State ex rel. Johnson v. Buder

• Decision Date: 18 July 1922
• Citation: 242 S.W. 979,295 Mo. 63
• Parties: THE STATE ex rel. JOHN L. JOHNSON and LIBERTY CENTRAL TRUST COMPANY v. WILLIAM BUDER, Assessor of City of St. Louis, et al
• Court: Missouri Supreme Court

242 S.W. 979

295 Mo. 63

THE STATE ex rel. JOHN L. JOHNSON and LIBERTY CENTRAL TRUST COMPANY v. WILLIAM BUDER, Assessor of City of St. Louis, et al

Supreme Court of Missouri

July 18, 1922

Record quashed.

Fordyce Holliday & White, William C. Connett and Bennett C. Clark for relators.

(1) The Board of Equalization has totally disregarded the provisions of Section 12775, Revised Statutes 1919, and the decisions of this court construing and applying said law. State ex rel. Miller v. Shryack, 179 Mo. 424; State ex rel v. Brinkop, 238 Mo. 298; State ex rel. Gardner v Harris, 227 S.W. 818. (2) These decisions alone are controlling on the question here involved, and the right of the shareholders to deduct the entire value of the real estate which the Trust Company owned and on which it paid taxes is clearly established. This construction is in accord with all prior rulings of this court where the question has arisen in regard to taxation of both stock and property. Hannibal & St. Jos. Ry. Co. v. Schacklett, 30 Mo 558; State v. Hannibal & St. Jos. Ry. Co., 37 Mo. 265; St. Louis Mut. Life Ins. Co. v. Charles, 47 Mo. 462; Scotland County v. Railroad, 65 Mo. 123; State v. Railway Co., 77 Mo. 202; Valle v. Ziegler, 84 Mo. 214; State ex rel. v. Lesser, 237 Mo. 310.

Henry S. Caulfield and George F. Haid for respondents.

(1) The indebtedness on relators' real estate was not a part of the value entering into the value of its shares of stock, and, therefore, was not deductible from such value. (2) The indebtedness on relators' real estate was not included in the bank's reserved funds, undivided profits, premiums or earnings, because the same had already been deducted from its total resources, and, therefore, was not deductible from the net assets in determining the value of its shares of stock. (3) Section 12775 authorizes the deduction from the total of the capital, reserved funds, profits, etc., of the bank only so much of the value of the bank's real estate as is actually included in the aggregate of those items. (4) By the phrase "represented by such shares of stock" is meant such part of the value of the shares of stock as is actually invested in real estate. Dennis v. First National Bank, 178 P. 580. (5) Corporations are not entitled to exemption from taxation when, under like circumstances, an individual would not also be exempt to the same extent. State ex rel. v. Tax Commission, 282 Mo. 223. (6) The entire property of banks is to be taxed to the same extent as property of individuals and other corporations, but the banking corporation pays the real estate tax, and the value of the personal property is assessed against the stockholders. State ex rel. v. Citizens Bank, 274 Mo. 67; St. Louis Mut. Life Ins. Co. v. Board of Assessors, 56 Mo. 516; State ex rel. v. Tax Commission, 282 Mo. 223. (7) In construing Section 12775, it is necessary to ascertain the intention of the Legislature and give effect to such intention. State ex rel. v. Tax Commission, 282 Mo. 219. (8) Exemption from taxation must appear in express terms or necessary implication. If the law invoked to show exemption is susceptible of any other rational construction, the exemption cannot exist. State ex rel. v. Board of Equalization, 256 Mo. 463.

HIGBEE, J. Graves, David E. Blair, Elder and Walker, JJ., concur; James T. Blair, C. J., concurs in the result.

OPINION

In Banc.

Certiorari.

HIGBEE J.

-- Certiorari to quash the action of the Assessor and Board of Equalization of the city of St. Louis in increasing the assessment of the relator, the Liberty Central Trust Company.

The Trust Company, an incorporated bank, on December 27, 1921, delivered to the assessor a verified list of all shares of stock held therein and the face value thereof, the value of all real estate represented by such shares of stock, together with all reserved funds, undivided profits, etc., as required by Section 12775, Revised Statutes 1919. This statement shows amount of capital, surplus and undivided profits, $ 4,283,265, which includes real estate in this State carried on its books at the value of $ 2,325,436. A part of this real estate was, on June 1, 1921, encumbered by a mortgage, executed by a former owner, to secure the payment of notes for the principal sum of $ 1,725,000, held by the First National Bank of St. Louis, to which the Trust Company pays the interest, the notes being a part of the liabilities of the Trust Company. All of the real estate was assessed to the Trust Company for the year 1922.

The issue in the case is thus stated by the respondents:

"The sole question for the consideration of this court is whether in determining the value of the stock of the relator bank for the purpose of assessment against the stockholders under the provisions of Section 12775, Revised Statutes 1919, there should be deducted from the amount of the capital, surplus, earnings, profits, etc., the sum of $ 1,725,000, the amount of the mortgage indebtedness upon the real estate of the bank, although said sum is not included in and does not form a part of the capital, surplus, etc., shown by the books of the bank, and the question arises in this way:

"The Liberty Central Trust Company owned real estate, which it carried on its books at $ 2,365,435.98 (under 'Resources'), some of which was acquired by it subject to the obligations of the Penco Realty Company, a prior owner, amounting to $ 1,725,000, shown under the head of 'Liabilities.' The bank's statement further shows capital, surplus and undivided profits of $ 4,068,197.23 and earnings of $ 488,845.18 (returned for assessment at $ 4,283,265), so that the mortgage indebtedness appears upon its books as a liability distinct from the capital, surplus and undivided profits, etc., and therefore is not included in such surplus and undivided profits. The Board of Equalization, therefore, deducted from the capital, surplus and undivided profits the difference between $ 1,725,000 and $ 2,365,435.98, the whole value of the real estate, to-wit, about $ 640,000, and allowed the latter sum as a deduction from the capital, surplus and undivided profits as the value of the real estate represented by such shares of stock, and also allowed a deduction for certain stocks owned by the bank in other corporations, and fixed the amount to be assessed against the shares of stock, the amount of the difference, to-wit, $ 3,415,570, as shown by its order on page 23 of the abstract."

This indebtedness of $ 1,725,000, being a liability of the Trust Company, it thus appears that the sole question for consideration is whether in determining the value of the stock this liability should be deducted from the amount of the capital, surplus and undivided profits of the company, as stated by respondents. Section 12775, Revised Statutes 1919, so far as material, reads:

"Persons owning shares of stock in banks, or in joint stock institutions or associations doing a banking business, shall not be required to deliver to the assessor a list thereof, but the president or other chief officer of such corporation, institution or association shall, under oath, deliver to the assessor a list of all shares of stock held therein, and the face value thereof, the value of all real estate, if any, represented by such shares of stock, together with all reserved funds, undivided profits, premiums or earnings, and all other values belonging to such corporation, company, institution or association; and such shares, reserved funds, undivided profits, premiums or earnings and all other values so listed to the assessor shall be valued and assessed as other property at their true value in money, less the value of real estate, if any, represented by such shares of stock."

It is insisted by respondents that by deducting the $ 1,725,000 from the total value of the real estate, there remains the sum of about $ 640,000 as the total amount invested by the company in real estate, and they stress the claim that this sum is the total value of real estate represented by the shares of stock. It is further said in respondents' brief:

"The bank saw fit to place in its resource column the entire value of the real estate, and therefore, in order to show the true situation, it became necessary for it to place the amount of the unpaid real estate obligations in its liability column so that its statement of capital stock surplus, earnings, etc., would properly include...