State v. Gehner

• Decision Date: 08 April 1927
• Docket Number: No. 27362.,27362.
• Citation: 292 S.W. 1028
• Court: Missouri Supreme Court
• Parties: STATE ex rel. LIGGETT & MYERS TOBACCO CO. v. GEHRIER, City Assessor, at al.

292 S.W. 1028

STATE ex rel. LIGGETT & MYERS TOBACCO CO. v. GEHRIER, City Assessor, at al.

No. 27362.

Supreme Court of Missouri, in Banc.

April 8, 1927.

Original proceeding by certiorari by the State of Missouri, at the relation of Liggett & Myers Tobacco Company against Frederick Gehner, as Assessor of the City of St. Louis, and as President of the Board of Equalization of the City of St. Louis, and as Head of the Assessment Division of the Department of Finance of the City of St. Louis, and others, as Members of the Board of Equalization of the City of St. Louis, to quash assessment of income taxes against relator. Motion to quash allowed.

Jourdan & English, of St. Louis, for relator.

North T. Gentry, Atty. Gen., George W. Crowder, Asst. Atty. Gen., and A. R. Morse, of Jefferson City (Julius T. Muench, City Counselor, and Oliver Senti, 1st Associate Counselor, both of St. Louis, of counsel), for respondents.

BLAIR, J.

This is an original proceeding by certiorari, whereby relator seeks to quash the assessment of income taxes against it for the year 1925 by the board of equalization of the city of St. Louis. The pleadings are the petition of relator, the return of respondent, setting forth the records of the board of equalization, and relator's motion to quash the record of respondent.

The facts are not in dispute. They are concisely stated in the record made by respondent board when it assessed the tax in question. We quote therefrom as follows:

"The board finds and determines .from the evidence that Liggett & Myers Tobacco Company is, and at all times herein mentioned was, a corporation organized and existing under the laws of the state of New Jersey, and duly licensed to do business in the state of Missouri and having its principal office and place of business in the city of St. Louis, Mo.; that a blank form for the making of income tax returns to the state of Missouri for income received during the year 1925 by said company was duly served by the assessor of the city of St. Louis, Mo., upon said Liggett & Myers Tobacco Company, and said corporation in due and proper time prepared a return truly stating the gross amount of its income received within the year 1925 from all sources within the state of Missouri, in the amount of $1,673,053.36; that from said gross amount of its income the said Liggett & Myers Tobacco Company returned deductions therefrom as authorized in the first, second, and third clauses of the second subdivision of section 13114, Revised Statutes of Missouri for the year 1919, which deductions from said gross income amounted in the aggregate to $850,447.76.

"The board further finds that said Liggett & Myers Tobacco Company made a further deduction from the said gross amount of its income for taxes paid within the year imposed by the authority of the United States in the amount of $1,789,427.58, and also deducted from the gross amount of said income, taxes paid within the year imposed under the authority of the state of Missouri and its political subdivisions in the amount of $40,667.73, and that when said deductions were made the total amount of said deductions exceeded the amount of said gross income from all sources within the state of Missouri by $1,007,489.71.

"The board further finds that the said amount deducted for taxes imposed by the authority of the United States truly and correctly represents the amount of income taxes imposed by the authority of the United States and paid during the year 1925 to the collector of internal revenue of the United States at and within the state of Missouri, and the board further finds that the said amount deducted for taxes paid within the year 1925, imposed by the authority of the state of Missouri and the city of St. Louis in the amount of $40,667.73, is true and correct.

"However, the board finds that the said amount of taxes so paid within the year 1925, imposed by the authority of the United States, represents the amount paid to the United States for income taxes assessed against said Liggett & Myers Tobacco Company by the authority of the United States upon the income of said Liggett & Myers Tobacco Company from all sources within the United States, and the board finds that the proportion of said income tax imposed by the United States which the gross amount of the income of said Liggett & Myers Tobacco Company for the year 1925 from business transacted and capital invested within the state bears to the gross amount of its income derived from all sources within and without the state amounts to $79,736.89; and the board therefore orders the said deduction of $1,789,427.58 for taxes paid within the year, imposed by authority of the United States, reduced to the sum of $79,736.89, notwithstanding that all said taxes imposed by the authority of the United States were paid within the state of Missouri; and the board therefore finds that said Liggett & Myers Tobacco Company is taxable for income taxes to the state of Missouri on the amount of $702,200.98, and orders that said assessment be made against said company for income taxes for the year 1925 in said amount."

It is not necessary to detail the steps taken by relator in resisting the order of the board of equalization. The appropriateness of relator's remedy by certiorari is not challenged. The sole question is whether or not, in determining its net taxable income in this state, relator is entitled to deduct from the gross amount of its income from its business within the state of Missouri, in the year 1925, all taxes paid by it in the state of Missouri and within said year, and imposed by the authority of the United States upon its income from all sources within the United States. If so, the record of the board of equalization should be quashed. If not, our writ should be quashed.

Respondents' contention is clearly stated as follows:

"We respectfully submit that taxes imposed by authority of the United States, paid within the state, means federal taxes paid on business done within this state, and does not mean such federal taxes paid by a foreign corporation as have undergone the process of being carried or sent to a United States internal revenue collector, who is located within this state; that it was the intention of the Legislature to tax the income of all foreign corporations, and it was not its...