Mayor of Baltimore v. Canton Co.

Ritchie, J"., delivered the opinion of the Court. This suit was brought by the appellant to recover of the appellee, the Canton Company, a corporation formed under the laws of Maryland and having its principal office in Baltimore City, taxes for the years 1880, 1881, 1882, 1883, on the aggregate valuation of the capital shares of stock of said company as assessed by the State Tax Commissioner and certified by him to the Appeal Tax Court of said city. The first question arising upon the agreed statement of facts upon which the case was tried is, whether the said company was entitled to have deducted from said valuation of its stock the value of its reversions in fee in certain parcels of land in Baltimore City demised by it to various tenants under leases for ninety-nine years, renewable forever, in the form and mode customary in that city, which leases reserve certain irredeemable ground rents and contain covenants by the lessees to pay all taxes levied or assessed on said parcels of land, and the annual ground rents incident thereto, and all improvements thereon; and which parcels of land and the improvements-thereon have been assessed at their full taxable value, including said reversions in fee to which said ground rents are incident, to the ■lessees thereof or their assigns, who, for the purposes of this suit, are admitted to have paid to the collector of Baltimore City all the taxes thereon for the said years. ²³³ The second question presented is, assuming that the appellee was entitled originally to have such deduction made, whether it can now set up such a defence under the further facts admitted in the record, to wit: that the President of the Canton Company furnished to the Appeal Tax Court for the years mentioned a true statement of the said reversions in fee in and to said parcels of land and of the ground rents reserved thereon; that said reversions and ground rents were for each of said years valued and assessed by said Appeal Tax Court to the appellee, but no certificates of such valuations and assessments were furnished to its president or other officer, and therefore no certificates of such valuations and assessments were transmitted to the State Tax Commissioner, and none of such valuations and assessments were considered by him in ascertaining the taxable value of the shares of stock of the defendant corporation. The Act of 1880, chap. 20, amending section 151 of Art. 81 of the Code, as re-enacted by the Act of 1878, chap. 178, provides, that the president or other proper officer of every corporation, formed under the laws of this State or doing business therein, shall furnish a true statement of any real property which it shall own or possess to the County Commissioners or the Appeal Tax Court of Baltimore City, according to the location of said property, and such real property shall be valued and assessed by the said Commissioners or Tax Court, respectively, to the said corporation, and they shall give duplicate certificates of such valuation and assessment to such president or other officer, who shall transmit one of such certificates, with his return of stock, to” the State Tax Commissioner, and taxes shall be paid by such corporation on such assessment in the same manner as the same are levied upon and paid by individual owners of real property in such county or city; and that the Tax Commissioner shall deduct'the assessed value of such real property from the" aggregate ²³⁴ value of all the shares of stock of such corporation and divide the residuum by the number of the shares of the capital stock, and the quotient shall be the taxable value of such respective shares of stock.

It is contended by the appellee that its reversionary interest in the parcels of land demised by it as aforesaid, to-the extent it has entered into the taxable valuation and assessment of said lands, brings it within the statutory provision just cited, and should have been deducted from the valuation made by the Tax Commissioner of its capital-stock, as being real estate of which it is the owner; and, further, that the taxes upon the full value of said lands having been paid by its lessees, not to deduct the value of such interest from its capital stock would be in effect to subject it to double taxation. In our construction of the law the appellee is not entitled to be considered an owner of real estate within the contemplation of the Act of Assembly, nor within the proper signification of those words as used in connection with the established tax system of the State. Those corporations only are to be regarded as owners of real estate, the valuation of which is to be deducted from the valuation of their stock, to whom the land is directly assessable, and who are primarily chargeable with the taxes thereon. It is only when a corporation is thus liable for the taxes on real property that the law relieves its. stock as representative of that property.

The relation between the land and the stock must be thus direct. It is not such taxation as may incidentally burden the resources, or reduce the profits of corporations, and incidentally or circuitously affect the market value of their stock for which it is the design or policy of the law to allow an abatement. Nor is it compatible with public convenience and the prompt collection of revenue, for the State to trace out all the sub-divided or qualified interests that may be held in ²³⁵ real estate, and seek to hold the various owners responsible. Its policy is to assess the fee simple value of the land to the holder of the possession, where its real owner is not apparent or accessible, leaving the parties interested to adjust the proportions of liability between themselves.

This general principle is stated on page 223 of Burroughs on Taxation, as follows : “It is the fee simple in land that is assessed. The law does not regard the different interests in the assessment. It looks to the person having the present right of enjoyment, whether the tenant for life or years, for the tax on the fee simple value of the land, and such person is the-one to he assessed with the land.” This policy is recognized in the Act of 1812, chap. 112, sec. 36, and with specific reference to leasehold estates. As incorporated in the Code, Art. 81, sec. 73, Act of