The San Francisco call., 1904-03-20
TAXES SHOULD
BE RETURNED
City Attorney Holds Facts
Do Not Sustain Assessment
of Bonds of Hobbs Estate
NO FRAUDULENT INTENT
Money Is Withdrawn From
Bank for the Financial
Advantage of the Heirs

| City Attorney Long yesterday ad-
vised the Board Of Supervisors that the
petition of the estate of j. X. C. Hobbs
fer the return of the taxes paid on
| 500, 475 on deposit in commercial banks,
but afterward invested in non-taxable
securities may be lawfully allowed, and
that no useful purpose would be served
by a reference of the matter to the
courts. The money was assessed by As
SCISSOR Dodge on the ground that il had
been withdrawn from the banks pre-
vious TO the first Monday in March,
1908, and then invested in bonds for the
/ purpose of evading the taxes thereon, a
/ fact admitted by one of the executors
of the estate. Longs opinion continues:
/ Tested By law. ] am. Of the opinion that The
/ facts disclosed in this matter do not sustain
/ the assessment. II appears that the purchase
OF tie bonds made TO the financial ae-
vestment; they were not sod atter lne taA
day had passed but the contrary were re-
tanned as a part OF the estate ana We're, a. a.
/ the suggestion Of the executors. distributed IN
I kind 10 TIE benehciaries under the Will. Inc
declaration bY the executors that this ex-
emptlon from direct taxation was a moving
consideration 10 their purchase is not suf-
hcient. in the absence OF a showing of fraud-
ulent intent 70 evade the tax laws TO justly
nipulation, under the guise Of disposition, the
1 only effect OF which Is 10 defeat a tax.
This view appears 10 be further sustained
/ by consideration Of the character OF the
bonds purchased. They bonds OF the
Southern Pacific Compsny and Of the Pa
| cifc Electric Company. both quasi public cor
/ poratiors engaged in the operation OF CONNER
cial and street railways respectively. Their
/ bonds secured by deed OF trust OF the
7 property Of the corporation issuing them. The
4 general constitutional declaration that mort
gage deed Of trust contract or other obliga-
tion by which a debt is secured shall, for
purposes cf assessment and taxation. be
deemed and treated as an intersss in the
I property affected thereby, Is applicable 10
I the bouds OF quasi public corporations secured
/ by deed % trust of the property Of such cor
/ porations.
While TIE bonds Of these COMPANIES are non
1 sSsessa BILE they ere nevertheless taxable and
are in fact taxed in the taxation of the prop
critics which secure their pRymsnt and in
meet TIE interest OF their bonds and the con-
sequsnt value thereof must be affected by the
amount OF taxes which the companies may
( be required 70 pay unon their properties, IL
[ cannot be said that tie bonds are not af-
feoted by the tax upon such prop perties. 1t
results that money invested in the bonds of
quasi public corporations in California does
not thereby evaoe taxation. since such bonds
are. in conten- -'iation of law, taxed through
the medium ~ the property Of the corpora
/ tion securing them, Ard while II is not
I necessary to the decision of this matter TO
pass directly upon the question whether, in
proper case a fraudulent purchase OF such
bonds. with the averred purpose Of evadng
taxation. may be dlsregarded and the tax inn
| posed reference is made TO the matter for the
purpose OF placing the subject before your
committee in all its legal bearings.