Whitaker, Auditor's Agent, v. Brooks
| Citation | 90 Ky. 68 |
| Parties | Whitaker, Auditor's Agent, v. Brooks. |
| Decision Date | 01 April 1890 |
| Court | Kentucky Court of Appeals |
APPEAL FROM KENTON CHANCERY COURT.
H. P. WHITAKER FOR APPELLANT.
O'HARA & BRYAN FOR APPELLEE.
JUDGE HOLT DELIVERED THE OPINION OF THE COURT.
In July, 1882, the appellee, L. H. Brooks, and others incorporated themselves under chapter 56 of the General Statutes by filing articles of incorporation in the Kenton County Court, of this State, under the name of the "Brooks-Waterfield Company," for the purpose of carrying on the tobacco warehouse business. The articles located its principal office or place of doing business in Covington, Kentucky, but, in fact, the business was conducted in Cincinnati, Ohio. Its tangible property, real and personal, was located there, save a comparatively small amount of real estate in Mason and Lewis counties, Kentucky, which had been taken for debt. Its property in Ohio was listed for taxation there, and its real estate in Kentucky in the counties where it was situated.
The appellee, Brooks, is the owner of shares of stock in the corporation of the par value of seventy-five thousand dollars, and actually worth, according to the assessment made, fifty-two thousand dollars. He, and in fact all of the corporators, are residents of Kenton county, Kentucky. He declined to list his shares of stock for taxation in Kenton county, Kentucky, by reason of the payment of taxes by the corporation in Ohio and this State, as above stated, and upon the ground that, under our law, where the corporation lists the corporate property for taxation, the stockholder is not required to list his shares of stock.
The appellant, as Auditor's Agent, thereupon filed an information before the Kenton County Judge, as authorized by the act of the Legislature of April 29, 1880, commonly known as the "Auditor's Agent Act," for the purpose of compelling the appellee to list his stock for taxation for the years from 1882 to 1888. A response was filed, and, after hearing, the county court assessed it, and the list was placed in the hands of the Auditor's Agent for collection. The appellee then brought this action enjoining its collection. The chancellor perpetuated the injunction as to all the years named, and the case is now here upon appeal.
Prior to the present revenue law, which became operative on May 17, 1886, there appears to have been no provision for the taxation, in any case as against the stockholder, of shares of stock eo nomine in a corporation. Where liable to be embraced in his list it could only be as a part of his surplus wealth left after giving in the specific list required, and deducting his indebtedness, or under what was commonly known as "the equalization law." (General Statutes (1873), chapter 92, article 1, section 5.)
It is now urged, therefore, that if the stock of the appellee be liable to taxation for any of the years named, that yet the judgment below should be affirmed, because the information proceeded for, and the county court made, an assessment of the shares of stock as such for taxation. It does not, however, appear that there was any objection to the information for insufficiency, or that there was any claim that the appellee had included the value of the stock in an assessment under the equalization law, or that he should not have done so because of any indebtedness. Upon the contrary, his response shows that his sole objection to the assessment was, that the stock was not liable to taxation. It is, therefore, now too late to raise this formal objection. It was waived by the failure to present it in the county court. The statute authorizing the proceeding in that court should be liberally construed in view of the mischief intended by the Legislature to be remedied, and the assessment as made in this instance should be regarded as one merely taxing so much surplus wealth of the appellee.
Prior to April 22, 1884, certain corporations were required to pay taxes upon their property by article 12, chapter 92, of the General Statutes, and section 8 thereof provides: "The individual stockholders of the companies which are by this article required to report and pay tax upon the value of their property shall not be required to list their shares in such companies for taxation."
It was decided by this court, however, in the case of the Louisville & Evansville Mail Company v. Barbour, &c., 88 Ky., 73, that a steamboat corporation was not embraced by article 12 of the statute, and that up to April 22, 1884, when the statute was changed, the value of the stock was liable to assessment as against the stockholder. In other words, in cases where the corporations were expressly required to assess the corporate property and pay the taxes, the share-holder was not liable to taxation upon his stock; but where they were not so required, the burden was upon him.
Under the ruling in that case the Brooks-Waterfield Company is not a corporation of a character embraced by article 12, and it is manifest that it did not embrace all corporations from the language of section 8, supra. As the then existing law looked only to the stockholder in a corporation like this one for the taxes, a payment of them by the corporation was without legal warrant, and would not relieve him from tax liability as to his stock. The Legislature, however, on April 22, 1884, by the first section of an act, which then took effect, provided: "That hereafter all corporations in this Commonwealth, except railroad and turnpike companies, shall, in the manner provided by article 12, chapter 92, of the General Statutes, list their...
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