Court Opinion

ID: 9811024
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:06:22.52406+00
Date Added: 2024-06-11T13:40:24.018122
License: Public Domain

Hoke, J., dissenting:
I am constrained to differ from tbe Court in its decision of this case, and tbe question presented being a matter of importance both to tbe parties litigant and to tbe public, I deem it proper that I should state briefly tbe reasons for my position.
*577It bas been long an accepted principle that shares of stock in a bank, when owned by individuals, are entirely separate and distinct from the corporate property and assets. This was held for law in Van Allen v. Nolan, and several other eases of like import, sometimes called the bank tax cases, decided as far back as 1865, and reported in 70 U. S., p. 573. The question there chiefly determined was whether the bonds of the United States Government should be first deducted in estimating the value of shares of stock in the hands of individual owners for the purpose of State taxation, permissible under the Federal statute; and it was held that while the bonds of the Federal Government were exempt from any and all forms of taxation, direct or indirect, yet the shares of stock owned by individuals being an entirely distinct and separate species of property, the Government bonds, though held and owned by the bank, should not be deducted in determining the value of these shares:
In the case referred to, Associate Justice Nelson, delivering the opinion, thus states the principle and the reason for it as follows:
“But in addition to this view, the tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal; and within the powers conferred upon it by the charter, and for the purposes for which it was created, can deal with the corporate property as absolutely as a private individual can deal with his own. This is familiar law, and will be found in every work that may be opened on the subject of corporations.
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“The interest of the shareholder entitles him to participate in the net profits earned by the bank in the employment of its capital, during the existence of its charter, in proportion to the number of his shares; and, upon its dissolution or termination, to his proportion of the property that may remain of the corporation after the payment of its debts. This is a distinct, independent interest or property, held by the shareholder like any other property that may belong to him.” • Van Allen v. Nolan, 70 U. S., 573.
"While this principle was originally established by a divided Court, it has been since repeatedly affirmed and applied by the Supreme Court of the United States, as in Bank v. Tennessee, 161 U. S., 134; Bank v. Des Moines, 205 U. S., 518, and many other cases; and has been so long recognized and acted upon by courts and' Legislatures that in the impressive language of flsso-ciate Justice Moody, delivering the opinion in the case last cited, “It has come to be inextricably mingled with all taxing *578systems and. cannot be disregarded without bringing them into confusion that would be little short of chaos.”
The decisions of our own State are equally pronounced in recognition of this principle. Commissioners v. Tobacco Co., 116 N. C., 441; Belo v. Commissioners, 82 N. C., 415. In the last case, Chief Justice Smith, speaking to this question, said:
“In an able opinion of the author of that valuable work on railways, commenting on the law, he says: ‘We here find the clear recognition of this kind of corporate property, taxable to the corporation, and the shares in the hands of the corporators, distinctly defined as a fourth species of corporate property, taxable only to the owners or holders: (1) The capital stock; (2) the corporate property; (3) the franchise of the corporation, all of which is taxable to the corporation; and the shares in the capital stock, which are taxable only to the shareholders.’ 1 Red. Am. R. Cases, 497.
“A tax on the shares of stockholders in a corporation is a different thing from a tax on the corporation itself, or its stock, ■ and may be laid irrespective of any taxation of the corporation where no contract relations forbid it. Cooley Const. Lim.,169; Field on Corp., 521.
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“In Van Allen v. Assessors, 3 Wall., 573, it is held that shares in a National bank may be taxed to the holder, although the whole capital is invested in securities of the National Government, which an act of Congress declares to be exempt from taxation by State authority.”
This being the doctrine as it now universally prevails, the Revenue Acts of the State establishing the method of taxation applicable to banks provide that the shares of stock of all banks of this State, both State and National, shall be taxed as the property of the individual owners, and for that purpose said shares shall be assessed at their market value, and, if they have no market value, then at their actual value; that this actual value, when there is no market value, shall be ascertained and determined by adding together the capital stock, surplus and undivided profits and deducting therefrom the value of the real and personal property on which it pays tax under local assessment, and insolvent debts, if properly itemized and sworn to, may also be deducted.
It will be noted here that the shares of stock are assessed and taxed, and the deductions are to be made only in determining the value of these shares as property of individual owners, and separate and distinct from the property and assets of the bank, *579and the only deductions allowed by tbe law are the real and personal property locally assessed and taxed and insolvent debts.
