State ex rel. Langer v. Packard

CourtUnited States State Supreme Court of North Dakota
Citation168 N.W. 673,40 N.D. 182
Decision Date19 July 1918

168 N.W. 673

40 N.D. 182


FRANK E. PACKARD et al., Defendants and Respondents

Supreme Court of North Dakota

July 19, 1918

Original proceeding by the State on the relation of William Langer and others for the issuance of a writ prohibiting and enjoining the State Tax Commission and others from assessing and listing for taxation certain real estate mortgage securities.

Writ issued.

Writ issued.

Lawrence & Murphy, C. A. Pollock, W. S. Lauder, H. R. Turner, Allen W. Wood, and Butler, Mitchell, & Doherty, for plaintiffs.

The questions here involved are of great interest and importance, and if decided by this court it would prevent numerous suits, and would determine the rights of the state as a sovereign power or restrict its operation. There is a great public interest and questions involved which affect the state's sovereignty. State ex rel. Linde v. Packard, 155 N.W. 666-668.

"The term, 'personal property,' in its general sense, is synonymous with 'personal goods.'" State v. Brown, 68 Tenn. 53; Comp. Laws 1913, § 2074.

The law has for its object the taxation of the same kind of property owned by a nonresident as that owned by a resident. It does not require the listing for taxation of any business, or the capital stock in any business, or the right to engage in any business. It is simply a classification of moneys and credits as a species of personal property. Laws 1917, chap. 229.

The state cannot tax property not within its jurisdiction or which is not owned by a resident of the state who is thus within the jurisdiction of the state. 1 Cooley, Taxn. 3d ed. p. 84; Augusta v. Kimball, 91 Me. 605.

"The state has no jurisdiction to tax property of nonresidents which has no actual situs within the state." Com. v. Lehigh V. R. Co., 186 Pa. 235; 37 Cyc. 805.

As to intangible personal property, the general rule is that it can have no situs other than that of its owner's domicil. 37 Cyc. 801, 956; Kirtland v. Hotchkiss, 100 U.S. 491, 25 L.Ed. 558; New Orleans v. Stemple, 175 U.S. 309, 44 L.Ed. 174, 20 S.Ct. 110; Boyd v. Selma, 96 Ala. 144, 16 L.R.A. 729, 11 So. 393; People v. Park, 23 Cal. 138; Sheeler v. Sohmer, 58 L.Ed. 1034.

"Notes and mortgages are of the same nature, and while they may not have become so generally recognized as tangible personal property, yet they have such a concrete form that we see no reason why a state may not declare that, if found within its limits, they shall be subject to taxation." New Orleans v. Stempel, 44 L.Ed. 181.

"There must be jurisdiction over either the property of the person of the owner, else the power cannot be exercised; but when the property is within our jurisdiction, and enjoys the protection of our state government, it is justly taxable, and it is of no moment that the owner, who is required to pay the tax, resides elsewhere." Cleveland, etc., R. Co. v. Pennsylvania, 21 L.Ed. 187.

"And as respects the power of a state to tax property beyond its jurisdiction belonging to a foreign corporation, it is of no moment whether the corporation be a carrier or a trading company, for a state is wholly without power to impose such a tax." International Paper Co. v. Massachusetts, 246 U.S. 135, 62 L.Ed. 624.

The physical presence of personal property in this state renders such property taxable here. Blackstone v. Miller, 47 L.Ed. 445; 15 Wall. 300; Monongahela R. C. C. & V. Co. v. Assessors, 2 L.R.A. (N.S.) 637; New Orleans v. Stempel, 175 U.S. 317, 44 L.Ed. 179, 20 S.Ct. 110; State Assessors v. Comptoir National D' Escompte, 191 U.S. 401, 48 L.Ed. 238, 24 S.Ct. 109.

In the cases used by respondents the physical presence of the property in this state was the actual test. With the law of these cases there is no dispute. State Assessor v. Comptoir, etc., 48 L.Ed. 232; Billinghurst v. Spink County, 58 N.W. 272.

The board of supervisors of a county cannot by an order fix the situs of a debt for the purpose of taxation; where there is no property in the state, nor agent in possession of property in the state, the situs of the property cannot be fixed within the state. Adams v. Colonial & U. S. Mortg. Co., 82 Miss. 263, 17 L.R.A. (N.S.) 138; State Tax on Foreign-Held Bonds, 15 Wall. 300, 21 L.Ed. 179; State Met. L. Ins. Co. v. Newark, 62 N.J.L. 74, 40 A. 573; Assessors v. New York L. Ins. Co., 54 L.Ed. 601.

"The maxim, mobilia personam sequunter, is not an inflexible rule, but, upon the contrary, may be modified or disregarded by the declaratory law of the state in defining promissory notes as tangible personal property, when held or located within its domain." Wheeler v. Sohmer, 58 L.Ed. 1033.

Statutes providing for taxation are to be construed strictly against the state and in favor of the taxpayers, and the burdens and liabilities which they impose are to be kept within the strict letter of the law, and not extended beyond its clear terms by any inference, implication or analogy. 37 Cyc. 768; St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 20 L.Ed. 192.

"The power to tax is limited to persons, property, and business within the state, and it cannot reach the person of a nonresident." Hillman Land & I. Co. v. Com. L.R.A. 1915C, 904.

The statute does not relate to or cover the taxation of a business. Louisville & J. Ferry Co. v. Kentucky, 47 L.Ed. 513; M'Culloch v. Maryland, 4 Wheat. 316, 429, 4 L.Ed. 579.

