New Orleans Securities Co., Inc. v. City of New Orleans

• Decision Date: 04 January 1932
• Docket Number: 31442
• Citation: 173 La. 1097,139 So. 635
• Court: Louisiana Supreme Court
• Parties: NEW ORLEANS SECURITIES CO., Inc., v. CITY OF NEW ORLEANS et al

139 So. 635

173 La. 1097

NEW ORLEANS SECURITIES CO., Inc., v. CITY OF NEW ORLEANS et al

No. 31442

Supreme Court of Louisiana

January 4, 1932

Rehearing Denied February 1, 1932

Appeal from Civil District Court, Parish of Orleans; Wm. H. Byrnes Judge.

Action by the New Orleans Securities Company, Incorporated, against the City of New Orleans and another. From judgment for plaintiff, defendants appeal.

Affirmed, after correcting clerical error.

Michel Provosty, City Atty., and Francis P. Burns, Asst. City Atty. both of New Orleans, for appellant city.

Rene A. Viosca, of New Orleans, for appellant Louisiana Tax Commission.

Leslie P. Beard and Harry P. Sneed, both of New Orleans, for appellee.

OPINION

OVERTON, J.

There appears on the tax rolls of the state and of the city of New Orleans, as a basis for the taxes of 1930, an assessment against plaintiff, described as credits, bills receivable, judgments, etc., amounting to $ 355,000. The purpose of this suit is to cancel the assessment on both rolls as illegal.

In the year named, plaintiff filed with the Louisiana tax commission a report showing credits, consisting of bills and accounts receivable, amounting to $ 436,190, and bills and accounts payable, amounting to $ 875,993. It is obvious that the bills payable are more than sufficient to offset the bills and accounts receivable. Plaintiff attached a copy of the report to its return to the board of assessors of the parish of Orleans. This was done on February 18, 1930. Of the bills payable, approximately the sum of $ 772,000 was payable to the New Orleans Bank & Trust Company for loans made by it to plaintiff, and approximately $ 100,000 for a loan madeto plaintiff by a New York bank.

The Louisiana tax commission refused to authorize the offset of the bills receivable by the bills payable, because the bills payable to the New Orleans and New York banks were not subject to taxation and were not assessed, and therefore to permit the offset would be granting, in effect, an exemption from taxation, not authorized, but rather prohibited, by the Constitution of this state.

The assessment is governed by Act No. 24 of 1918 (Ex. Sess.), page 35, in connection with which must be considered section 4 of article 10 of the Constitution of 1921, as amended in 1926, the amendment appearing at the close of the acts of 1926, on page 17 of the constitutional amendments of 1926. There must also be considered, in connection with the act of 1918, article 230 of the Constitution of 1913, under which the act of 1918 was passed, and incidentally Act No. 14 of 1917 (Ex. Sess.). Act No. 24 of 1918, Ex. Sess., omitting the repealing clause, reads as follows, to wit:

"All credits, including open accounts, bills receivable, judgments and all promissory notes not exempt from taxation shall be assessed in the same manner as all other personal property, but shall be off-set and lessened by the actual bona fide accounts payable, bills payable and other liabilities of a similar character and which are not exempt from taxation, of the corporation, partnership, firm or individual in whose name the said credits are assessed, provided, that any indebtedness due by branch houses or subsidiary corporations to the parent company or corporation, or by corporations, the majority of whose capital stock is owned and controlled by another corporation, or by its stockholders, engaged in the same business, due to that other corporation so owning its capital stock, shall not be so deducted, and, provided further that the provisions of this act shall not apply to the assessment of banks and trust companies." (Italics ours.)

The section of the Constitution of 1921, which must be considered in connection with Act No. 24 of 1918 (Ex. Sess.), namely, section 4 of article 10, as amended in 1926, contains many exemptions from taxation. That part of the section, which has any bearing whatever on the assessment reads as follows:

"The following property, and no other, shall be exempt from taxation: * * *

" Cash on hand or on deposit; loans or other obligations secured by mortgage on property located exclusively in the State of Louisiana, and the notes or other evidence thereof; loans by life insurance companies to policyholders, secured solely by their policies; loans by homestead associations to their members, secured solely by stock of such associations; debts due for merchandise or other articles of commerce or for services; obligations of the State or its political subdivisions. * * *"

The act of 1918 must also be considered in connection with the Constitution of 1913, for it was under that Constitution that the act was passed. The Constitution of 1913 contains an article, namely, article 230, which, as far as pertinent, reads:

"The following shall be exempt from taxation, and no other, viz.: * * * There shall also be exempt, from taxation, loans made upon the security of mortgages granted upon real estate situated in this State, as well as the mortgages granted to secure said loans, and the notes, bonds or other written instruments evidencing the said loans, whether in the hands of the mortgagee, or his or their transferees; and all loans made by life insurance companies to their policyholders, upon the sole security of policies held by the borrower in the company making the loans, as well as all notes or other written instruments, evidencing such loans; provided, that in the case of loans upon policies of life insurance, as aforesaid, the rate of interest charged upon such loans does not exceed five per cent (5%) per annum discount."

By Act No. 52 of 1914, adopted by the people, as a constitutional amendment in November of that year,...