Court Opinion

ID: 8058224
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:35:07.627867+00
Date Added: 2024-06-11T16:37:56.843610
License: Public Domain

Vredenburgh, J.,
dissenting. This certiorari was brought to test the correctness of the tax assessed for the- year 1862 ■upon the property of the prosecutor. The prosecutor is a private corporation, and its capital stock has been assessed at par. It is not denied that the actual value of the stock is not over ■seventy-five cents on the dollar. The prosecutor contends that the tax should be at the real, and not its par value; ■that the tax should be in proportion to'value; or, in other words, on $75,000, and not on $100,000. This tax was *413assessed by virtue of the act of March 28th, 1862, Pamph, Laws 344.*
It is contended, on the part of the prosecutors, that the question is regulated by the 14th section of this act. This • provides that it shall be the duty of the assessors, jn assessing any property to be assessed under this act, to assess and value such property at its full and fair value, and at such price as, in his judgment, said property would sell for at a fair and bona fide sale by private contract at the time such assessment is made. The prosecutor contends that in this case this section has been disregarded, and that the assessor should only have taxed it at such price as in his judgment the capital stock would have sold for at private sale. The prosecutor further relies on the 7th section of the same act, which provides that all real and personal estate, whether owned by individuals or corporations, shall be assessed at the full and actual value thereof.
The defendant, however, justifies his assessment under the 8th section of the same act. This provides that all private corporations shall be and are hereby required to be respectively assessed and taxed at the full amount of their capital stock paid in and accumulated surplus, and the persons holding the capital stock of such corporations shall not be assessed therefor. It is apparent, if we construe this 8th section literally, that the tax is correct as it stands j for it says expressly that every private corporation shall be taxed at the full amount of its capital stock paid in. But the plaintiff in certiorari contends that this language is modified by that of the said 7th and 14th sections. I think not. I think the 8th section means precisely what it says. This will be manifest from the presumption that the legislature must be intended to mean what they plainly say. I do not see how its clear and explicit language can be subject to doubt. It says expressly, that “every private corporation shall be taxed at the full amount of its capital *414stock paid in and accumulated surplus,” and devotes two long sections, the 8th and 9th, to effect that object, and to make that very important change upon the law as it stood before. ' But the prosecutors contend that this 8th section taxes private corporations on their capital and accumulated surplus, and therefore applies only to corporations that have an accumulated surplus; that corporations whose stock is below par can have no surplus, and that therefore such corporations are not within the meaning of this section ; that the section was intended to govern those corporations only which had an accumulated surplus. I cannot so think, for many reasons. In the first place, such is not the grammatical sense of the terms used. The language is, “ all private corporations shall be taxed at the full amount of capital paid in and accumulated surplus.” Now suppose there is no accumulated surplus, and the capital stock is taxed, is not the surplus also taxed ? The surplus is nothing, and the tax on it is nothing, and the tax on the capital is as strict a compliance with the words -of the act, if there is no surplus as if there is. But again, if private corporations which have no surplus be not within this 8th section, then neither such corporations nor the property they represent can be taxed at all; for this very section provides that the persons holding the capital stock shall not be assessed therefor, and no other section or law provides for taxes on corporations as such.
All the other sections relate to taxes on property only, which stock belonging to individuals is not, so far as corporations are concerned. Let us now take a more general view of this subject.
Before the act of 1854, Nix. Dig. 850, the general principle of taxation was to tax the individual for the visible property he had in possession, without deducting his debts. The great change introduced into this act of 1854 was to tax to the individual all property, real and personal, including stocks in corporations, in his possession, deducting his debts. One of the main objects of tire act of 1862, under which this tax was levied, was to change his principle as to private *415•corporations, and instead of taxing the individual for the stock he owned, which might be nothing after deducting ■either his own debts or the debts of the corporation, to tax the corporation itself by a special standard, — to tax the corporation itself, not for what its property was worth after deducting debts, hut on its capital stock paid in and its .accumulated surplus. This act of 1862 still preserves the principle of taxing individuals according to what they were worth by deducting their debts from their property, and placing the tax on the balance. But. as regards private corporations, that was the precise principle the legislature meant to change by this act of 1862, and to tax corporations not for what they were worth, by first deducting their debts, but ■upon their whole capital paid in and accumulated surplus. This kind of tax was, in its essence, partly a capitation tax and partly a property tax; it was a capitation tax, regarding the corporation as an artificial person, so far as regards the tax on their capital stock paid in, and a property tax, so far as regards the accumulated surplus. To now tax a private corporation for what it is worth, or its stock at its value in •the market, is but coming back again to the act of 1854, and repealing the act of 1862 by judicial construction. If this be not correct, why was the act of 1862 passed at all. Its effect, in this regard, is precisely like that of 1854; the only differ.ence is, that in the one case the tax is paid by the individual stockholders, in the other by the treasurer of the corporation, but its amount and object are the same.
