Ramsey v. Investors Diversified Services
| Decision Date | 16 April 1952 |
| Docket Number | No. 10035,10035 |
| Citation | 248 S.W.2d 263 |
| Parties | RAMSEY et al. v. INVESTORS DIVERSIFIED SERVICES, Inc. |
| Court | Texas Court of Appeals |
Price Daniel, Atty. Gen., C. K. Richards, Asst. Atty. Gen., for appellants.
McGown, McGown, Godfrey & Logan, Harry L. Logan Jr., R. W. Decker, all of Fort Worth, by Harty L. Logan, Jr., for appellee.
Appellee sued the Secretary of State, the State Treasurer and the Attorney General, in their official capacities (herein referred to as the State) to recover $55,699.79 paid under protest, Article 7057b, Vernon's Ann.Civ.Stat. This amount had been assessed as additional franchise taxes due under Article 7084, Vernon's Ann.Civ.Stat., and which assessment was for the years 1943 through 1948, both inclusive.
The trial court awarded appellee a recovery of $55,177.86 and interest, and awarded the State a recovery of $521.93.
Appellee is a Minnesota corporation with its home office in Minneapolis. In 1941, it was issued a permit to do business in Texas, for the following purposes:
'* * * to accumulate and loan money; to sell and deal in notes, bonds and securities; to act as Trustee under any lawful express trust committed to it by contract, and as agent for the performance of any lawful act; to subscribe for, purchase, invest in, hold, own, assign, pledge and otherwise deal in and dispose of shares of capital stocks, bonds, mortgages, debentures, notes and other securities or obligations, contracts and evidences of indebtedness of foreign or domestic corporations not competing with each other in the same line of business, to borrow money or issue debentures for carrying out any or all purposes above enumerated.' Art. 1303b, Vernon's Ann.Civ.Stat.
Also, appellee complied with Article 696, Vernon's Ann.Civ.Stat., by depositing with the Secretary of State $100,000 in United States Treasury bonds, and with Article 1524a, Vernon's Ann.Civ.Stat., by making deposits of collateral securities with the Second National Bank of Houston, Texas, as Trustee.
Appellee filed annual franchise tax returns with the Secretary of State for the years 1943 through 1948, and paid the amount of money due as reflected by those returns. The amount of money so paid is not in issue here. In 1949, the Secretary of State issued and delivered to appellee a 'State of Texas Delinquent Franchise Tax Notice' for the years 1943 through 1948, showing delinquent franchise taxes due for those years amounting to $55,699.79.
Appellee tendered to the Secretary of State amended franchise tax returns for each of the years involved which showed no business done in Texas for those years. The Secretary of State refused to accept or to file the amended returns and appellee then paid the amount of taxes alleged to be due and filed the following written protest to such payment:
'This payment is made under protest for the following reasons:
'(1) In computing the franchise tax alleged to be due, the State of Texas has erroneously included certificates and contracts of Investors Syndicate to the extent of their cash surrender value as 'outstanding bonds, notes and debentures'. Such method of computation is in error in that:
'(a) Such certificates and contracts are not in whole or in part 'outstanding bonds, notes and debentures' as such terms are used in Article 7086, Texas Revised Civil Statutes, and
'(b) Such certificates and contracts are not in whole or in part 'outstanding bonds, notes and debentures' or 'written evidence of indebtedness' which bear a maturity date of one year or more from date of issue, nor have such certificates or contracts been renewed, extended or refinanced.
'(2) In computing the franchise tax so alleged to be due, the State of Texas has erroneously included interstate transactions as 'business done in Texas' in that:
'(a) All receipts from certificate and contract sales by Investors Syndicate, now Investors Diversified Services, Inc., during the periods in question were interstate transactions and were not 'business done in Texas' within the meaning of such phrase as used in Article 7084, Texas Revised Civil Statutes. Such certificate and contract sales are under the methods employed by the State of Texas in arriving at the amount of such alleged tax erroneously deemed 'business done in Texas'.
'(b) All mortgage loan transactions, involving mortgages on Texas assets, consummated by Investors Syndicate, now Investors Diversified Services, Inc., during the periods in question, were interstate transactions and were not 'business done in Texas' within the meaning of such phrase as used in Article 7084, Texas Revised Civil Statutes. In computing the tax so alleged to be due the State of Texas has erroneously included all such mortgage loan transactions as 'business done in Texas'.
'(c) Investors Syndicate, now Investors Diversified Services, Inc., did not engage in any intrastate business in Texas in any of the periods in question. In this connection in its original franchise tax returns for the periods here in question, Investors Syndicate erroneously included as 'business done in Texas' certain amounts as therein shown. All of such amounts consisted of certificate and contract sales and mortgage loan transactions, each of which in reality was an interstate transaction. Investors Syndicate has heretofore tendered to the Secretary of State amended franchise tax returns, correctly reflecting no 'business done in Texas' in any period here in question. The Secretary of State has refused to accept or file said amended returns. Said amended returns are attached hereto as a part of this protest and are marked 'Exhibit A' for identification.
'(d) All transactions, which in computing the franchise tax alleged to be due, the State of Texas has considered as 'business done in Texas' were in fact interstate transactions.
'(e) The Secretary of State has erroneously refused to accept or file the above referenced amended franchise tax returns, which are attached hereto and marked 'Exhibit A' for identification.'
The business done by appellee was: (1) the issuance and sale of 'Installment Investment Certificates' to residents of the State of Texas, and (2) the making of loans on real estate located in Texas. The investment certificates were sold and issued in the following manner. Divisional managers and sales representatives of appellee (later referred to as agents) in Texas maintained their own offices at their own expense and were paid by commissions on sales. These agents solicited applications for the purchase of investment certificates, received such applications and collected the initial installment payment from Texas residents. The application and payment were forwarded by the agents to appellee at Minneapolis where the necessary book entries as to the certificate were set up and kept. Upon acceptance of the application, the certificate was issued and forwarded to the local agent for delivery to the purchaser. The holder of the certificate made current payments over a period of ten or fifteen years as provided for in the certificate. These payments could be made to either appellee's home office at Minneapolis or to the local agent and sent by him to the home office. The certificates provided that if the holder made the required payments for twelve, eighteen or twenty-four months (depending on the terms of the particular certificate) that thereafter he might elect not to make further payments with the option to: (1) within two years resume the required payments with a reinstatement of the certificate; (2) elect to receive a paid up certificate; or (3) elect of receive the cash value of the certificate. The certificates also provided for a maturity value, and further contained a provisions similar to, or that:
'The Syndicate shall have the right at any time at its option to call in this Certificate and take it up by payment the registered owner hereof the full amount paid thereon...
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