Fidelity Trust Co. v. Gorman

³³³ Thomas, J., delivered the opinion of the Court. This appeal is by the Fidelity Trust Company, a Maryland corporation, from an order of the Baltimore City Court dismissing its appeal from an assessment of its stock made by the State Tax Commission. The petition of the company in the Court below alleges., in the first paragraph thereof, that the company appeals from the action of the Commission in assessing its stock for the year 1918 in. the manner and amount set forth in the petition, and “charges and alleges” that the action of the Commission in making said assessment “is illegal because unequal and discriminatory.” The second paragraph alleges that the company, on or about the 21st of January, 1918, filed with the Commission, as required by law and on the form furnished by the Commission, a full and complete report of all information required by the Commission “together with certificates,” and that on or about the 19th day of February., 1918, the Commission made a tentative assessment of the shares of the stock of the company for 1918, and notified the company that said assessment would become final unless cause to the contrary he shown; that according to said tentative assessment the value of the shares was fixed at $308.00 per-share, and the total issue of 10,000 shares at an aggregate-value of $3,080,000.00, and that this amount., less credits to-which the company was entitled under the laws of the State,, would he the amount upon which the company would he required to pay for its stockholders State taxes, and city, county and town taxes to the several “taxing units, in the State,”' wherein the shareholders reside, or where the shares may-properly he taxed. The third paragraph charges that the-company, within the time provided, protested against the proposed assessment “in the manner and amount herein set; forth,” hut that the Commission “paid no consideration to the-protest,” and on the 10th of April, 1918, assessed the 10,000 shares at $308.00 per share, “or an aggregate of $3,080,-000.00,” and notified the company of its action.

