State v. Pioneer Savings & Loan Company
| Decision Date | 02 December 1895 |
| Docket Number | 9601--(108) |
| Parties | STATE OF MINNESOTA v. PIONEER SAVINGS & LOAN COMPANY |
| Court | Minnesota Supreme Court |
Case certified from the district court for Hennepin county Russell, J. Affirmed.
Order affirmed.
A. H Nunn, F. M. Nye, County Attorney, and H. W. Childs, Attorney General, for plaintiff.
An enactment granting privileges, exemptions or immunities not enjoyed by the community at large must be strictly construed. St. Peter's Church v. County of Scott, 12 Minn 280 (395); County of Hennepin v. Bell, 43 Minn. 344 45 N.W. 615; County of Ramsey v. Church of Good Shepherd, 45 Minn. 229, 47 N.W. 783; State v. Cooley, 62 Minn. 183, 64 N.W. 379. Mortgages and loans collateral to which the shares of members are pledged are not included in the shares to be taxed. But such securities and credits are a part of the assets of the association. Lister v. Log Cabin B. Assn., 38 Md. 115; State v. Hornbaker, 41 N. J. Law, 519, s. c. 42 N. J. Law, 635; Mechanics' B. & L. Assn. v. Conover, 14 N.J.Eq. 219; McGrath v. Hamilton S. & L. Assn., 44 Pa. 383; Watkins v. Workingmen's B. & L. Assn., 97 Pa. 514. The provision for taxing shares to members in the county where they reside and the exemption from taxation of part of the stock renders the act repugnant to Const. art. 9, § 3. The failure to include in the enumeration other taxable personal property renders the act repugnant to Const. art. 9, §§ 1, 3. State v. Redwood Falls B. & L. Assn., 45 Minn. 154, 47 N.W. 540; Sanborn v. Commrs. of Rice Co., 9 Minn. 258 (273); Comer v. Folsom, 13 Minn. 205 (219); State v. District Court, 33 Minn. 235, 22 N.W. 625; People's L. & H. Assn. v. Keith, 153 Ill. 609, 39 N.E. 1072. Each share of stock not pledged, up to the time of maturity of the series to which it belongs, represents the amount paid in on it without interest, unless interest be allowed by statute. This is true though the stock is fully paid up. Barker v. Bigelow, 15 Gray, 130; O'Rourke v. West Penn L. & B. Assn., 93 Pa. 308. The aggregate stock in these companies does not approach as nearly as in an ordinary corporation the equivalent of its assets. Even in an ordinary corporation the capital stock does not consist of shares of stock separately or in the aggregate. Chicago, B. & Q. R. Co. v. Siders, 88 Ill. 320; People v. Commissioners, 4 Wall. 244; State Railroad Tax Cases, 92 U.S. 575, 578. See City of Memphis v. Ensley, 6 Baxt. 553; Farrington v. Tennessee, 95 U.S. 679; Mechanics' & Farmers' Bank v. Townsend, 5 Blatchf. 315, Fed. Cas. No. 9,381; People v. Commrs. of Taxes, 23 N.Y. 192; Dewing v. Perdicaries, 96 U.S. 193. To be uniform and equal taxes must be imposed on all subjects of taxation within the jurisdiction of the taxing power. Wells v. City of Weston, 22 Mo. 384; People v. Townsend, 56 Cal. 633; Gilman v. City of Sheboygan, 2 Black, 510. Many members of these associations are nonresidents, and no method of taxing the stock, except shares within the state, is provided. The act discriminates in favor of nonresidents against citizens. Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 208, 5 S.Ct. 826; Com. v. Standard Oil Co., 101 Pa. 119. See Pittsburg, F. W. & C. Ry. Co. v. Com., 66 Pa. 73.
George D. Emery, Cross, Carleton & Cross, A. Ueland, H. W. Benton, B. Sutherland and Haynes & Chase, for defendant.
In mutual building and loan associations the stock represents the entire assets. The assets equal the debts. If a tax is levied on the stock alone, the entire assets are taxed. Any additional tax on items which constitute the value of the stock is double taxation. Pennsylvania Co. v. Com. (Pa. Sup. Ct., Oct., 1888) 15 A. 456. The value of the shares of a member includes his proportionate interest in the entire assets. People v. Commrs. of Taxes, 23 N.Y. 192; Commrs. of Rice Co. v. Citizens' Nat. Bank, 23 Minn. 280. See Savings Bank v. Nashua, 46 N.H. 389; Cheshire Co. Telephone Co. v. State, 63 N.H. 167. Where the shares are taxed, it is not the purpose of the law to tax the property which they represent. State v Redwood Falls B. & L. Assn., 45 Minn. 154, 47 N.W. 540; Cheshire Co. Telephone Co. v. State, supra; Lackawanna Co. v. First Nat. Bank, 94 Pa. 221; Board of Revenue v. Gaslight Co., 64 Ala. 269; Smith v. Burley, 9 N.H. 423; Bank of Georgia v. Savannah, Dud. (Ga.) 130. The presumption is against the intent of the legislature to impose double taxation. New York & E. R. Co. v. Sabin, 26 Pa. 242; 2 Cooley, Taxation, 227, 228; Middlesex R. Co. v. City of Charlestown, 8 Allen, 330; Rome R. Co. v. Mayor of Rome, 14 Ga. 275; Cook, Stock & Stockholders, § 567; Gillespie v. Gaston, 67 Tex. 599, 4 S.W. 248; Tennessee v. Whitworth, 117 U.S. 129, 6 S.Ct. 645. See Cooley, Taxation, 225, 229, n. 1.
