Zoercher v. Indiana Associated Telephone Corp.

• Citation: 7 N.E.2d 282,211 Ind. 447
• Decision Date: 02 April 1937
• Docket Number: 26811.
• Parties: ZOERCHER et al. v. INDIANA ASSOCIATED TELEPHONE CORPORATION.
• Court: Supreme Court of Indiana

7 N.E.2d 282

211 Ind. 447

ZOERCHER et al. v. INDIANA ASSOCIATED TELEPHONE CORPORATION.

No. 26811.

Supreme Court of Indiana

April 2, 1937

Appeal from Superior Court, Marion County; Clarence E. Weir, judge.

Omer Stokes Jackson, Atty. Gen., Philip Lutz, Jr., former Atty Gen., and Urban C. Stover, Deputy Atty. Gen., for appellant.

Charles H. Stuart, Allison E. Stuart, Brenton A Devol, and Cable G. Ball, all of La Fayette, for appellee.

HUGHES Judge.

This is an action by the appellee for a declaratory judgment to determine its rights and liabilities under the Intangibles Tax Laws of Indiana. It appears from the complaint that in 1932 and prior to the enactment of the General Intangibles Tax Act (Acts 1933, c. 81), appellee issued its First and Refunding 6 per cent. Gold Bonds, Series A, the same being secured by indenture of mortgage. The mortgage contemplated that additional series of bonds might be issued. In the early part of 1936, appellee executed and issued a series of bonds dated October 1, 1935, and known as First Mortgage 4 1/2 per cent. Bonds, Series B, due October 1, 1965, secured by said mortgage as supplemented by a certain supplemental indenture. The litigation here involved is with reference to Series B Bonds.

The State Board of Tax Commissioners determined that the appellee was liable for intangibles tax for the exercise of the privilege of issuing intangibles. The appellee paid, under an escrow agreement, the amount claimed to be due as intangible tax and asks in its complaint that the money be returned to it on the theory that it was not subject to any intangible tax. The appellant filed a demurrer to the complaint of appellee which was overruled. The court made a special finding of facts, and the conclusions of law were in favor of the appellee and judgment was rendered for the appellee. The errors relied upon for reversal are as follows:

1. The court erred in overruling the demurrer to the complaint.

2. The court erred in its conclusions of law upon the special findings of facts.

3. The court erred in its conclusions of law Nos. 1, 2, and 3.

It is not necessary to set out all of the special findings of facts. In special finding No. 6, it was found that the appellee applied to the Public Service Commission of Indiana for permission and authority to issue its said 'First Mortgage 4 1/2% Bonds, Series B, due October 1 1965,' and to execute a supplemental indenture, and on November 29, 1935, the appellee was authorized and permitted by the said commission to issue $3,000,000 of said bonds, dated October 1, 1935, to be negotiated and sold at not less than 98 per cent. of the par value thereof and was authorized to execute a supplemental indenture of trust.

In special finding No. 8, it was found that in the month of March, 1936, the appellee signed, executed, and issued said bonds of Series B and sold the same. That said bonds were authenticated by the signature of the First National Bank of Chicago, as trustee, and that said bonds of Series B were signed on behalf of appellee, by its authorized corporate officers at Chicago, Ill., and were then and there delivered by appellee to the First National Bank of Chicago, at its office in the City of Chicago, State of Illinois, for authentication by said bank as trustee and were there authenticated by said trustee.

In finding No. 10, it is found that the bonds were sold to different parties at Chicago, Ill., and were delivered by the appellee to said purchasers at Chicago, and were there paid for by said purchasers and that said purchasers were not, nor were any of them at such time, residents or domiciled in the State of Indiana. It is further found in finding No. 12 that the appellee did not, prior to or at the time of the signing, executing, and issuing of said bonds of Series B, or at the time of the sale and transfer thereof, affix thereto adhesive stamps required by chapter 81, Acts 1933 of the General Assembly of the State of Indiana, in the case of intangibles subject to taxation under that act, commonly called 'Indiana Intangible Stamps,' nor did appellee affix said stamps to the supplemental indenture, nor did appellee pay by registration as provided by section 14 of said act, or in any other manner, any intangibles tax under said chapter 81, on said bonds or on account of the signing, executing, and issuing thereof, or the sale and transfer of said bonds as aforesaid.

