State v. Fidelity & Deposit Co. of Maryland

• Decision Date: 16 March 1904
• Citation: 80 S.W. 544
• Parties: STATE v. FIDELITY & DEPOSIT CO. OF MARYLAND.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

80 S.W. 544

STATE v. FIDELITY & DEPOSIT CO. OF MARYLAND.^*

Court of Civil Appeals of Texas.

March 16, 1904.

Appeal from District Court, Travis County; R. L. Penn, Judge.

Action to recover taxes by the state against the Fidelity & Deposit Company of Maryland. From a judgment for defendant, plaintiff appeals. Reversed.

This is a suit by the state against the appellee to recover taxes amounting to $1,626.26, with interest thereon and penalties, alleged to be due by the appellee upon securities of the value of $50,000 which were on deposit with the Treasurer of the state on the 1st day of January, 1898, 1899, 1900, and 1901, which were so deposited by the Fidelity & Deposit Company under a law passed by the Twenty-Fifth Legislature (page 244, c. 165), approved June 10, 1897, requiring foreign corporations engaged in the surety and guaranty business in this state to deposit with the State Treasurer, in order to be permitted to transact business here, good securities of the cash market value of $50,000. The sum sued for is the taxes due on this deposit for the years 1898, 1899, 1900, and 1901. The answer of the defendant includes a general demurrer, and a special demurrer to the effect that as the appellee appears to be a corporation created by the laws of Maryland, and there domiciled, the state, for the purposes of taxation, did not have jurisdiction over the property in question, because of its intangible nature, and because a recovery of taxes upon this property would be in violation of the fourteenth amendment of the Constitution of the United States, and would deprive the defendant of its property without due process of law; and an answer to the effect that the securities in question were merely deposited here by the appellee in order to enable it to do business within this state, and for no other purpose, and that it had no managing agent in this state having control of its securities, and that the interest coupons attached to the securities were transmitted to and collected from the home office, in the state of Maryland, and that the securities were at all times assessed for taxation in the state of Maryland, and were there paid by the city of Baltimore under a statute of that state requiring the city to pay taxes on this property, and that the defendant has, for each of the years mentioned in the plaintiff's petition, paid all the taxes required by the state of Texas, such as its franchise tax and the tax on its gross earnings. The trial court overruled all the demurrers, and rendered judgment to the effect that the state take nothing by its suit.

The facts agreed upon are as follows:

"First. That the defendant herein is a corporation duly incorporated under the laws of the state of Maryland, and was doing business on the 1st day of January, 1898, and has continued to do business since said date in the state of Texas up to the present time, under a regular permit to do business in this state, issued in full compliance with the laws of this state, and it has no managing agent or general agency of any character within the state having any control over the securities hereinafter mentioned, and that the coupons representing interest on the securities hereinafter mentioned are at maturity transmitted to and collected from the home office.

"Second. It is agreed that the securities, the taxes upon which are sued for in this cause, were deposited with the Treasurer of the state of Texas prior to the 1st day of January, 1898, under and by virtue of the provisions of chapter 165, Acts 25th Leg. p. 244, and were on deposit with said State Treasurer under and by virtue of the requirements of said law, and not otherwise, on the 1st day of January, 1898, and on the 1st day of January, 1899, the 1st day of January, 1900, and the 1st day of January, 1901, and that said deposit of said securities was made with the State Treasurer, in compliance with the said law of the state of Texas, for the purpose of enabling the said defendant to do business in this state, and for no other purpose, and that the cash market value of said securities was, as assessed on the 1st day of January of each of said years, the sum of $50,000.

"Third. That on the 1st day of January, 1898, 1899, 1900, and 1901, the said defendant had on deposit with the Treasurer of the state of Texas, in compliance with the laws of the state of Texas as aforesaid, the following securities or evidence of indebtedness described in plaintiff's petition, to wit: $50,000 of certificates of stock of the city of Baltimore, of the cash market value on the 1st day of January of each of said years of $50,000.

