Pratt v. Street Comm'rs of City of Boston

• Decision Date: 25 June 1885
• Citation: 2 N.E. 675,139 Mass. 559
• Parties: Robert M. Pratt v. Street Commissioners of the City of Boston
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

139 Mass. 559

2 N.E. 675

Robert M. Pratt v. Street Commissioners of the City of Boston

Supreme Judicial Court of Massachusetts

June 25, 1885

Argued March 5, 1885

Suffolk.

Petition for a writ of certiorari, to quash the proceedings of the respondents in refusing to abate a tax assessed upon the petitioner by the assessors of Boston as of May 1, 1884. The case was reserved for the consideration of the full court, by Field, J., upon the petition, answer, and an agreed statement of facts, and was as follows:

The petitioner filed a list of his estate with the board of assessors, in accordance with the Pub. Sts. c. 11. In answer to inquiries by the assessors, he stated that he owned on May 1, 1884, thirty-five hundred shares of the capital stock of the Mexican Central Railway, limited, -- a corporation duly organized on February 25, 1880, under the St. of 1879, c 274, for the purpose of building railroads in a foreign country, and now existing under the Pub. Sts. c. 112 §§ 225-229. The assessors refused to accept the list unless these shares were added thereto. The shares were thereupon added to the list, the petitioner reserving his right to contest the assessors' right to assess a tax upon them. The assessors assessed a tax of $ 714 on these shares, based upon an estimate of their value on May 1, 1884. A petition was thereupon filed with the respondents, and they refused to abate the tax, and dismissed the petition.

The corporation paid to the treasurer of the Commonwealth, for the year in which the tax was assessed to the petitioner, a tax of one tenth of one per cent on the whole amount of its capital stock, under the Pub. Sts. c. 13, §§ 43 46.

Petition dismissed.

F. Morison, for the petitioner. The only question in this case is whether a stockholder in a corporation organized under the St. of 1879, c. 274, (Pub. Sts. c. 112, § 225,) is liable to taxation on the value of his shares by the city or town in which he resides. If he is so taxable, it must be under the general words in the Pub. Sts. c. 11, § 4, where among other property subject to taxation are included "stocks in . . . . moneyed corporations, within or without the State." The section, however, concludes with the following proviso: "Provided, that no taxes shall be assessed in any city or town for state, county, or town purposes upon the shares in the capital stock of a corporation organized or chartered in the Commonwealth paying a tax on its corporate franchises, under the provisions of chapter thirteen for any year in which it pays such tax."

It is agreed that, for the year in which this tax is assessed, the corporation, whose shares of stock have been assessed, paid a tax on the whole amount of its capital stock, under the Pub. Sts. c. 13, §§ 43, 46.

The Pub. Sts. c. 112, § 229, make the corporation subject to c. 13, § 46. The last-named section provides that such a corporation "shall, for purposes of taxation, be subject to the provisions of section forty-three; but no other provisions of this chapter relating to the assessment of taxes upon corporations or the shareholders therein shall apply thereto."

Section 43 imposes upon the corporation a semiannual tax of one twentieth of one per cent upon the "capital stock at the par thereof."

A tax of this nature is clearly a tax upon the corporate franchise. Commonwealth v. People's Five Cents Savings Bank, 5 Allen 428. Oliver v. Washington Mills, 11 Allen 268, 274. Commonwealth v. Hamilton Manuf. Co. 12 Allen 298. Attorney General v. Bay State Mining Co. 99 Mass. 148, 152.

The provisions of the Public Statutes exempting shareholders in such corporations being so clear and unambiguous, it is unnecessary to consider whether, under the statutes as they previously existed, a shareholder in such a corporation was liable to taxation. If it be assumed that he was thus liable, those statutes have been expressly repealed, and whether it was or was not intended in the Public Statutes to change the law, the law has been changed. Baker v. Atlas Bank, 9 Met. 182, 197. Holbrook v. Bliss, 9 Allen 69, 76.

T. M. Babson, for the respondents.

W. Allen, Colburn, & Holmes, JJ., absent. Devens, J.

OPINION

Devens J.

Previously to the enactment of the Public Statutes, three modes of taxing corporate franchises and privileges, and shares of capital stock, existed. Most of the corporations chartered by the State, or formed under its general laws, paid annually a tax upon their corporate franchises at a valuation equal to the aggregate value of the shares in the capital stock at the market price as ascertained by the tax commissioner, and the individual holder of shares was not taxable after the corporations had paid this tax upon their franchises. St. 1865, c. 283, §§ 3-5.

A second class, which originally included corporations chartered by the Commonwealth or organized under its general laws for mining, or owning, purchasing, or selling mines or lands without the State, and also all such companies incorporated elsewhere as had an office or place of business within the Commonwealth for the direction of their affairs or the transfer of their shares, paid annually a tax of one tenth of one per cent upon the capital stock at the par value thereof. This was not a tax upon property, but was a fixed and arbitrary excise upon the corporate functions and privileges with which they were invested by the Commonwealth, or which, being created or authorized by another State, they were permitted to exercise here, this tax upon foreign companies being founded upon the consideration of their "having an office or place of business within the Commonwealth." St. 1865, c. 283, § 8. All these corporations were required by subsequent provisions to make a report of their property, receipts, and expenditures, products of their business, &c.; from which report or otherwise the tax commissioner was to ascertain the net profits or gains of each, and assess a tax of four per cent upon the amount thereof to the corporation. St. 1865, c. 283, §§ 9-11.

The St. of 1879, c. 274, provided for the formation of corporations to construct and operate railroads and telegraphs in foreign countries. The other provisions of this statute need not be considered. Section 6 provides that, for purposes of taxation, such corporations shall be subject to the provisions of section eight of chapter two hundred and eighty-three of the acts of the year 1865; but no other provisions of said act relating to the assessment of taxes upon corporations or the shareholders therein shall apply thereto. They were thus made subject to the franchise tax of one tenth of one per cent annually on their stock at its par value, which was a strictly arbitrary imposition in the nature of an excise. Although by the same section they were required to render annually to the tax commissioner a complete list of their shareholders, with their places of residence, the number of shares held by each, the amount of the capital stock, and the par and market value of the shares, they were not made subject to the tax upon profits imposed upon the corporations described in the St. of 1865, c. 283, § 8; nor were the provisions for ascertaining them, found in that chapter, made applicable to this class of corporations.

Under the law as it thus stood, it was never questioned, and we do not now understand it to be controverted, that the shares in corporations formed to build and operate railroads in foreign countries were taxable in cities or towns for State, county, city, or town purposes to the owners thereof; and that the tax on the corporation itself was strictly on its franchise, and not upon either its property or its profits.

The position of the petitioner is, that, whatever may have been the law at any previous time, since the enactment of the Public Statutes, which repealed the Sts. of 1879, c. 274, and 1865, c. 283, no tax can now be levied by the city of Boston, or other place where the owner thereof may reside, on his...