Court Opinion

ID: 6657057
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:58:37.484224+00
Date Added: 2024-06-11T15:59:59.423947
License: Public Domain

The following opinion on rehearing was filed July 12, 1907. Former judgment of reversal vacated and judgment of district court affirmed:
1. Taxation: CLASSIFICATION: Constitutional Law. The classification (laws 1903, ch. 73, sec. 66) of “every person, company or corporation engaged in the business of buying and selling grain for profit” as a “grain broker,” for purposes of assessment, and providing for the assessment of the average capital of grain brokers, is not unconstitutional.
2.-: Assessment. The amount of capital invested in a business ordinarily is the whole amount of money invested and used in carrying on that business. ■ The average capital of a grain dealer is defined by section 66 of the revenue law to be the average amount which the total investment in the business of the grain dealer exceeds the tangible property which can be separately assessed at the time of assessment. The assessor, from the examination pointed out in the statute, must find what capital of the business there was, if any, from time to time during the tax year, not including in the computation the tangible property on hand and capable of assessment at the time of assessing, and the average or mean of the capital so found is to be assessed as property in addition to the tangible property.
Sedgwick, C. J.
The facts in this case, so far as the essential questions' of law involved are concerned, may be found in the former opinion, ante} p. 311. A rehearing was granted, new briefs have been filed, and oral argument heard thereon. The plaintiff is a corporation engaged in buying and selling grain. It operates a large number of grain elevators located in different counties of the state. Among* them it operates an elevator in Lancaster county for the transfer and cleaning of grain in transit to eastern markets.. It returned to the assessor of Lancaster county for taxation a statement of its capital stock, its surplus *320and profits, and an itemized statement of its tangible property assessable in Lancaster county. In this statement Aras not included $10,000 Avorth of grain in its Lincoln elevator. The assessor added this property to the schedule, and Avhother he erred in so doing is the question to be decided. Section 66, ch. 73, Iuavs 1903, is quoted in the former opinion. Several of the provisions of this section have been debated in this case.
1. The section of the statute under consideration provides that “every person, company or corporation engaged in the business of buying and selling grain for profit, shall be held to be a grain broker,” and it is largely from this provision that attorneys for defendant draw their argument that the taxation imposed by this section on average capital is an occupation tax. Section 1, art. IX of the constitution, authorizes the legislature to tax peddlers, auctioneers, brokers, and others named, “in such manner as the legislature shall direct.” It is, hoAvever, not to be supposed that the purpose of the legislature in providing that a dealer in grain “shall be held to be a.grain broker” Avas to enable it to levy an occupation tax upon grain dealers, and so evade the above provision of the constitution. To determine what class of persons may be included in the term broker for the purpose of levying a.n occupation tax, it Avould be necessary to ascertain the true definition of the Avord broker as that term was generally understood at the time of the adoption of the constitution. The legislature could not enlarge its poAver to levy an occupation tax by extending the meaning of the words employed in the constitution beyond their reasonable and generally accepted significance Avlien adopted. A different purpose is apparent in adopting a specified term to be applied to dealers in grain. The fact that the Avords “grain broker” are used instead of some other words is of no significance. By this section the legislature provides a manner to ascertain the value of the property of “persons, companies or corporations engaged in the buying and selling *321of grain for profit,” in some respects different from that employed in general. They are classed as grain brokers and are to he assessed upon their average capital. If the legislature has power to “require the assessment of average capital” instead of the assessment of the property owned at some specified time, and if there is a special and sufficient reason for ■ using this method in assessing those engaged in buying and selling grain for profit, a reason that does not apply to assessment in general, then there can be no doubt of the power of the legislature to so classify such interests for assessment. Rosenbloom v. State, 64 Neb. 342. Some reasons are stated in the former opinion for assessing average capital invested in dealing in grain. In addition to what is there said, we quote" the following very apt suggestions from the plaintiff’s brief: “But the capital invested in the business is continually changing form from money to grain and then back to money. Hence, if taxed