State v. Freehold Inv. Co.
Citation | 264 S.W. 702 |
Decision Date | 31 July 1924 |
Docket Number | (No. 25145.) |
Parties | STATE, v. FREEHOLD INV. CO. |
Court | United States State Supreme Court of Missouri |
Appeal from Circuit Court, Greene County; Orin Patterson, Judge.
Action by the State against the Freehold Investment Company. Judgment for defendant, and the State appeals. Reversed and remanded, with directions.
Jesse W. Barrett, Atty. Gen., and Harry C. Willson, Sp. Asst. Atty. Gen., for the State.
C. W. Hamlin, of Springfield, for respondent.
Appellant has made and respondent has accepted the following statement:
The act under which the suit was brought is found in Laws of 1917 at pages 237 to 242. It was amended in 1919 and again in 1921. Such amendments need not be noticed, for the reason that the validity of the corporation franchise tax here involved must be determined from the original 1917 act. Briefly sketched, section 1 of the act then in force provides that every corporation, whether organized under the laws of this state or not, engaged in business in this state, shall pay an annual franchise tax equal to three-fortieths of 1 per cent. of the par value of its outstanding capital stock and surplus employed in this state. The act does not apply to corporations not organized for profit, or to express and insurance companies, a tax upon which was otherwise provided for. The details provided for determining and collecting the tax need not be recited. Sections 4, 5, and 6 of the act provide for reports from, and payment of certain fiat fees by, corporations having no capital stock, insurance companies, and building and loan associations.
It is the contention of respondent that the act violates certain provisions of our state Constitution and the Fourteenth Amendment to the federal Constitution. In its brief respondent has apparently abandoned the contentions, made below in its demurrer to the petition, that the act violates section 4 of article 10 of our Constitution, which provides that "all property subject to taxation shall be taxed in proportion to its value." We think the question is no longer an open one in this state, in view of the following cases: Marquette Hotel Investment Co. v. Tax Commission, 282 Mo. 213, 221 S. W. 721; Mass. Bond. & Ins. Co. v. Chorn, 274 Mo. 15, 201 S. W. 1122; Express Co. v. St. Joseph, 66 Mo. 675, 27 Am. Rep. 382. The great weight of authority is to the effect that a franchise tax is not a property tax. Southern Gum Co. v. Laylin, 66 Ohio St. 578, 64 N. E. 564; State v. Railroad Co., 45 Md. 361, 24 Am. Rep. 511; Phoenix Carpet Co. v. State, 118 Ala. 143, 22 South. 627, 72 Am. St. Rep. 143; State v. Insurance Co., 89 Ala. 338, 7 South. 753; People ex rel. v. Knight, 174 N. Y. 475, 67 N. E. 65, 63 L. R. A. 87; People v. Insurance Co., 92 N. Y. 328.
Respondent does not contend in its brief here, as in its demurrer below, that the act violates section 30, article 2, of our Constitution, or the due process clause of the Fourteenth Amendment to the federal Constitution. This very act was sustained by the United States Supreme Court as against such attack in St. Louis-San Francisco Ry. v. Middlekamp, 256 U. S. loc. cit. 229, 41 Sup. Ct. 489, 65 L. Ed. 905. The constitutional attacks still made by respondent are that the act violates section 3, article 10, of the Missouri Constitution, and the "equal protection of the laws" clause of the Fourteenth Amendment to the federal Constitution. It is asserted that the act does not afford equal protection of the laws, for the reason that the tax is not uniform upon the same class of subjects within the state, as required by section 3 of article 10 of the Missouri Constitution. Therefore, if the act be found not to be violative of this section of the Missouri Constitution, we may safely assume it affords equal protection of the laws, as required under the federal Constitution.
In State ex rel. Standard Tank Car Co. v. Sullivan, 282 Mo. 261, 221 S. W. 728, this court required the secretary of state to grant authority to do business in this state to a corporation organized under the laws of another state and having shares of common stock of no stated par value. Our statutes were there held to contain no authority for the organization in this state of such a corporation. At pages 280 and 281 (221 S. W. 734) Judge Goode used the following language:
Respondent has seized upon this language as authority for the proposition that a foreign corporation, without capital stock and organized for profit, may be admitted to do business in this state and be subject only to the flat corporation franchise tax of $25 per annum, while a Missouri corporation, engaged in like business and employing the same amount of property and assets in this state, is subject to a corporation franchise tax much greater in amount. Thus respondent finds discrimination under the act against Missouri corporations, in favor of corporations not organized under the laws of this state, but engaged in business herein, and argues that thus the franchise tax provided for does not apply uniformly upon the same class of subjects and violates section 3 of article 10 of our Constitution.
For the purposes of the case, we will assume that, if respondent's contention that only the $25 flat fee is imposable upon such corporations is sound, discrimination and therefore want of uniformity exist. But we do not agree with respondent's premise that a corporation, organized for profit under the laws of a foreign state and having no capital stock, may come into this state and do business herein, and satisfy the Corporation Franchise Tax Law of 1917 by paying a flat fee of $25 per annum.
Let us first attend the Standard Tank Car Case. It must be remembered that the amount and application of the corporation franchise tax were not in any wise matters of decision in that case. In deciding that a corporation having common stock of no stated par value should be licensed to do business in this state, Judge Goode merely referred to the Corporation Franchise Tax Law to illustrate his point that the Legislature had passed laws looking to the possibility of corporations without capital stock being organized in this state and providing for taxing corporations of other states having no capital stock.
But if Judge Goode in that case intended to hold (and we think he had no intention of so holding) that a foreign corporation, having no capital stock and organized for profit, could do business in this state by paying the flat corporation franchise tax of $25 per annum, such holding must be regarded as obiter. When Judge Goode observed, "But section 6 of the Franchise Tax Law includes, among foreign corporations having no capital stock upon which a franchise tax may be laid, not only mutual and other insurance companies organizable under our statutes, but any other foreign, corporation organized for profit and without a capital stock," he did not use the exact language of section 3. Nowhere in the section, and particularly not in referring to "other corporation not organized strictly for religious, charitable or educational purposes and having no capital...
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