter and that thereupon the said assessment became final. The defendant answered denying its liability for the tax upon the ground that during each of the years named it was liable to pay, and did pay, to the state a license tax to carry on its business; and alleging further that its principal business was that of operating ice factories for the manufacture and sale of ice, and that its other business was merely incidental to and a part of the business of manufacturing ice, and that during each of the years named it paid to the state a separate annual license tax on each of its six ice factories in Jefferson county. To this answer a demurrer was sustained, and, the defendant declining to plead further, the court rendered a judgment against appellant for the full amount of the tax on its capital stock at 30 cents per $1,000 for each of the years named. The correctness of this ruling depends upon an interpretation of the statute, and brings us to the consideration of two questions: (1) Is appellant within the class of excepted corporations designated by the statute? (2) Even if that part of appellant's capital stock which is employed in the manufacture and sale of ice is exempt by reason of the payment of the license tax on the ice machines, is that part of its capital stock employed in the business of operating cold storage plants also exempt?

The two sections involved are sections 4189a and 4189c of the Kentucky Statutes, and are as follows, to wit:

"4189a. All corporations having capital stock divided into shares organized by or under the laws of this or any other state or government owning property or doing business in this state, except foreign insurance companies, whether fire life, accident, casualty or indemnity, foreign and domestic building and loan associations, banks and trust companies, and all corporations which, under this act or the general law, are liable to pay a franchise or license tax, shall pay to this state an annual license tax based upon its authorized capital stock, as hereinafter provided."

"4189c. Domestic and foreign corporations shall pay an annual license tax of thirty cents on each one thousand dollars of that part of their authorized capital stock represented by property

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