The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1925-07-01
HIGH C0URTT0
DECIDE EXCESS
TAX LAW CASE
Tax Commissioners Demur-
rer in Test Suit Overruled
by Judge Jans0nius

Action brought in Burleigh county
district court by the Gable Robin
son sFruit company Of Bismarck
against 4. II. H. Thorcsen, as tax
commissioner of North Dakota, to
decide whether the deduction of
moneys and credits from corporation
excess profits is constitutional was
certified to the supreme court today
by Judge Fred Jansonius, who over
ruled Commissioner Thoresen's de-
murrcr TO the complaint in an opin-
ion handed down this morning.
The suit alleges that moneys and
credits are absolutely exempted from
taxation under chapter 30 of the laws
of 1923 and that the value of credits
and money Is reflected in the market
value of the stock of the corporation;
that if the tax commissioner cert-
fled the assessment as he proposed
to do. moneys and credits will in fact
be taxed.
Two Acts Involved
Judge Jansonius held in his opln
ion that the action involves the con-
StructiOn of two acts of the eigh-
tccnth legislative assembly-ch chapter
sos and chapter 3O7 Of the laws Of
1923.
There is no question but that all
moneys and credits in the hands of
natural persons, and foreign corpor-
ations, operating in the state. arc
exempt. and so far as direct proper
ly tax is concerned, it is also exempt
as to domestic corporations" the
opinion states.
"Regarding the constitutiOnality Of
chapter 3O5, it seems to me that is
not open to discussion. since the law
as it originally stood. as section 2llO
has been before our court and the
United States supreme court in the
case of Grand Forks county VS..
Cream Of Wheat company. 1t was
there held that the law was cohsti-
tutional.
"The decision in this case depends
upon the construction OF chapter
3O5 If it was the intention Of the
legislature to levy property tax
on the capital stock, as distinguish
ed from franchise tax, moneys and
credits must be deducted, since that
deduction applies only to property
tax.
"As a general rule statute i'm
posing taxes on corporations are
classified as property taxes, where
the capital stock is the direct sub
ject Of the tax and the term ls used
in the sense Of meaning the aggre-
gate of the property and assets, both
tangible and intangible.
"A franchise or excise tax Is one
wherein the capital stock is not per
Sc the object Of the tax but is the
standard taken for the purpose OF
finding the amount of an excise tax
upon the corporation.
Very Close Question
II realize it is a very close ques-
tion whether this is a property or
franchise tax, and that the validity
of the law so far as it affects the
moneys and credits depends upon
which Of the two it is. II it is q
tax upon property. the capital stock
is merely the measure Of the tax,
the character of the property in
which the capital is invested is i'm
material.
"This tax is called a corporate
excess tax. The purpose is to tax
the intangible property of the cor
poration. Or, in other words, its
good will, business opportunity and
management, in addition to the tang
ible property as represented by ITS
IE0I duu RC4oOHOs PAVPSASJ.
ITO ascertain what this intangible
property is worth the stock is re-
quired to be listed at its actual or
market value and not ut its par
value, and the difference between its
actual value and its real and per-
sonal property is the excess.
"Those two acts Of the legislature
must be construed together, and with
other existing laws so far as they
may be applicable.
1T is my opinion that chapter 3O5,
known as the corporate excess law
was intended to reach only the in
tangible property, as represented by
the difference between the actua!
value of the stock AMI the real and
personal property, which is other
wise taxed, and that chapter 3o7 the
moneys and credits of domestic cor
poration joint stock company and as.
sociation, as we'll as individuals and
foreign corporations operating IN
this state.
"My opinion is strengthened by the
fact that the legislature in the last
ten wears has enacted considerable
legislation to encourage cooperative
/ associations, and it therefore does
not seem reasonable that the legis.
lature intended to place domestic
corporations, joint stock companies
and associations organized in this
state at a disadvantage in compel.
ing with foreign corporations doing
business in this state. The demur'
rer will therefore be overruled.
"Both parties indicated at tht
hearing that they wished to have
| this matter taken to the supreme
| court.
"Since this is strictly . question
| Of law I will If it is desired certif,
it At once to the supreme court"