as grain, at a time when the grain on hand had all or for the most part been sold, but a fraction would be reached; if taxed as money, when a large amount of grain was on hand, but a fraction would be reached; if assessed both as grain and as money, the one being a mere form of the other, the same capital would be taxed twice; if assessed by taking the sum of the grain and the money on hand April 1, the danger would be that money is easily juggled and concealed. If an arbitrary date were taken, there would be a likelihood that grain brokers would have very little grain on hand and very little money on deposit on that day..” It is, however, contended in the defendant’s brief that the assessment of average capital is not the assessment of property within the meaning of the constitution, and therefore it is beyond the power of the legislature to provide for assessment in that manner, except as an occupation tax. This argument is not convincing. It will be conceded that the legislature might require the property owned by the taxpayer on the 1st day of May, or on any other specified day of the year, to *322be Talued for taxation, as well as to select the 1st day of April for that purpose. The requirement of the constitution is that the value of the taxpayer’s property for assessment shall be “ascertained in such manner as the legislature shall direct.” Property necessarily fluctuates in value, and ownership is changed from one person to another, so that if the average value during the year could be accurately ascertained it would furnish the true basis for taxation. Taking the value of each individual on some given day of the year is supposed to be, in ordinary cases, the most practicable method of reaching a just equalization of property for assessment..
2. A very important question in this case, and one that has been very much debated, is Avhat is meant by average capital as used in the statute referred to. Tn our former opinion it was said: “Average capital used in the business evidently means the money used in buying grain, and all of the money so used.” It is also considered in that opinion that grain in elevators is a part of the average capital of the business, and, being assessed as a part of such average capital, it cannot be separately specifically assessed. This led us to the conclusion that the assessor erred in placing the grain in plaintiff’s elevator in Lincoln upon the schedule for assessment. The average capital of the business is generally understood to mean all of the money invested in the business and would include all property used in the business..
There is in New York a general statute which provides that nonresidents of the state doing business therein shall be taxed on the capital invested in such business as personal property. It was held that by the words “capital invested in such business” ivas meant the money which was put into the business with the intention that it shall be used in the transaction of the business. People v. Feitner, 67 N. Y. Supp. 893. This is the ordinary use of the word capital. Does the use of these words in this section of the statute and the connection in which they are used require us to inferna different meaning? It is *323said that the words “other tangible property” used in connection with the words “real estate” in specifying what shall not be included in the average capital must be construed to mean other like tangible property, that is, other tangible property of the character.of real estate. It is suggested that the connection in which these words are used and the subject matter of the section indicate this intention of the legislature. The constitution requires that all property of every nature be in some manner valued for taxation, and be required to bear its share of the public burden. The construction thus contended for does not seem to be more usual and natural than to consider the words used as equivalent to “all tangible property including real estate.” If, in ascertaining the average capital for assessment as such, we include all tangible property that is capable of being assessed separately, including real estate, and deduct the value of all property already separately assessed, the object of the legislature would seem to be reached. This is analogous to the manner prescribed for assessing banks. The value of the capital stock of a bank for assessment is ascertained by taking the sum of its liabilities from the sum of its assets, and from this valuation of the stock, when so ascertained, is deducted for assessment the value of the tangible property that is otherwise assessed which enters into the valuation placed upon the assets. This, of course, gives the same valuation of capital stock for assessment as would be obtained by excluding all tangible property otherwise assessed in computing the assets of the bank, and we see no reason for giving any other construction to the section of the statute under consideration. This construction of the statute requires that the tangible property of a grain broker, iñcluding real estate, be assessed in precisely the same manner as the property employed in other ways is assessed.
