Smith v. Stephens

• Decision Date: 08 March 1910
• Docket Number: No. 21,442.,21,442.
• Citation: 173 Ind. 564,91 N.E. 167
• Parties: SMITH et al. v. STEPHENS, County Treasurer.
• Court: Indiana Supreme Court

173 Ind. 564

91 N.E. 167

SMITH et al.

v.STEPHENS, County Treasurer.

No. 21,442.

Supreme Court of Indiana.

March 8, 1910.

Appeal from Circuit Court, Warren County; J. T. Saunderson, Judge.

Suit by William C. Smith and others against William H. Stephens, County Treasurer. From a judgment sustaining a demurrer to the complaint, complainants appeal. Reversed, with directions to overrule demurrer, and for further proceedings.Hanly, McAdams & Artman, for appellants. Stansbury & Billings, for appellee.

MYERS, J.

Complaint by appellants, as stockholders of 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 Burns' Ann. St. 1908, §§ 10,208-10,210, inclusive. The complaint discloses that appellants were all 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 section 10,210, that the capital stock of the bank was $50,000, its surplus $20,000, and its undivided profits $2,800; that $14,800 of its surplus over and above the $20,000 had been invested in real estate, which the bank had been completed 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 80 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 Board of State 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, $58,240, and brought suit to enjoin collection of the difference by the treasurer alleged to be then threatened. A demurrer was sustained to the complaint, the ruling on which is the only error assigned.

The controversy arises over the wording of section 10,210, Burns' Ann. St. 1908, respecting the manner of assessing the shares of stock in a banking business represented by shares, that “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 being insisted, first, 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, or doubly taxed, in violation of the fourteenth amendment of the federal Constitution, guaranteeing due process of law, unabridged privileges and immunities, and the equal protection of the laws, and of section 1, art. 10, of the state Constitution, providing that taxation shall be upon a uniform and equal rate of assessment, and section 23, art. 1, 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. Board v. Johnson (1909) 172 Ind. -, 89 N. E. 590, and cases there collected, and it is unnecessary to cite the cases again. And whether the legislation is applicable to a large or a small class is a purely legislative question. Board v. Johnson, supra, and cases there cited.

What property shall be assessed, and how taxed, is a legislative question, so long as there is uniformity and equality of rate, as to those of the same class. Board v. Johnson, supra, and cases cited; State v. Smith, 158 Ind. 543, 63 N. E. 25, 214, 64 N. E. 18, 63 L. R. A. 116;Cleveland, etc., Co. v. Backus, 133 Ind. 513, 33 N. E. 421, 18 L. R. A. 729;Gilson v. Board, 128 Ind. 65, 27 N. E. 235, 11 L. R. A. 835; Cooley on Taxation, 5, 169; Sharpless v. Mayor, 21 Pa. 147, 59 Am. Dec. 759. The due process of law, equal protection of the laws and the privilege and immunity clauses of section 1, art. 14, of the amendments to 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 v. Johnson, supra, and cases cited. State Railroad Tax Cases, 92 U. S. 575, 23 L. Ed. 663;Jennings v. Coal Ridge Co., 147 U. S. 147, 13 Sup. Ct. 282, 37 L. Ed. 116;Travelers' Ins. Co. v. Connecticut (1901) 185 U. S. 364, 22 Sup. 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, and the express letter of the statute, the system of taxation as a whole, is one thing; its application to administration is quite a different thing, and 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 be assessed at its “true cash value,” or “full true cash value, *** being the price which could be obtained therefor at private sale, and not at force or auction sale.” Burns' Ann. St. 1908, §§ 10,197, 10,202, 10,256. 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 only assessed for taxation at $7,070, less than half its “true cash value.” Had it been assessed at its “true cash value,” it would have been assessed at 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 full true cash value; but, so far as the statute is concerned, that is the command in valuing. State v. Smith (1901) 158 Ind. 565, 63 N. E. 25, 214, 64 N. E. 18, 63 L. R. A. 116;Willis v. Crowder, 134 Ind. 515, 34 N. E. 315;Cleveland, etc., Co. v. Backus, 133 Ind. 513, 535, 33 N. E. 421, 18 L. R. A. 729. 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, as much as 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 is not one created by the statute, or one contemplated. 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 a rate as is possible to be devised. If that were the case, then where it is provided, as in section 10,210, that “whenever any such bank, banking association or trust company shall have acquired...