Washburn Wire Co. v. Bliss
Decision Date | 31 December 1918 |
Docket Number | No. 5206.,5206. |
Parties | WASHBURN WIRE CO. v. BLISS et al., Board of Tax Com'rs. |
Court | Rhode Island Supreme Court |
Exceptions from Superior Court, Providence and Bristol Counties; Willard B. Tanner, Presiding Justice.
After the assessment by Zenas W. Bliss and others, as the Board of Tax Commissioners, of the corporate excess of the Washburn Wire Company, the latter appealed to the circuit court. From a decision reducing the corporate excess tax, the Tax Commissioners bring exceptions. Reversed and remitted, with directions.
Swan & Keeney, of Providence, for petitioner.
Herbert A. Rice, Atty. Gen., for respondents.
This cause is before the court on bill of exceptions brought by the respondents, the state board of tax commissioners, whereby exception is taken to a decision of the superior court reducing the petitioner's corporate excess tax assessed by said board for the year ending December 31, 1916. The facts in the case, which are not in dispute, are as follows:
The petitioner, the Washburn Wire Company, is incorporated under the laws of the state of Maine. It owns no property and carries on no business in that state. For a number of years prior to 1916 it had carried on the business of manufacturing and selling wire and steel products. The offices of the company and the principal manufacturing plant were located in East Providence, in this state. The company also operated a branch manufacturing plant in New York City. Prior to the year 1916, the petitioner was allowed a deduction, from the aggregate value of its capital stock and indebtedness, on account of the value of its plant and other tangible assets situate in New York, in determining the amount of its corporate excess in Rhode Island, so that no tax was in fact imposed upon that part of such aggregate value which arose from the ownership of its New York assets. Public Laws 1912, c. 769, §§ 9, 10, 11; Id. c. 784, § 3.
In May, 1916, at the annual meeting of the stockholders of the Washburn Wire Company, a statement by the treasurer of the company was presented to the stockholders the material parts of which are as follows:
"The officers have also had prepared a proposed contract transferring the New York plant to the New York corporation, and same is submitted herewith for your approval."
The plan thus proposed was approved by the stockholders and the following vote was passed:
"Resolved, that the stockholders of the Washburn Wire Company hereby approve the organization of a New York corporation, in accordance with the certificate of incorporation read to this meeting, to take over the assets and business of this company in New York state as of June 1, 1916, subject to the liabilities there owing as of that date, and that the directors and proper officers of the company be and they are hereby authorized to take such action in the matter as may seem necessary or proper and as they may be advised by counsel, including the execution of the contract read to this meeting and contained in the statement of the treasurer hereinbefore recorded, and of any and all other contracts, deeds, and agreements as may be necessary to carry the said transfer into effect."
We have quoted at some length from the records of the company as we think they serve to Illumine both the purpose and the result sought to be obtained. The New York corporation, the name of which is "Washburn Wire Company, Incorporated," was organized in May, 1916. The amount of capita] with which the corporation was to begin and carry on business was fixed in the certificate of incorporation at $5,000. The company was authorized to issue not exceeding 1,000 shares of capital stock, which it was provided should have no nominal or par value. The board of directors were authorized to have one or more offices, and to keep the books of the company within or without the state of New York; but the company was required to always keep at its principal office in New York correct books of account of all its business and transactions, a stock-book containing the name and residence of each stockholder, and showing the number of shares of stock held and the amount paid thereon by each stockholder, which books should be open daily to stockholders and judgment creditors. By article V of the certificate of incorporation it was provided that the principal office of the company should be located in the city of Hornell, state of New York. The certificate of incorporation also provided that the directors for the first year should be five designated persons, all but one of whom, viz. Daniel C. Turner, the manager of the New York manufactory, were also directors of the Maine corporation. The Maine corporation had a board of seven directors, four of whom, as thus appears, were directors in the New York corporation. The entire plant of the Maine corporation located in New York, including real estate, machinery, merchandise, and other assets, was sold and transferred to the New York corporation on June 1, 1916, and in consideration therefor the New York corporation issued 1,000 shares of its capital stock and approximately $1,400,000 of its debenture bonds to the Maine corporation. Subsequent to December 31, 1916, the Maine company filed a return, as of that date, with the board of tax commissioners in this state, setting forth its ownership of the capital stock and bonds of the New York company, valued at $5,000 and $1,230,189.06, respectively, and claiming that these securities were exempt from taxation or nontaxable in determining its Rhode Island corporate excess. The board of tax commissioners,...
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