The Harvester Building Company v. Hartley

• Decision Date: 07 October 1916
• Docket Number: 20,319
• Citation: 160 P. 971,98 Kan. 732
• Parties: THE HARVESTER BUILDING COMPANY, Appellee, v. J. O. HARTLEY et al., as the Board of County Commissioners of the County of Saline et al., Appellants
• Court: Kansas Supreme Court

160 P. 971

98 Kan. 732

THE HARVESTER BUILDING COMPANY, Appellee, v. J. O. HARTLEY et al., as the Board of County Commissioners of the County of Saline et al., Appellants

No. 20,319

Supreme Court of Kansas

October 7, 1916

Decided July, 1916.

Appeal from Saline district court; DALLAS GROVER, judge. Opinion flied October 7, 1916. Reversed.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

TAXATION -- Listing Capital Stock of Certain Corporations for Taxation--Statute Construed. The statute providing that no person shall be required to list for taxation any portion of the capital stock of certain corporations, but that their agents shall list "the full amount of stock paid in and remaining as capital stock," which shall be taxed at its true value, as other personal property, a deduction being first made of the amount of stock invested in specific property which is given to the assessors for taxation, is interpreted to mean that taxes are to be paid upon the actual value of the shares of stock outstanding, less the amounts assessed against specific property, and that this rule applies even where the corporation is engaged in no other business than in renting real estate which it has procured by the expenditure of the whole amount paid in by stockholders, and the stock is appraised at a greater value than the realty.

S. M. Brewster, attorney-general, S. N. Hawkes, John L. Hunt, assistants attorney-general, and Leonard A. Hamner, county attorney, for the appellants.

Z. C. Millikin, of Salina, for the appellee.

OPINION

MASON, J.:

The taxing officers of Saline county assessed for taxation the capital stock of the Harvester Building Company, a Kansas corporation having its principal place of business in that county, at $ 14,500. This sum was arrived at by appraising the corporation's stock at $ 60,000, which was the amount of its authorized and paid in capital, and deducting therefrom the assessed value of its real estate in the county, $ 45,500. The company obtained a judgment enjoining the collection of the tax based on this assessment, and the county officers appeal.

It was shown that the entire capital of the corporation had been used in the purchase of real estate, and that its business consisted solely in renting that property. The company contends that in paying taxes on the realty it had made its full contribution to the cost of government; that as it owned no other property it had nothing upon which a further tax ought to be imposed; that the additional assessment was in violation of the statute and of the rule of equality and uniformity in taxation. The statute invoked reads as follows, the phrases particularly relied on being italicized:

" That no person shall be required to include in the list of personal property any portion of the capital stock of any company or corporation which is required to be listed by such company or corporation; but all incorporated companies, except such companies and corporations as are specially provided for by statute, shall be required to list by their designated agent in the township or state [city] where the principal office of said company is kept, the full amount of stock paid in and remaining as capital stock, at its true value in money, and such stock shall be taxed as other personal property: Provided, That such amount of stock of such companies as may be invested in real or personal property which, at the time of listing said capital stock, shall be particularly specified and given to the assessors for taxation, shall be deducted from the amount of said capital stock." (Gen. Stat. 1909, § 9229.)

It is urged that as the entire amount paid in by stockholders has been expended for real estate, the deduction of the amount of stock so invested from the amount paid in will leave nothing whatever to be listed and taxed; that the statute undertakes to impose a tax upon the capital stock, which is the property of the corporation, and not upon the shares of stock, which are owned by its individual members. The argument is plausible, for this distinction between the phrases "capital stock" and "shares of stock," as used in taxation statutes, is generally recognized. (1 Words & Phrases, p. 965; 10 Cyc. 364, 365; 2 Cook on Corporations, 7th ed., § 563; Powers v. Detroit & Grand Haven Ry., 201 U.S. 543, 559, 50 L.Ed. 860 26 S.Ct. 556.) As suggested, however, in the case last cited, "the terms 'share,' 'stock,' 'capital,' 'capital stock' are of frequent and not uniform use, and we have often to turn to the context to see what is intended by its use in a particular case." (p. 559. See, also, 1 Cook on Corporations, 7th ed., § 8.) The obvious purpose of the statute under consideration is in effect to require the corporation to list for taxation, and pay the taxes upon, the property which otherwise the shareholder would have to return and answer for. The law undertakes to reach the property of the individual through the organization. This result is ordinarily accomplished, as in the statute relating to the taxation of banks (Gen. Stat. 1909, § 9298), by providing in so many words that the assessed value of any real estate shall be deducted from the original assessment of...