The fifth paragraph states that the company “now alleges and charges”' ³³⁴ that the action of the Commission in assessing the shares of the company in said amount per share “is illegal and void for the following! reasons”: “That in computing the assessable value of shares of corporations subject to assessment on shares the law of Mrayland does not define the method to be used in determining the taxable value, but that the Constitution and laws of the State do set forth that all taxable property in the State shall be placed upon the assessment books and equalized between persons, films and corporations in all the cities, districts, towns and villages of the State. That in assessing shares of corporations the commission considers several methods in arriving at the assessment and that the commission assesses some corporations by one- method and some other corporations by some other method. That, as advised by the commission at the hearing, the methods which may be used are as follows: “(a) Assessment based on the market value of shares. “(b) Assessment based on the book or liquidation value of shares. “(c) Assessment based on capitalization of earnings at a percentage and this percentage is determined by the commission. “(d) Or assessment based on combination of two or more of these methods, but which means selection of one of the methods.” The sixth paragraph of the petition avers that if the Commission assessed the shares of the company for the year 1918 according to the first of the above methods the assessment at $308.00 per share is illegal and void because the price at which the shares were sold during the year 1917 rang’ed between $312.00 and $310.00, the last sale being in October, and the market value of all securities was declining during the fall of 1917, and about the first of 1918 the bid price for said stock was $306.00, and within the first ten days of January, “shares were sold at $306.00.” The seventh para ³³⁵ graph charges that in the assessment of shares of other hanks, trust companies and corporations, “the same percentage of assessment to the market value has not heeu applied by thei’ Commission, “because it will appear that the shares of this corporation have been assessed at a basis of 99.9 per cent, and your petitioner alleges that the percentage of assessment 1o the value of shares, of other corporations is. much lower than the percentage in the assessment of this corporation”; that real estate and personal property in the counties and Baltimore City are assessed at a percentage far below tho ratio of 99.9 per cent., and that that fact is known to the Commission; that the assessment of the shares of the company at $308.00 produces gross inequality, which, inequality is unlawful under the laws of tho State, and under “the Constitution of the United States, and amendments, in that it denies to this petitioner the equal protection of law.” The eighth paragraph alleges that if the Commission based the assessment on the hook or liquidation value of the stock the assessment is illegal and void because it produces gross inequality when compared with the assessment of shares of other corporations, according to the hook or liquidation value of the shares of such other corporations, for that, according to the value of the assets of the company on or about the first of January, 1918, and the report of tho company filed with tho Commission, the book value of the shares of the company was $240.55 per share., and the assessment of $308.00 per share-“represents a percentage of assessment to value of 125 percent.,” and the same ratio of assessment to- the hook or liquidation value has not been applied by tho Commission to shares of other banks, trust companies or corporations, and that said ratio of 125 per cent, is not. the same ratio of assessment to value of the real estate and personal property in the counties, and Baltimore City, and the assessment of the shares of tho company is “far in excess of the ratio of assessment of other persons, and corporations.” The ninth paragraph charges that if the Commission adopted “the capitalization-of-earning method” in arriving at the assessment of $308.00 per share,. ³³⁶ the assessment is illegal and. void because unjust and unequal as compared with the assessment of banks, trust companies and other corporations, because according to the books of the company, and the report of the company to the Commission, the net profits of the company for the year ending the 31st of December, 1917, were $271,477.75, and the assessment of $308.00 per share represents a capitalization at the rate of 8% per cent., and the same rate of capitalization has not been used by the Commission as the basis of capitalization of net earnings of other banks, trust companies and corporations, and that no uniform rate is used by the Commission in arriving at assessment by method of capitalization of earnings; that the rate applied to other corporations for the year 1918 is in excess of 8% per cent.; that capitalization of net earnings at different rates produces gross inequality of assessments, and that tire assessment of the company is therefore unjust and unlawful under the laws of Maryland and the Constitution of the United States and amendments thereto. The tenth paragraph charges- that any method used by the Com,mission in arriving a-t the' taxable value of the shares of the petitioner by a combination of two or more of the methods mentioned is illegal and void because discriminatory, and the result produced is unequal and unjust, “and has not been used by the Commission in arriving at the assessed value of shares of other banks, trust companies and other corporations subject to assessment on shares.” The eleventh and remaining paragraph avers that in 1917 the Commission proposed to assess the shares of the company at $280.00' per share, and that after protest the assessment was fixed by the Commission at $275.00 per share; that the assessment of $308.00 per share represents an increase for the year 1918 over the year 1917 of $33.00 per share notwithstanding the fact that during the year the market value of the shares on the market advanced only five points over the preceding year, and the book value of the stock in 1917 increased $11.14 per share, and could have been increased $1.00 pei’ share more had an extra Red Cross dividend of 1 per ³³⁷ cent, been carried to the surplus; that the earnings for the year 1916 were $251,880.69, and the assessment for the year 1917 of $275.00' per share represents an assessment at 9 1/6 per cent., and the assessment for the year 1918 of $308.00 per share is “unlawful and unjust.” The prayer of the petition is (1) that the assessment by the Commission of $308.00 per share be annulled and set aside, and that the Court “make a legal and proper' assessment.” (2) That the Commission be required to produce at the hearing the report of the company to the Commission, together with all findings and actions of the Commission “therein”; the “reports of other banks., trust, companies and other corporations subject to assessment on shares., showing the sales prices of stock during the year, the book value of stock and the net earnings with the ratio- of earning’s, to assessed value”; the findings and assessments for the year 1918 made by the Commission, and “the ratio of assessment of property to value in the City of Baltimore and in the counties of Maryland,” and (3) that the Court “equalize the assessment of the Fidelity Trust Company for the year 1918 with the assessment of other corporations, and property in this State.” The transcript of the record of proceedings, before the State Tax Commission contains only the report of the Fidelity Trust Company to the Commission for the year 1918, on a form furnished by the Commission, in accordance with the provisions of the Code requiring such reports to be made annually; the notice to the company, dated March 19th, 1917, enclosing copy of proposed assessment of its. shares of stock, and advising the company that the same would become final unless sufficient reasons, for a change therein be presented within ten days from said date; the notice to the company, dated March 15th, that it would, on March 18th, be granted a hearing “in the matter of its assessment”; a similar notice on March 20th fixing time for the hearing on March 22nd; the notice to the company on March 26th containing the final assessment of its stock; the petition and protest of the com ³³⁸ pany filed with the Commission on March 28th, alleging that the assessment was unequal and unfair; was in excess of the true value, market value and book value of the stock, and that if the assessment was made by capitalizing net earnings the basis of capitalization was not fair; and the notice to the company on April 10th that, after due consideration of its petition, the Commission had determined to make no' change in the assessment, and would certify it as final.

The record before the Court below consisted of the petition of the appellant to that Court, the record of proceedings before the Commission, and a miotion of the Commission to disrmiss the appeal, and the appeal was dismissed by the Court on the ground that the questions submitted by the petition were not questions of law but questions of fact. The appeal to the Court below, and the present appeal were taken under sections 239 and 245 of Vol. 3, Art. 81 of the Code, as enacted by the Act of 1914, Ch. 841, and no question appears to have been made in the lower Court, and none has been made in this Court, as to the right of appeal under those sections from the action