A similar idea is found in the statutes of the state of Louisiana. Their revenue act contains the following declaration: “In assessing mercantile firms the true intent *324and purpo.se of this act shall be held to mean, the placing of such value upon the stock in trade, all cash, whether borrowed or not, money at interest, open accounts, credits, etc., as Avill represent in their aggregate a fair average on the capital, both cash and credit, employed in the business of the party or parties to be assessed.” The supreme court of that state had occasion to construe that statute in Swift & Co. v. Board of Assessors, 115 La. 322, 38 So. 1006. The court also discussed the meaning of the words “a fair average on the capital employed in the business.” A definition of average is quoted from the Standard Dictionary: Average is “obtained by calculating the mean of several amounts, numbers, or quantities.” The plaintiff in that case was engaged “in buying and selling of fresh meat shipped to the city of New Orleans in carload lots.” The question involved was as to the proper method of ascertaining the fair average capital employed in the business. In the statement of the case by the court the following language occurs:
“In assessing the merchandise or stock in trade, the taxing authorities took the total amount of meat received during the previous year, and divided the same by 12, thus reaching what is called the ‘average’ value of stock on hand during the previous year.” In regard to this method of obtaining the average value, the court said: “The assessors’ contention is that the monthly receipts of merchandise during the year should be added together, and their sum total divided by 12. This method necessarily counts merchandise sold during the month as a part of the stock on hand at the end of each month, and is an assessment of the amount of purchases, rather than of stock on hand. As the money or credits received from sales are also taxable, this method would lead to double taxation, in contravention of the express provisions of section 7, which declares that no property shall be taxed twice in the same year.’ Tinder the assessors’ rule, a merchant whose entire capital is $5,000 might be taxed on $10,000 on stock in trade, if he each month sold $5,000 *325of merchandise, and reinvested the proceeds in other merchandise. On the same theory a butcher or other vendor of perishable commodities, who buys and sells from day to day $100 worth of stock, might be taxed on $3,000 of capital. The circumstance that the merchant or dealer turns over his capital every six months, or every month, or every day does not affect the question. His capital, plus profits or minus loss, remains the same; and it is this average capital, represented by merchandise, money, rights, credits, which the statute intends to reach.”
The court said that their statute does not provide “that the capital eo nomine shall be assessed, but that all the elements which enter therein shall be so valued as io represent a fair average of the capital employed.” The same may be said of our statute, if we look to its intention and results. While our statute names “average capital,” and declares that “taxes shall be charged” thereon, and so, when taken literally, requires average capital to be assessed in that name as an element of property, still the result and the manifest intention of the statute is to enable the assessing authorities to ascertain the proper assessable value of all the property used in the business. We may then say with the Louisiana court: “The meaning of the proviso, therefore, is that the average amount of stock, money, rights, credits, etc. (including real estate), which may vary through the year, shall be taken as the basis of assessment.” That is, all property, real and personal, used in the business is to be .assessed, and if the assessor, from the examination of the books, etc., which the statute requires him to make, finds that the property so assessed is less than the property (including money on hand or in bank, and real estate) in use in the business at other times during the preceding tax year, he ascertains from the books of account and checkbooks of the grain broker how much more property has been in use in the business at other times during the year than is so used at the time of the assessment. For instance, if he finds no grain, or but a small quantity, on *326hand at the time of the assessment, and that at other times during the year there have been large quantities of grain on hand, and that all other elements of the net assets of the business have remained substantially constant, he should ascertain from the accounts, etc., how much .this excess of grain on hand has been from time to time, and the average or mean of this excess (in the statute denominated “average capital invested”) should be added to the assessment of the visible and tangible property. The true average capital would be the average sum invested in the business from time to time. The statute, however, points out the way to find what part of the true average capital has not been reached by the assessment of the tangible property found at the time of assessment, and requires the. assessment to be corrected by adding this excess. If this is the true interpretation of the statute, then the assessor should value for taxation all of the property of the person, company or corporation engaged in the buying and selling of grain for profit, including real estate and grain on hand, and should then ascertain, in the manner that the statute points out, whether the average capital invested in the business during the preceding tax year was greater than the capital which he has so assessed, and, if he finds that it was greater, then he should add to his assessment such excess of the average capital invested. In this case the plaintiff omitted from its statement of property, for taxation the amount of its grain on hand, and the assessor properly added this amount to the assessment. By its judgment the district court approved of this action on the part of the assessor and was right in so doitíg.
The judgment heretofore entered in this case is vacated and the judgment of the district court affirmed.
Judgment accordingly.