Commissioners of Beaufort County v. Old Dominion Steamship Co.

39 S.E. 18, 128 N.C. 558, 1901 N.C. LEXIS 429

• Court: Supreme Court of North Carolina
• Decided: June 7, 1901
• Status: Published

Opinions

The defendant having "domesticated" under the Craig Law, the question here presented is, how much of its capital stock should be taxed in this State? Upon the facts agreed, the capital stock of $1,250,000 is all listed for taxation in Delaware. The defendant does business in (559) several States, and the value of its tangible property in this State, and the value of its tangible property in this State, steamers, warehouses, etc., is $62,000, all of which is listed for taxation. It has no separate capital stock as a domesticated corporation, its business and property here being part of the general corporation, chartered and doing business in several States.

In Commissioners v. Tobacco Co., 116 N.C. 441, it is held that "capital stock" is a distinct subject of taxation from "shares" of capital stock, the former belonging to the corporation, and the latter to the individual stockholders. It was held, following the uniform decisions here and elsewhere which are cited, that it was "within the legislative power, in respect to corporations, to levy any two or more of the following taxes simultaneously: (1) On the franchise (including dividends); (2) on the capital stock; (3) on the tangible property of the corporation, and (4) on the shares of the capital stock in the hands of the stockholders — taxation on the last two being imperative under the Constitution.

Under sec. 39, ch. 15, Laws 1899, the assessed value of the real and personal property of the corporation is directed to be deducted from the aggregate value of the shares of stock, and the difference, if any, to be listed for taxation, the object being evidently to avoid double taxation (though the Legislature could authorize it, Commissioners v. Tobacco Co.,supra. The defendant having no separate capital stock, as a North Carolina corporation, contends that it can not be taxed here because it is a nonresident corporation. It is settled that it is a domestic corporation (Debnam v. Telephone Co., 126 N.C. 831), so far as jurisdiction is concerned.

As to matters affecting taxation, it makes no difference whether it is a North Carolina corporation or not. Whether domesticated here or not, the business and operations here are practically a part of the larger corporation doing business in several States (2 Morawetz Corp., secs. 994, 996), (560) and, therefore, as repeatedly held in the United States Supreme Court, whenever a tax upon the capital stock of corporations is laid "such a proportion of the whole value of its capital stock as the length of its lines within the State bears to the length of its lines anywhere" can be taxed as capital stock in this State. Telegraph Co. v. Taggart, 163 U.S. 1. As our Statute directs the value of its tangible property to be deducted, the sum of $62,000, the value of the defendant's tangible property in this State should be deducted from the proportion of the valuation of the whole capital stock, which, by above rule, should be proportioned to this State and the difference should be taxed in this State as capital stock. The above rule was reaffirmed in Express Company v. Ohio, 165 U.S. 194, and Same v. Kentucky, 166 U.S. 171. Upon a rehearing of the former case Express Company v. Ohio, 166 U.S. 185, the point was most elaborately and ably argued, as may be seen from the briefs, and the above doctrine again repeated and conclusively in an opinion in an unanimous Court by Mr. Justice Brewer. In that case it is held, "whatever property is worth for the purpose of income and sale, it is worth for the purpose of taxation, and when, as in the case of the express company, the tangible property of the corporation is scattered through different States by means of which its business is transacted in each, the situs of this intangible property is not simply where its home office is, but is distributed wherever its tangible property is located and its work is done." It was also held that "no fine spun theories about situs should interfere to enable those large corporations, whose business is of necessity carried on through many States, from bearing in each State such burden of taxation as a fair distribution of the actual value of the property among those States requires." Hence, in the Ohio case a tax on $533,095.85 of capital stock (561) was sustained, though the corporation had only $42,065 of real and personal property in that State. In the Kentucky case a tax on $1,463.040 as the fair proportion of its capital stock, taxable in the State, was sustained, though the corporation had only $36,614.53 of tangible property within that State. 166 U.S., bottom of page 172. Where the Legislature arbitrarily fixed the proportion of the capital stock of a corporation operating in several States, which should pay taxes in that State, it was upheld. Minot v. R. R., 85 U.S. 206.

Under our statute, the assessment of the capital stock should be made by the Corporation Commissioners, and not by the County Commissioners. This objection is not made by exception below nor by motion here, but it is a defect of which we can take notice ex mero motu. While, therefore, we must dismiss the action we have passed upon the point, as the party interested desires us to do so by not having objected, and it is a matter of public interest. Milling Company v. Finlay, 110 N.C. 411; S. v. Wylde, Id., 500.

Action dismissed.