Laws 1891, c. 131, in excepting from taxation shares pledged on a loan, simply follows the principle of the general tax law, and does not exempt the actual assets of the company or its members. Even if the section of the act of 1891 which provides how the individual shall be assessed on his stock is void, it does not follow that the value of the assets represented by the stock is to be assessed to the corporation. What it is to be taxed for is limited to furniture and real estate. The residue of its assets must be taxed as "stock" to the individual member either under Laws 1891, c. 131, § 35, or Laws 1889, c. 236, § 35.
If the law of 1891 is open to objection, it would not, as to the sections under consideration, have the effect of repealing the corresponding parts of the law of 1889. A repeal of acts and parts of acts inconsistent with a statute does not affect laws inconsistent only with such parts thereof as are themselves constitutional. Miller v. Edwards, 8 Col. 528, 9 P. 632; Devoy v. Mayor of New York, 35 Barb. 264; Harbeck v. Mayor of New York, 10 Bosw. 366; Sullivan v. Adams, 3 Gray, 476; Tims v. State, 26 Ala. 165; State v. Burton, 11 Wis. 50; Shepardson v. Milwaukee & B. R. Co., 6 Wis. 605; Childs v. Shower, 18 Iowa 261; People v. Tiphaine, 3 Park. Cr. R. 241. The invalid section does not affect the residue of the act. Reimer v. Newel, 47 Minn. 237, 49 N.W. 865; City of Duluth v. Krupp, 46 Minn. 435, 49 N.W. 235; Endlich, Interpretation St. § 265. The failure of the act to provide for assessment of the stock to the company and its provisions that such stock be assessed to the member are within the province of the legislature. People's L. & H. Assn. v. Keith, 153 Ill. 609, 39 N.E. 1075. See State v. District Court, 33 Minn. 235, 22 N.W. 625. It does not follow that when the last clause of section 35 is found unconstitutional, sections 34 and 35 must follow the same construction. Cooley, Const. Lim. 209 (177); O'Brien v. Krenz, 36 Minn. 136, 30 N.W. 458. Statutes in favor of those on whom taxes are assessed or burdens are laid are remedial and to be liberally construed. Sutherland, St. Const. § 441, and cases there cited.
C. H. Childs, for defendant.
The burdens of taxation are equally distributed. The fact that a tax law might in its application, under certain circumstances, fail to reach certain property, does not render it invalid for want of uniformity. The rule of uniformity does not require that everything which the legislature might make taxable should be made so in fact. Cooley, Const. Lim. 632 (514). Inequality does not necessarily follow from restricting taxation to a few subjects, or to a single subject: it is only when individuals are singled out for exception that inequality is manifest. 1 Desty, Taxation, 192; Durach's Appeal, 62 Pa. 491; Fletcher v. Oliver, 25 Ark. 289; Youngblood v Sexton, 32 Mich. 406. The legislature may in its discretion provide different methods for taxation of different subjects. The requirement of equality does not preclude the division of things taxable into classes, and the imposition of taxes which, while bearing equally on the different members of each class, bear unequally on the classes in the aggregate. 25 Am. & Eng. Enc. Law, 62; City of Dubuque v. Illinois C. R. Co., 39 Iowa 56; State v. Mann, 76 Wis. 469, 45 N.W. 526, and 46 N.W. 51; State R. R. Tax Cases, 92 U.S. 575; Singer Mnfg. Co. v. Wright, 33 F. 121; Kentucky R. R. Tax Cases, 115 U.S. 321, 6 S.Ct. 57; Gibbons v. District of Columbia, 116 U.S. 404, 6 S.Ct. 427; Davenport Bank v. Davenport Board of Equalization, 123 U.S. 83, 8 S.Ct. 73. Different kinds of corporations or corporations engaged in different kinds of business may be placed in different classes. Coal Run Coal Co. v. Finlen, 124 Ill. 666, 17 N.E. 11; Pacific Exp. Co. v. Seibert, 142 U.S. 339, 12 S.Ct. 250. See Commrs. of Rice Co. v. Citizens' Nat. Bank, 23 Minn. 280. Although the law may be inoperative as to credits of non resident stockholders, it is not unconstitutional because not sufficiently comprehensive. The presumption is in favor of the validity of statutes. Ogden v. Saunders, 12 Wheat. 213; Com. v. Erie R. Co., 62 Pa. 286; Bourland v. Hildreth, 26 Cal. 161, 228. If the same law is equally applicable to an association having its membership entirely within a state and to one having nonresident stockholders, the court in passing on a law of general application is bound to assume the state of facts which will uphold its validity. Wellington et al., Petitioners, 16 Pick. 87. Even if the value of pledged shares escape taxation, and the clause excepting such shares be void, it does not follow that the whole of section 35 is void. State v. Tuttle, 53 Wis. 45, 9 N.W. 791; State v. Exnicios, 33 La. An. 253; People v. Lawrence, 36 Barb. 177; Railroad Companies v. Schutte, 103 U.S. 118. If the whole of section 35 be void, section 34 still stands. The provision of the constitution requiring laws to be passed taxing all moneys, credits, etc., is not self-executing. Willis v. Mabon, 48 Minn. 140, ...
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