That this construction of the act of 1862 is correct appears from the whole structure of that act. Thus the act of 1862 .preserves the great principle, which was the corner-stone of the act of 1854, which so altered our ancient tax laws, viz. that of taxing the individual for what he was worth; but it intended to change that whole principle as regarded private corporations, and apply an entirely different theory to the whole mass of private corporations in the state. No one can read its different sections, especially the 8th, 9th, 10th, 12th, and 13th, without being struck with the anxiety and *416determination with which the legislature are pursuing that object.
Let us now turn our attention again to the 8th section of this act of 1862.
As we have before remarked, if private corporations which have no surplus are not within its provisions, then, as there is no other section or law that taxes them, they cannot be-taxed at all. But there are other difficulties connected with the matter. If the tax is to be, not upon the amount of capital paid in, but upon its value in the market, if there is a. surplus it will probably be above par, and that in proportion to the amount of the surplus. What then ? How, under the act, are we to tax it above par ? or if we do, do we not, as we have to tax the surplus too, tax the same property twice over, first the surplus, and then the stock above par which represents it.
But again, the value of a stock in the market depends-often, not so much on the value of the property it represents as upon the income it produces; and in the market would often bring $150, when all the property of the corporation,, if sold, would not bring twenty. This would be a tax not on property, but upon income, which there are no indications in the act, that tlie legislature intended.
But again, the value of a stock, for the most part, depends-on the debts it owes. If $100,000 are paid in, its stock is presumed to be worth par; if the debts are $100,000, it is worth nothing.
Is there any pretence that, under this act, the assessors, in assessing private corporations, are- to deduct debts of the-corporations ? Are not all the mandates of the act in the very teeth of such a procedure? When the legislature intend that debts shall be deducted from property, do they not, as in the 12th section, say so explicitly? And do they not pass the 8 th and 9th sections for the express and only purpose of making that distinction between corporations and individuals?
But again, this great change which the legislature meant *417to make between individuals and corporations, by the act of 1862, is further manifest from, the remaining clauses in its 8th section. There are many corporations in this state which have no capital stock. These clauses provide “ that such corporations as have no capital stock; shall be assessed for the full amount of their property and valuable assets, without any ■deduction for debts or liabilities.”
Here is the same distinction between the taxes of individuals and corporations. The individual is taxed for his property after, these corporations before deducting debts. Can it be possible that the legislature intended to make any such ■distinction between corporations which had, and those that had not capital stock, as to tax the one free from, the other subject to their debts ?
That the intent of the 8th section is precisely what it says, is further manifest from the 9th and 13th sections. This 13th section provides that the real estate of private corporations shall be assessed to said corporations, and the amount deducted from the amount of the capital stock and surplus. Now, if the prosecutors are right, this real estate would have to be deducted, not from the amount of the capital stock, but from the amount of the market value of the stock.
But it is 'contended, by the prosecutors, that the construction comes in collision with the 7th section of the act. Our first answer is, if it does, the 8th section is subsequent to the 7th, and if both cannot stand, the 7th will have to yield. But Secondly, we do not see any such collision. The 1st section of the act provides, that there shall be assessed on the inhabitants of this state, and on their taxable real and personal property, and upon the other objects of taxation herein .after specified, a state tax. So that the 1st section recognizes three distinct objects of taxation: 1st, persons; 2d, property; 3d, other objects of taxation: and as private corporations are the only other objects of taxation named in the -act, the legislature must have designated private corporations .as an object of taxation distinct from natural persons and from property.
*418•The 1st object of taxation — natural persons — is satisfied by the poll-tax in the 6th section. The 2d object of taxation — ■ property — is satisfied in the 7th section, which provides that' all property shall be taxed iu the manner and subject to the-exemptions in the act specified. The 3d object of taxation,. viz. private corporations, is satisfied by the 8th, 9th, and 10th-sections providing for such taxation.
Nor does the 7th section collide at all with the 8th, 9th,. and 10th sections. The 7th section provides, that all personal* estate shall be liable to taxation, in the manner, and .subject: to the exemptions in the act specified, at the full and actual-value thereof. Now the first property exempted in the act is-the capital stock of private corporations held by individuals,, but which capital stock is taxed in the manner prescribed im the 8th section, to wit, at par upon its capital paid in. The-property of persons, consisting of stocks in private corporations, is by the 8th section taxed in this manner, to wit, by taxing it at its par value in the name of and to the corporations. It is to be taxed at its full and actual value in the manner specified in the act, and the manner specified in the act is at the full amount of the capital paid in. So that the-7th and 8th sections are in this regard in perfect accord.
