Worth v. Petersburg R.R. Co.
| Decision Date | 31 October 1883 |
| Citation | 89 N.C. 301 |
| Parties | J. M. WORTH, Treasurer, v. PETERSBURG RAILROAD COMPANY. |
| Court | North Carolina Supreme Court |
ACTION tried at January Term, 1882, of WAKE Superior Court, before Gilmer, J.
The plaintiff, suing as the treasurer of the state of North Carolina, alleged in substance as follows:
1. That the defendant is a corporation formed under the laws of Virginia and this state, and a portion of its line is located in this state, and in the act of incorporation by the state of Virginia it was enacted that “all machines, wagons, vehicles and carriages purchased as aforesaid with the funds of the company, and all other works constructed under the authority of this act, and all profits which shall accrue from the same, shall be vested in the respective shareholders of the company forever in proportion to their respective shares, and the same shall be deemed personal estate, and shall be exempt from any public charge or tax whatsoever.” But the assent of the legislature of North Carolina by the act of 1830 was given to said act, with the exception contained in the 8th section thereof, “that this act and every part and provision thereof shall be subject to be altered, amended or modified by any future legislature as to them shall seem necessary and proper, except so much thereof as prescribe the rate of compensation or tolls for transportation of produce or other commodities allowed to the said company.”
2. That by the act of 1876-'77, ch. 156, schedule C, §1, it is enacted: “Every railroad or canal company incorporated under the laws of this state, and not liable to a tax upon the property of said company, or the shares therein, shall pay a tax on the corporation equal to a tax of one per cent. upon the gross receipts of said company; that said tax shall be paid semi-annually, upon the first days of July and January, commencing upon the first day of July, one thousand eight hundred and seventy-nine; and for the purpose of ascertaining the amount of the same, it shall be the duty of the treasurer of said company to render to the treasurer of the state, under oath or affirmation, a statement of the amount of gross receipts of said company during the preceding six months; and if such company shall refuse or fail for a period of thirty days after such tax becomes due to make return or pay the same, the amount thereof, as near as can be ascertained by the public treasurer, with an addition of ten per cent. thereto, shall be collected for the use of the state as other taxes are collected: provided, that when a line of railroad or canal belonging to any company liable to this tax lies partly in this state and partly in an adjoining state or states, the part or share of such earnings only shall be subject to the tax as will be in that proportion to the whole receipts which the length of the road or canal within the limits of the state shall bear to the whole length of such road or canal. And in said act it was directed that every railroad and canal company, incorporated under the laws of this state and doing business herein and not liable to a tax upon the property of said company or the tax before mentioned, shall pay a tax of one per cent. upon the actual cash value of every share of its capital stock to the treasurer of the state for its use on the first day of July, 1877, and each year thereafter with like provisions with regard to the return of statements, the enforcement of the tax and apportionment thereof when the road lies partly in this state and partly in an adjoining state, as the one annexed to the first tax.
3. That the same enactments were made in the ensuing revenue laws, except that in that of 1881 a privilege tax of twenty-five dollars per mile per annum was substituted in place of the tax upon the cash value of the shares.
The plaintiff further alleged that the defendant had failed to make the returns required by law and to pay any of the taxes imposed by said statutes, and prayed that the defendant be compelled to make the required return of statements and pay the taxes which shall be ascertained to be due.
The defendant, admitting that the statutes referred to in the complaint were correctly cited, denied that they had any applicability to it.
The plaintiff demurred to the answer. The court sustained the demurrer and gave judgment against the defendant, and the defendant appealed.
Attorney-General and John W. Graham, for plaintiff .
Messrs. Merrimon & Fuller, for defendant .
The plaintiff, by his action, seeks to subject the defendant corporation to the payment of certain taxes alleged to be due and owing by defendant for the years 1877, 1878, 1879 and 1880, under the following provisions of the act of 1876-'77, ch. 156, schedule C, §1, and similar enactments till 1881:
1. “Every railroad or canal company incorporated under the laws of this state, and not liable to a tax upon the property of said company, or the shares thereof, shall pay to the state a tax on the corporation equal to the sum of one per cent. upon the gross receipts of said company.”
2. Every railroad and canal company incorporated under the laws of this state and doing business herein, and not liable to a tax upon the property of said company, or the tax before mentioned in this section, shall pay a tax of one per cent. upon the actual cash value of every share of its capital stock, and the tax of twenty-five dollars per mile per annum as a privilege tax, for the year 1881, required by the act of 1881, chapter 70, schedule C, seetion 1, to be paid in lieu of the last tax.
In the charter of this company there is the following exemption: “All machines, wagons, vehicles and carriages purchased as aforesaid with the funds of the company, and all their works constructed under the authority of this act, and all profits which shall accrue from the same shall be vested in the respective shareholders of the company forever, in proportion to their respective shares, and the same shall be deemed personal estate, and shall be exempt from any public charge or tax whatever.”
It is a very broad and sweeping exemption, and from the long acquiescence of the public authorities of the state in its observance, it was thought, no doubt, by the corporators to be an exemption from every species of burden upon any taxable subject connected with the corporation. But the legislature has seen proper to pass the act imposing a tax on the corporation equal to the sum of one per cent. upon the gross receipts of the company.
The franchise of a corporation, its capital stock, its property consisting of land, machinery, &c., the shares of the stockholders, and the dividends or profits accruing from the management of the property of the corporation, are all severally the subjects of taxation; and a tax upon a corporation can only be effected by imposing it upon some of these subjects; as, for example, a tax upon the property or the capital stock. When the tax is imposed directly upon the corporation, it must be a franchise tax. It is not a tax on capital stock, nor individual shares or profits, nor upon gross receipts, for that is here made the measure of the tax. Cooley on Taxation, 303.
It is held in Commonwealth v. Lowell Gas Light Co., 12 Allen, 75, that a tax on a corporation of a certain percentage upon the excess of the value of its capital stock...
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