The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1893-04-05
GREEN SMITH TANGLED UP
Last Year He Rendered an Opinion That
"Paid-Up" Stock Was Exempt.
Seems 10 Have Been q Revolution in HIS
Ideas on Building Association Law
Levy Will Be Resisted.

The new statute enacted by the Attor-
ney-general Monday relative 10 taxation
of paid-up shares of building and loan as
sociations created o great deal of excite
ment among building and loan companies
and their agents. One remarked that if
the opinion Is rood law. his company
would sell no more paid-up shares. One
prominent citizen. interested in the opin-
ion, said there was more senti-
ment q law In it Others
recalled an opinion rendered by Attorney
general Smith q year ago on the same sub
ject. in direct contrsdiction of this last
u~tterance. A copy or that opinion WAS OBJ
tanned by the Journal at the ofhoe OF the
Auditor of State. Ii bears date OF April
~. 1852. and il addressed to Hon. Joseph T..
Tanning. secretary OF the Board OF state
Tax Commissioners, for the of
the board. which had submitted six ques-
tions to the Attorney-general concerning
building and loan taxation. Question y
read as follows:
Is stock of a bona fde subscriber of a building
and loan association. which has been paid up
wholly or partially lin advance of the usual as
sessments. instead OF being paid in weekly or
monthly installments), to be considered as other
stock OF the association taxed in like mannerf
Ii will be remembered that yesterdays
u~tterance made a distinction not borne out
by the law, between bona fde shareholders
thu OAucl VI phiu-up IbtlCntoos III
distinction Is one with only q mental diff
ference. as auditor of State Henderson ex-
planned yesterday. A holder of paid-up
certificates when asked by the assessor,
This money that you have in the build
lug and loan association Is merely a loan.
is 1t mott" And the holder can
stock which | bought" There can be no
dispute about this. for the intention rests
with the owner of the money unless he ao-
cepts q specified interest. When the
Attorney general. in the fear OF an APP
preaching campaign one year ago. IN WHOM
lie was personally interested, was answer
ing the question, he said:
AS to your third inquiry, the persons alluded
10 are shareholders, having regularly subscribed
for a certain number of shares of stock. The
only difference being that instead of paying their
assessments from week 70 week or month 10
month, for the purpose of avoiding such incon-
venience, or from any other motive, they have
paid in advance. The law clearly defines the
namely. the amount paid in to the association on
or before the first day OF April. including such
advanced payment, shall be returned for taxa
ton less the amount loaned to shareholders
upon mortgage security.
One of the six questions submitted by
the board to she Attorney-general was as
follows:
Is the certifcatesof a building and loan asso-
citation issued q o person by said association for
money loaned by IL, and upon which interest Is
paid. subject to taxati0ni Is the holder OF such
u CetIHcdtc III Ally legal sense ~ eHuTeuOiucr, VI
entitled to receive any of the profits OF said as
ISOLATION further than the interest stipulated.
The answer was substantially the same as
the recent utterance concerning those who
loan money at an interest rate TO ass0cia-
tions and take certificates of paid-up stock
as q sort of collateral security, n who do
not become subject as shareholders to
profits and losses. There has been no ques-
ton about the liability of those loaning
money to associations to be taxed on the
loans. The Attorney-general said in 1892:
The holder OF a certificate for money loaned
to a building and loan association is. In no sense,
O member of said association. He is not a sub
seriber to such organization, and is entitled TO
receive none of the dividends thereof further
as the lender of money and has taken the writ
ten promise of the association, in the form of a
certificate. to return to him the amount loaned.
with interest thereon. at q stipulated rate. The
certificate is nothing more or less than a promis-
sorry note. and Is as much subject TO taxation as
II 1t were signed by an individual. Under the
protection of the law relative to building and
have attempted to place loans which would not
be burdened with taxation. Through this misin-
depreciation OF the statute and by unfairly ex-
tending its provisions, n great deal OF evil has
grown up which must be checked.
Ii Is the Attorney generals effortto bring
all holders of paId-up stock within the
scope of taxation that has caused the DIS
content and dissatisfaction among stock
holders IN building and loan associations,
and which has placed him in opposition TO
the Legislature. which refused to enact
such q law.