This, then, being the provision of the law under which the taxes are assessed, the Legislature of 1909 enacted chapter 510, Laws 1909, entitled, “An act to issue bonds, etc., to care for the insane of the State”; and, after providing for such issue to an amount of $500,000, the statute contains the following section:
“Seo. 4. The said bonds and coupons shall be exempt from all State, county or municipal taxation or assessment, direct or indirect, general or special, whether imposed for purposes of general revenue or otherwise, and the interest paid thereon shall not be subject to taxation as for income, nor shall said bonds and coupons be subject to taxation when constituting -a part of the surplus of any bank, trust company or other corporation.”
It is contended that under and by virtue of this provision, the bonds to be issued under this act shall not be considered in determining the value of shares in the hands of individual owners for purposes of taxation under the revenue laws above referred to.
This being a claim for exemption from taxation, it can only be allowed in case the claim is clearly established. R. R. v. Allsbrook, 110 N. C., 137; R. R. v. Missouri, 120 U. S., 569; R. R. v. Supervisors, 93 U. S., 595; Judson on Taxation, sec. 86.
In Allsbrook's case, supra, it was held:
“2. The grant of an exemption from taxation must be expressed by words too plain to be mistaken; if a doubt arise as to the intent of the Legislature, that doubt must be resolved in favor of the State.”
In R. R. v. Missouri, supra, it was held:
“Immunity from taxation will not be recognized unless granted in terms too plain to be mistaken.”
These decisions, while quoted as indicating the only condition under which an exemption from taxation should ever be allowed, can hardly be considered apposite to the question presented ; for, bearing in mind that cardinal principle that shares of stock in the hands of individual owners are entirely distinct from property of the bank, the statute in question nowhere provides that the valuation of these shares, as the property of the individual holders, should be in any way diminished by reason of the ownership of the bonds in question on the part of the banks, nor in my opinion does it use words that justify or permit of any doubt on that question. The section quoted provides :
1. That the bonds shall be exempt from all taxation, direct or indirect, etc.
*5802. That the interest thereon shall not be subject to taxation as for income.
3. Nor shall they be taxed when, constituting a part of the surplus of the bank.
And in language both plain and explicit these are all the exemptions which the statute sanctions or allows. There is nothing obscure or ambiguous in them, and in such case the courts have no power to add what is, to my mind, an entirely distinct provision, to wit: “Nor shall said bonds be considered in determining the value of the shares when assessed and taxed as the property of the individual stockholders.”
The first exemption specified in the law, “shall not' be subject to taxation, direct or indirect,” comes clearly under the decisions referred to, which hold that United States Government bonds shall not be deducted in estimating the value of the shares in National banks for purposes of taxation. An exemption by statute cannot be expressed in terms more comprehensive and searching than that which arises from the principle that the bonds of our National Government may not be taxed by the States. Such a power involves its very existence as an independent sovereignty, and, notwithstanding this, these bonds, when owned by a bank, are not deducted in determining the value of the shares, because, as stated, the shares are an entirely distinct and separate species of property.
The terms of the second exemption in the statute are not relevant to the discussion, and the third, “Nor shall the bonds be taxed when constituting part of the surplus of the bank,” in clear and express terms applies to the bonds when constituting part of the corporate property, and in no way affects the valuation of the shares, which are the property of the individual.
It is insisted, in support of the proposed change from the express terms of the law, that unless it shall be interpreted as affecting the valuation of the shares it would be meaningless; and it is further urged that the history of this legislation and the action of the Executive Departments of the State Government should lend force to' the position taken in the principal opinion; but these are considerations and rules of construction and interpretation permissible only when the language of a statute is of doubtful meaning, and have no place when its expressions are plain and do not permit of construction.
In Black on Interpretation of Laws, sec. 26, quoted with approval In re Applicants for License, 143 N. C., 3, it is said:
“Sec. 26. The meaning of a statute must first be sought in the language of the statute itself.
“And further: ‘If the language is plain and free from ambi*581guity and expressed a simple, definite and sensible meaning, that meaning is conclusively presumed to be the meaning which the Legislature intended to convey.’
