The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1893-04-12

has caused much comment and the at
tacks on the encouragement have been
constant What seems to trouble the op-
position most is that some of the capital
lists who have invested money in building
and oan associations for the purpose of
eveding taxation will have it assessed
against them and be Obliged to paw their
full share OF taxes. The opinion doesn't
strike at the poor man who j. investing
his money for the purpose Of securing
home. even though he may have paid for
his stock in advance such investors do
not receive any interest on their invest
ments. They only share in the accrued
profits at the close Of the term Of the az
sociation. But here is a capita 1T, for in
stance, who has $1,000 be wishes to IN
vest and he doesn't care particularly
about paying taxes upon IT, Therefore he
invests II in building and loan association
stock. since he thinks the law will as
sist him to eyade taxation The asssoca-
ton paws him Is or per cent interest,
issuing paid up stock certificates for secur-
ity the investor then escapes taxation.
though he does not share IN he profits at
the close OF the term of the association,
drawing interest instead Cleary there Is
vast difference between him and the
man Of moderate or small means. who
shares only in tine profits accruing to the
association. It Is the first whom the
opinion is meant for. and the law was ev-
identiy enacted 10 cover such cases.
How They are Taxed.
taxed underlsec So OF che general tax law
OF 1859. which Gays
Before the FIRST day Of June each year. the
tecretary Of every building loan and savings
association shall fl- with the auditor Of tie
county IN which said association was organ
5zed, duplicate statement verified by SAIL
Jecretary, showing the amount paid into said
ASSOCIATION By shareholders upon their share Of
stock Issued by Il mp % the first DAY Of April
preceding. and then outstanding, and also the
amOnnt loaned up 10 SAID date to shareholders
and secured by mortgage upon T,a estate
listed Tor taxation. And the auditor shall de-
liver thss statement r. the prOper assessor who
shall proceed 10 ass s. said association Tor tax
alton. with the amount shown 10 have been
paid into said OcIatIOu mp 70 said st lay OF
April upOn outstanding shares OF stock, less
the amount shown by the statement 10 have
been loaned 10 shareholders upon said mort
gage security listed Tor taxation. and neither
saId assoc. alton nor the shareholders there N
shall be liable TO other taxation upon said
shares OF stock.
Tho provisions for taking out the out
standing Investments secured by mort
gage lie for the purpose Of preventing
double taxation. Ii such securities were
assessed when the assOcia ion Is assessed
and then assessed to tn one holding the
loan an lDjus ice wou q be worked 20 each
individual IA the association. But such
b. -.
comes up, "What shall become OF those
who have invested money IN paid up Sc
:urities, who receive interest on their
.oRns to the association, and who do not
participate IN the resulting profits at the
close OF the term" the only logical
method OF procedure Is 10 tax those in
vestments the same as promissOrv notes
or stock IN a bank Is taxed The numer-
ous letters received would indicate that
money has been drawn from othsr bank
ing institutions and invested in building
and loan associations under the general
mislnterpretation OF the law in which the
conception has gained ground that paid
up shares IN builiiug and loan associa-
uOns are exempt FROM taxation.
The attOTneN-g neral Is charged with
rendering "dlap critically opposed" Oun-
ions on the subject II would be we'll 10
examine former opinions, perhaps. MAY
IS 1921, he rendered an opinion under
the act OF March :, 1857, in which oc-
CURED the following:
"a" is the owner Of certain certificates issued
% him by the building and loan tund Of
bloomington, Ind, upon which he received 6
per cent. interest per annum, payable seminar
nuelly, and at any time upon thirty DAYS
notice he withdraw all OF his money lie
Is not member of the association. nor In any
LEGAL sense q share -hOlder, nor entitled 70 re-
eeIve any Of the dividends or profits oil said as
ISOLATION further than the interest stipulated.
ARE his certificates subject TO taxation?
The opinion was rendered by the same
attorney general. and says:
Il sesms clear from the facts in the case that
the owner 0f the certificates merely loaning
money to the association, and has taken its
written promise 70 pay w.tn interest, which
amounts 10. and IS. IN fact. a prOmissory note
Tor money loGnec. 1 he law OF the state with
reference 20 on ding aud loan associations
t0uohing the matter ot the taxation Of their
stock Is clear and definite. Under the act OF
March 7, 1851. such associations are required 10
Die with the auditor Of the county in which
they are organized a statement showing the
amount OF money paid into said association by
BhaTe-hO ders upon shares OF stock issued by 4
up 70 tie first day OF April preceding and then
outstanding and also the amount loaned nm To
said date 10 shareholders ana secured by mort
gage upon r a. estate. The assessor il required
10 assess Tor taxation the amount shown 10
have been paid. les, the amount loaned 10 share-
holders upon mortgage security. Ths exem-
ton does not cover he holder Of a note or ceY.
thcate OF an association to whom he has loaned
money! and upon VII Oh he Il receiving interest
My conclusion. Therefore. is that the certificates
held by "A" would be sub iect o. taxation pre-
eisely the same As II he held the note of an in
oiyiduai 10 wnOm he had made a similar losn.
80 much for the construction of the old
law. The law OF 1891 and the opinion of
1892 are not essentially different. In 4 pril
1892. the following question was addressed
% the attorney general:
Is the certificate Of = building and loan as,o-
citation. issued 70 a person by said association
for money loaned BY II and upon which inter-
est Is paid. subject 20 taxation2 Is the holder
Of suen a certificate in any legal sense a shnre-
holder or emitted TO receive any OF the profits
Of said association further than the interest
stipulated?
The answer was:
The holder of a certificate for money loaned
20 n building ami loan association 10 in no
seDss a member OF sad association He 10 not
asubseriber to such organization aud IL entitled
20 rece.V none Of the dividends thereof further
than the intereststipuiated. lie stands simply
es the lender OF money and has taken the
written promise OF the association in the form
of csrti6cats to return e. him the amount
loaned with interest thereon NJ a stipui atsd
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