The Ottawa Glass Co. v. Mccaleb

• Decision Date: 31 January 1876
• Citation: The Ottawa Glass Co. v. Mccaleb, 81 Ill. 556, 1876 WL 10048 (Ill. 1876)
• Parties: THE OTTAWA GLASS COMPANYv.H. A. MCCALEB, County Clerk, etc.
• Court: Illinois Supreme Court

81 Ill. 556

1876 WL 10048 (Ill.)

THE OTTAWA GLASS COMPANY

v.H. A. MCCALEB, County Clerk, etc.

Supreme Court of Illinois.

January Term, 1876.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of LaSalle county; the Hon. EDWIN S. LELAND, Judge, presiding.

Mr. ARTHUR J. CATON, for the appellants.

Mr. JUSTICE WALKER delivered the opinion of the Court:

Appellants filed their bill in chancery, to restrain the extension of the State and other taxes against the property of the company, which had been assessed and returned for the purpose. The return made by the Auditor of Public Accounts, was the amount agreed to and fixed by the board of equalization. The township assessor returned the capital stock as given in by the company at $32,500, which was divided into shares of $100 each, all of which had been sold and paid for, and the proceeds invested in property owned by the company. The bill averred that the shares of capital stock were worth no more than 75 cents on the par value of the same.

The company also listed for taxation, $13,000 of personal property, and $33,000 worth of real estate, making, at the valuation they placed on their property, $46,000 in the aggregate. The county board, in equalizing the assessment of the various towns of the county, raised this valuation to $50,690; but the State Board of Equalization reduced it to $37,257, and it was so returned by the Auditor to the county clerk, for the extension of the several taxes on that sum.

The bill charges, and the demurrer admits, that the State board found the full cash value of the capital stock and franchise of the company to be $32,500; that they added to that sum the amount of the indebtedness owing by the company, being $103,500, returned to the town collector, making the sum of $136,000, and then in some manner reduced that amount to $98,677, which they called capital stock, and from which they deducted $37,257, the equalized value of their tangible property, leaving for taxation the sum of $61,420, which amount was certified to the county clerk upon which to extend the several taxes, in addition to the tangible property of the company.

The officers of the company, conceiving the valuation of the capital stock and franchise against the company to be unauthorized and oppressive, filed this bill to enjoin and restrain the county clerk from extending the tax against this valuation on the collector's books. Defendants demurred to the bill. The court sustained the demurrer, pro forma, and rendered a decree dismissing the bill, and the company appeals.

No question is made as to the tangible property or its assessment; but it is urged, that there is no constitutional warrant for the State board to assess the capital stock and franchise against the company for taxation; that the shares belong to the stockholders, are their property, and they should pay taxes on them; that to do so is to tax the company on property and rights which belong to others, and which the company does not own. But it has been held, that a corporation is possessed of three kinds of property subject to taxation: First, the capital stock; second, the corporate property; and, third, the franchise; and that the shares may be assessed against their owners. See Gordon v. The Appeal Taxes, 3 Howard, 143, and Porter v. The Rockford, Rock Island and St. Louis Railroad Co. 76 Ill. 561, and the authorities there cited.

Our General Assembly have not gone the entire length of the doctrine announced in Gordon's case. They, on the contrary, have provided that where the tangible property or capital stock of a corporation is assessed for taxation, the shares shall not be assessed against the holders thereof. (See clause 4, sec. 3, chap. “Revenue,” R. S. 1874, p. 858.) Thus it is seen that the shareholders, under this provision, escape taxation on their individual shares, when the company lists their tangible property as capital stock. We perceive no excess in the exercise of power by the General Assembly, in making this provision. The company, through its directors, in exercising the franchise, and managing the business for the shareholders, act as quasi trustees; and their relation to each other is so close, in the management of the corporation, their business and property thus held and managed, that no reason is perceived why the General Assembly, if they believe that such a mode is better calculated to prevent the shares from escaping their just proportion of taxation, may not require the taxes to be paid by the corporation, and collected by them of the shareholder, by deducting the amount from his dividends or otherwise.

That a franchise has a value, and that it may be ascertained, is, we think, as clear as that a chose in action has a value that may be estimated. In estimating its value, more facts may have to be considered, as it has no market value. But the very fact that it grants rights, privileges and exemptions, not enjoyed by individuals generally, makes it desirable and gives it value. The length of time the corporation may exist, the business to which it relates, its location, and a variety of other circumstances, all, of course, enter into the value of the privilege, and should be considered in ascertaining its value. But that it has a taxable value, we entertain no doubt. And if it is property and has value, it, under the constitution, is not only liable to be taxed, but is required to be, in some appropriate mode.

If it be urged that the constitution requires that all property shall be taxed, according to its value, so that it may only be required to bear its proportion of the necessary burthen of taxation, and this property is overvalued, and, therefore, must pay more than its share, then we can only say, that the court are utterly powerless to review and fix its proportionate value. The valuation of property is conferred upon, and is solely intrusted by the organic law to another and different class of individuals and officers, than those connected with the judicial department of the government. See The Republic Insurance Co. v. Pollak, 75 Ill. 292. The constitution has declared that the persons required to make the valuation shall be elected or appointed for the purpose, and it neither gives nor contemplates an appeal from their action, to the judicial or to the executive department of the government.

It is urged that the rule adopted by the board of equalization is unjust, illegal and unconstitutional. It provides that to ascertain the fair cash value of the stock and franchise of incorporated companies, the fair cash value of the capital stock be added to the fair cash value of the debts of the company, except the debt for current expenses, and when so added together, the amount shall be considered as the fair cash value of the capital stock and franchise, less the equalized value of the tangible property, which is to be deducted from the sum thus found for the cash value of the capital stock and franchise. This, then, leaves the balance, when...