Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1880-03-05
CALIFORNIA LEGISLATURE.
XIII. sEssIoN-sI -sIXTTIETH DAY.
[Phonographicaily reported for the RECORD UNION
by Willis & Stockton.l
SENATE.

SACRAMENTO March 4, 1850.
The Senate met in regular session st 10 A. u,
President Mansfield in the chair
Roll called ana o quorum present.
The Journal OF Yesterday was read and approved.
REPORTS.
Mr.. NEUNAEN, from the Committee on Elections,
reported back fayorably rs amended Senate Bill No.
3G9-an Act TO arcend Sections 1888, 1905, l1l3,
1l15, 1ll6 Isl, 1928, 1880, 1882 and 1898 of the
Political Code, relative 10 registration and elections
Mr.. JOHNSON, from the Committee of Conference
on Senate Bi No. 56-al Act to a end Section ISL
OF the Political Code relative to clerks of the Su-
preme Court-reJorted the following amendment to
Section 2 strike out $3.50 and insert s6G6 67.'
The amendment was concurred in.
On motion OF Mr.. TRAYLpR Senate Bill No. 354-
relative to teachers sa!aries-was made the special
order for Saturday at II A. H.
On mot on OF Mr.. DAVIS Senate Bill No 399-the
bill on education-was ordered at the head OF the
file for first reading.
MIR. SEARS, from the Committee on Corporations,
reported back favorably amended Senate Bill No.
221-an Act to compel railroad corporations and
individuals owning railroads TO operate their roads
TAXATION.
The Senate took up the special order:
Assembly Bill No. 404-An Act TO amend Sections
3607, ,S6l7, 1927, 1923, 3629 $780, 1884 364O 3643,
$3.50, 3651, 1852, 1858, SGIS 367S, 367y 37l7 $780,
1852, 1856, 1899 and 1861, and TO repeal Sections
$3.50 and 36S7of an Act entitled an Act to establish
PoliticslG0le, approved March u, 1872, relating
to revenue, and to add two new sections, numbered
1864 and 3665.
The Secretary read Sections and z
Mr. RYAN moved to amend Saction by striking
out OF line 10, the word and, and insert or other
wise" Lost.
The Secretary read Section g.
Mr.. CHENEY offered the following substitute for
Section s " Each person, firm corporation own
ing or having in his or its possession any OF the
shares of the capital stock OF any corporation asso-
cation or loint stock company, shall he assessed
therefor. II the corporation, association or iunt
stock company has its principal place of business in
this State the asessable value of each share of its
stock shall be ascertaned by taking from the mar
ket value OF its entire capital stock the value of all
property assessed TO it and dividing the remainder
by the entire number of shares into which the cant
Ia stock is d vided."
Mr.. CHENEY spoke in favor of the amendment
He held that the corporation did not vn the shares
OF stock, and if they taxed the corporation
the tax could not be collected because property
must be assessed to the owner. 1t had been held
by the Courts that when shares of stock had been
assessed to a corporation, the assessment was void
because the shares were not assessed to the owner
Mr.. WENDELL. took the opposite view, and cited
cases to snow taat other States had taxed the stock
to corporations and it had been held good
Mr.. SArrERwHrTE offered the following amend
menC to the amendment: "The property
of corporations aud joint stock companies
shall be asse sed to them at their princi.
pal 1lace OF business. The owners or holders Of
certificates of shares in the capital stock of corpora
tions and joint stock companies must be individu-
ally assessed to such shares Of stock at their market
Naiue, after de Quctlng theretrom the value Gf the
property assessed to the coporation association or
joint stock company. Each shareholder IS entitled
to pro rata OF deduction. q he shares of capital
stock in National Banks owned by non-Tesidents Of
this State shall be assessed to such owners at the
town city where such bank is located" {"
He held that the Constitution did not intend de-
ductiOn III the case Of corporations and stock To
asse the tangible property to the corpora ION and
the stock TO the corporation also, would be to fall
into double taxation. By assessing it to different
persons double taxation was avoided. He wanted
to follow out the theory OF the Constitution and
assess property where it belongs, to the
of Illinois, cited by Mr.. Wendell, was
in conflict with the decision OF the Supreme
Court OF the United States, in the foreign
held bonds case" reported in 18th Wallace. In
that case the United States Supreme Court de-
cided that the State could not assess a mortgage
owned by nonresident and make him pay the tax
in the State that the situs OF the mortgage followed
the residence OF the owner, and that he was without
the jurisdiction OF the taxing power His amend
ment provided for the taxation Of nonresident
holders Of shares in National banks because the Act
of Congress gave the State that right. If they
would assess the property OF the corporation to the
corporation, and then the shares of stock to
the owner, they weulG avoid all confusion, and it
would not be double taxation.
