State v. Pierce Petroleum Corporation

• Decision Date: 04 February 1928
• Docket Number: No. 28080.,28080.
• Citation: 2 S.W.2d 790
• Parties: THE STATE, Appellant, v. PIERCE PETROLEUM CORPORATION.
• Court: Missouri Supreme Court

2 S.W.2d 790

THE STATE, Appellant, v. PIERCE PETROLEUM CORPORATION.

No. 28080.

Supreme Court of Missouri, Court en Banc.

February 4, 1928.

Appeal from Circuit Court of City of St. Louis. — Hon. John W. Calhoun, Judge.

REVERSED AND REMANDED.

North T. Gentry, Attorney-General, Claude E. Curtis, Special Assistant Attorney-General, and W.E. Sloat, Special Assistant Attorney-General, for appellant.

(1) Section 12, Laws 1921, p. 664, applies to foreign and domestic corporations in valuing no-par stock for assessment of franchise tax. (a) The fundamental rule in construing statutes is to ascertain and give effects to the intent of the Legislature. Consolidated School Dist. v. Hackman, 302 Mo. 560; Lincoln University v. Hackman, 295 Mo. 125; Keeney v. McVoy, 206 Mo. 65. (b) The object and purpose of the Legislature in passing a law, as well as the possible results, must be considered in construing a statute. State ex rel. Hackman v. Boonville, 293 Mo. 319; Straughn v. Meyers, 268 Mo. 591; Glaser v. Rothschild, 221 Mo. 210. (c) Where there are two statutes dealing with a subject, one in a general way, they should be read together and harmonized if possible. State ex rel. Buchanan Co. v. Fulks, 296 Mo. 626; State ex rel. Lashley v. Becker, 290 Mo. 620. (d) If they can consistently do so, the court should give effect to an act of the Legislature, and construction which produces the greatest harmony should prevail. Home Ins. Co. v. Wickham, 281 Mo. 315; State ex inf. v. Street Ry. Co., 146 Mo. 168. (2) When a foreign corporation enters a state for the purpose of doing business, it agrees to conform to and be bound by the laws of that state the same as a domestic corporation. State ex inf. Hadley v. Standard Oil Co., 218 Mo. 377, 194 Mo. 149; State ex rel. v. Cook, 171 Mo. 362; Hooper v. California, 155 U.S. 652; Allgeyer v. Louisiana, 165 U.S. 583. (b) A law passed by a state assessing no-par stock in domestic corporations at one hundred dollars per share, may be constitutional. A foreign corporation would necessarily be governed by the same law. Roberts & S. Co. v. Emmerson, 271 U.S. 54. (c) A state has the right to fix the method of valuation on stock for assessing a franchise tax so long as it is fair. State v. Margay Oil Co., 269 S.W. 65.

Fordyce, Holliday & White for respondent.

(1) That part of Section 12, Laws 1921, page 664, fixing an arbitrary valuation on no-par-value stock of one hundred dollars per share does not relate to or in any way affect the computation of the franchise tax under Chap. 90, Art. 1, R.S. 1919, as amended by Laws 1921, p. 121. (a) The fundamental rule in construing statutes is to ascertain and give effect to the intention of the Legislature. R.S. 1919, sec. 7058; St. Louis v. Lane, 110 Mo. 254; Keeney v. McVoy, 206 Mo. 42; Clark v. Railroad, 219 Mo. 524; De Hart v. School District, 214 Mo. App. 651. (b) Every statute must be construed with reference to the object intended to be accomplished by it, and in order to ascertain this object it is proper to consider the occasion and necessity for its enactment. Southwest Mo. Light Co. v. Scheurich, 174 Mo. 235; State v. Balch, 178 Mo. 392; State v. Hackman, 293 Mo. 313; State ex rel. v. Sullivan, 282 Mo. 261. (c) By the rule "ejusdem generis," where general words follow the enumeration of particular classes of persons or things, the general words will be construed as applicable only to persons or things of the same general nature or class as those enumerated. State ex rel. v. Corkins, 123 Mo. 56; State v. Krueger, 134 Mo. 269; State v. Longfellow, 95 Mo. App. 660; St. Louis v. Laughlin, 49 Mo. 559; State v. Dinnisse, 109 Mo. 434; State ex rel. v. Fry, 186 Mo. 198; R.S. 1899, sec. 9747. (d) In seeking the intention of a public enactment it is always permissible to consider the consequences of any construction proposed to be given to it. Limar v. City of Limar, 128 Mo. 210; Fruin v. Meredith, 145 Mo. App. 601; De Paige v. Douglas, 234 Mo. 78. (e) Revenue laws, such as laws imposing taxes and licenses operating to impose burdens upon the people or to restrict them in the enjoyment of their property and pursuit of their occupations, are, therefore, strictly construed, and the provisions of such statutes are not to be extended beyond the clear import of the language used in the legislative act. (b) Where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise, and by the other of which such questions are avoided, it is the duty of the courts to adopt the latter. Texas v. Ry. Co., 66 L. Ed. 572; United States v. Railroad Co., 213 U.S. 366. (2) Assuming that the part of Section 12, Laws 1921, p. 664, involved in the case at bar, controls, the imposition of a franchise tax on that basis is unconstitutional. Secs. 3 and 4, Art. 10, Mo. Constitution; Fourteenth Amendment, U.S. Constitution; Hammond Beef Co. v. Best, 91 Me. 431; Santa Clara County v. So. Pac. Railroad Co., 118 U.S. 394; Southern Railroad Co. v. Green, 216 U.S. 400; A.T. & S.F. Railroad Co. v. Mathews, 174 U.S. 96; Southern Railroad Co. v. Green, 216 U.S. 412; Hayes v. Missouri, 120 U.S. 71; People ex rel. Taxi Co. v. Walsh, 195 N.Y. Supp. 184; People ex rel. v. Mensching, 187 N.Y. 8; Connolly v. Union Sewer Pipe Co., 184 U.S. 540; Southern Railroad Co. v. Greene, 216 U.S. 400; Raymond v. Traction Co., 207 U.S. 20; Gulf, C. & S. Ry. Co. v. Ellis, 165 U.S. 150; Rosenblum v. State (Neb.), 89 N.W. 1053; Cotting v. Kansas Stock Yards, 183 U.S. 79; State v. Baskowitz, 250 Mo. 82; Sams v. St. L. & Meramec River Co., 174 Mo. 53; Air-Way Elec. Appliance Corp. v. Day, 266 U.S. 71; W.U. Tel. Co. v. Kansas, 216 U.S. 1; Ludwig v. Tel. Co., 216 U.S. 146; Crane v. Looney, 245 U.S. 178; Frick v. Pennsylvania, 268 U.S. 473; Union Transit Co. v. Kentucky, 199 U.S. 194; State v. F. Inv. Co., 305 Mo. 88; State ex rel. Tank Car Co. v. Sullivan, 282 Mo. 261; State v. Margay Oil Co., 269 S.W. 63; Detroit Mortgage Co. v. Sec. of State, 211 Mich. 320; Staples v. Petroleum Co., 250 S.W. 293; N.A. Petroleum Co. v. Hopkins, 105 Kan. 161; Warren v. Bank, 149 Ill. 25; Insurance Co. v. Cohen, 179 U.S. 262; U.S. Mortgage Co. v. Sperry, 138 U.S. 313; Nathan v. Lee, 152 Ind. 232; Stack v. Lumber Co., 151 Mich. 21; Berry v. Rood, 168 Mo. 316; City of Independence v. Gates, 110 Mo. 374.

