The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-04-05
QUESTION OF TAXES
ORAL ARGUMENT IN THE BUILDING
AND LOAN LITIGATION.
Supreme Court Has comprehensive
Argument Presented to 1t fn
This Suit.


morning before the Supreme Court in two
cases involving the right of county auditors
and treasurers to collect taxes on prepaid
and paid-up building and loan stock. One
case was that of William H Denistcn, Au-
ditor, We. Frank Fl. Terry, civil case, and
the other was the State of Indiana ex rel
the Prosecuting Attorney of Fulton County
VS.. Lyman III. Bracket. The local counsel
for the State was ex-Judge Conner, of Wa
bash county, and NJ. A. Baker, of Fulton
county, assisting Attorney general Ketch-
am, who was ordered into the case by the
Supreme Court. Byron X. Elliott, of this
city, and Messrs. Holman and Stevenson. of
Fulton county, appeared for the defense.
The question being the same in the two
cases, they were considered as one for the
purposes of argument. Attorney-general
Ketcham said that the only question was
whether paid-up and prepaid stock Is SUBJ
ject to taxation or not. He disclaimed de-
sire to argue the whole question of taxa
ton of building and loan associations at
this time. He explained that in the civil
case the grayamen of the complaint was
that the auditor was about to assess s1,500
of paid-up building and loan stock as omit
ted property. In the second the issues were
Joined in a suit to recover a penalty against
Bracket for making a false return of prop
erty by failing to list certain paid-up stock
Il.
constitution and bylaws of the Indiana
Farmers Building and Loan Association, of
Rochester, which guarantees to the in
weston in its paid-up stock eight per cent
per annum If the stock runs for a year,
and six per cent if it holds for six months
or less. This" said the Attorney-general
lis rather an extraordinary paper 1t pro-
fesses to be certificate of paid-up stock,
but even a cursory investigation of it will
disclose the fact that it is not a certificate
of stock at all, but only a subterfuge to
enable the holder to obtain with certainty
cies and per cent. in others upon thirty
days call loan. Under the terms of the
r. the pF8s o 70 cent the
to participate beyond per cent, and if the
association should lose money he would
still be entitled to recover the face of his
loan with per cent. interest if left six
months or more and per cent. ii left
year. This hardly presents the question of
ISOLATION stock. 1t more nearly and accur-
atey represents a straight loan of money
s5N in order to avoid contributing its fair
portion of the public burdens"
would hold that Section s5o7 Violates Art tt
Gle A. Section % of the Constitution, which
prohibits the Legislature from enacting
special laws on the subject of taxes, and
also Article 10, Section 1, which requires
the Legislature to provide a uniform and
equal rate of taxation except upon munich
pal. educational, literary. scientific and re-
ligious property as may be especially ex-
empted by law He declared that it it. was vas
federal. Constitution which prohibits any
State from denying to any person the
equal protection of the laws. He then re-
viewed the tax provisions of the act OF
1891 and continued:
separately and as instinct from all other
provisions constitutional and statutory, it
will be observed that the attempt is made.
first, to assess against the corporation only
the excess of receipts from shareholders
over and above, the amounts loaned out to
shareholders which in majority or IN
stances.
for it is the obvious intention of the build
ing association law that all the money
ceived, not only from shareholders from
stock, but also from all other sources, in
Guiding fines, penaltles and forfeitures,
should be kept constantly loaned out; sec
ond to exempt the stock itself from any
taxation whatever.
such construction is to withdraw from its
fair share of the public burdens all the
capital invested, directly. or indirectly, in
building associations and this court will
take judicial notice that this represents
very large portion of the capital in the
"As applied to the question presented here
each of the three constitutional provisions
presents the same question, for If all other
property is required to be taxed at it's full
value while building associa ton property is
only taxed to the extent of the difference
between the money paid in by Sharehold-
ers stock and the amount loaned out on
mortgage, the General Assembly viii have
passed law that f is SPECIAL Tor i the net penene
prescribed such regulations as shall secure
a just valuation for taxation of all proper
ty and other capital, corporate and indi-
vdual, will have been denied. quoad taxa
ton, compared with building associa-
tions''. capital the equal protection of the
laws"
Judge Elliott argued the case for the de-
Tense. He said that the statute regulating
building and loan fund associations is con-
stitutional The subject is one requiring
legislation different from that required in
enee between ct building and loan fund as
ISOLATION and an ordinary corporation is
inherent. The statute governing building
and loan fund associations does not ex-
empt any property from taxation. 1t pro-
vides a mode or method of taxation appl-
cable to such associations. 1t provides
against double taxation, but it exemptS no
There can be no enforcible act, Judge Ell
lott continued, unless there is a. statute
subjecting the property to taxation and
providing method for assessing it, The
seasing prepertw Ph Courts baV oa no poW
er to prescribe mode or remedy defects
in one prescribed by the Legislature. The
subject is entirely and exclusively legisla-
tive. The statute which provides a mode
for taxing building and loan associations
prescribes Just and equitable method.
No other would prevent double taxation.
suppose an association to be composed of
thirty members, twenty belonging to the
borrowing and ten to the nonborrowing
class. In such a case to tax the shares of
stock would be to tax the persons who pay
in money once upon the money they pay
in and again upon the mortgages executed
to secure loans obtained from the associa-
ton.
The statute assesses taxes on the asso-
citation, and this, as every case upon the
subject adjudges, is a tax upon the shares
is taxed save and except only money
loaned to shareholders secured by mort
gage on property listed for taxation" The
property listed for taxation, of course, pays
taxes, and it is only that class of property
that is to be deducted from all the money
erty OF every kind and description is taxed.
But suppose the method adopted is defec-
by the Legislature. IF there is any omis-
sion, which / deny, it is defect in the
-