It is next contended that this construction of the 8th section comes in collision with the 14th section of the same act.. This 14th section provides that it shall be the duty of the-assessors,'in assessing any property to be assessed under this-act, to assess and value such property at its full and fair-value, and at such price as in his judgment said property would sell for at a fair and bona fide sale by private contract, at the time such assessment is made; and every assessor shall annex to his duplicate an oath, that all assessments in it have been made according to the requirements-of this section. Now it could not have been intended, by the legislature, that the last clause of this section should be-literally construed, for it is impossible that the assessments-required by the 6th and 10th sections should be made according to the requirements of the 14th section. The legis*419lature could only have intended, by the last clause of the section, that the oath of the assessor should cover .all the duties required of him by the first clause of the section. When, therefore, the legislature required that the assessor should swear that, in assessing any property under this act, he valued such property at its true value, what property was in the eye of the legislature? Surely not- the stock of private corporations in the hands of the stockholders, for that was free from taxation by the very terms of the act. Was it the capital stock of private corporations assessed as against the corporations ? Certainly not, for two reasons.
First. Because the legislature had already, in the 7th section, provided a special manner of taxing that upon a different principle than its value; and it is against every principle of construing statutes, that when a special matter is specially provided for, it should be affected by a subsequent section embracing more general matters.
Secondly. Because the said 14th section speaks only of assessing property. Now the capital stock of a corporation in the hands of the stockholder is property, but in the hands of the corporation it is not. The capital stock of a corporation in the hands of the stockholders is no more the property of the corporation than is its circulation. It is the debt of the corporation, and the property of the stockholders. The assessor, therefore under this act, in assessing the corporation for its capital stock, is no more assessing property than he is assessing property when he is assessing a poll-tax. Let us test this a moment. If the capital stock of a corporation is property, and is to be assessed at its value, what is the assessor to assess it at? What is its value? The prosecutors say, what it will bring in market or at private sale. But what will the capital stock of a corporation bring in the market by virtue of an assessment against the corporation ? It belongs to the stockholders, and not to the corporation. As the property of the corporation, it is obviously valueless. No value can be assigned to it as the property of the corporation. If sold as the property of the corporation, what *420could be got for it ? What would the purchaser get? This 14th section does not therefore apply at all to this tax on the capital stock of corporations, but only to property of individuals and corporations, other than what is represented by the par value of their stock. This 14th section has relation only to the second object of taxation named in the first section of the act, viz. to tax on property, and not to the first and second objects of taxation therein named, to wit, natural persons and corporations or artificial persons. It is evident that filie legislature, in dealing in this regard with corporations, was treating them as artificial persons, and intending the tax on them to be in the nature of a poll-tax. It is a tax on the poll, or head, or capital of the corporation; the capital being to the corporation what the poll or head is to the private individual. The capital is to the artificial person what the caput or poll is to the natural person. The prosecutors complain that this is unjust; that their stock has depreciated in value. But it is unjust only in the sense that every poll-tax is unjust. The head, poll, or caput of a bachelor is taxed at $2, while that of a married man is taxed at only $1. Is the caput of one double the value of the other? We can only say the legislature sic volet; they have the power to do so, and have done so. There is nothing unusual in this principle of taxation. It was the universal one in this state prior to the áct of 1854.
It is next urged that it is not to be presumed that the legislature would adopt any such arbitrary mode of taxation towards corporations. We are not quite so sure of that.
The increased taxation made necessary by the civil war forced the legislature to look around for additional objects of taxation. For popularity sake, they would naturally look around for matters of taxation that would occasion as little remark as possible. The increased taxation upon individuals would tend to excite clamor everywhere; the rich corporations had also power to resent unequal taxation, but the lame and sickly corporations Avere Avithout much power to clamor or resent. They Avere without either friends or sympathy, and consequently the Avhole community would unite *421in the justice of any amount of taxation on them, however unequal. We are not therefore quite certain but that the legislature intended the precise thing which the prosecutors have with so much force and eloquence contended that they should be presumed not to have done. The particularity with which this case has been examined was due to the large interest involved.
Cited in State, People’s Fire Ins. Co., pros., v. Parker, Receiver, 6 Vr. 580

This opinion refers to the facts in the case of the Camden Water Works Company.