Court Opinion

ID: 6440056
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:16:10.927939+00
Date Added: 2024-06-11T15:52:32.502205
License: Public Domain

Sanderson, J.
The petitioner,-a safe deposit company incorporated under G. L. c. 158, and subject to an excise tax upon the value of its franchise under G. L. c. 63, §§ 53-60, inclusive, filed this petition under G. L. c. 63, § 77, for the abatement of a portion of its tax for the year 1928, its contention being that the value of its bonds, secured by mortgages on Massachusetts real estate, the mortgages being held by trustees for the bondholders, should have been deducted from the market value of the shares of its corporate stock in ascertaining the valuation on which the excise tax should be assessed. The parties stipulated with the assent of the single justice that in each instance the mortgagee’s interest as represented by the bonds which the mortgage secures is less than the actual and assessed value of the mortgaged real estate. A demurrer based upon the ground that the petition did not state a cause of action was sustained and the petitioner appealed from a final decree dismissing the petition.
G. L. c. 63, § 55, as amended by St. 1926, c. 279, § 6, Fifth, provides in part that from the market value of the shares constituting the capital stock of corporations subject to a franchise tax in accordance with its provisions, a deduction shall be made of “the value as found by the commissioner of their . . . real estate . . . subject to local taxation wherever situated.” The only deductions which may be made in determining the value of the franchise of a corporation taxable under G. L. c. 63, § 58, are those for *477which the statute expressly provides,. see Commonwealth v. Hamilton Manuf. Co. 12 Allen, 298; Commonwealth v. New England Slate & Tile Co. 13 Allen, 391, 393; Manufacturers’ Ins. Co. v. Loud, 99 Mass. 146, 147, and the petitioner is not entitled to a deduction of the value of its bonds unless they are its "real estate” within the meaning of those words in the statute. The holder of a duly recorded mortgage given to secure a fixed and certain sum of money has an interest in real estate taxable as real estate. G. L. c. 59, § 12. By the terms of the statute if a corporation subject to a franchise tax under G. L. c. 63, § 58, holds the title to a mortgage of the kind described as security for a loan, it is entitled to a deduction from the market value of its shares of its interest as mortgagee as represented by the loan, in ascertaining the basis for the franchise tax. Firemen’s Fire Ins. Co. v. Commonwealth, 137 Mass. 80. United States Trust Co. v. Commonwealth, 245 Mass. 75, 80. See Attleboro Trust Co. v. Commissioner of Corporations & Taxation, 257 Mass. 43, 49. If the interest of such corporation as mortgagee is taxable as real estate under the statute its right to have the deduction made would not be affected by the fact that the full tax, based upon the combined interests of the mortgagor and mortgagee, had been assessed to and paid by the mortgagor under G. L. c. 59, §§ 13, 14.
In the case at bar the petitioner is not the holder of any of the mortgages securing the bonds, nor is it taxable as mortgagee. Neither the mortgages nor the bonds which they secure are the petitioner’s real estate within the meaning of the statute. The section of the statute providing for the deduction refers to legal ownership of real estate rather than to an equitable and nonassessable interest and does not authorize the deduction sought by the petitioner. It is not material that the bonds would not be taxable if owned by an individual (Knight v. Boston, 159 Mass. 551) or that they would be deductible under the provisions made for business corporations, G. L. c. 63, § 30, els. 3 (b), 4 (b), or that the value of the bonds may to some extent increase the market value of the corporate shares. Commonwealth v. Hamilton Manuf. Co, 12 Allen, 298, 306. The terms of *478the section of the statute upon which the decision in Knight v. Boston, 159 Mass. 551, was based (Pub. Sts. c. 11, § 4) are materially different from those of the section defining the deductions to be made in determining the valuation upon which the excise tax upon the petitioner’s franchise is to be based. Compare G. L. c. 59, § 4, with G. L. c-. 63, § 55, Fifth. Under the first of these provisions a loan is not assessable as personal property if secured by a mortgage taxable as real estate, while under G. U. c. 63, § 55, Fifth the deduction authorized is the value of the corporation’s “real estate . . . subject to local taxation,” and by the terms of G. L. c. 59, § 12, it is the holder of a mortgage whose interest as mortgagee is made assessable as real estate. Firemen’s Fire Ins. Co. v. Commonwealth, 137 Mass. 80. United States Trust Co. v. Commonwealth, 245 Mass. 75, 80. The demurrer was rightly sustained.

Decree affirmed with costs.