Smith v. Stephens
| Citation | 91 N.E. 167,173 Ind. 564 |
| Decision Date | 08 March 1910 |
| Docket Number | 21,442 |
| Parties | Smith et al. v. Stephens, Treasurer |
| Court | Supreme Court of Indiana |
From Warren Circuit Court; J. T. Saunderson, Judge.
Suit by William C. Smith and others against William H. Stephens, as treasurer of Warren county. From a judgment for defendant plaintiff appeals.
Reversed.
J Frank Hanly, Charles V. McAdams and Samuel R. Artman, for appellants.
Stansbury & Billings, for appellee.
Complaint by appellants as stockholders of the Warren County Bank, to enjoin the treasurer from collecting alleged unlawful taxes assessed against them on their shares of stock.
The questions for determination arise upon the construction to be given to §§ 10208-10210 Burns 1908, Acts 1907, p. 624, §§ 1-3. The complaint discloses that appellants were all of the shareholders of the Warren County Bank. In making the statement for taxation in 1907 the cashier of the bank reported to the auditor under § 10210, supra, that the capital stock of the bank was $ 50,000, its surplus, $ 20,000, and its undivided profits, $ 2,800; that $ 14,800 over and above the $ 20,000 of its surplus, had been invested in real estate, which the bank had been compelled to take in the course of its business, which real estate was situate in different townships from the township of the location of the bank, and the officer in his statement deducted the sum of $ 14,800, so invested from the surplus, and reported the remainder of its surplus and undivided profits, together with its capital, for taxation at the sum of $ 72,800. The board of review added the $ 14,800 to the surplus and undivided profits, making a total of $ 87,600, upon which it imposed an assessment of eighty per cent on the whole, which was the rule applied in assessing all other bank shares, making $ 70,080. From this latter sum the board deducted $ 7,070, the assessed value of the real estate in which the bank had invested $ 14,800, leaving $ 63,010 for taxation. The bank appealed from this assessment to the State Board of Tax Commissioners, which board dismissed the appeal, on the ground that there was no right of appeal in the bank. The stockholders then paid the taxes based upon the amount which they admitted as correct, to wit, $ 72,800, and brought suit against the county treasurer to enjoin the threatened collection of the difference. A demurrer was sustained to the complaint, the ruling on which is the only error assigned.
The controversy arises over the following language used in § 10210, supra, respecting the manner of assessing the shares of stock in a banking business: "Whenever any such bank, banking association or trust company shall have acquired real estate, the assessed value of such real estate shall be deducted from the valuation of the capital or capital stock of such bank, banking association, or trust company." It is insisted that if the bank is not permitted to deduct the amount it has invested in the real estate, but only the assessed value, then, as to the difference between the amount invested and the assessed value, such difference is twice taxed, in violation of section one of the 14th amendment to the federal Constitution, guaranteeing due process of law, unabridged privileges and immunities, and the equal protection of the laws, and of article 10, § 1, of the state Constitution, providing that taxation shall be upon a uniform and equal rate of assessment, and of article 1, § 23, of the state Constitution, prohibiting privileges and immunities to one class which, upon the same terms, shall not belong to all citizens. Taking the last proposition first, together with the equal protection and the privilege and immunity clauses of the federal Constitution, to which it is allied, if all who are in the same class or like situated are dealt with alike, there is no discrimination inimical to either Constitution. We have lately had occasion to go into these questions in the case of Board, etc., v. Johnson (1909), ante, 76, and it is unnecessary again to cite the cases there collected. Whether the legislation is applicable to a large or to a small class is a purely legislative question. Board, etc., v. Johnson, supra, and cases there cited.
What property shall be assessed and how it shall be taxed, are legislative questions, so long as there is uniformity, and equality of rate as to those of the same class. Board, etc., v. Johnson, supra, and cases cited; State, ex rel., v. Smith (1902), 158 Ind. 543, 63 L.R.A. 116, 63 N.E. 25; Cleveland, etc., R. Co. v. Backus (1893), 133 Ind. 513, 18 L.R.A. 729, 33 N.E. 421; Gilson v. Board, etc. (1891), 128 Ind. 65, 11 L.R.A. 835, 27 N.E. 235; Cooley, Taxation (2d ed.), 164 et seq.; Sharpless v. Mayor, etc. (1853), 21 Pa. 147, 59 Am. Dec. 759.
