State v. Bodcaw Lumber Co.
| Decision Date | 12 March 1917 |
| Docket Number | (Nos. 223, 236.) |
| Parties | STATE ex rel. DAVIS, Atty. Gen., v. BODCAW LUMBER CO. |
| Court | Arkansas Supreme Court |
Appeal from Lafayette Chancery Court; J. M. Barker, Chancellor.
Action by the State, on the relation of Wallace Davis, Attorney General, against the Bodcaw Lumber Company. From a judgment sustaining a demurrer to the complaint and dismissing the action for want of equity, the relator appeals. Reversed and remanded, with directions to overrule the demurrer, and for proceedings not inconsistent with the opinion.
Wallace Davis, Atty. Gen., and George Vaughan, Frank Pace, and T. M. Seawell, all of Little Rock, for appellant. Henry Moore and Henry Moore, Jr., both of Texarkana, for appellee.
The Attorney General instituted this action in the chancery court of Lafayette county against the Bodcaw Lumber Company, a domestic corporation domiciled in that county, to recover taxes alleged to be due the state and its subdivisions by reason of the failure of said corporation to assess all of its property for taxation for certain years. The right to sue is predicated upon the authority of the statute embraced in Kirby's Digest, § 7204 et seq., Act May 30, 1911, p. 324, and further amended by Act March 12, 1913, p. 724, providing that where it is made to appear to the Attorney General that —
"in consequence of the failure from any cause to assess and levy taxes or because of any pretended assessment and levy of taxes upon any basis of valuation other than the true value in money of any property hereinafter mentioned, or because of any inadequate or insufficient valuation or assessment of such property or undervaluation thereof, or from any other cause, that there are overdue and unpaid taxes owing to the state * * * by any corporation upon any property now in this state which belonged to any corporation at the time such taxes should have been properly assessed and paid, that it shall become his duty to at once institute a suit * * * for the collection of the same," etc.
It is alleged in the complaint that the property of the Bodcaw Lumber Company consists of its capital stock represented by and invested in real and personal property situated in certain counties in the state of Arkansas and in the state of Louisiana, and that the said corporation had failed, during certain years, to make return of all its property for taxation as provided by the statutes of this state, in that it had made no return of its capital stock and had not assessed for taxation any of its property except the tangible property situated in the state of Arkansas. It is further alleged that the capital stock of said corporation is, and has been during the years mentioned, of very great value in the aggregate, after deducting the tangible property subject to specific assessment under the statutes of the state, and that there is now due to the state the sum of $250,000, as the just proportion from said corporation to the state for the taxes on property which has thus escaped taxation. The court sustained a demurrer to the complaint and dismissed it for want of equity, and the Attorney General has prosecuted an appeal to this court.
Learned counsel in the case have set forth in the abstract by way of illustration the exact financial condition of the Bodcaw Lumber Company for many years past and the situs and value of its tangible property together with a statement of the amount of its capital stock, the number of shares and value thereof as taken from the reports filed by the president and secretary with the county clerk pursuant to statute, but that statement is not set forth in the complaint nor exhibited therewith, and we cannot take notice of it. Nor do we deem it necessary to do so in order to dispose of the questions of law presented on the demurrer, for the complaint contains sufficient allegations to present for argument the questions discussed so thoroughly and ably by counsel in the respective briefs. Suffice it to say that the facts appearing from the complaint are that the Bodcaw Lumber Company has, during the years named, assessed for taxation its tangible property situated in the state of Arkansas, but it has not made any return of its capital stock for taxation, which, according to the contention of the state, is subject to taxation here without deduction of the value of property outside of this state which goes to make up the value of the stock. On the other hand, the contention of counsel for the defendant corporation is that only the tangible property of the corporation in the state is subject to taxation here, and that the taxation of the capital stock, without deduction of the value of the tangible property outside of the state, would be tantamount to indirectly taxing the property itself, and would constitute double taxation. It must be treated as settled that there can be no double taxation in the sense that the same property may be twice assessed for taxation. That is not contemplated by the Constitution and laws of this state. Nor does it matter, in considering the question of double taxation, whether property is doubly taxed partly in one state and partly in another, for the rule against double taxation reaches to any form, and prohibits the double taxation under different sovereignties. Wright v. L. & N. Railroad Co., 195 U. S. 219, 25 Sup. Ct. 16, 49 L. Ed. 167. Therefore an attempt on the part of the state to tax property permanently situated outside of its borders would constitute double taxation. It has been held by many of the courts that shares of stock in a corporation may be treated separate and apart from the stock and property of the corporation itself for the purpose of taxation, and that that does not offend against the rule prohibiting double taxation. Kidd v. Alabama, 188 U. S. 733, 23 Sup. Ct. 402, 47 L. Ed. 669; Corry v. Mayor of Baltimore, 196 U. S. 466, 25 Sup. Ct. 297, 49 L. Ed. 556; Hawley v. City of Malden, 232 U. S. 1, 34 Sup. Ct. 201, 58 L. Ed. 477, Ann. Cas. 1916C, 842. Such, however, is not the practice under the statutes of Arkansas, which contain an express provision that:
"No person shall be required to include in his statement, as a part of the personal property, moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise which is required to list, any share or portion of the capital stock or property of any company or corporation which is required to list or return its capital and property for taxation in this state." Kirby's Digest, § 6902; Acts 1883, § 15, p. 217.
This court decided that the purpose of the lawmakers in enacting the above statute was to provide against double taxation. Dallas County v. Banks, 87 Ark. 484, 113 S. W. 37; Dallas County v. Home Fire Ins. Co., 97 Ark. 254, 133 S. W. 1113.
A discussion of the questions presented involves an analysis of the statutes of this state relating to the assessment of the property of corporations for taxation. There are different classifications under the statute for different kinds of corporations. There is a separate provision with reference to banks, which requires a return to be made by the officials of the corporation, and we have decided that the scheme contemplates a taxation of the shares of stock in such corporation according to value, and not of the property of the corporation itself, and that, therefore, the value of shares of stock in a national bank, when assessed for the purpose of taxation, is not subject to deduction of value of property of the bank which is exempt from taxation. First National Bank v. Board of Equalization, 92 Ark. 335, 122 S. W. 988.
Kirby's Digest, § 6936, Act March 11, 1913, p. 615.
The next section (6937) provides that if the officers of the corporation neglect or refuse to make the return as required above, then "the assessor shall from the best information he can obtain make out and enter upon the proper assessment roll a list with the valuation of all tangible and intangible property belonging to such defaulting company or corporation subject to taxation by the provisions of this act, with 50 per cent. penalty."
Now the provision just quoted with reference to the method of assessment of corporation property must be read in connection with the statute already referred to, which provides that the owners of shares of stock in a corporation required to list its capital stock are not required to include such shares of stock in their personal assessments, and when thus considered it is seen that the legislative scheme provided is not merely to assess the property of the corporation itself, but to include the value of the shares of stock and tax them...
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