State v. Brinkop

• Citation: 143 S.W. 444
• Parties: STATE ex rel. CAMPBELL et al. v. BRINKOP, President of Board of Assessors, et al.
• Decision Date: 14 November 1911
• Court: United States State Supreme Court of Missouri

143 S.W. 444

STATE ex rel. CAMPBELL et al. v. BRINKOP, President of Board of Assessors, et al.

Supreme Court of Missouri.

November 14, 1911.

Rehearing Denied December 16, 1911.

1. CORPORATIONS (§ 438)—PROPERTY—TITLE.

The legal title to corporate property is in the corporation, but the beneficial interest belongs to the stockholders.

2. TAXATION (§ 47) — ASSESSMENT — CORPORATE PROPERTY—DOUBLE TAXATION.

Under Rev. St. 1909, § 11,357, providing that owners of shares of stock in banks or insurance companies shall not be required to list the same for taxation, but that the corporation shall deliver to the assessor a list of all shares of stock held therein, and the value of real estate represented by such stock, together with all personal property owned by the corporation, and such shares and personal property shall be assessed at their true value less the value of the real estate, and in view of Const. art. 10, §§ 3, 4, providing for uniformity of taxation, and that all property shall be taxed in proportion to its value, an insurance company should not be taxed upon shares of stock which it owns in banks, as that would, in effect, be double taxation.

3. TAXATION (§ 47) — ASSESSMENT — CORPORATE PROPERTY—DOUBLE TAXATION.

The property of a manufacturing corporation being directly taxed as such, an insurance company which owned shares of stock therein should not be taxed thereon, for to do so would result in double taxation.

4. TAXATION (§ 387)—ASSESSMENT — CORPORATE PROPERTY—ASSETS OUT OF STATE.

Under Rev. St. 1909, § 11,357, requiring an insurance company to deliver to the assessor a list of the shares of stock therein and the face value thereof, and the value of the real estate, if any, and the personal property represented by such shares, and that the assessment shall be made upon the value of such shares and personal property less the value of the real estate, an insurance company, which, for bona fide reasons and not to escape taxation, keeps part of its funds on deposit in a foreign state, is not liable to be taxed thereon, for section 7098 provides that the property of insurance companies shall be assessed and taxed as that of individuals, while section 11,415, relating to corporations other than banks and insurance companies and fixing the only other mode of corporate taxation, makes it the duty of such corporations, just as it is the duty of individuals, to make return to the assessor of all their real and personal property, subject to taxation in the state, and individuals are not taxed on property outside the state, even though personalty for the purpose of distribution follows the domicile of the owner.

In Banc. Certiorari by the State, on the relation of Edward T. Campbell and the American Central Insurance Company, against Christian Brinkop, President of the Board of Assessors, and Edmond Koeln, Collector of the City of St. Louis, to review an assessment. Assessment quashed.

A. & J. F. Lee and Chas. M. Polk, for relators. Lambert E. Walther and Wm. E. Baird, for respondents.

VALLIANT, C. J.

On the petition of relators a writ of certiorari issued to respondents requiring them to send up the records held by them showing the assessments for taxes made by the assessors of the shares of stock of the American Central Insurance Company and relators' appeal therefrom to the board of equalization and the action of the board on that appeal, to the end that this court may pass judgment on the legality of the assessment which relators claim to be unlawful. In obedience to the writ, the records have been sent up. There is no dispute as to the facts.