In finding No. 13, it was found that because of doubts existing as to the liability of appellee for the tax imposed under said act, the appellee was unable to sell said bonds for their fair value, unless it paid or provided for payment of the tax, which would accrue and be assessable against appellee if the provisions of said Act were held applicable to it. That in order to sell said bonds, the appellee was compelled to and did on March 13, 1936, deposit with the defendants, as members of and constituting the State Board of Tax Commissioners, in escrow, the sum of $7,500, said sum to be returned to appellee in the event it established it was not liable for the payment of said tax. The court stated three conclusions of law upon the special findings of facts, as follows:

1. That the law is with said plaintiff.

2. That said plaintiff is not liable for the payment of any tax under chapter 81, Acts 1933 of the General Assembly of the State of Indiana, on account of the signing, executing, and issuing of said bonds, designated as First Mortgage 4 1/2 per cent. Bonds, Series B, due October 1, 1965, nor on account of sale and transfer thereof, nor on account of the execution of the supplemental indenture securing said bonds, dated October 1, 1935.

3. That the plaintiff is entitled to have returned to it the sum of $7,500 deposited by plaintiff in escrow with said defendants, Philip Zoercher, Albert F. Walsman, and Gaylord S. Morton, as members of and constituting the State Board of Tax Commissioners of the State of Indiana.

It is the contention of the appellants that subdivision (a) of section 2 of the Intangibles Tax Act imposes a tax on the right to exercise the privilege of signing, executing, and issuing intangibles and therefore the appellee is liable for the tax. The appellee insists that the tax is imposed by the statute only on the owner of intangibles domiciled in the State of Indiana, and the appellees further assert that if the General Intangibles Tax Act does impose a tax on the issuer of intangibles, it does not apply to intangibles signed, authenticated, and issued outside of the State of Indiana. The appellee also submits the proposition that as a public utility, it was compelled to and did pay into the State Treasury of Indiana, through the Secretary of Public Service Commission, a tax of $7,500 under the Public Service Commission Act (Burns' Ann.St.1933, § 54-511) on account of the issuance of the bonds in question, and therefore, if an intangible tax be due from appellee, its liability was discharged by the payment of the said $7,500 into the treasury for the benefit of the general fund.

The first question presented and considered is this: Does the General Intangible Tax Act impose a tax upon the issuer of intangibles? If the answer to this question is in the negative, then it is not necessary to consider any other question presented in this case.

Section 2 of the General Intangibles Act provides: 'On and after the passage of this act, every person residing in and/or domiciled in this state, shall pay a tax to the State of Indiana at the rate and in the manner provided in this act, for the right to exercise any one or more of the following privileges: (a) Signing, executing and issuing intangibles.'

The appellants contend that this subdivision (a) makes the issuer of intangibles subject to the tax. If this subdivision stood alone, the appellants would have strong reason for their contention, but it does not stand alone and it must be construed with all the other provisions of said section 2 and with all other sections of the act. The whole act must be construed together in order to determine the meaning of the act and the intent of the Legislature.

The purpose of interpretation of statutes is to ascertain the true intent of the Legislature in enacting them. Gilson v Board of Com'rs of Rush County, 128 Ind. 65, 27 N.E. 235, 11 L.R.A. 835; State v. Weller, 171 Ind. 53, 85 N.E. 761; Hyland v. Rochelle, 179 Ind. 671, 100 N.E. 842. And when the legislative intent is ascertained, it must be given effect if it is not violative of the Constitution. Moore-Mansfield Const. Co. v. Indianapolis, N. & T. R. Co., 179 Ind. 356, 101 N.E. 296, 44 L.R.A. (N.S.) 816, Ann.Cas.1915D, 917; Pennsylvania Co. v. Mosher, 47 Ind.App. 556, 94 N.E. 1033. It is also a rule of statutory construction that words of a statute will be construed in accord with the apparent legislative intent, even though their exact and literal meaning would not warrant such construction. State ex rel. Devening v. Bartholomew, 176 Ind. 182, 95 N.E. 417, 420, Ann.Cas.1914B, 91. In this case the court quoted with approval the following from Clare v. State (1879) 68 Ind. 17: 'We do not understand that this court is bound, in the interpretation and construction of a statute, to take the words used therein in their plain, exact, and literal sense. On the contrary, the true rule is, and always has been, as recognized in many decisions of this court, to make the legislative intention, in the enactment of the particular statute, the chief guide of the court in its interpretation and construction. If the object, purpose, and intention of the Legislature, in the enactment of the particular statute, can be fairly ascertained and arrived at, then it is the duty of the court to overlook and disregard all apparent ...