The Hawaiian gazette., 1905-01-13
CONTRACTS
NOT TAXABLE
trrom wednesday's Advertiserl

handed down decision that pIai'"
ton agency contracts were not taxa
BILE. thereby putting itself in conflict
with n decision of the Territorial Su-
preme Court in re Brewer VS.. Assessor
which decision was handed down on
June 1, 1908. The syllabus of that de-
cision, upon the point of the taxation
OK agency contracts. follows:
Sugar plantation contracts are con-
tracts within the meaning of that word
as used in Section Sl9, and taxable;
but neither promissory notes, nor ac-
counts receivable are such. contracts,
nor are they taxable"
The agencies involved in the deci-
sion made yesterday are as follows,
with the amounts at issue: w. G. IT.
win & Co., Ltd, assessed at S6S,oS5, un-
returned. amount In dispute $63,0S5; +.
A. Schaefer G. Co., Ltd, assessed at
s1S,125, amount in dispute $lS,l2o: u
Brewer & Co., Ltd, assessed at $65,Aoo,
returned at $S,30S.46, amount in dispute
s57,156.52; H. Hackfeld & Co., Ltd,
assessed at s110.615, returned at s4o,-
44452, amount in dispute s70,l70.4S;
II. III. Davies & Co., Ltd. assessed at
s56.Se5. returned at s120, amount In
dispute $56,775: Alexander & Bald
win. Ltd, assessed at $l11,S3 returned
as of no value, amount in dispute $l11,-
$50; Castle G. Cooke, Ltd, assessed at
s97. .662. unreturned, amount in dis
pute $97,662.
Under the terms of the decision, the
stand tn lose a large
sum in taxes. but the matter will be
appealed to the Supreme Court and
SO the fight is not ended yet. The
contracts of the agencies had been
given a total taxable value of $4S3,23
by the assessor making the tax due
from them at one per cent $3,s3233.
The text of the Tax Appeal Courts de-
cision follows:
1.-TWO questions are to be especially
considered by this Board In the matter
OF the above appeals.
'First Are these agency contracts
taxable property within the meaning
and intent of the law?
Second. If taxable under the law
what is the cash value of such con-
tracts?
Counsel for various appellants have
submitted briefs arguing with much
force and supported by various au-
thorities that none of these contracts
are within the purview and intent oi
the tax law.
'"The Supreme Court of the Terrific
ry has, in the case of Assessor VS.. c
Brewer & Co.. Is Hawn.. page &c. def
nitely set forth the view that, 'Thes'
agreements whether written or verbal
and whether for a definite period o.
terminable at will, are certainly al
contracts within the meaning of Sec
S19 and are taxable"
As to the value of such contracts
the Supreme Court has further givei
opinion in 10 Hawn., page 36, that suci
contracts termnable at will or for {
period of not more than one year haV'
of themselves no cash value.
The decision further reads, Moth
ing could be realized upon an attempt
ed sale of a privilege to act as agent
which privilege, carries with 1t no as
surance of its continuance for a def
mite length of time.
1.-THE evidence shows that the agen
holding contracts with the sugar com
panies, invariably either themselves
or with their employees, officers ant
friends, hold a majority control of tn
stock of the sugar company, and tn
contracts are unquestionably of valu
to the agents holding them.
"rhose contracts containing provi
sions such that they can be terminal
ed at a years notice, from either par
ty, are to large degree perpetua
contracts, for those interested are of
ficers, directors and stockholders Il
both companies to the agreement, an
therefore so interviewer with one an
other that it would be almost impos
sible to dispose with the contrac
alone without a transfer of the con
troll of the stock.
"It Is difficult to imagine one o
these agency contracts, standing b.
itself, where the agency holding tn
contract has no direct interest In tn
plantation, nor has any agents owl
stockholders or friends any direct in
terest in said plantation, in which cas-
the central of the plantation would b'
in the hands of rivals of or opponents
to the agent holding the contract.
''It is further difficult to imagln
that an agency contract under condi
tions above outlined has much marke
value, if any.
'"The Supreme Court decision in l
Haw., page A, reads: The value a
which property is to be assessed un
der the tax law is the value for tn
purposes of sale, and not the value t
the owner.
mo legislative enactment prescribe
a mode of estimating the value c
these contracts
1.-THE revenue in the form of com
missions from these contracts mign
form a basis for establishing a valu,
IL the contracts could be brought ur
der the head Of an enterprise for prot
it; but this too has been excluded b
the Supreme Court decision above re
ferred to.
''The evidence shows that these ageI
cy contracts, by themselves. have ne'
er been bought or sold in this marke
therefore no previous sales of col
tracts can be used for establishir
values.
"Messrs. Brewer & Co. and Messl
II Hackfeld K. Co have indeed r