The American Central Insurance Company is a Missouri corporation, a fire insurance company. In the assessment made of the value of the stock of the corporation for taxation the relators say that items were included that should not have been taken into account. The petition states that the insurance company by one of its chief officers made its return to the assessor of all the property taxable as the property of the corporation against its shareholders, which amounted to $734,848.55, which, according to the uniform rule of equalization adopted by the board of equalization, should have been assessed at 55 per cent. of its actual value, that is, $404,166.69—but the assessor added to the list of property returned by the corporation certain other items which increased the amount of actual values to $2,938,074, of which 55 per cent. was $1,615,950. It appears from the petition that, after the return above mentioned, an assistant secretary of the company, in the absence of the president and without authority, sent a statement to the assessor of the assets of the corporation containing the items which it is now claimed were improperly listed for taxation, and it was upon that information that the assessor acted in adding those items to the return previously made by the company; that, as soon as it was discovered, the company applied to the assessor for its correction, and, on his refusal, appealed to the board of equalization, which also refused to strike those items from the list. It is stipulated, however, that that act of the assistant secretary in no way estops the relators from questioning the legality of the assessment.

The items in the assessment of which the relators complain are:

(1) Shares of stock owned by the insurance company in national banks, a state bank, and a trust company, the latter two Missouri corporations, and all located in the city of St. Louis, which stocks were of the aggregate value of $1,092,510. These stocks were duly assessed and taxed against the insurance company as owner, and the taxes paid thereon were paid by the national banks and the state bank and the trust company, and the insurance company reimbursed the banks and trust company therefor as the law requires.

(2) Shares of stock owned by the insurance company of the value of $97,795 in manufacturing and business corporations organized under the laws of this state, the properties of which corporations were all duly assessed against them and paid by the corporation.

(3) Premiums due June 1, 1909, to the amount of $328,696.38 on policies issued by the insurance company outside of Missouri on property outside of the state, the premiums payable outside the state by nonresidents, on which sums the insurance company was assessed and paid taxes in the states in which such nonresidents lived.

(4) A bank deposit of the insurance company, subject to its check, kept by it in good faith on June 1, 1909, in a bank outside of this state, with no intent to avoid the taxation thereof in Missouri, and taxable in the state where kept.

The question is whether either or all of those four items is or are to be taken into account in estimating the value of the shares of stock held by the shareholders in the insurance company. The position of the relators on this question is that, having already paid their taxes on the shares of stock held by them in the national banks and the Missouri corporations, it would be double taxation to take those items into account in determining the value of their shares of stock in the insurance company, and that, as to the premiums due outside the state and money in bank outside the state which are taxable in the states where located, the statutes of this state do not authorize their assessment here. The position of the respondents is that taxation of the property of a corporation is one thing and taxation of shares of stock in the corporation is another thing; that to tax the corporation on the value of its property and tax the shareholders on the value of their shares is not double taxation; and that as to the intangible personal property outside the state the taking of it into account in estimating the value of the stock for taxation is not taxing the property.

1. Generally speaking, the title to corporate property is in the corporation, while the beneficial interest is in those who own the stock. The profits derived from the successful operation of the business of the corporation is distributed among the shareholders, its losses fall indirectly on the shareholders, and upon its dissolution the property is reduced to money and likewise distributed. Thus, although the shareholders do not own the property, yet they alone are interested in the profits or losses arising from its use, and they alone are affected financially by the increase or diminution of its value. Therefore, notwithstanding the artificial legal distinction between the ownership of the property and the ownership of the stock, it is true as a matter of fact that whatever affects the property affects the financial value of the stock, and whatever burden the property has to bear is borne by the shareholders, whatever tax it pays is paid at the expense of the shareholders; and when the tax on the property is paid at the expense of the shareholders and then a tax is levied on the stock owned by the shareholders, taking into account in estimating its value the value of the property on which the tax has already been paid, it is in fact double taxation in spite of the legal fiction. Under our statute, stock in a bank, federal or state, is assessed against the shareholder, but the tax is paid in the first instance by the bank, and the bank is reimbursed by the shareholder. That is merely a mode of convenience in collecting the tax. The effect is the same as if the shareholder paid it in the first instance. In the case now before us the insurance company was a shareholder of stock in these banks. The banks paid the tax that was assessed against the insurance company's stock, and the insurance company reimbursed the banks as the law required. The insurance company in this act took money out of its treasury to pay those taxes. Whose money was that? The legal title was in the corporation, but the beneficial interest was in the shareholders of that corporation. The act affected financially no one but...