State v. United States Fidelity & Guaranty Co.

Briscoe, J., delivered the opinion of the Court: This is a suit at law instituted by the State of Maryland against the United States Fidelity and Guaranty Company, of Baltimore City, a corporation of the State of Maryland, to recover a State franchise tax of two per cent of its gross receipts claimed to be due by the appellee .to the appellant for the year 1898. The record in the case presents but a single question and that involves a construction of section 146 of Art. 81 of the Code, as amended by the Act of 1896, chapter 120. This Act provides in substance that a State tax, as a franchise tax, of two per centum, is to be levied annually upon the gross receipts or earnings of every telegraph or cable, express or transportation, telephone, parlor-car, sleeping-car, safe deposit, trust, guarantee and fidelity company incorporated under any general or special law of the State and doing business herein. It also provides that all the provisions and requirements of the section shall be in force and apply to all corporations of a like kind to those enumerated herein which are doing business in the State, and which are incorporated by or under the laws of any other State, district, territory or foreign country.

Eveiy unincorporated association, partnership or individual engaged in any one or more of the above specially enumerated branches of business in this State except guano, phosphate and fertilizer companies shall be subject to the gross-receipt tax and shall comply with all the provisions of this article with reference thereto as fully as if such association, partnership or individual was a corporation. ³¹⁶ At the trial of the case, the plaintiff reserved an exception to the granting of the defendant’s prayer and also to the refusal of the Court below to grant its prayer. The proposition of law submitted on the part of the defendant by its prayer was that under Art. 81, sec. 146, of the Code, the State is only entitled to recover the tax of two per cent upon the gross receipts or earnings of the defendant for year ending January 31, 1898, on business done in the State. The converse of this proposition, that the State was entitled to recover two per cent upon the total gross receipts or earnings •of the company upon its entire business, for the year ending January 31, 1898, was submitted on the part of the plaintiff but rejected by the Court. The total gross reeeipts or earnings of the defendant company for the year 1898 were shown to amount to the sum of .$153,160.10.

The gross receipts or earnings derived from the business done by the company within the State amounted to $22,619.14. There is no question raised as to the validity or constitutionality of the Act under which the tax here is imposed. ,'The Supreme Court of the United States and this Court have in a number of decisions settled the question that a franchise tax on the gross receipts of a corporation is not an invalid exercise of the taxing power of the State ; it being a tax imposed on the corporafion because of the value of its franchise, as distinguished from its ownership of property, Pacific Express Co. v. Seibert, 142 U. S. 339 ; Western Union Telegraph Co. v. Alabama, 132 U. S. 472 ; U. S. Electric Power and Light Co. v. State, 79 Md. 69 ; State v. Northern Central Rwy. Co., 44 Md. 169 ; State v. Balt. & Ohio R. R. Co., 48 Md. 49 . It will be thus seen that the only question presented in this case and the one we are called upon to decide is whether the franchise tax of two per cent is to be levied under the statute upon the total gross receipts or earnings of the defendant company, from its entire business or whether the tax is to be limited and imposed