State ex rel. Harris v. MacCorkle

• Citation: 123 S.E.2d 888,146 W.Va. 946
• Decision Date: 20 February 1962
• Docket Number: No. 12137,12137
• Court: West Virginia Supreme Court
• Parties: STATE ex rel. Jesse Lee HARRIS v. Sam L. MacCORKLE, Assessor of Kanawha County, West Virginia.

Page 888

123 S.E.2d 888

146 W.Va. 946

STATE ex rel. Jesse Lee HARRIS v. Sam L. MacCORKLE, Assessor of Kanawha County, West Virginia.

No. 12137.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 10, 1962.

Decided Feb. 20, 1962.

Syllabus by the Court.

1. Mandamus is the proper remedy to compel an assessor to assess for taxation omitted property legally liable for taxation. It lies on the relation of the proper public officer or of an individual taxpayer.

2. The legislature has the power to provide the method or mode by which assessments shall be made on any class of property.

3. Although double taxation is not constitutionally prohibited, it is frowned upon by courts and should only be done by the specific direction of the legislature.

4. Code, 11-3-14a, as amended, which provides that investment shares and investment share accounts in building and loan associations representing money withdrawable therefrom shall be deducted by the assessor in determining the true and actual value of the capital of such associations, merely constitutes a method or mode of assessment for taxation of such associations and does not violate Article X, Section 1 of the Constitution of West Virginia, which provides that all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law.

Paul M. Friedberg, Henry C. Bias, Jr., Charleston, for relator.

C. Donald Robertson, Atty. Gen., Andrew J. Goodwin, Asst. Atty. Gen., Charles M. Walker, Pros. Atty., Charleston, for respondent.

Spilman, Thomas, Battle & Klostermeyer, Wood Bouldin, Jr., W. Victor Ross, Charleston, for intervening respondents.

BERRY, Judge.

This is a proceeding in mandamus under the original jurisdiction of this Court by the petitioner, Jesse Lee Harris, a citizen and taxpayer of Kanawha County, West Virginia, against Sam L. MacCorkle, Assessor of Kanawha County, West Virginia, respondent, to compel the assessor to include in his assessment of savings and loan and building and loan associations located in Kanawha County the value of their investment shares and investment share accounts, on the ground that the provisions of Code, 11-3-14a, as amended, relied upon by the assessor in the assessment of these associations, are invalid, as conflicting with Article X, Section 1, of the Constitution of West Virginia.

On October 16, 1961, a rule was issued by this Court, returnable November 7, 1961, against the respondent, Sam L. MacCorkle, to show cause why a writ of mandamus should not be awarded against him as prayed for. On November 6, 1961, the respondent filed his answer to the petition, and on the return day of the rule the Empire Federal Savings and Loan Association, the Charleston Federal Savings and Loan Association, the First Federal Savings and Loan Association and the West Virginia Building and Loan Association appeared by counsel and presented a petition and motion to intervene as parties respondent in this proceeding, which motion was granted to said parties to intervene. Thereupon, the intervening respondents filed pleadings consisting of a motion to quash or dismiss the rule heretofore issued, a demurrer to the petition, and an answer to the petition. By agreement of counsel and leave of the Court, the case was continued to the January term of this Court and leave granted to the parties to introduce evidence by depositions, and by an agreed statement of facts or stipulation, at which time the case was argued by the parties and submitted to the Court for decision.

The deposition and stipulation filed in this case show the financial conditions of the building and loan associations in Kanawha County as compared with the industrial loan companies and commercial banks in Kanawha County, as well as the assessments made and taxes paid, and the ratio with regard to each; also, what the effect would be if assessments were made and taxes paid in the manner sought by the petitioner.

The evidence in this case indicates that the building and loan associations in Kanawha County at the present time are assessed at a higher ratio of assessed value to net capital accounts than other institutions. The ratio for the state banks in Kanawha County is 51.73%, for the national banks 45.21%, for the industrial loan companies 56.04%, and for the building and loan associations 72.27%. The evidence further shows that under the present basis the state banks in Kanawha County would pay an average tax of $3171.00, and with the investment shares or investment share accounts eliminated, the building and loan associations in Kanawha County would pay an average tax of $3988.00. However, if the investment shares or investment share accounts were included in the assessments for the building and loan associations, the average tax for such associations would be $57,421.00.