"Fourth. That if the said defendant is liable for taxes at all, to the state of Texas and county of Travis, on the foregoing property, the taxes on the aforesaid property for the year 1898 due to the state of Texas and county of Travis amount to $415, and for the year 1899, $415, and for the year 1900, $398.33, and for the year 1901, $398.33; that demand has been made upon said defendant for payment of said taxes prior to the ordering and institution of this suit, and that the defendant has refused to pay same or any part thereof; that on the 30th day of January, 1902, J. E. Kaufman, tax collector of Travis county, Texas, did assess the aforesaid property for each of the aforesaid years for taxes, upon the statement given him by John W. Robbins, State Treasurer, of the amount of same for each year, being the respective amounts set out in the foregoing paragraph, and did place the aforesaid assessments for each of the aforesaid years upon his tax collector's supplemental assessment roll, which was, by the commissioners' court of Travis county, Texas, in open court, duly approved on the 30th day of January, 1902; that the defendant was duly notified of said assessment by the said J. E. Kaufman, tax collector of Travis county, Texas, on the 31st day of January, 1902, and demand was by him then made upon defendant for the payment of the taxes so assessed, and payment was refused, and suit was thereupon ordered by the commissioners' court of Travis county, Texas.

"Fifth. That the aforesaid securities so assessed for taxes, and so claimed to be liable for taxes by the state of Texas and county of Travis for the foregoing years, were never rendered for taxation for any of said years by said defendant in any other county of the state of Texas, and no other taxes on same have ever been paid in any county in the state of Texas, and that said property was subject to and rendered for taxation by defendant company under the laws of the domicile of said corporation, and was for each of said years then and there assessed for taxation, and that the taxes so assessed were then paid to the proper officials in the state of Maryland by the city of Baltimore under a statute of the state of Maryland requiring the city of Baltimore to pay taxes on all stock issued by it; that defendant has, for each of the years above mentioned, paid its franchise taxes and annual tax on gross earnings to the state of Texas, as the law requires."

James & Yeiser, for the State. Brooks & Shelley and Fiset, Miller & McClendon, for appellee.

FISHER, C. J. (after stating the facts).

The questions to be determined are: First. Is the situs of the property in question within this state, so as to authorize the state to exercise its jurisdiction to tax it? Second. Do the laws of this state relating to the taxation of property include property of the class in controversy, and has the law been complied with in rendering and assessing the property for taxes?

The state has the undoubted authority to tax all property, real and personal, within its jurisdiction. McCulloch v. Maryland, 4 Wheat. 316, 4 L. Ed. 579; Tappan v. Mer. Nat. Bank, 19 Wall. 490, 22 L. Ed. 189; Coe v. Errol, 116 U. S. 517, 6 Sup. Ct. 475, 29 L. Ed. 715; Pullman Car Co. v. Pennsylvania, 141 U. S. 18, 11 Sup. Ct. 876, 35 L. Ed. 613; Savings & Loan Ass'n v. Multnomah County, 169 U. S. 426, 18 Sup. Ct. 392, 42 L. Ed. 803; New Orleans v. Stemple, 175 U. S. 309, 20 Sup. Ct. 110, 44 L. Ed. 174; Bristol v. Washington County, 177 U. S. 144, 20 Sup. Ct. 585, 44 L. Ed. 701; Blackstone v. Miller, 188 U. S. 202, 23 Sup. Ct. 277, 47 L. Ed. 439; Piano & Organ Co. v. City of Dallas, 61 S. W. 942, 2 Tex. Ct. Rep. 262; and Western Assurance Co. v. Halliday (a recent case, decided by the United States Circuit Court of Appeals of the Sixth Circuit on November 3, 1903) 126 Fed. 257. And this power may be exercised over the property within the state, although the domicile and residence of the owner may be elsewhere. Cases supra.

The question arises, were the securities, at the time they were assessed for taxes, within this state, in the sense that it had jurisdiction over them for the purposes of taxation? The legal fiction that personal property attaches to the person of the owner, and is subject only to the jurisdiction of the laws of his domicile, is not obsolete and without force, but has been by recent and well-considered cases much modified, not only as to the classes of property that come within the spirit of the rule, but has extended a denial of an application of the doctrine where property is situated within a jurisdiction other than that of the owner, which former jurisdiction, by the exercise of its laws, assumes jurisdiction over it for the purposes of taxation, in order that it may bear its proportion of the burdens of the government of its actual situs that affords it protection. And this power may be exercised over the property of the nonresident that is in a sense intangible, which by its character in a concrete form is capable of having a value and an actual physical situs where permanently found, and in cases where its situs in the jurisdiction different from the domicile of the owner is for a business use and purpose. These cases rest upon the reason that the owner, having voluntarily, by his conduct, fixed the situs of his property...