National Bank of Commerce v. City of New Bedford
| Decision Date | 06 January 1892 |
| Citation | 155 Mass. 317,29 N.E. 532 |
| Parties | NATIONAL BANK OF COMMERCE ADAMS v. CITY OF NEW BEDFORD. ADAMS v. SAME. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Crapo Clifford & Clifford, for petitioners.
T.F Desmond, for respondent.
The petitioner appealed to the superior court under St. 1890, c 127, § 1, from the decision of the assessors of New Bedford refusing to abate any part of a tax upon its shares at a valuation of $120 per share of the par value of $100. The superior court sent the case to a commissioner to report the facts, and afterwards heard the case on the report without other evidence. It found as a fact from the report that for the purposes of taxation in this case the fair cash value of the shares at which they are required to be assessed by Pub.St. c. 13, § 8, was their market value as found by the commissioner, and ruled that upon the facts the assessors had no right to assess the stock upon the basis of the value as shown by the capital stock, the surplus fund, and the undivided profits, irrespective of the other evidence in the case, and that such assessment should be abated as to the excess above the fair cash value found to be the market value as first stated. This ruling was excepted to. Substantially the same point is presented another way by an exception to a refusal to rule that the assessors had a right to assess the stock upon the real worth of the property of the bank, all things considered.
The difference between the parties arises from findings by the commissioner that, assuming that the bank was to continue its business, the fair market value of the shares on May 1, 1890, was $102 per share, but that, assuming that it was to close its business, convert its assets into cash, and divide the cash among the shareholders, the fair value of each shareholder's interest was $126 per share, from which $6 is to be deducted for real estate. The discrepancy is accounted for by a loss of confidence in the management, and the fact that for some years the bank had paid low dividends.
The main question argued before us was whether the foregoing ruling and refusal were right. There is a strong argument that the respondent was not entitled to any ruling as to what the assessors had or had not a right to do, but that the only business of the superior court was to determine afresh on the facts and within the limits of its appellate action what a fair assessment would be, and what, if any, abatement is reasonable. Pub.St. c. 11, §§ 69, 71.
If, however, we are called on to go further, in order to see that the superior court did not adopt a false standard, we must notice that the court did not rule that under no circumstances would the assessors have had a right to assess on the basis mentioned, but only that it was wrong upon the facts found. One of the facts found is that in this case the fair cash value of the shares was their market value. Of course, the cash value of stock may be its market value, so that, putting the respondent's case at the highest, the petitioner must prevail upon the merits unless the court was not justified in its finding of fact by the commissioner's report.
The thing of which the fair cash value is to be found is the stock or shares of the corporation. Value refers to exchange. The cash value of an article is the amount of cash for which it will exchange in fact. That amount depends on the opinion of the public of possible buyers, or of that part of it which will pay the most. If, in their opinion, the stock is worth only $102 per share,--if that is all that the stock will sell for,--it is vain to show that the net value of the property of the corporation,--that is to say, the opinion of the public about a chief component element of the value of the stock, if uncontrolled,--logically leads to a different value for the stock. It has been recognized judicially that the value of the property and the value of the stock might differ for reasons which have been found to exist in this case. Com. v. Manufacturing Co., 12 Allen, 298, 302, 303; Com. v. Improvement Co., 98 Mass. 19, 22.
Moreover, if there seems to be a difference in the value of the stock when arrived at in the two ways under consideration, generally speaking, the effect of the value of the property of a corporation upon the value of its stock will be estimated more accurately by the interested and trained judgment of the market than it can be by a court. As a rule, the fair cash value of shares having a market is best ascertained by finding the price at which they sell in the market.
But in truth the commissioner's report discloses no difference in the value of the stock according as it is got at, one way or the other. The difference in the value found by him depends upon whether it is assumed that the corporation was to continue its business or was to be wound up. If it was to continue its business, $102 was the fair market value for a share,--that is to say, $102 was the full amount of...
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