Building and loan associations have been operating in some form in this state since the formation of the state, and various statutes pertaining to such associations have been enacted. They came into prominence after 1900, and the Federal Savings and Loan Associations have become popular since the thirties, as a result of federal legislation, and by the authority of federal statutes are taxpayed in the same manner as state building and loan associations which are statutory corporations.

A distinguishing feature of these associations is that they are mutual organizations in which every person who borrows or invests money becomes a 'member'. A member who borrows money from the association has no equity to start with and pays periodical dues on his membership to build up his paid-up interest in the association. Other members invest their money or deposit it in one of the associations in what is known as a 'savings account'. These savings accounts are commonly called 'investment shares or investment share accounts' and dividends are obtained from the associations on such savings accounts. The money so invested by these members is loaned to the members who wish to borrow from the associations for building purposes. The combined assets of the five savings and loan and building and loan associations in Kanawha County, as of June 30, 1961, are approximately $31,000,000.00. About $28,000,000.00 of these combined assets consist of the deposits or investments of the members in investment shares or investment share accounts and is loaned or is available for loans to members who wish to borrow from the associations. The difference between the total assets and the amount of the savings accounts of about $3,000,000.00 constitutes the capital accounts consisting of the surplus, reserves, and undivided profits. Any member can withdraw upon notice what he has invested or deposited in the savings account, but if he owes the association he must settle such account upon withdrawal. The association can also require members to withdraw or retire from the association by giving them notice and refunding their savings accounts.

Before 1904 all corporations, with the exception of special types such as public utilities and public carriers, were assessed on a net value basis, that is, the indebtedness to others was allowed to be deducted from their capital before any assessment on such was made. After 1904 different methods were used in taxing corporations, banking institutions and building and loan associations. Real estate of corporations has always been separately assessed and deducted from the capital for assessment purposes. At the present time ordinary corporations are assessed only on certain constituent elements of their total wealth, and shares of stock in the corporation are not assessed to either the corporation or the individual stockholder.

Commercial banks at the present time, except for real estate, pay only ad valorem taxes on the assessed value of shares of stock in the corporation. The assessment is made to the individual stockholder, but paid by the bank, and the bank may recover the amount paid from the stockholders. The practical aspect of this method of assessment is that the value of the stock which is assessed is obtained from the amount of reserve, surplus, and undivided profits of the bank, omitting its deposits. Commercial banks, therefore, pay taxes on the assessed value of net capital and recover such payments from their individual stockholders either directly or indirectly.

The method of assessment against building and loan associations in this state has varied from time to time. This Court held in the case of Ohio Valley Building & Loan Ass'n v. County Court of Cabell County, 42 W.Va. 818, 26 S.E. 203, decided in 1896, that building and loan associations should not be assessed with the capital stock, but that the members of the associations should be assessed with their investment shares or investment share accounts. This was the method of assessing building and loan associations in this state until 1938, and the only tax they paid was upon real estate owned by them. In 1938 this Court held in the case of Charleston Federal Savings & Loan Association et al. v. James, Tax Commissioner et al., 120 W.Va. 781, 200 S.E. 845, that, because of certain statutory changes and decided cases relating thereto, building and loan associations were statutory corporations, and their intangible and other personal property was subject to taxation. By virtue of this case, these associations were then assessed and taxed on the value of investment shares and investment share accounts.

In 1939 the legislature followed the reasoning of the James case and amended the statute relating to the taxation of building and loan associations by the passage of Section 14-a, Article 3 of Chapter 118, Acts of the Legislature, 1939, Regular Session, which, as amended, provided for the assessment of the value of investment shares and investment share accounts of such associations as capital. In the case of In re Tax Assessments against Hancock County Federal Savings & Loan...