Court Opinion

ID: 6657059
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:58:37.487793+00
Date Added: 2024-06-11T15:59:59.426794
License: Public Domain

*327The following opinion on motion for rehearing was filed October 16, 1907. Rehearing denied:
1. Taxation: Avebage Capital. The average capital of grain dealers, mentioned in section 66 of the revenue law (laws 1903, ch. 73), is not the average of the total capital used in the business, but is the excess of such capital over the real estate and other tangible property which can be viewed by the assessor and “assessed separately.”
2. Average capital is not average purchases, nor average sales, and cannot be found by adding together the amount of purchases or the amount of sales during the year, and dividing the sum by an arbitrary divisor.
3. Average capital is the average of the amount of cash and all other property of every hind used in carrying on the business; and, if there is an excess of this average of capital over the amount of real estate and other tangible property that can be viewed by the assessor, then such excess is to be added for assessment.
Sedgwick, C. J.
The appellant has filed in this case a brief in support of a motion for a rehearing. From this brief it appears that the opinion herein is not at all understood by counsel for appellant. Speaking of the opinion the brief says: “It is vague, hazy, indefinite, and muddy as it can be, and I speak respectfully. It furnishes no definite rule or guide that can be followed either by the assessor or the grain broker.” The case is one of very much importance. The opinion is supposed to be a guide for assessors in all parts of the state in assessing grain dealers. If the court has failed to. so state its views as to enable the learned and able counsel for appellant to understand them, it would seem to be desirable to attempt to make the opinion clearer, so that assessors, who are not supposed always to possess the legal acumen of appellant’s counsel may be able to understand the construction which the court attempts to give to this statute. Counsel understand that the average capital of a grain dealer is to be found by adding together all the purchases *328of grain during tbe year and dividing tbe total amount by some indefinite number selected at random. An extended illustration of tbis proposition advanced by counsel is given in tbe brief, and we will quote it in full as a basis of our explanation of tbe views of the court. It is as follows: “Let me give a practical concrete illustration of this proposition, for tbe purpose of testing its accuracy, and of showing that tbe above statement is correct. Let it be admitted that tbe volume of business at Friend, Nebraska, for the year 1905, was $65",000, that is, that there was purchased at that point by tbe appellant during tbe year 1905, altogether, $65,000 worth of grain. Tbis was made up of a great number of items that were purchased during tbe year and is tbe aggregate of all of the different purchases made by that company at that point during the year. Now, if Ave use 20 as the divisor for the purpose of getting the average capital on any given day (I take 20 as the divisor because that is the number used in this county and many others), I shall get the average capital, which Avill be $3,250. Now, suppose one of the items that goes to make up the $65,000 is a $5,000 purchase of grain which is still in the elevator at the date of assessment. Should this grain be assessed separately as tangible property? If so, then the assessment would stand thus:
Average capital.$3,250
Amount on hand as tangible property.... 5,000
Total assessment .$8,250
Can it be successfully contended by anyone that in this method or process you have not assessed the $5,000 of grain twice, once as average; capital and once as tangible property?” This proposition of counsel shows two important particulars in which the court has been misunderstood :
First. We do not consider that average capital can be found by adding the total of purchases during the year and dividing that amount by any number whatever, *329much less by an indefinite number selected at random. If the grain dealer should purchase $10,000 worth of grain each day during the year, or on each one of 300 days during the year, and should sell the grain so purchased on each succeeding day, the total amount of purchases would be $3,000,000, and if we select the divisor at random, say 20, “because that is the number used in this county and many others,” we would have an average capital of $150,000, whereas the capital needed for such transactions during the year would be only $20,000. The amount received for the second day’s sale could be used for the third day’s purchase. It is very plain that the average of the purchases Avould not be the average of the capital, invested, and this fundamental error runs through the entire brief. The average capital could not in any event be ascertained by using an arbitrary divisor. In the above demonstration taken from the appellant’s brief the divisor 20 is used “because that is the number used in this county.” Manifestly counsel would have as readily accepted any other number as a divisor. If he had happened to have selected 25 as a divisor the average capital Avould have been $2,600 instead of $3,250. If he had taken 12, the number of months in the year, as a divisor, as was done in the Louisiana case cited in the opinion, the average capital would have been $5,416.66|; and, again, if he had selected 52 as a divisor, the number of weeks in the year, the average capital would have been $1,250. Manifestly the average capital used in a given business cannot be ascertained by such methods.
Second. Counsel understands the opinion to mean that the average capital used in the business is to be ascertained by some method and is to be assessed at all events, and, in addition to this average capital, the real estate and all tangible property is to be assessed also, whereas the view of the court is that all tangible property of a grain dealer is to be assessed in precisely the same manner as the property of other persons and corporations is assessed. In addition to this, the assessor is to ascer*330tain whether this result is a fair assessment of the grain dealer’s property used in the business. If he finds no grain or cash on hand, and all other elements of the property used in the business remain substantially constant during the year, it would be manifest that by assessing the tangible property found by the assessor he would not have reached all of the property used in the business. It is only in such case that he is required to assess average capital, and it is not the total average capital that he is to assess, but it is the average amount of capital invested in the business, exclusive of real estate and other tangible property assessed separately.. If the real estate and other tangible property which is assessed is not equal to the money and property used in the business on an average during the year, then he is to add to the value of the real estate and tangible property an assessment of .the average amount of capital in excess of the real estate and tangible property. This average amount of capital in excess of the real estate and tangible property he is to determine from the books of account and checkbooks, as pointed out in the statute. In determining this excess of capital above the amount which he finds as tangible property, he is not confined to the purchases of grain nor to the sales of grain, nor is he to use arbitrary divisors. If the grain dealer is to be assessed only upon the property in sight on any given day, and we suppose that he is dishonest enough to seek to avoid taxation, his cash and grain can be so manipulated by him as to bring about that result. If, on the other hand, we suppose (which would, of course, generally , be the case) that he is honest and does not resort to manipulation, then he might be in some cases unjustly taxed. But the law does not assume that he will accumulate grain on the first day of April for the purpose of swelling his assessment. There are, of course, manifest difficulties in the way of accurately determining in all cases the average amount of capital used during the year in excess of the real estate and other tangible property which the assessor can view on the first *331day of April. The legislature evidently supposed that this difficulty in determining the excess of the capital used is not so great as to malee it necessary to allow grain .dealers to escape a fair assessment by placing their grain and cash beyond the view of the assessor on the first day of April. No scheme of assessment is perfect. If it comes as near an exact equality of assessment as the circumstances of the case will admit, and no manifest injustice is done, it is all that is required.
We think that the statute in question meets this requirement, and that the construction which we have given it is the correct one.
The motion for rehearing is
Overruled.