Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1907-03-22
TAX SUITS ARE FILED.

| HuOotlouS VI ihE-EchCuluB Importance CON
corning the proper methods of assessing
and taxing the shares of financial corpora
tons and the use of Baltimore city stock 10
cutting down assessments.
In the first suit the County Commission.
ers of Montgomery county ask for equitable
relief against Buchanan Schley, State Tax
Commissioner, and charge him with apply
ing an irregular and unlawful method in
the assessment of the shares of the Mont
gomery County National Bank and of the
First National Bank of Gathersburg. 1t is
charged that, in violation of the statute
which requires him to ascertain the "true
value" of the shares, the Tax Commissioner
purposes to value the shares on the arbitra-
ry basis of three fourths of the "book value"
of the capital assets of the banks.
The bill sets out that the Montgomery
County National Bank has aggregate re-
sources of more than 81 900, 900, with total
capital of $21S, 1879, consisting of capital
stock, 100000 surplus, undivided profits
and contingent fund, $118, 129, making a
book value per share of $21s, which is the
valuation placed on the stock by the bank
alleged that the shares have sold in the mar
ket during the last year at prices ranging
between $500 and $3.50, and that the net
earnings of the bank for 1906 were more
than 1T per cent on the capital stock.
1t ia claimed that under the method Of cal
Ion LOT nIvy fro If fhn h1n No Inn
which the Tax Commissioner purposes to
pursue, the shares will be valued in gross at
only $163597, or at the rate Of $16S.59 a
share. This method is characterized as Ear.
bitrary and capricious" and in abuse OF his
official discretion.
1t is further averred that the Montgom-
cry County National Bank is the holder of
$119,20 of Baltimore city stock, and that
the Tax Commissioner has no right to de-
duct such city stock from the assessed valu-
alton of the banks shares, either for State
or local purposes. Provisions of the code
are referred to which, 1t is commended, limit
the allowance of credits to city stock on
which the State tax is payable by the city
Of Baltimore. The plaintiffs claim that under
the Federal laws governing national banks
no part of their assets can be reached by the
States for taxation and that the only way In
which such ban ks can be taxed is directly
on their shares of capital stock and on their
real estate; that accordingly the city stock
held by such banks is not subject to State
taxation and therefore is not entitled to de-
duct:on under the tax laws of Maryland
inasmuch as these laws limit the allowance
of credit to such city stock as is subject to
taxation in the hands of the holder. 1t is
stated in the bill that as a result Of deduct
ing the holding of city stock the taxable
value of the shares of the Montgomery Coun-
ty National Bank will only be $3.50 q
share ON the Tax Commissioner theory.
In reference to the Mutual Fire Insurance
Company of Montgomery county the bill
sets forth that the company now holds
$119 500 of Baltimore city stock on which
the State tax Is payable by the city of Bal
timore, but that the Tax Commissioner in
tends to allow this holding as set off or
deduction from the Amount of its assets
taxable in Montgomery county. This pro.
cedure is claimed to be illegal, it being
averred that the tax law of Maryland con-
templates only an allowance or credit for
State purposes aud not for county purposes
The second suit is by Blair Lee, suing in
his capacity as large taxpayer and Is also
directed against State Tax Commissioner
Schley. In addition to covering much of
the same ground as in the first suit 1t asks
mandatory injunction to value and assess
the taxable securities and assets of the Mu-
tual Fire Insurance Company of Montgom-
cry county, 1t being alleged that the com.
pany has not been returned by the Tax
Commissioner either for State or county
taxes on such property since 1896.
A copy of an opinion by Attorney Gem
eral Bryan is incorporated in the bill. In
this opinion the Attorney General holds
that mutual insurance companies have been
liable to taxation on their assets since 1896.
Judge Revell signed a restraining order
in both cases and ordered the State Tax
Commissioner to show cause by March 81
why it should not be made permanent
and mandatory injunction should not be
granted.
Messrs. George IL. Lamar, OF Rockville,
and A. Theodore Brady, of Annapolis, ap-
peared with Senator Lee as solicitors for the
| plaintiffs.
Senator Lee, in an interview, said that,
according to his information, the total book
value of the capital assets Of the various
financial corporations of the State having
shares of stock amounts TO about $4,000
900, 80 that the deduction of one fourth. as
practiced by the State Tax Commissioner,
represents a loss in the basis of State and
local taxation of about $8,500,000. He said :
"As the law contemplates that shares OF
stock shall be valued at what they are
worth TO the holder-that Is, at th lr fair
| market value--and as this market value is,
In most cases, higher than the more or less
arbitrary figure at which the corporations
carry their assets on their books, the loss
in taxable basis is really greater than the
figure have given.
"The marked decrease in corporate as
easements returned to our county and the
consequent shifting of the tax burden on
4 the farmers and other individual owners Of
property makes this question one Of con-
siderable importance to us. l am advised
that not few OF the stockholders and some
of the directors Of the affected corporations
in Montgomery county express themselves
as being in sympathy with the movement
for the equalization OF taxation in this re-
gard. | feel sure it will be no undue hard
ship on any Of them.
awe need more money for schools and
public improvements, and 1t is apparent that
all lawful taxes should be collected in pref
| ..,,. 10 inoraaoino the Ia 4 rate