“And in Lewis’ Southerland Statutory Construction (2 Ed.), sec. 267, it is said: ‘When the intention of the Legislature is so apparent from the face of the statute that there can be no question as to its meaning, there is no room for construction.’ ”
In McCluskey v. Cornwell, 11 N. Y., 601, Allen, J., quotes with approval the rule as expressed by Johnson, J., in Newell v. The People, 3 Selden, 1897, as follows:
“Whether we are considering an agreement between parties, a statute or a constitution, with a view to its interpretation, the thing we are to seek is the thought which it expresses. To ascertain this, the first resort, in all cases, is to the natural signification of the words employed, in the order and grammatical arrangement in which the framers of the instrument have placed them. If thus regarded the words embody a definite meaning, which involves no absurdity and no contradiction between different parts of the same 'writing, then that meaning apparent upon the face of the instrument is the one which alone we are at liberty to say was intended to be conveyed.”
And in- the same opinion it is said further:
“In the construction both of statutes and contracts, the intent of the framers and parties is to be sought-first of all in the words and language employed, and if the words are free from ambiguity or doubt, and express plainly, clearly and distinctly the sense of the framers of the instrument, there is no occasion to resort to other means of interpretation. It is not allowable to interpret what has no need of interpretation, or, when the words have a definite and precise meaning, to go elsewhere in search of conjecture in order to restrict or extend the meaning. Statutes should be read and understood according to the nat-hral and most obvious import of the language, without resorting Oto subtle and forced construction for the purpose of either limiting or extending their operation.”
These views are quoted with approval both in the opinion and dissenting opinions in Nance v. R. R., 149 N. C., 366, and express a well-recognized principle, of law. As heretofore stated, there is nothing in the statute which in express terms, or by any permissible intendment, refers to the omission of these bonds in determining the value of shares when taxed as the property of individual holders, and the courts, in my opinion, are without power to add such a provision to the law.
Speaking generally to the question presented, Associate Justice Peckham, delivering the opinion of the Court in Bank of Commerce v. Tennessee, 161 U. S., 146-147, says:
*582“These eases show the principle upon which is founded the rule that a claim for exemption from taxation must be clearly made out. Taxes being the sole means by which sovereignties can maintain their existence, any claim on the part of any one to be exempt from the full payment of his share of taxes on any portion of his property must on that account be clearly defined and founded upon plain language. There must be no doubt or ambiguity in the language used upon which the claim to the exemption is founded. It has been said that a well-founded doubt is fatal to the claim; no application will be indulged in for the purpose of construing the language used as giving- the claim for exemption, where such claim is not founded upon the plain and clearly expressed intention of the taxing power.
“The capital stock of a corporation and the shares into which such stock may be divided and held by individual shareholders are two distinct pieces of property. The capital stock and the shares of stock in the hands of the shareholders may both be taxed, and it is not double taxation. Van Allen v. Assessors, 3 Wall., 573; People v. Commissioners, 4 Wall., 244, cited in Farrington v. Tennessee, 95 U. S., 687.
“This statement has been reiterated many times in various decisions by this Court, and is not now disputed by any one.
“The surplus belonging to this bank is- ‘corporate property/ and is distinct from the capital stock in the hands of the corporation. The exemption, in terms, is upon the payment of an annual tax of one-half of one per cent upon each share of the capital stock, which shall be in lieu of all other taxes. The exemption is not, in our judgment, greater in its scope than the subject of the tax. Recognizing, as we do, that there is a different property in that which is described as capital stock from that which is described as corporate property other than capital stock, and remembering the necessity there is for a clear expression of the intention to exempt before the exemption will be granted, we must hold that the surplus has not been granted exemption by the clause contained in the charter under discussion. The very name of surplus implies a difference. There is capital stock and there is a. surplus over, above and beyond the capital stock, which surplus is the property of the bank until it is divided among stockholders.”
There is no one who is more jealous for the honor and reputation of this State and its government than the writer. I know, full well that it is their desire and fixed purpose to meet every obligation and duty incumbent upon them as an enlightened, progressive and Christian people, and where such pur*583pose bas been enacted into law their courts should at all times and under all circumstances be swift to enforce it; but this sentiment, deep as it is, does not permit — on the contrary, it forbids — that in expounding tbeir laws we should depart from fixed principles of interpretation, or read into their statutes an effect and meaning contrary to the clear import of their terms. I am of. opinion that the judgment below should be affirmed.