RAGLAND, J.

Appellant's statement of the case, which is acquiesced in by respondent, is as follows:

"This case arises out of an action to recover delinquent franchise taxes. Defendant, respondent in this court, is a private corporation organized under the laws of the State of Delaware and licensed to do business under the laws of the State of Missouri. In compliance with our franchise-tax law, defendant made its report in writing to the State Tax Commission for the year 1926. Said report disclosed that said defendant corporation was organized in Delaware with two million five hundred thousand (2,500,000) shares of stock having no stated par value; that three and one-tenth per cent of the total number of shares were employed within the State of Missouri; that seventy-seven thousand five hundred (77,500) shares of stock represented three and one-tenth of the total number of shares; and that said seventy-seven thousand five hundred (77,500) shares of no-par value represented that part of defendant's outstanding capital stock and surplus said to be employed in Missouri.

"Upon the basis of this report, the Tax Commission assessed a tax against the defendant corporation on the sum of seven million seven hundred and fifty thousand dollars ($7,750,000); that amount being arrived at by allotting to each no-par-value share of stock, said to be employed in this State, an arbitrary value of one hundred dollars each, as provided by law. The resulting tax was $3875. Defendant paid to the State of Missouri, $410.18, the amount it claimed it owed for franchise tax for 1926, said amount being arrived at by basing the tax on the actual value of the no-par-value shares employed in this State, instead of giving an arbitrary value of one hundred dollars to each share. The balance of the tax, $3464.82, as assessed, remaining due and unpaid on June 1st (the delinquent date named in the statute), the State Treasurer certified the same to the Attorney-General for collection.

"The Attorney-General filed suit to collect the tax and agreed by stipulation to waive penalty and interest. Defendant filed its answer, setting up as a defense that there was no law authorizing the State to tax a corporation having share of stock with no stated par value, for the purpose of the franchise tax at one hundred dollars per share; and further, that such a method of taxation was unconstitutional.

"The case was submitted to the court on the pleadings, and judgment was rendered for the defendant. From this judgment, plaintiff appeals to this court."

It is the State's contention that Section 12 of an act relating to stock corporations, passed by the General Assembly in 1921 (Laws 1921, p. 664), requires that for the purpose of computing a corporation's annual franchise tax each share of its stock which is without any nominal or par value shall be considered the equivalent of a share having a nominal or par value of one hundred dollars.

Respondent's position is: First, that said Section 12 in no way relates to the computation of the franchise tax which is required to be paid by corporations under the laws of this State; and, second, that if said section be construed as requiring that an arbitrary value of one hundred dollars per share be put on no-par-value stock for the purpose of computing the franchise tax, the section in that respect violates designated provisions of the State Constitution and the Constitution of the United States. The proper construction of the statute is therefore the first, and possibly the only, question for determination.

I. Prior to 1921 all the statute laws of this State relating to...