Mr. BAKER opposed both OF the amendments He
held that if they tax ares OF stock in the manner
suggested they would allow to go free OF taxation
large amount of stock in banking corporations of
the State owned by non-residens OF the State. He
wanted to reach all OF the property in the state aG
tax 1t. II they taxed the stock to the corporation
then they could leach the nonresident owncr OF
the stock. The property could only be reached by
taxing the capital stock capital stock He
though, the amendments entirely outside Of the
necessities of the case. With the amendment yes
terday proposed by Senator Cheney, and an amend
meut striking out market value" and inserting
cash value" the section would not be very obec-
tionabe the idea of the bill TO be carried out
Mr.. CHASE opposed the amendments. The Senate
had resolved to adopt the minority bill as basis
and it ought rot now to adopt amendments which
would place in the minority bill the principles of the
majority bill. 1t was Impossible to pass perfect
revenue bill Let the Legislature pass this bill and
try it for one year, and if il found to contain
imreGiections, then let it be amended next year. 80
as to improve it, He hoped all the amendments
would be pa sed over, and the bill passed at once
Mr.. SEARS said that the amendment proposed by
Mr.. Satterwhite contained the principle for whicn
he contended here week ago. He believed that
they could not tax the shares of stock OF corpora
tion to the corporation, because the corporation did
not own the shares. Ii they were assessed to the
corporation the tax could not be collected The
shares belonged to the individuals and they must be
assessed to the owners. He cited cases in>support
OF his position. The shares ef stock ought to be
taxed TO the owner. That plan would bring a large
revenue to the State while in the other case the
stocks would escape taxation. He. did rot believe
that the corporation could be constitutonay axed
for the shares OF stock which it did not own He
wished it could be done, but he did not believe it
could.
Mr.. HILL hoped that the amendments already Of
fered, and all tnat might be offered, would be voted
down. He held that the corporation was the owner
Of the capital stock. certificate of stock merely
entitled the owner to a share il the profits.
MIR. TRAYLoa explained the relations of the stock
holders TO the corporation The stockholder owned
proportionate share in the corporation. IL the
stock was worth anything more than the proper
tionae share in the corporation it belongs to the
person, and shorld be taxed TO him.
Mr.. ZCCR said that the frien of the ma jonty bill
first Ia asino stocks at all and uny az
were the ones who feared that stocks would escape
taxation.
Mr.. RYAN believed that If shares of stock were to
be taxed at all they should be taXei to the owners
of the stock. He would be willing to tax the cor
p0rations ii the tax could be collected but he did
not believe it could He opposed to the section
as it stood. He did not like the amendment offered
by Dir. Satterwhitc, though it was better than the
section. He did not like the amendment offered by
Mr.. Cheney in all respects but it the best yet
offered. All revenue laws were to some extent the
result of compromise, and il they could get Just
wha. they wanted they must do the best they could
He friend of the new Constitution when it
was before the people. During his canvass for that
instrument he had repeatedly told the people that
no double taxation was intended by it, and he now
opposed Section because he wanted TO show the
people that double taxation was not intended
Mr.. CoNGER said that he had favored the taxation
of stocks to the owner in the committee and in his
votes in the Senate had been eonsis ent He was in
favor of the taxation OF stocks. The Constitution
was the light by which he was guided He held it
to be the grandest fundamental law ever framed
The plain, duty of the Senate was to obey the
commands of the majority of the people of the Stae
Taxation should always be reasonable and as nearly
equal as it was possible to make it by law Mining
stocks could not be reached by taxing the capital
stock to the corporation The property OF the great
mining corporations OF San Francisco was in Nevada
and a tax upon 1t could not be collected in San
francisco, as there was nothing there that could be
levied on to enforce the Judgment. He favored the
amendment offered by Mr.. Cheney.
Pending the remarks of Mr. Conger the Senate
took the usual recess.
AFTERNOON SESSION.
The Senate reassembled at 1:3o T. ", President
Mansfield in the chair
Roll called and quorum present
Mr.. CoseBR continued his remarks on the amend
ment He insisted that il they assessed the capital
stock, as an entity to the corporation though each
shareholder might be individually liable for his share
Of the tebtS and liabilities Of the corporation the
tax could never be collected by execution on the
shareholder. The only way was to assess the shares
Of stock to the individual owner. He objected to
the amendment offered by Mr.. Satterwhite, and
held that while it would tax the stock of the ma
tional banks, it would allow the mining stocks to
escape. He used the Sierra Nevad Mining Com
psny illustration, and held that if the shares
of stock of that corporation were assessed to the
corporation nothing would be collected. He wanted
every dollar invested in the business of stock
gambling pay its share OF taxation, and he believed
the only way to accomplish that result to adopt
the amendment offered by Mr.. Cheney. With this
amendment in the bill all of the property OF the
State would be taxed once or nearly 50 as could
be done under any revenue system. he had voted
against the income tax because he believed to be
double taxaton taken in connection with the rest OF