The due process of law, equal protection of the laws and the privilege and immunity clauses of article 14, § 1, of the federal Constitution do not abridge the right of the states to adjust their systems of taxation in all proper and reasonable ways, so long as discrimination is not made against particular classes or particular persons. Board, etc., v. Johnson, supra, and cases cited; State Railroad Tax Cases (1875), 92 U.S. 575, 23 L.Ed. 663; Jennings v. Coal Ridge, etc., Coal Co. (1893), 147 U.S. 147, 13 S.Ct. 282, 37 L.Ed. 116; Travellers' Ins. Co. v. Connecticut (1902), 185 U.S. 364, 22 S.Ct. 673, 46 L.Ed. 949.
It is not claimed here that there is discrimination, save in the one particular, that the shareholders would be doubly taxed, in violation of the equality clause, by reason of being taxed on the difference between the assessed value of the real estate and the amount invested in the real estate upon which they are taxed as surplus, in that the surplus to that extent is represented by the real estate, and so taxed. The object, the express letter of the statute, and the system of taxation as a whole is one thing; the application of the statute in administration is quite a different thing. It is by reason of this difference, and not by reason of a deficiency or inequality in the law itself, that the condition arises which is here presented. The statute with respect to the assessment of both personal and real property is the same. It requires that each kind of property be assessed at its "full, true cash value," or "true cash value, * * * being the price which could be obtained for said property at private sale, and not at forced or auction sale." §§ 10197, 10202, 10256 Burns 1908, Acts 1903, p. 49, §§ 7, 32, Acts 1891, p. 199, § 95.
Take the case before us: It is alleged that the bank has invested $ 14,800 in real estate, and that it is of that value, yet it is assessed for taxation at only $ 7,070, less than one-half its "true cash value." Had it been assessed at its "true cash value," it would have been assessed for at least $ 14,800, so that it is seen that the fault lies, not with the statute, but with the assessing authorities. It is no answer to say that the taxes are assessed upon an equal valuation with other lands, for, if so, that only proves that none of them are assessed at their true cash value; but, so far as the statute is concerned, that is the command, in valuing. State, ex rel., v. Smith, supra; Willis v. Crowder (1893), 134 Ind. 515, 34 N.E. 315; Cleveland, etc., R. Co. v. Backus, supra. It can be no fault of the law that the valuing officers have failed in their duty.
If the land is assessed at less than one-half its admitted value then appellants are not paying by so much the amount they ought to pay, but are paying relatively the same on the real estate, supposing the assessment upon all other lands to be made in the same manner, and the amount they are assessed on the difference in their surplus invested in the land would probably be about the equivalent, allowing for the difference in the rate between the township where the land is located and taxed, and the township where the bank is located and taxed; but even that condition and that inequality are not created or contemplated by the statute. The statute intends just the contrary. It intends equality, and if the true cash value of all property were made the basis for taxation, as the statute intends, it would result in about as equal and uniform rate as is possible to be devised. If that were the case, then, as is provided in § 10210, supra, "whenever any such bank, banking association or trust company shall have acquired real estate, the assessed value of such real estate shall be deducted from the valuation of the capital or capital stock of such bank, banking association, or trust company," we have no difficulty in understanding what was intended. That is, the assessed value is intended by the statute to be the "true cash value," and this would result in equality among all classes of taxpayers, and on all classes of property. We are referred to § 10234 Burns 1908, Acts 1891, p. 199, § 74, referring to the taxation of domestic corporations, providing that "where the capital stock, or any part thereof, is invested in tangible property, returned for taxation, such capital stock shall not be assessed to the extent that it is so invested," as placing stress on the difference between the amount invested in land or tangible property, and the assessed value of the tangible property, and permitting deduction of the amount so invested, in assessing the stock or the corporation itself. It should be noted that this section applies to...
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