A nonresident who has no established place of business or any authorized agent or representative in this state, and keeps no funds for investment in the state, who loans moneys on applications sent to him by loan brokers and receives and accepts such applications at his home office in another state, from which he transmits the moneys to the broker or borrower by draft or cashier's checks drawn upon a bank in the state of such nonresident's domicil, is not "doing business in this state," within the meaning of the statutes in question, so as to subject the mortgage securities so taken to taxation in this state. United States Sav. & L. Co. v. Shain, 8 N.D. 136, 77 N.W. 1006.

"The taxing power of a state does not extend beyond its territorial limits. Within such limits it may tax persons, property, incomes, or business." State v. Wis. Tax Commission, 152 N.W. 848; U. T. Co. v. Kentucky, 199 U.S. 194, 50 L.Ed. 150, 26 S.Ct. 36, 4 Ann. Cas. 493; Tax on Foreign-Held Bonds, 15 Wall. 300, 21 L.Ed. 179; Territory v. Delinquent Tax List, 24 P. 182; Holland v. Board of Commissioners, 39 P. 575; Adams v. Colonial & United States Mortg. Co., 34 So. 482; Jack v. Walker, 96 F. 578, affirmed 100 F. 1006; Hathaway v. Edwards, 85 N.E. 28; Com. v. Peebles, 119 S.W. 774; National F. Ins. Co. v. Assessors, 46 So. 117; General Elec. Co. v. Assessors, 46 So. 122; County Comrs. v. Cutler, 3 Colo. 351; Goldgart v. People, 106 Ill. 29; Firesman v. Byrns, 69 Ind. 254; Com. v. Consolidated Casualty Co., 185 S.W. 508.

The residence or domicil of the corporation was in Minnesota. "A corporation cannot have two domicils or residences at the same time. Newport & C. Bridge Co. v. Woolley, 78 Ky. 523; Bank of Augusta v. Earle, 13 Pet. 521, 10 L.Ed. 274.

The state may tax moneys and credits of a nonresident "when the money is invested, the debt contracted and the investment controlled by a resident agent of the owner having the evidences of the debt in his possession." Walker v. Jack, 88 F. 576; State Tax on Foreign-Held Bonds, 15 Wall. 300; Kirtland v. Hotchkiss, 100 U.S. 498; Savings & L. Soc. v. Multnomah Co., 169 U.S. 421, 18 S.Ct. 392; Finch v. York Co., 19 Neb. 50, 26 N.W. 589; Billinghurst v. Spink Co., 5 S.D. 84, 58 N.W. 272; Re Jefferson, 35 Minn. 215, 28 N.W. 256; Redmond v. Commissioners, 87 N.C. 122; People v. Ogdensburg, 48 N.Y. 390; Catlin v. Hull, 21 Vt. 152; People v. Smith, 88 N.Y. 567; Hutchinson v. Board, 66 Iowa 35, 23 N.W. 249; People v. Davis, 112 Ill. 272; People v. Insurance Co., 29 Cal. 534; Herron v. Keeran, 59 Ind. 472; New Orleans v. Stempel, 175 U.S. 309; Bristol v. Washington County, 177 U.S. 133; Metropolitan L. Ins. Co. v. New Orleans, 205 U.S. 395; Holland v. Board of Commissioners, 39 P. 575.

The fact that some of the interveners have complied with the foreign corporation act of North Dakota does not enlarge the power of the state to tax the notes in question. Merely obtaining a permit to transact business within the state does not affect the situation unless the authority obtained is exercised. Washburn Mill Co. v. Bartlett, 3 N.D. 138, 54 N.W. 544; Com. v. Consolidated Casualty Co., 185 S.W. 508.

William Langer, Attorney General, E. B. Cox, Assistant Attorney General, and Frank E. Packard, for defendants and respondents.

Two subjects may be submitted in one proposed amendment to the Constitution. Const. § 202, § 176, Prior to Amendment, 1914; Gottstein v. Lister, 88 Wash. 462; State ex rel. Hudd v. Timme, 54 Wis. 318, 11 N.W. 785; State ex rel. Morris v. Mason, 43 La.Ann. 590, 9 So. 776; State ex rel. Adams v. Herried, 10 S.D. 109, 72 N.W. 93; Hamlin v. Clark, 136 Ga. 313, 38 L.R.A. (N.S.) 77, 71 S.E. 479; Jones v. McClaughty, 151 N.W. 210; Lobaugh v. Cook, 127 Iowa 181; Cabert v. Chicago Rapid City & P. R. Co., 171 Mo. 84; People v. Sours, 31 Colo. 369; People v. Provost, 65 Colo. 199; State ex rel. Lantum & N. Stationery & Printing Co. v. Kiplinger, 32 Wash. 831, 70 P. 438; Chicago v. Reeves, 220 Ill. 274; Turner v. Hamsey, 163 P. 213; State v. Jones, 64 So. 241.

The power to tax is an incident to sovereignty, and is possessed by all state governments without being expressly conferred by the people in the Constitutions. 1 Cooley, Taxn. 3d ed. 7; Judson, Taxn. p. 3; Mercantile Ins. Co. v. Junkin, 19 Ann. Cas. 269, and note on p. 270, 85 Neb. 561.

Intangible personal property has no actual physical situs, and for the purpose of taxation a legal situs is assigned it. So long as the legislature does not infringe upon the power...

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